Hdfc forex trading explained

Even if the borrower is in your family, the legal issue can be complicated. Forex Market Explained - Hedging in the Forex Market. So you can deposit cheque issued for Dec in your account without any issues. Can a personal car loan be transferred to a business auto loan? Suppose, Ram owns a company. Why is this taking so long?

Economy 3 years Ago Comments Initially people used barter system for trading. But the barter system had many problems click me. Therefore, people switched to money system. Why is deflation bad for economy? You can see, when Rajan has raised reserve trdaing, money with SBI is reduced from 73 crores to just 45 forxe. Situation : Economy has inflationary trend. Prices of goods and services increasing every day. During deflation, RBI will do the reverse.

How will it hdfc forex trading explained deflation? Think in your head. First find a statement that is definitely right or definitely wrong and eliminate choices accordingly. Therefore, both 1 and 3 are correct. By the way, What about Statement 2: Deposit of currency in commercial banks by the public.

Will it increase money supply or not? Because We know that statement 1 is definitely correct. And there is no option where 1,2 are given simultaneously. Obviously they should increase bank rate. That way it becomes harder more expensive for banks to borrow from RBI. But bank cannot use Rorex securities for this. We already know how to apply SLR, CRR and OMO to fight inflation and deflation.

From above above graph, you can see RBI has frequently changed its repo rate to combat both inflationary and deflationary trend. No matter what number juggling or statistical interpretations are given- the hardship of common man has not stopped- be it milk, petrol, onion, LPG anything. Observe the following image. Suppose Vijay Mallay got crore loan from State Bank of India. Banks are not legally required to reduce their loan interest rates.

Expalined if SBI changes her Base rate then all of above loan interest exlpained will change automatically. Rajan will try to influence those bankers via- direct meetings, conference, giving media statements, giving speeches public seminars, university convocations etc. First you find out a statement tradig is definitely right or definitely wrong. In above case, we can see 2 is definitely right. RBI lends funds to banks in expllained times of need Repo, MSF These are the topics I wanted to discuss in trdaing article, but they would break the flow of other topics.

Hence writing them bottom: From the discussion so far, you might think why Rajan only focuses on Repo rate to control money supply. Why not simply explainde SLR and CRR requirements. Tradihg crores, barely 45 crores left with the bank. But adding insult to the injury- even here RBI mandates Priority sector lending PSL. So in a way- that was also one of the factors leading to Balance of Payment crisis and subsequently LPG reforms.

You can read more about that in NCERT Class chapter 2 and 3. Plagued by problems and losses in nationalized banks, Government of India formed this Committee. To counter the effect of deflation, which of the following steps should RBI initiate? Thank you sir for such an interesting article……………no one can explain better than this………. Diff btw policy rate and marginal standing facility — no body has explained in the simple and easy as u did!!!

Really loved the way you explained. GR8 MATERIAL SIR, THANK YOU VERY MUCH. Salute to your selfless effort that you put behind this great article. Hi sir, I found a base rate definition as — rate decided by RBI? Thank u sir… Thank you Mrunal. Its really easy to understand and rtading of all i like the examples. Sir,kindly help me plz clear my doubt of these questions.

Hello sir, i was just looking up for some posts rrading RBI Gr B …can you please haelp us?? Academic books should be allowed to be written in this way Tradung explained and even a Layman can get it! YOU Jdfc THE GREAT …. When RBI varies Reserve Ratios to fight inflation or deflationbanks change their Interest Rates to keep their profit margin stagnant.

P to increase the sale in time of inflation. Is it a good thing hdfc forex trading explained is there any other way of interpreting this? Because the facility decision I guess lies with RBI whether to sign a Reverse Repurchase agreement or not. But before dwelling into that, we must recap the basic concepts of what is monetary policy: its tools and limitations. Hence in a way, this hdfv article is a prologue to wxplained article.

Why RBI and Why Monetary policy? Initially people used barter system for trading. There are two types of financial intermediaries: banking institution and non-banking financial institutions. RBI controls all traxing and some non-banking financial institutions. So, if prices keep falling and falling say explainsd Nano carthen car marker will suffer losses. He hdfc forex trading explained no motivation to expand business.

If prices of everything fall- then custom duty, VAT, excise duty, service tax- their collection will also decrease. DEFLATION fall in the prices and hdfc forex trading explained IN employment. Foex REFLATION policy to stop the fall in price levels, but without causing rise in the price levels inflation.

Policy made by the central bank. To control money supply in the economy. RBI implements monetary policy using certain tools. Quantitative Tools 1: Reserve Ratios SLR and CRR SLR A Bank has to set aside this much money into gold or RBI approved securities. Bank cannot lend it to anyone. Bank earns no interest rate or profit on this. Prices of all goods and services are increasing day by day. How can RBI stop it using Reserve ratio as a tool? In this case, RBI should RAISE the reserve ratios.

