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2021-08-06 09:30:15 CASH MANAGEMENT BILLS

The cash management bill (CMB) is the most flexible instrument for a Central Bank because it can be issued when needed, allowing the Central Bank to have lower cash balances and issue fewer long-term notes. CMBs tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to lower overall interest expense.

The Government of India, in consultation with the RBI, had decided to issue a new short-term instrument, known as Cash Management Bills, to meet the temporary cash flow mismatches of the Government. CMBs in India are non-standard, discounted instruments issued for maturities less than 91 days. CMBs have the generic character of Treasury Bills.


Features of cash management bill (CMB)
1. CMBs are in nature similar to Treasury Bills.
2. The tenure of CMBs is less than 91 Days, but the amount and date of issue depend upon the requirements.
3. It is issued at a discount on Face Value.
4. The announcement is made One day prior to the auction
5. The settlement of the auction is on T+1 Basis.
6. It is Tradable
7. Investment in them is eligible in Government securities by banks for SLR purpose Open / Comment

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2021-08-06 02:31:07 Micro-Finances

Micro-Finance has been defined by RBI “as provision of thrift and credit and other financial services of very small amount to the poor in rural, semi urban and urban areas to improve their income and living standard”.

Micro-credit institutions are those which are engaged in providing credit and other facilities to these poor strata of the society. RBI has asked banks and financial institutions to formulate their own schemes, models, prescribe suitable criterions, choose suitable branches, credit norms and interest rates etc for this purpose. Accordingly, banks have to prepare micro-credit plans for blocks, districts and the whole state for this purpose and these plans are reviewed at State and National level.

The non-governmental organizations (NGOs), voluntary organization and self help groups are playing critical role in providing micro-finance facilities. Even NABARD is playing active role in supporting these organizations and even arranging financial assistance to them. Many states have also launched various schemes of micro-finance for increasing income of poorest of the poor in rural, semi urban and urban areas.

Micro-Finance products
1. Micro credit
2. Micro savings
3. Micro insurance
4. Micro leasing
5. Micro Money Transfer

Participants in Micro finance
– Financial institutions
– Donors
– Private equity
– Micro-finance institutions
– Self help groups
– Non-Government organizations (NGO's)

In India SHG‟s are playing key role in the field of Micro-finance with key objective like-
– To create habit of savings
– To secure financial technical and moral strength
– To avail loan from financial institutions
– To gain economic prosperity through loan/credit
– To save them from exploitation by money lenders.

Millennium Development Goals of Micro-finance
– Eradiate extreme proverty and hunger
– Universal primary education
– Women empowerment
– Reduce child mortality
– Control HIV/AIDS, Malaria etc.

The last two decades has seen the microfinance industry grow by leaps and bounds around the world. India is no exception, the number of non banking finance companies providing credit and savings products has gone from a few dozens to several hundreds. It is estimated by Sa-Dhan, a self regulatory organization that the total number of microfinance clients in India touched the figure of 30 million in mid 2017. This figure does not include the clients serviced by six micro-finance companies that have been given a banking license by the Reserve Bank Of India.

Demonetization, an ill conceived act of financial terrorism failed to deter the spirit of MFI’s, entrepreneurs and borrowers who continued to repay micro-loans albeit with minor hiccups in the repayment schedule. There was also some contraction in loan portfolio’s observed as demonetization hurt the poor the most and capital formation indicators turned negative.

Going forward it is important to collect and study empirical data from the industry to ensure that microfinance companies continues to strengthen the financial inclusion agenda in India. To enable this, Sa-Dhan has released the latest version of it’s Bharat Microfinance Report 2017. The data and figures from this report can be used until September 2018 when the next version will be released. Open / Comment

2021-08-05 18:17:52 Target IBPS RRB PO/Clerk Exam 2021

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2021-08-05 12:01:01 WORLD'S FIRST BUILT IN NEWS

World’s first Ship Tunnel to be built in Norway

World’s Largest Floating Solar Farms being built in Singapore

World’s First ‘Energy Island’ to be built by Denmark in North Sea

South Korea to Build World’s Largest Offshore Wind Farm

Australia building world’s first platypus sanctuary Open / Comment

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2021-08-05 07:31:20 What are the permissible debits into EEFC account?

i) Payment outside India towards a permissible current account transaction [in accordance with the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000] and permissible capital account transaction [in accordance with the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000].

ii) Payment in foreign exchange towards cost of goods purchased from a 100 percent Export Oriented Unit or a Unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park

iii) Payment of customs duty in accordance with the provisions of the Foreign Trade Policy of the Central Government for the time being in force.

iv) Trade related loans/advances, extended by an exporter holding such account to his importer customer outside India, subject to compliance with the Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000.

v) Payment in foreign exchange to a person resident in India for supply of goods/services including payments for airfare and hotel expenditure.


Is there any restriction on withdrawal in rupees of funds held in an EEFC account?

Ans. No, there is no restriction on withdrawal in Rupees of funds held in an EEFC account. However, the amount withdrawn in Rupees shall not be eligible for conversion into foreign currency and for re-credit to the account. Open / Comment

2021-08-04 19:41:49 Target NABARD Grade A Exam 2021

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2021-08-04 09:31:05 Foreign exchange regulation act

Foreign Exchange, since time immemorial, has been recognised as the exclusive domain for banks and corporations at large. To add to it, it is also the world’s biggest market so far. Keeping in mind the augmenting importance of this market where currency gyrations can dictate the fortunes of one and all, it was considered of paramount importance, to bring foreign exchange under the ambit of regulation.

FERA – the four-letter acronym for Foreign Exchange Regulation Act is a legislation that came into existence in 1973 with the purpose to regulate certain dealings in foreign exchange, impose restrictions on certain kinds of payments and to monitor the transactions impinging the foreign exchange and the import and export of currency.

Features of FERA:
Applicable to all the citizens of India, the intent of FERA, inter alia, was to conserve the foreign exchange resources of the nation. Some of the key features of the act are as follows:

Authorisation by RBI to any person/company to deal in foreign exchange
Authorisation to the dealers by the Reserve Bank of India for transacting foreign currencies, subject to review and revocation of the authorisation in the case of non-compliance
Authorisation to the money changers for conversion of currencies as per the rates determined by RBI
Restrictions on import/export of currencies
Restriction on persons other than the authorised dealers to enter into transactions involving the financial currency
Restrictions on issue of bearer securities
Restrictions on holding or acquiring immovable properties outside India
Restrictions on making/receiving payment to/from a resident outside India
The Power of RBI to call for information and seize documents, wherever or whenever required. Open / Comment

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