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Cardinal Principles of lending

A bank is an institution which is primarily seen as a body that accepts monetary deposits from its customers (general public), looks after their money, offer them some beneficial services such as cheque books to make payments and lends money to other public (borrowers). Now lending money to someone comes with some inherent risks especially […]

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Investment Fluctuation Reserves

Investment Fluctuation Reserves: IntroductionInvestment fluctuation reserves are the reserves built up within many accumulation-style superannuation funds. The main purpose is smoothening the year-to-year returns credited to member accounts. These reserves are established by not distributing some of the investment income when fund earnings are high. When the earnings are low, the investment reserves are then […]

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Need for Cash Balances with Banks

The banking system in any country in the world is the lifeline of its economy. As long as the money the banking system generates is circulated in the economy, the country will be running smoothly and efficiently. However, as soon as this money supply is stopped, it becomes a serious cause for concern. If capital […]

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Valuation of Bank Investments

Banks are the institutions that deals in money and its substitutes and provide other financial services. The main function of a bank is to act as an intermediary between money surplus units (lenders) and money deficit units (borrowers). Bank also does the job of an advisor or analyst that evaluates various money deficit units so […]

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Cash and Balances with RBI

Behaviour of Banks with regard to cash and BalancesTo understand the behaviour of banks with regard to cash and balances, first we need to understand what cash is how it is related with RESERVE BANK OF INDIA. Also how it impacts banks and economy.Cash Reserve Ratio is the amount of money which Banks have to […]

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Market Risk Management

IntroductionRisk may be defined as an exposure to uncertainty which may lead to a favorable or unfavorable outcome. Market risk   refers to the risk of losses in the bank’s trading book due to movements in market prices. Risk taking forms an essential part of business. All businesses take risks based on two factors: the probability […]

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Why do Banks Invest

What is Banking?Banking can be defined as the business activity of accepting and safeguarding money owned by other individuals, and for earning profit they lend this money. But as the time passes by the activities covered by banking business have widened and now various other services are also offered by banks. Banking services issue debit […]

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Risks Involved in Investments

Risks in financial sector can be defined as the amount of uncertainty in the expectation of return for an investment made. To be precise, it can be said that when an investment is made, a certain return is expected out of it, and the deviation of the return of the investment from its expected return […]

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Credit Appraisal

INTRODUCTIONCredit appraisal means an investigation done by a bank before providing any advances, loans or project finance. Banks also check the financial, commercial & technical viability of the project proposed its funding pattern & further checks the primary & collateral security cover available for recovery of such funds.Credit Appraisal is a process to ascertain the […]

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Maturity Gap

Maturity OverviewThe distinction between the normal development of advantages and liabilities is called development hole. At the point when the development crevice is equivalent to zero progressions in investment rates will bring about equivalent however counterbalancing changes in the estimation of advantages and liabilities and net pay. Along those lines it is all conceivable to […]