MICROCREDIT OR MICROFINANCE

               Micro credit is the extension of very small loans to the unemployed to poor Endeavour and to others living in poverty who are not considered bankable. These individuals lack collateral steady employment and variable credit history and therefore cannot meet even the most minimal qualification to gain excess to traditional credit.
                Microcredit is a part of microfinance which is the provision of the wider range of the financial services to the very poor. Microcredit is the financial innovation which originated in Bangladesh where it has successfully enabled to extremely impoverish people to engage itself employment project. The founder of this microcredit is Prof. Mohammad Yunus in mid 1970s. He is also the founder of grami8n bank of Bangladesh with which Mr. Yunus has received the Noble Peace Price 2006 and to pay respect towards microcredit the united nation organization has declared year 2005 “The International Year of Microcredit.”

Basel Norms

     Basel is the city of Switzerland where in 1992 the BIS conference was held (Banks for International Settlement) & this conference for organized by the European Banks in which they have prepared some guidelines for the banking industry dividing into parts Basel-I & Basel-II.
    Basel I- between 1994 to 2004
    Basel II- after 2004
           The Basel-I guidelines were only intact with the CAR of the banks in which banks were bound to maintain their CAR between 8-12%
    BASEL III
            Basel III (or the Third Basel Accord) is a global, voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity risk. It was agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and was scheduled to be introduced from 2013 until 2015; however, changes from 1st April 2013 extended implementation until 31 March 2018. The third installment of the Basel Accords (see Basel I, Basel II) was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis. Basel III was supposed to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.

Key principles of BASEL III :

Capital requirements: The original Basel III rule from 2010 was supposed to require banks to hold 4.5% of common equity (up from 2% in Basel II) and 6% of Tier I capital (up from 4% in Basel II) of "risk-weighted assets" (RWA).[3] Basel III introduced "additional capital buffers", (i) a "mandatory capital conservation buffer" of 2.5% and (ii) a "discretionary counter-cyclical buffer", which would allow national regulators to require up to another 2.5% of capital during periods of high credit growth.

Leverage ratio: Basel III introduced a minimum "leverage ratio". The leverage ratio was calculated by dividing Tier 1 capital by the bank's average total consolidated assets; The banks were expected to maintain a leverage ratio in excess of 3% under Basel III. In July 2013, the US Federal Reserve Bank announced that the minimum Basel III leverage ratio would be 6% for 8 Systemically important financial institution (SIFI) banks and 5% for their insured bank holding companies. Liquidity requirements: Basel III introduced two required liquidity ratios. The "Liquidity Coverage Ratio" was supposed to require a bank to hold sufficient high-quality liquid assets to cover its total net cash outflows over 30 days; the Net Stable Funding Ratio was to require the available amount of stable funding to exceed the required amount of stable funding over a one-year period of extended stress.

Tier I Capital: Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view. It is B composed of core capital, which consists primarily of common stock and disclosed reserves (or retained earnings), but may also include non-redeemable non-cumulative preferred stock. The Basel Committee also observed that banks have used innovative instruments over the years to generate Tier 1 capital; these are subject to stringent conditions and are limited to a maximum of 15% of total Tier 1 capital. This part of the Tier 1 capital will be phased out during the implementation of Basel III.

Tier II Capital: Tier 2 capital, or supplementary capital, include a number of important and legitimate constituents of a bank's capital base. These forms of banking capital were largely standardized in the Basel I accord, issued by the Basel Committee on Banking Supervision and left untouched by the Basel II accord. National regulators of most countries around the world have implemented these standards in local legislation. In the calculation of regulatory capital, Tier 2 is limited to 100% of Tier 1 capital.

RUPAY CARD

                RuPay is the Indian domestic card payment network set up by National Payments Corporation of India (NPCI) at the behest of banks in India. The RuPay project had been conceived by Indian Banks Association (IBA) and had the approval of Reserve Bank of India (RBI).
                RuPay LogoNational Payments Corporation of India (NPCI) has a plan to provide a full range of card payment services including the RuPay ATM, RuPay MicroATM, Debit, Prepaid and Credit Cards which will be accepted in India and abroad, across various channels like POS, Internet, IVR and mobile etc.
               The initial focus of NPCI would be to approach those banks who have not been issuing any payment card at all more specifically – Regional Rural Banks (RRBs) and urban co-operative banks.
                All Public Sector Undertakings (PSU) banks set to join RuPay system by the end of year 2012. RuPay-based debit cards can be used by the consumers on the Internet from September, 2012. The government of India had launched India’s first domestic payment card network, RuPay, to compete with Visa Inc and Mastercard Inc.

