RBI – Central Banking Glossary: Capital Funds
Economic capital: There are three types of capital viz. Regulatory capital, Book capital and Economic capital. Regulatory capital is the amount of capital a bank is required to hold as per the stipulations prescribed by the banking regulator of the country. Book Capital is the actual capital that the bank has, which includes equity capital,…
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Meaning of incoterms ‘Delivered at Terminal’ (DAT)
“Delivered at Terminal’ or three letter abbreviation DAT refers to common contractual term used in international trade. The term DAT replaces earlier term ‘Delivered ex quay’. As per ‘Delivered ex quay’ term seller must deliver the goods at a wharf, and was thus applicable to goods delivered via waterways (whether inland or sea). The term…
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What is restructuring of loan?
A restructured or rescheduled account is practically a new loan replacing the older account. The purpose of restructuring of a loan is to accommodate the borrower who is in financial difficulty and unable to repay the loan as per repayment schedule. Restructuring of loans involve modification of terms and conditions of the loan usually with…
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Reports on 5 days week in banks not factually correct: RBI
Mr.Yogesh Dayal, Chief General Manger of RBI in his press release dated Apr 20, 2019 clarified that RBI has not issued any direction on 5 days week in banks and the above information appeared in media reports is not factually correct. The reason for the above clarification on press release is necessitated because of certain…
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What is Taylor rule?
The Taylor rule was first proposed by economist John B. Taylor in 1993 to provide guidance to the U.S. Federal Reserve* and other central banks for setting short-term interest rates based on economic conditions. John Taylor proposes how Central Banks should alter interest rates in response to changes in economic conditions mainly inflation and economic…
Loan provisioning process explained with examples
The potential loan losses arise to banks and financial institutions due to default of repayments from borrowers or renegotiated terms of a loan or one time settlement that incur lower than previously estimated repayments. The provision for loan loss is the money banks and financial institutions set aside to cover these potential losses on their…
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