What is AFS/ Available for Sale
The investment portfolio of the banks are classified under three categories viz. ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’. Banks take decision to categorise their investments at the time of acquisition of these securities and recorded on the investment proposals of the bank. The Available for Sale (AFS) are debt and equity…
Read article
What is HTM/ held to maturity?
The entire investment portfolio of the banks (including SLR securities and non-SLR securities) are classified under three categories viz. ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’. Held-to-maturity securities are debt security investments which the holder has the intention and ability to hold them until specific date of maturity. The investments classified under…
Read article
What is 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, loans, and…
Read article The role of RBI as a lender and Banker to Government
In terms of Section 20 of the RBI Act 1934, RBI has the responsibility to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union. In addition to that RBI has the right to transact…
What is correspondent banking?
Generally, correspondent banking arrangement involves two banks establishing reciprocal accounts with each other through bilateral agreements. These accounts are established to enable the domestic bank to make payments or money transfers on behalf of the foreign bank. The most common services provided by correspondent banks are currency exchange, wire transfer, handling business transactions and trade…
Read article