KALYAN CITY BLOG

Nationalisation of Banks in India - Introduction After independence the Government of India (GOI) adopted planned economic development for the country (India). Accordingly, five year plans came into existence since 1951. This economic planning basically aimed at social ownership of the means of production. However, commercial banks were in the private sector those days. In 1950-51 there were 430 commercial banks. The Government of India had some social objectives of planning. These commercial banks failed helping the government in attaining these objectives. Thus, the government decided to nationalize 14 major commercial banks on 19th July, 1969 . All commercial banks with a deposit base over Rs.50 crores were nationalized. It was considered that banks were controlled by business houses and thus failed in catering to the credit needs of poor sections such as cottage industry, village industry, farmers, craft men, etc. The second dose of nationalisation came in April 1980 when banks...

Monetary Policy Reforms in India The Monetary Policy of the RBI has undergone massive changes during the economic reform period. After 1991 the Monetary policy is disassociated from the fiscal policy . Under the reform period an emphasis was given to the stable macroeconomic situation and low inflation policy. The major changes in the Indian Monetary policy during the decade of 1990. Reduced Reserve Requirements : During 1990s both the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR) were reduced to considerable extent. The CRR was at its highest 15% plus and additional CRR of 10% was levied, however it is now reduced by 4%. The SLR is reduced form 38.5% to a minimum of 25%. Increased Micro Finance : In order to strengthen the rural finance the RBI has focused more on the Self Help Group (SHG). It comprises small and marginal farmers, agriculture and non-agriculture labour , artisans and rural sections of the society. However still only 30% of the sasaran popula...

Economic Reforms of the Banking Sector In India Indian banking sector has undergone major changes and reforms during economic reforms. Though it was a part of overall economic reforms, it has changed the very functioning of Indian banks. This reform have not only influenced the productivity and efficiency of many of the Indian Banks, but has left everlasting footprints on the working of the banking sector in India. Let us get acquainted with some of the important reforms in the banking sector in India. Reduced CRR and SLR : The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are gradually reduced during the economic reforms period in India. By Law in India the CRR remains between 3-15% of the Net Demand and Time Liabilities. It is reduced from the earlier high level of 15% plus incremental CRR of 10% to current 4% level. Similarly, the SLR Is also reduced from early 38.5% to current minimum of 25% level. This has left more loanable funds with commercial banks, solvin...

The instrument of monetary policy are tools or devise which are used by the monetary authority in order to attain some predetermined objectives. There are two types of instruments of the monetary policy as shown below. (A) Quantitative Instruments or General Tools ↓ The Quantitative Instruments are also known as the General Tools of monetary policy. These tools are related to the Quantity or Volume of the money. The Quantitative Tools of credit control are also called as General Tools for credit control. They are designed to regulate or control the total volume of bank credit in the economy. These tools are indirect in nature and are employed for influencing the quantity of credit in the country. The general tool of credit control comprises of following instruments. 1. Bank Rate Policy (BRP) The Bank Rate Policy (BRP) is a very important technique used in the monetary policy for influencing the volume or the quantity of the credit in a country. The bank rate refers to rate ...

Meaning of Monetary Policy The term monetary policy is also known as the 'credit policy' or called 'RBI's money management policy' in India. How much should be the supply of money in the economy? How much should be the ratio of interest? How much should be the viability of money? etc. Such questions are considered in the monetary policy. From the name itself it is understood that it is related to the demand and the supply of money. Definition of Monetary Policy Many economists have given various definitions of monetary policy. Some prominent definitions are as follows. According to Prof. Harry Johnson , "A policy employing the central banks control of the supply of money as an instrument for achieving the objectives of general economic policy is a monetary policy." According to A.G. Hart , "A policy which influences the public stock of money substitute of public demand for such assets of both that is policy which influences public liquidity p...

Indian Money Market - Features Every money is unique in nature. The money market in developed and developing countries differ markedly from each other in many senses. Indian money market is not an exception for this. Though it is not a developed money market, it is a leading money market among the developing countries. RBI , all scheduled commercial banks and other recognized financial institutions. However, the unorganized part of the money market comprises domestic money lenders, indigenous bankers, trader, etc. The organized money market is in full control of the RBI. However, unorganized money market remains outside the RBI control. Thus both the organized and unorganized money market exists simultaneously. Seasonality : The demand for money in Indian money market is of a seasonal nature. India being an agriculture predominant economy, the demand for money is generated from the agricultural operations. During the busy season i.e. between October and April more agricultural ...