Objectives of RuPay:
           The Main Objective of the RuPay payment network project is to reduce the overall transaction cost and develop products appropriate for financial inclusion.

• Reduce overall transaction cost for the banks in India by introducing competition to international card schemes. 
• Develop products appropriate for the country particularly for financial inclusion. 
• Provide card payment service option to many banks who are currently not eligible for card issuance under the eligibility criteria of international card schemes. 
• Build environment whereby payment information of the country remains within the country 5. Shift Personal Consumption Expenditure (PCE) from cash to electronic payments in a growing economy with a population of 1.2 billion

Important Points to Remember:

• RuPay is the Indian domestic card payment network. 
• The RuPay payment network set up by National Payments Corporation of India (NPCI) at the behest of banks in India. 
• The RuPay project had been conceived by Indian Banks Association and had the approval of Reserve Bank of India. 
• The main objective of RuPay project is to reduce overall transaction cost for the banks in India by introducing competition to international card schemes. 
• NPCI has plan to provide full range of credit service like RuPay ATM, RuPay MicroATM, Debit, Prepaid and Credit Cards which will be accepted across various channel POS, Internet, IVR, Mobile etc. 
• All state-owned banks are expected to join the RuPay system by the end of this year. 
• RuPay-based debit cards can be used by the consumers on the Internet from September, 2012.

CAPITAL MARKET

                              Capital market deals with medium term and long term funds. It refers to all facilities and the institutional arrangements for borrowing and lending term funds (medium term and long term). The demand for long term funds comes from private business corporations, public corporations and the government. The supply of funds comes largely from individual and institutional investors, banks and special industrial financial institutions and Government.

STRUCTURE I CONSTITUENTS I CLASSIFICATION OF CAPITAL MARKET
                Capital market is classified in two ways

• CAPITAL MARKET IN INDIA

1. Gilt - Edged Market  Gilt - Edged market refers to the market for government and semi-government securities, which carry fixed rates of interest. RBI plays an important role in this market.
2. Industrial Securities Market :- It deals with equities and debentures in which shares and debentures of existing companies are traded and shares and debentures of new companies are bought and sold. 
3. Development Financial Institutions :- Development financial institutions were set up to meet the medium and long-term requirements of industry, trade and agriculture. These are IFCI, ICICI, IDBI, SIDBI, IRBI, UTI, LIC, GIC etc. All These institutions have been called Public Sector Financial Institutions. 
4. Financial Intermediaries :- Financial Intermediaries include merchant banks, Mutual Fund, Leasing companies etc. they help in mobilizing savings and supplying funds to capital market.

• The Second way in which capital market is classified is as

1. Primary Market :- Primary market is the new issue market of shares, preference shares and debentures of non-government public limited companies and issue of public sector bonds.
2. Secondary Market This refers to old or already issued securities. It is composed of industrial security market or stock exchange market and gilt-edged market.

Money Market

                  A money market is a market for borrowing and lending of short-term funds. It deals in funds and financial instruments having a maturity period of one day to one year. It is a mechanism through which short-term funds are loaned or borrowed and through which a large part of financial transactions of a particular country or of the world are cleared. It is not a single market but a collection of markets for several instruments like call money market, Commercial bill market etc.
                 The Reserve Bank of India is the most important constituent of Indian money market In money market the players are

• Government 
• RBI
• DFHI (Discount and finance House of India) Banks
• Mutual Funds
• Corporate Investors
• Provident Funds
• PSUs (Public Sector Undertakings)
• NBFCs (Non-Banking Finance Companies) etc. 

