FDI Rules FDI ceiling for public sector banks is 20% on government approval routes. FDI in insurance ventures is allowed up to 74% under the automatic approval route. FDI ceiling for LIC is 20% under the automatic approval route. (Recently changed before LIC IPO.)
Surety Bond: A surety bond is a legally binding contract entered into by three parties – the principal, the obligee, and the surety. The obligee, usually a government entity, requires the principal, typically a business owner or contractor, to obtain a surety bond as a guarantee against future work performance. Surety bonds are mainly aimed at infrastructure development, …
AT1 Bonds: AT1 Bonds stand for additional tier-1 bonds. These are unsecured bonds that have perpetual tenure. In other words, the bonds have no maturity date. Purpose: These bonds are typically used by banks to bolster their core or tier-1 capital. These bonds were introduced by the Basel accord after the global financial crisis. Returns and Risk: These …
G-Sec Acquisition Programme(G-SAP): G-Sec Acquisition Programme(G-SAP) is basically an unconditional and a structured open market operation (OMO), of a much larger scale and size. Aim of G-SAP: The aim of G-SAP is to enable a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions. Benefits of G-SAP: G-SAP is expected to bring down the cost of borrowings for …
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Targeted Long Term Repo Operations(TLTRO): It is a tool that lets banks borrow one to three-year funds from the RBI at the existing repo rate by providing government securities with similar or higher tenure as collateral. It is called ‘Targeted’ LTRO as in this case, the RBI wants banks opting for funds under this option …
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Long Term Repo Operation (LTRO): Long Term Repo Operation(LTRO) is a mechanism to facilitate the transmission of monetary policy actions and to inject liquidity into the banking system to boost credit growth. Under this, the central bank provides one-year to three-year money to banks at the prevailing repo rate accepting government securities with matching or …
Open market operations is the sale and purchase of government securities and treasury bills by RBI or the central bank of the country. The objective of OMO is to regulate the money supply in the economy. The central bank carries out the OMO through commercial banks and does not directly deal with the public. When …
Background: Currently, the Indian markets have the concept of Qualified Institutional Buyers (QIBs), which include mutual funds, insurance companies or foreign portfolio investors. These investors enjoy greater market access. However, an individual investor cannot obtain the QIB status. The concept of accredited investor will provide QIB-like status to individual investors. Qualified Institutional Buyers: They are those institutional investors who …
What is real effective exchange rate (REER)? It is the weighted average of a country’s currency in relation to an index or basket of other major currencies. The weights are determined by comparing the relative trade balance of a country’s currency against that of each country in the index. An increase in a nation’s REER …
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Social Stock Exchange(SSE): Social Stock Exchange(SSE) is a platform that allows investors to invest in select social enterprises or social initiatives. Social Enterprise is a revenue-generating business. The primary aim of social enterprise is to achieve a social objective such as providing healthcare or clean energy. Aim: To help social and voluntary enterprises to raise capital in form …