Capital and Currency - Venezuela

VENEZUELA

Capital : Caracas

Currency : Bolivar Fuerte

President : Nicolas Maduro

Non Aligned Ministerial Meeting (NAM Summit ) Going to be held in Venezuela in September 2015.

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.