STRUCTURE OF INDIAN MONEY MARKET

• Organised Sector 
• Call and Notice Money Market 
• Indigenous Bankers 
• Treasury Bill Market 
• Money Lenders 
• Commercial Bills 
• NBFI 
• Certificate of Deposits 
• Commercial Papers 
• Money Market Mutual Funds 
• The REPO Market 
• DFHI 

Organised Sector Of Money Market :-
                 Organised Money Market is not a single market, it consist of number of markets. The most important feature of money market instrument is that it is liquid. It is characterised by high degree of safety of principal. Following are the instruments which are traded in money market
1) Call And Notice Money Market
                 The market for extremely short-period is referred as call money market. Under call money market, funds are transacted on overnight basis. The participants are mostly banks. Therefore it is also called Inter-Bank Money Market. Under notice money market funds are transacted for 2 days and 14 days period. The lender issues a notice to the borrower 2 to 3 days before the funds are to be paid. On receipt of notice, borrower have to repay the funds.
2) Treasury Bill Market (T - Bills)
                This market deals in Treasury Bills of short term duration issued by RBI on behalf of Government of India. At present three types of treasury bills are issued through auctions, namely 91 day, 182 day and364day treasury bills. State government does not issue any treasury bills. Interest is determined by market forces. Treasury bills are available for a minimum amount of Rs. 25,000 and in multiples of Rs. 25,000. Periodic auctions are held for their Issue. Commercial Banks, Primary Dealers, Mutual Funds, Corporates, Financial Institutions, Provident or Pension Funds and Insurance Companies can participate in T-bills market.
3) Commercial Bills
                Commercial bills are short term, negotiable and self liquidating money market instruments with low risk. A bill of exchange is drawn by a seller on the buyer to make payment within a certain period of time. Generally, the maturity period is of three months. Commercial bill can be resold a number of times during the usance period of bill.
4) Certificate Of Deposits (CDs)
                 CDs are issued by Commercial banks and development financial institutions. CDs are unsecured, negotiable promissory notes issued at a discount to the face value. The scheme of CDs was introduced in 1989 by RBI. The main purpose was to enable the commercial banks to raise funds from market. At present, the maturity period of CDs ranges from 3 months to 1 year. They are issued in multiples of Rs. 25 lakh subject to a minimum size of Rs. 1 crore. CDs can be issued at discount to face value. They are freely transferable but only after the lock-in-period of 45 days after the date of issue.
5) Commercial Papers (CP)
                  Commercial Papers were introduced in January 1990. The Commercial Papers can be issued by listed company which have working capital of not less than Rs. 5 crores. They could be issued in multiple of Rs. 25 lakhs. The minimum size of issue being Rs. 1 crore. At present the maturity period of CPs ranges between 7 days to 1 year. CPs are issued at a discount to its face value and redeemed at its face value.
6) Money Market Mutual Funds (MMMFs)
                   A Scheme of MMMFs was introduced by RBI in 1992. The goal was to provide an additional short-term avenue to individual investors. In November 1995 RBI made the scheme more flexible. The existing guidelines allow banks, public financial institutions and also private sector institutions to set up MMMFs. The ceiling of Rs. 50 crores on the size of MMMFs stipulated earlier, has been withdrawn. MMMFs are allowed to issue units to corporate enterprises and others on par with other mutual funds. Resources mobilised by MMMFs are now required to be invested in call money, CD, CPs, Commercial Bills arising out of genuine trade transactions, treasury bills and government dated securities having an unexpired maturity upto one year. Since March 7, 2000 MMMFs have been brought under the purview of SEBI regulations. At present there are 3 MMMFs in operation.
7) The Repo Market
                    Repo was introduced in December 1992. Repo is a repurchase agreement. It means selling a security under an agreement to repurchase it at a predetermined date and rate. Repo transactions are affected between banks and financial institutions and among bank themselves, RBI also undertake Repo.
8) Discount And Finance House Of India (DFHI)
                    In 1988, DFHI was set up by RBI. It is jointly owned by RBI, public sector banks and all India financial institutions which have contributed to its paid up capital.It is playing an important role in developing an active secondary market in Money Market Instruments.

