I guess a concept of risk weighted assets is also very important while calculating SLR/CRR 😉 Nice discussion going on :)
PS Bank rates vs Repo Rates , repo rates very important in call money market from a tenure of overnight to 14 days 😃 and Bank rates have longer term duration 😃
Just a quick clarification from Roger Federer and fellow puys.
Like mentioned by Federer , out of Rs. 100 , 5.5 would be deposited with the central bank as CRR requirement.
1.Now as far as SLR is concerned , firstly would it too be calculated on the same Rs.100 ( since those 100 rupees are the liquid cash and not the asset value). Say if a bank has 100rs in cash and 50 rs worth of gold and bonds. What would happen in that case. Will we consider 5.5% of 100, 24% of 50 or 29.5% of 150 ?
2. Also is SLR inclusive of CRR. Even if we are considering 100rs to be the total amount with the bank (including cash and monetary value of assets), would it be 24 + 5.5 =29.5 or 18.5 +5.5=24?
somehow i landed up on this thread
since i am working on a project which involves all this, i thought i will
put in my thoughts...they could be wrong also as i am quite new to this
project...
:a bank usually has separate divisions that is retail banking and investment banking. my thoughts are limited to retail banking only...
as far as what i have understood till now this CRR/SLR is calculated on the closing balance on that day...a bank has opening balance and closing balance...closing balance is calculated using defaults and attrition rates for that particular portfolio.
banks usually use use this SLR/CRR rates to build the NPV(net presnt value) models using historical rates and also pricing models for a particular portfolio which are basically current accounts,vehicle loans and home loans.International banks use basel 2 model.
i added the above para to know the significance of SLR/CRR rates for a bank. as told above i dont know how it works in Investment Banking.
I guess a concept of risk weighted assets is also very important while calculating SLR/CRR 😉 Nice discussion going on :)
PS Bank rates vs Repo Rates , repo rates very important in call money market from a tenure of overnight to 14 days 😃 and Bank rates have longer term duration :)
Risk weigted assets are used for calculation of CAR or CRAR and not for CRR/SLR. Pls lemme know in case u know how they are important for calc. of SLR/CRR.
Bank rate is now used more in Economics books compared to Economy
as banks now prefer other methods to complete their shortfall ... repo being 1 of them. If u have noticed, bank rate has been maintained at 6% for ages now simply becuz it wont impact the liquidity too much as it has limited use
Jus to add to it ,Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) can be reduced to increase the liquidity in banks . But the expense for this move would be demand for Government securities might come down a little .
Pls do not see it this way. SLR investment cannot actually be termed
as a " demand " for Govt securities.
CRR and SLR are tools that serve dual purpose
1. To prevent the banks from lending too much( to keep inflation in chk along wid Repo )
2. Govt needs money to run the nation and this is one way.
The word DEMAND becomes correct in present European scenario.
Example - Greece is on a verge of collapse ... now investors wont like to invest in Greek Govt Securities as its not sure that Greek Govt in future will be able to fulfill its obligation of repayment ... hence the DEMAND for Govt Securities will come down. :)
Risk weigted assets are used for calculation of CAR or CRAR and not for CRR/SLR. Pls lemme know in case u know how they are important for calc. of SLR/CRR.
Bank rate is now used more in Economics books compared to Economyas banks now prefer other methods to complete their shortfall ... repo being 1 of them. If u have noticed, bank rate has been maintained at 6% for ages now simply becuz it wont impact the liquidity too much as it has limited use
yeah my mistake thanks for correcting me the Risk Weighted assets are there for calculating Captial Adequacy ratios according Basel III requirements 😃 banks must shore up their capital adequacy ratios and maintain top-quality capital at 7 percent of risk-weighted assets
abhimukh19 Saysyeah my mistake thanks for correcting me the Risk Weighted assets are there for calculating Captial Adequacy ratios according Basel III requirements 😃 banks must shore up their capital adequacy ratios and maintain top-quality capital at 7 percent of risk-weighted assets
I m yet to read the Basel III Accord but in Basel II
CAR is 8% but Indian Banks are required to keep at 9%.
However most of Indian banx have kept it at 11% approx.
...tho Indian Banking still cannot boast of a 100% implementation of Basel II....and Basel III is already knocking
i want to become consultant after MBA.. And have been shortlisted for finance at SPJIMR.. Can anyone suggest me how can i relate the 2 and back my specialisation? (fresher,interview on 16th feb)
P.S- sorry if have posted in wrong thread.. But i posted here reading first few pages and the title..
i want to become consultant after MBA.. And have been shortlisted for finance at SPJIMR.. Can anyone suggest me how can i relate the 2 and back my specialisation? (fresher,interview on 16th feb)
P.S- sorry if have posted in wrong thread.. But i posted here reading first few pages and the title..
