01. Banking Currency and Crypto

Sources of RBI Revenue

1. Interest Income from banks, Gvt

2. Returns from Foreign Bonds, Investments, currency exchange gains

3. Seigniorage

What is Seigniorage

difference​ ​between​

​face​ ​value​ ​and​ ​printing​ ​cost​ ​of​

​currency

Loans by RBI to gvt

1. Ways and Means Bill - 90days - repo rate - max amount can be borrowed is fixed

2. Overdraft - 14 days - repo + 2%

3. Direct Bond Purchase - Market rate - Long term - in rare conditions only like in Emergencies

List 4 RBI functions

1. Targets Infaltion

2. Issues Currency

3. regulate Banks

4. LENDER OF LAST RESORT

What is Contigency Risk Buffer

RBI's safety net - amount it keeps it with itself from surplus - 4.5% to 7.5%

1. Under what Act RBI is established?

2. Does RBI pays tax?

3. Why RBI extra money is called surplus but not dividends/profit

1. RBI Act,1934

2. No

3. Because RBI is not a company

MPC

1. composition

2. Meeting frequency

3. Voting tie

1. 3 from RBI + 3 from Central gvt

2. every 2 months

3. Governor vote wins

1. Repo rate vs Rev Repo rate vs SDF vs MSF vs OMO vs MSS

2. LAF

3. LAF corridor

4. bank rate

5. what is the status of Rev repo now

1A. RBI gives money for interest (with securities)

1B. RBI gives interest for money (with securities)

1C. RBI gives interest for money( Repo rate-0.25%)

1D. RBI gives money for interest (Repo rate +2.5)

1E.

1F. To manage excess liquidity of rupees caused by actions taken by RBI because dumping of dollars in Indian market by Foreign investors.

2.RBI's mechanisms for liquidity - Repo/rev repo, SDF, MSF, OMO, forex swaps, MSS

3. MSF - SDF = 0.5%

4. RBI buys/rediscounts Commercial bills

4. Although it is present, it is discretionary of RBI and RBI generally uses SDF

repo/rev repo vs OMO

1. promise of purchasing later

2. No promise of purchasing later

Explain MSS

1. Bonds in MSS vs Normal

step1: Dollars flood market, rupee appreciates a lot

step2: RBI buys dollars, so rupees flood the market

step3: so MSS is done

1. in MSS - NEW bonds by gvt - RBI sells them for gvt - money received CANNOT be spent by gvt(cuz that will increse liquidity) - RBI just acts as auctioneer of these Bonds

1. Can CRR have anything other than cash?

2. Where is CRR kept?

3. How much is present CRR

1. No, Only cash

2. With RBI

3. 3% NDTL

1. SLR can have what formats

2. How much is SLR

3. Where is it kept

1. Cash, Gvt Securities, T-Bills, State Development Loans, Excess cash in CRR, Gold

2. 18% of NDTL

2. with banks

what happens to Int rate when

(i) Gvt spends more - expansionary

(ii) Gvt spends less - contractionary

(i) increases - because Money demanded by people increases because of increase in GDP(transaction demand)

(ii) Decreases - Because money demanded by people decreases (transaction demand decreases)

Changed Gold Loan Rules

1. Proof of ownership

2. Concurrent loans prohibited(consumption + income generation)

3. 22 carat pricing and purity testing

4. 5000/ day fine on banks after 7 days delay after returning money by borrower

Stable coin

1. vs other Cryptos like bitcoin

2. Who introduced it and what acts

3. Diff between both acts

1. Stable coin is backd by an asset

2. US House of Representatives - Stable Act ; US Senate - Genius Act

3. Asset Backing the stable coin; stable act - dollar+assets such as treasury bills; genius act-only dollar

Small Finance Bank

1. What regulations they have compared to Universal banks

1. - atleast 25% branches in unbanked areas
   - Loans upto 25 lakhs only
   - 75% PSL
   - Minimum paid up euqity capital of 100 crores

What are residuary NBFCs

NBFCs whose principal business is deposit accepting