II. Unorganised Sector Of Money Market
                     The economy on one hand performs through organised sector and on other hand in rural areas there is continuance of unorganised, informal and indigenous sector. The main constituents of unorganised money market are:-
1) Indigenous Bankers (IBs) Indigenous bankers are individuals or private firms who receive deposits and give loans and thereby operate as banks. IBs accept deposits as well as lend money. They mostly operate in urban areas, especially in western and southern regions of the country.
2) Money Lenders (MLs) They are those whose primary business is money lending. Money lending in India is very popular both in urban and rural areas. Interest rates are generally high. Large amount of loans are given for unproductive purposes.
3) Non - Banking Financial Companies (NBFCs)
                  They consist of
1. Chit Funds
                  Chit funds are savings institutions. It has regular members who make periodic subscriptions to the fund. The beneficiary may be selected by drawing of lots. Chit fund is more popular in Kerala and Tamilnadu.
2. Nidhis
                 Nidhis operate as a kind of mutual benefit for their members only. The loans are given to members at a reasonable rate of interest. Nidhis operate particularly in South India.
3. Loan Or Finance Companies
                 Loan companies are found in all parts of the country. Their total capital consists of borrowings, deposits and owned funds. They give loans to retailers, wholesalers, artisans and self employed persons. They offer a high rate of interest along with other incentives to attract deposits. They charge high rate of interest varying from 36% to 48% p.a.
4. Finance Brokers
                They are found in all major urban markets specially in cloth, grain and commodity markets. They act as middlemen between lenders and borrowers. They charge commission for their services.

MONEY

             Money is a thing that is usually accepted as payment for goods and services as well as for the repayment of debts.

Types of Money 

• Commodity Money - Commodity money value is derived from the commodity out of which it is made. The commodity itself represents money and the money is the commodity. For instance, commodities that have been used as mediums of exchange include gold, silver, copper, salt, peppercorns, rice, large stones, etc. 
• Representative Money - Representative Money includes token coins, or any other physical tokens like certificates, that can be reliably exchanged for a fixed amount/quantity of a commodity like gold or silver. Fiat Money - Fiat money, also known as fiat currency is the money whose value is not derived from any intrinsic value or any guarantee that it can be converted into valuable commodity (like gold). Instead, it derives value only based on government order (fiat). 
• Commercial Bank Money - Commercial bank money or the demand deposits are claims against financial institutions which can be used for purchasing goods and services. 
• Narrow and Broad Money - Money supply, like money demand, is a stock variable. The total stock of money in circulation among the public at a particular point of time is called money supply.

Banking Ombudsman

          The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services.
           The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
            As on date, fifteen Banking Ombudsmen have been appointed with their offices located mostly in state capitals. The addresses and contact details of the Banking Ombudsman offices have been provided in the annex.
           All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.
           One can file a complaint before the Banking Ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one s representation, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank.
           One may lodge his/ her complaint at the office of the Banking Ombudsman under whose jurisdiction, the bank branch complained against is situated. For complaints relating to credit cards and other types of services with centralized operations, complaints may be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the customer is located. Address and area of operation of the banking ombudsmen are provided in the annex.
           

Budget and its types

Budget
       Budget is the estimation of income and expenditure. Budget is prepared for proper and systematic development.

Budget represent in 3 ways
              1. Income> expenditure= surplus
              2. Income= expenditure= balance budget      
              3. Income< expenditure = deficit budget
         Note- India's budget is always deficit because India is a developing country.

Sources of Money for Government

1. Loan from RBI 
2. Government securities 
3. Loan from Asian development Bank and world bank

Categories of Budget

1. Gender Budget 
2. Zero base Budget 
3. Outcome Budget
4. Traditional Budget 
5. Performance Budget 
6. Interim Budget

• Gender Budget- When budget is female oriented is called gender budget. 
• Zero base Budget- When government form budget without considering last years budget performance that is called zero base budget. 
• Outcome Budget- When budget is result oriented(means particular sector growth related). 
• Traditional Budget- When income estimated and expenditure fixed is called Traditional budget.
• Performance Budget- When government form budget with considering last year budget.
• Interim Budget- Year 2014-15 budget is interim budget. When government is not able to prepare budget for full year is called interim budget. Example in election times , in wars. Interim Budget is for 4 months.

Note- First time budget was represented by Robert woolpoul in 1773 in U.K. Bugat is a french word for Budget.

• In India under Constitution Article 112 government present Union Budget. 
• In constitution of India annual financial statement is mentioned not budget. 
• State Legislative Assemble present their budget by article 202.
• India's First Budget was presented by James Wilson in 1860 when lord canning is viceroy of India. 

