What is Basel Norms

Bureau of International Settlement (BIS) headquarters at Basel, Switzerland has appointed a committee to supervise and to set some standards for International Banks. This committee is known as Basel Committee on Bank Supervision (BCBS). The rules and regulations for Banks issued by this committee were called Basel Norms / Accords. There are three Basel Norms, namely Basel I, II and III.

Basel I Accord : This was issued in 1988. This accord focused on the capital adequacy of financial institutions. Banks that operate internationally are required to have a risk weight of 8% or less. India adopted Basel I Norms in the year 1999.

Basel II Acord : This is the second of the Basel Accords, published in the year 2004. This consists of the recommendations on Banking Laws and Regulations issued by BCBS.

Basel III Accord : Basel III guidelines were released in the year 2010. This is to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents and seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the banks' transparency.

What Are Bitcoins

The Bitcoin is a form of currency without notes and coins, it is a digital currency.

In this era of Internet and digitization, we’ve moved from phone to VoIP calls, face-to-face meeting to video conferencing, fax to email, cable television to IP TV, and the list goes on.

The concept of Bitcoins was developed by Satoshi Nakamoto and belongs to Japan.
The world’s first insured bitcoin storage service has launched in the UK (London).

What is FDI & FII

FDI: Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

FII: Foreign institutional investors (FIIs) are those institutional investors which invest in the assets belonging to a different country other than that where these organizations are based.

Note: Foreign institutional investors play a very important role in any economy. These are the big companies such as investment banks, mutual funds etc, who invest considerable amount of money in the Indian markets. With the buying of securities by these big players, markets trend to move upward and vice-versa. They exert strong influence on the total inflows coming into the economy.

Difference b/w FDI & FII:
1. FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation.

2. In FII, the companies only need to get registered in the stock exchange to make investments. But FDI is quite different from it as they invest in a foreign nation.

3. FDI is more preferred to the FII as they are considered to be the most beneficial kind of foreign investment for the whole economy.

4. The Foreign Institutional Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. This difference is what makes nations to choose FDI’s more than then FIIs.

5. While the FDI flows into the primary market, the FII flows into secondary market. While FIIs are short-term investments, the FDI’s are long term.

What is Government Bonds

A government bond, which is also known as a government security, is basically any security that is held with the government and has the highest possible rate of interest.

SDR - Special Drawing Rights

SDR are new form of International reserve assets, created by the International Monetary Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained as accounting entries and not as hard currency or physical assets like Gold.

What is Direct & Indirect Tax

A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are an examples of direct tax. They are not shifted to somebody else.

Indirect Tax: This type of tax is not paid by someone to the authorities and it is actually passed on to the other in the form of increased cost. They are levied on goods and services produced or purchased. Excise Tax, Sales Tax, Vat, Entertainment tax are indirect taxes.

What is Fiscal Deficit

A deficit in the government budget of a country and represents the excess of expenditure over income. So this is the amount of borrowed funds require by the government to meet its expenditures completely.

What is Balance Sheet

financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.

The balance sheet must allow the following formula: Assets = Liabilities + Shareholders' Equity

Balance of Payments

A list of all of a country’s international transactions for a given time period, usually one year. Payments into the country (receipts) are entered as positive numbers, called credits; Payments out of the country (payments) are entered as negative numbers called debits. A single numbers summarize all of a country’s international transactions: the balance of payments surplus.

Balance of Trade

The value of a country’s exports minus the value of its imports. Unless specified as the balance of merchandise trade, it normally incorporates trade in services, including earnings (interest, dividends, etc.) on financial assets.
Balanced Trade: When a balance of trade equal to zero. (exports – imports = 0)

What is MICR

MICR stands for Magnetic Ink Character Recognition. MICR Code is a numeric code which uniquely identifies a bank branch participating in the ECS Credit scheme. MICR code consists of 9 digits e.g 400229128

 i. First 3 digits represent the city (400)

ii. Next 3 digits represent the bank (229)

iii. Last 3 digits represent the branch (128)

The MICR Code allotted to a bank branch is printed on the MICR band of cheque leaves issued by bank branches.

What is IFSC - Indian Financial System Code

i. Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system.

ii. This is an 11 digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero).and the last 6 characters representing the bank branch.

iii. IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.

Financial inclusion

Financial inclusion means providing sound and affordable financial services to the "unbanked”, those who do not have access to the formal financial system.
Financial inclusion is more than an economic issue - it is a legal and regulatory reform process.

Bhartiya Mahila Bank - BMB

Bhartiya Mahila Bank is an Indian financial services banking company based in New Delhi, India.India's Prime Minister Manmohan Singh inaugurated the system on 19 November 2013 on the occasion of the 94th birth anniversary of former Indian Prime Minister Indira Gandhi.

Headquarter – New Delhi. Bank will get an initial capital of Rs 1,000 crore.

Usha Ananthasubramanian – The First CEO/Chairperson of Bhartiya Mahila Bank

EMV based card payments

EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.

It is a joint effort initially conceived between Europay, MasterCard and Visa to ensure the security and global interoperability of chip-based payment cards

Certificate of Deposit - CD

Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialized form or as a Usance Promissory Note, for funds deposited at a bank or other eligible financial institution for a specified time period.

Period: Banks can issue CDs for maturities from 7 days to one a year whereas eligible FIs can issue for maturities 1 year to 3 years.

Commercial Paper - CP

Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.

Corporate, primary dealers (PDs) and the all-India financial institutions (FIs) that have been permitted to raise short-term resources under the umbrella limit fixed by the Reserve Bank of India are eligible to issue CP.

Period: CP can be issued for maturities between a minimum of 7 days and a maximum up to one year from the date of issue.

various types of financial markets

The financial markets can broadly be divided into money and capital market.

A. Money Market: The money market provides investment avenues of short term tenor. Money market transactions are generally used for funding the transactions in other markets including Government securities market and meeting short term liquidity mismatches.

By definition, money market is for a maximum tenor of up to one year. Within the one year, depending upon the tenors, money market is classified into:

 i. Overnight market or Call money - The tenor of transactions is one working day.
ii. Notice money market – The tenor of the transactions is from 2 days to 14 days.
iii. Term money market – The tenor of the transactions is from 15 days to one year.

B. Capital Market: Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized markets like stock exchanges.

What are soiled, mutilated and imperfect banknotes

(i) "soiled note:" means a note which, has become dirty due to usage and also includes a two piece note pasted together wherein both the pieces presented belong to the same note, and form the entire note.

(ii) Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces.

(iii) Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.

What is Online or Internet Banking

The accessing of bank information, accounts and transactions with the help of a computer through the financial institution's website on the Internet is called online banking. It is also called Internet banking or e-banking