For Consulting
http://www.pagalguy.com/discussions/consulting-management-strategic-it-et-all-25011643
For other qs seniors can answer :)
you can go through
http://www.pagalguy.com/discussions/2011-12-gdpi-helpline-by-nitie-students-the-last-lap-to-enter-dream-b-schools-25075440 :)
you can also read some SOPs (see if it helps)
http://www.pagalguy.com/discussions/the-art-of-writing-sop-25001501
I was reading the finance concepts thread and wanted to ask a doubt , the orignal thread was closed and pointed to this thread . If anyone can explain the thing below mentioned it would be very helpful
I was going through Wikipedia's page on Indian Economy which says
GDP 1.84 trillion $ nominal
4.46 trillion $ PPP
If anyone can explain the difference it would be helpful
PS. I am an engineer who has no head and tail of finance but want to know for GDPI prep
i have call from MFC 2012-2014...can nyone explain me what is finance controller??its work nd next level as CFO??...i m fresher with EC engg...is it good for me to go in ths field n easy to convert??
I was reading the finance concepts thread and wanted to ask a doubt , the orignal thread was closed and pointed to this thread . If anyone can explain the thing below mentioned it would be very helpful
I was going through Wikipedia's page on Indian Economy which says
GDP 1.84 trillion $ nominal
4.46 trillion $ PPP
If anyone can explain the difference it would be helpful
PS. I am an engineer who has no head and tail of finance but want to know for GDPI prep
I'm no expert either but i can try and explain what i have understood.
Difference between nominal and PPP is that nominal is the actual conversion in terms of $ whereas PPP is purchasing power parity which basically takes into consideration the standard of living and facilities that same amount of money can buy.
So if you take the case of developing countries , esp India and China, there will be a huge difference between nominal and PPP ( PPP being higher). Reason being that these countries have a weak currency so when converted to actual USD value , it gives a low figure. But since these countries on the whole are considered less expensive in terms of living costs, the amount of goods and services that can be bought with the same money is a lot more .
Try with an example, in India a modest dinner can be bought for 50 Rs, which is roughly 1 USD. But in US 1 dollar will not fetch you a dinner. So in terms of PPP , the GDP for developing countries would be higher.
For developed countries the nominal would be higher
And for US both nominal and PPP are the same because USD is the standard currency for expressing GDP, something like an SI unit for GDP
I'm sure others can help on improving this explanation but this is the basic gist of it.
Risk weigted assets are used for calculation of CAR or CRAR and not for CRR/SLR. Pls lemme know in case u know how they are important for calc. of SLR/CRR.
Bank rate is now used more in Economics books compared to Economy
:w00t: RBI has taken an exception to ur dig at bank rates and hence the response : Reserve Bank of India
😛
Can someone throw some light on forex trading. What factors decide the Buy and Sell rates for any currency?
hello guys ... . i am pursing my CFA . . .will i get good job prospects in USA, having my graduation from reputed college in India. .
:w00t: RBI has taken an exception to ur dig at bank rates and hence the response : Reserve Bank of India
:p
Thats a good catch
Believe me buddy....I had no idea that my post will be taken so so seriously by RBI
....they dint bother to change it after 2003 I guess and just cudnt wait after that post.Its 9.5 now.
CAT_gunner SaysCan someone throw some light on forex trading. What factors decide the Buy and Sell rates for any currency?
We all know that world is becoming 1 global village. Consequently trade between 2 countries is increasing.Inorder to enable monetary transactions resulting out of foreign trade, we need different currencies. If u wanna purchase bats from Australia..u need to give AUD and not INR to makers...hence trading between 2 currencies is FOREX trading.
Buy Sell rates are exchange rates b/w 2 currencies and depend on following factors
1. Inflation Rate
2. Interest Rates
3. Balance of payments
4. Political Situation
5. Employment level
6. Expectations from overall economy in future.
Couldn't find a better thread to ask this question:
What all should a MBA Finance student be well versed with at the start of the summer internship? Is there any subject or topic in which I need in-depth and technical knowledge?
I have covered basics in Accounting and undergone courses in Financial Management, Commercial Banking, Capital & Money Markets & International Finance in my first year. Are there any specific topics within these subjects that I should be extremely thorough with before joining my interning organisation?
Experiences from seniors and inputs from those interning this year would be appreciated.
Thanks 
how is job prospects in US for the Indians on completing CFA ?
As u know Indians are the most targeted people for any profession whether its related to software field,medicine,management. CFA is a course which has most demand in US and UK . Dont worry u have choose a good carrer option and u will get through it.
Hi Superlike
The above mentioned are the categories which constitute the financial institutions in India , share market or mutual funds are avenues of investment for an individual or an institution.
I dont think its very difficult to understand , once you read more about them on the internet and try understand their mechanism , i am sure you will get clarity and offcourse if you have doubts or queries , i am sure we can discuss and sort them out here :)
sir i want to CFA and NCFM in MBA ....i want ot complete it anyway ....i want to PGDM in finance....sir tell me how is ITM NAVI MUMBAI for finance ..how about salaries ....etc.my ultimate aim is to earn 6L per annum with in 3 years from now ...is it possible with ITM NAVI MUMBAI...pls tell sir