Structure of Indian Money Market - Chart ↓ The entire money market in India can be divided into two parts. They are organised money market and the unorganized money market. The unorganised money market can also be known as an unauthorized money market. Both of these components comprise several constituents. The following chart will help you in understanding the organisational structure of the Indian money market. Components, SubMarkets of Indian Money Market ↓ After studying above organisational chart of the Indian money market it is necessary to understand various components or sub markets within it. They are explained below. Call Money Market : It an important sub market of the Indian money market. It is also known as money at call and money at short notice. It is also called inter bank loan market. In this market money is demanded for extremely short period. The duration of such transactions is from few hours to 14 days. It is basically located in the industrial a...

Structure of Indian Capital Market with Diagram Broadly speaking the capital market is classified in to two categories. They are the Primary market (New Issues Market) and the Secondary market (Old (Existing) Issues Market). This classification is done on the basis of the nature of the instrument brought in the market. However on the basis of the types of institutions involved in capital market, it can be classified into various categories such as the Government Securities market or Gilt-edged market, Industrial Securities market, Development Financial Institutions (DFIs) and Financial intermediaries. All of these components have specific features to mention. The structure of the Indian capital market has its distinct features. These different segments of the capital market help to develop the institution of capital market in many dimensions. The primary market helps to raise fresh capital in the market. In the secondary market, the buying and selling (trading) of capital market ins...

Recent Developments in Capital Market of India The Indian capital market has witnessed major reforms in the decade of 1990s and there after. It is on the verge of the growth. Thus, the Government of India and SEBI has taken a number of measures in order to improve the working of the Indian stock exchanges and to make it more progressive and vibrant. Image or picture of SEBI Bhavan (House) in Mumbai, India. Reforms in Capital Market of India The major reforms undertaken in capital market of India includes:- Establishment of SEBI : The Securities and Exchange Board of India (SEBI) was established in 1988. It got a legal status in 1992. SEBI was primarily set up to regulate the activities of the merchant banks , to control the operations of mutual funds, to work as a promoter of the stock exchange activities and to act as a regulatory authority of new issue activities of companies. The SEBI was set up with the mendasar objective, " to protect the interest of investors in se...

Need for Documentary Letter of Credit LC Normally, in international trade, the exporter may not be ready to take the risk of selling his abroad unless he is sure of getting his payment. Likewise, the buyer may not buy goods in international market from an unknown party due to risk of not meeting his requirements. Both these risks are quiet high, which may sometime result into major financial loss. This perception is not congenial to development of international trade. The seller, therefore, needs an assurance of payment on behalf of the buyer; similarly, a buyer would want somebody to ensure due performance by the seller as per the contract. Both the parties can feel satisfied, if a professional intermediator like bank lends his support by issuing Documentary Credit on behalf of the buyer (importer) in favour of the seller (exporter). What is a Documentary Credit ? Meaning, Definition A Documentary Credit is an instrument, which can be used for settling the trade payments. It ...

I completely disagree with this statement. Man may be poor materialistically but spiritually and mentally he is not poor. Poverty depends on one's own thinking. There are many examples in public life which would support my view. Lal Bahadur Shastri, Abraham Lincoln, Dr. A.P.J. Abdul Kalam each belonged to a poor family. These persons touched the height of success. They encountered challenges of life lion-heartedly. They accepted the challenges, faced the difficulties and swam against the current of time, as a result of which they were mentally prepared for every circumstance of their lives. Poverty forced them to be strong, tough and bold. Image Credits © Siddharth Bargate Those who blame poverty for their failures are just making petty excuses. In fact, they have laid down their weapons against circumstances. They should have prepared themselves mentally and intellectually to face the challenges of life. Gold 'glitters with more radiance when it is burned in fire. Children ...

Child Labour in India Exist - Photos of Child Labour Child Labour is still prevalent in India . Following photos speak the harsh reality of poor Indian children who are forced to work because of poverty, hunger and fear. Most of them are school dropouts who work for at least 12 hours daily to feed themselves and their families.The Lost Child's Innocence. Forced Child Labour In Free India - Youtube Videos Child Labour a glaring social issue of Modern India.