In 1921 Edward committee recommend to divide budget in two parts 

1. Rail Budget
2. Union Budget 

• First Independent India's Budget presented by Mr. R. K kshadmugam chatti (it is first interim budget) in November 1947. 
• First Republic India's Budget presented byMr. John Mathei.

Inflation Related Terms

Inflation Related Terms 

• Deflation- Deflation is the opposite of inflation -- it's when prices fall. It is caused by a reduction in the supply of money or credit . 
• Hyperinflation- Extremely rapid or out of control inflation. Hyper inflation is a situation where the price increases are so out of control that the concept of inflation is meaningless. 
• Stagflation- A condition of slow economic growth and relatively high unemployment- a time of stagnation- accompanied by a rise in rises , or inflation. 
• Disinflation- A slowing in the rate of price inflation. Disinflation is used to describe instances when the inflation rate has reduced marginally over the short term. It is used to describe periods of slow inflation. 
• Reflation- Reflation is the act of stimulating the economy by incresing the money supply or by reducing taxes. it is opposite of disinflation.

Inflation

Inflation
         Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time.

Types of Inflation

1. Demand pull inflation 
2. Cost push Inflation 
3. wages Inflation 
4. Imported Inflation 

• Demand Pull Inflation- occurs demand for goods and services exceed the supply. 
• Cost Push Inflation- Price increase due to increase in price of other products. 
• Wages Inflation- It occur due to increase in wages as a result purchasing power of people increase. 
• Imported Inflation- The general price level rises in a country because of the rise in prices of imported commodities. 

Categories of Inflation

1. Creeping Inflation- When there is a general rise in prices at very low rates, which is usually between 2-4 percent annually. 
2. Walking Inflation - This type of strong, or pernicious, inflation is between 3-10% a year. It is harmful to the economy because it heats up economic growth too fast. 
3. Galloping Inflation- When inflation rises to ten percent or greater, it wreaks absolute havoc on the economy. Money loses value so fast that business and employee income can't keep up with costs and prices. 
4. Hyper Inflation- Hyperinflation is when the prices skyrocket more than 50% -- a month. It is fortunately very rare.

BSC Match Points June 2015

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RTGS

RTGS
        The acronym 'RTGS' stands for Real Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). 'Real Time' means the processing of instructions at the time they are received rather than at some later time; 'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.
        NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place with all transactions received till the particular cut-off time. These transactions are netted (payable and receivables) in NEFT whereas in RTGS the transactions are settled individually. For example, currently, NEFT operates in hourly batches. [There are twelve settlements from 8 am to 7 pm on week days and six settlements from 8 am to 1 pm on Saturdays.] Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time Contrary to this, in the RTGS transactions are processed continuously throughout the RTGS business hours.
        The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ` 2 lakh. There is no upper ceiling for RTGS transactions.
        The RTGS service window for customer's transactions is available to banks from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end. However, the timings that the banks follow may vary depending on the customer timings of the bank branches.
       With a view to rationalize the service charges levied by banks for offering funds transfer through RTGS system, a broad framework has been mandated as under: a) Inward transactions – Free, no charge to be levied. b) Outward transactions – ` 2 lakh to ` 5 lakh - not exceeding ` 30.00 per transaction; Above ` 5 lakh – not exceeding ` 55.00 per transaction.
       The remitting customer has to furnish the following information to a bank for initiating a RTGS remittance:
1. Amount to be remitted
2. Remitting customer’s account number which is to be debited
3. Name of the beneficiary bank and branch
4. The IFSC Number of the receiving branch
5. Name of the beneficiary customer
6. Account number of the beneficiary customer
7. Sender to receiver information, if any
       The beneficiary customer can obtain the IFSC code from his bank branch. The IFSC code is also available on the cheque leaf. The list of IFSCs is also available on the RBI website . This code number and bank branch details can be communicated by the beneficiary to the remitting customer.
       

BANK SCHEMA’S

BANK SCHEMA’S
**********************

• Which Bank is Introduced “ Pehli Udaan” Saving Account ? SBI
• Which Bank is Introduced “Young Champ” Saving Account? Federal Bank
• Which Bank is Introduced “Smart Star” Saving Account? ICICI Bank
• Which Bank is Introduced “Future Star” Saving Account? AXIS Bank
• Which Bank is Introduced “Zing Saving Account”? ING Vyesya Bank
• Which Bank is Introduced “My First Yes Account”? Yes Bank
• Which Bank is Introduced “Kids Advantage Account”? HDFC Bank
• Which Bank is Introduced “My Junior Account”? Kotak Mahindra Bank
• Which Bank is Introduced “Pehla Kadam Saving Account”? SBI
• Which Bank is Introduced “Power Kidz Account”? IDBI
• Which bank has started issuing Kisan Card to withdraw one lakh per day from ATMs? Axis Bank

Thanks to Reji Ram

NEFT

NEFT
    National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.
   
     Individuals, firms or corporates maintaining accounts with a bank branch can transfer funds using NEFT. Even such individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, such cash remittances will be restricted to a maximum of Rs.50,000/- per transaction. Such customers have to furnish full details including complete address, telephone number, etc.NEFT, thus, facilitates originators or remitters to initiate funds transfer transactions even without having a bank account.
   
     Individuals, firms or corporates maintaining accounts with a bank branch can receive funds through the NEFT system. It is, therefore, necessary for the beneficiary to have an account with the NEFT enabled destination bank branch in the country. The NEFT system also facilitates one-waycross-border transfer of funds from India to Nepal. This is known as the Indo-Nepal Remittance Facility Scheme. A remitter can transfer funds from any of the NEFT-enabled branches in to Nepal, irrespective of whether the beneficiary in Nepal maintains an account with a bank branch in Nepal or not. The beneficiary would receive funds in Nepalese Rupees. Further details on the Indo-Nepal Remittance Facility Scheme are available on the website of Reserve Bank of India
   
     There is no limit – either minimum or maximum – on the amount of funds that could be transferred using NEFT. However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances and remittances to Nepal.
   
      There is no restriction of centres or of any geographical area within the country. The NEFT system takes advantage of the core banking system in banks. Accordingly, the settlement of funds between originating and receiving banks takes places centrally at Mumbai, whereas the branches participating in NEFT can be located anywhere across the length and breadth of the country.
     
      NEFT operates in hourly batches - there are twelve settlements from 8 am to 7 pm on week days (Monday through Friday) and six settlements from 8 am to 1 pm on Saturdays.
     
NEFT offers many advantages over the other modes of funds transfer:

• The remitter need not send the physical cheque or Demand Draft to the beneficiary.
• The beneficiary need not visit his / her bank for depositing the paper instruments.
• The beneficiary need not be apprehensive of loss / theft of physical instruments or the likelihood of fraudulent encashment thereof.
• Cost effective.
• Credit confirmation of the remittances sent by SMS or email.
• Remitter can initiate the remittances from his home / place of work using the internet banking also.
• Near real time transfer of the funds to the beneficiary account in a secure manner.

SELECTIVE / QUALITATIVE CREDIT CONTROL METHODS by RBI

SELECTIVE / QUALITATIVE CREDIT CONTROL METHODS
          Under Selective Credit Control, credit is provided to selected borrowers for selected purpose, depending upon the use to which the control try to regulate the quality of credit - the direction towards the credit flows. The Selective Controls are

• Ceiling On Credit: The Ceiling on level of credit restricts the lending capacity of a bank to grant advances against certain controlled securities.
• Margin Requirements :- A loan is sanctioned against Collateral Security. Margin means that proportion of the value of security against which loan is not given. Margin against a particular security is reduced or increased in order to encourager to discourage the flow of credit to a particular sector. It varies from 20% to 80%. For agricultural commodities it is as high as 75%. Higher the margin lesser will be the loan sanctioned.
• Discriminatory Interest Rate (DIR) Through DIR, RBI makes credit flow to certain priority or weaker sectors by charging concessional rates of interest. RBI issues supplementary instructions regarding granting of additional credit against sensitive commodities, issue of guarantees, making advances etc. .
• Directives:- The RBI issues directives to banks regarding advances. Directives are regarding the purpose for which loans may or may not be given.
• Direct Action :- It is too severe and is therefore rarely followed. It may involve refusal by RBI to rediscount bills or cancellation of license, if the bank has failed to comply with the directives of RBI.
• Moral Suasion :- Under Moral Suasion, RBI issues periodical letters to bank to exercise control over credit in general or advances against particular commodities. Periodic discussions are held with authorities of commercial banks in this respect.

for referenct to Monitary Policy Click here