Originally cr SLR 40 CRR 15 Money left with SBI 45 cr. What tradinf be its implication? Same happens when SBI is left with less money after RBI increases reserve ratio. Solution: RBI raised reserve ratio CRR, SLR Result: SBI is left with less money to lend. Consequences: SBI raises its loan interest rate Businessmen borrow less money from SBI Businessmen donot start new business.

Even existing employees discharged. He starts cutting down unnecessary expenditure e. Ultimately shopkeeper will bring down the prices to attract people into buying more things. Thus inflation is reduced. Moving to the next Quantitative tool. Situation: Economy has inflationary trend. Solution: RBI starts selling government securities in open market. Then same as usual: SBI left with less money to lend. SBI raises its loan interest rate rtading keep profit margin same Businessmen borrow less money from SBI.

Businessmen donot start new business. Donot expand existing business Less jobs Less income Less demand Ultimately shopkeeper will bring down the prices to attract people into buying more things. Open Market Operation OMO RBI sell securities RBI buy securities Mock Question InUPSC walla asked a very chillar question from this topic. Attempt Correct answer is Opt C. So you mark the question foorex say 45at the back of your question paper. You look at the question again, and try to solve it. Most of the sincere players fail in prelims because of this reason.

Which of the following measures would result in an increase in the money supply in economy? Purchase of government securities from public by central bank Deposit of currency in commercial banks by the public Borrowing by government from the central bank. Sale of government securities to the public by central bank. Junta gives him their own explakned, Rajan gives them money.

Ultimate result: money supply increased in the system- because junta got the money. Meaning 1 definitely correct. If you think it on technical terms. Hence money supply increased. Anyways, 1 is right, Trqding choices that do not have corex Only 1 2 and 4 1 and 3 2, 3 and 4 Now the final answer depends on whether statement 3 is right or wrong?

How does Government borrow from Central bank? Does Mohan just callup Rajan and demand 1 lakh crores? Fordx will have to give Rajan that much government securities vegetables and Rajan will give him cash. Is money supply increased? Yes Mohan sold veggies to Rajan and got Money. Whenever Rajan buys veggies and pays — the money supply is increased.

Therefore Answer C: 1 and 3 correct. Hence 3 is wrong. Therefore final answer A only 1. Anyways, what to do in the exam? If you apply some concepts, you can eliminate wrong choices. But still if doubt persists in the mind e. Because bank can used it to expand loanable credit. Because Bank will have to put some money aside as CRR- so that much hdvc is less in the system. Anyways, Moving on…So far, RBI has two tools under monetary policy: reserve ratios SLR, CRR Open market operation.

Bank Rate When banks borrow long term funds from RBI. Bank can borrow money without pledging government securities to RBI Bank rate is not the main tool to control money supply these days. Nowadays, RBI uses LAF Repo rate as the main tool, to control money supply. Penal rates are linked with Bank rate. Then RBI can impose penalty interest on such notorious bank. Less people get home loan, bike loan, business loans. Less business expansion Less jobs Less incomes Less demand Ultimately shopkeeper will bring down ecplained prices hefc attract people into buying more things.

Open Market Operation OMO RBI sell securities RBI buy securities Bank rate Increase decrease Liquidity Adjustment facility LAF Liquidity Adjustment facility RBI started this in By the way, who are the clients of RBI? NBFI further includes: AIFI all India finance institutions NABARD, SIDBI, EXIM Bank and National Housing Bank. Primary dealers Morgan StanleyGoldman Sachs, JP Morgan Chase, Standard Chartered Bank, HSBC etc.

Sometimes police raids the den, and clients run hdfc forex trading explained with cash and register. If such things happen, Rajan will be at loss. She gives her stash of government securities to Rajan. Rajan gives her Rs. Important: Recall that SBI also has to keep part of her money in RBI approved securities under SLR. So Madam cannot USE those government securities to borrow under Repo Rate from Rajan. That leads eexplained a new topic Marginal Standing facility MSF MSF mechanism is same as repo.

All clients are welcome i. Central and state governments Banks — be it commercial bank or RRB or cooperative bank Non-banking financial institutions. Not all clients welcome here. Only scheduled commercial banks can borrow under this window. SBI, PNB, BoB, ICICI etc. This MSF facility is specially created to help them solve short-term cash mis-match. You bankers cannot pledge securities from SLR quota to borrow from this window.

Can use trafing from SLR quota. You may borrow as much as you want. To put this in crude words, if SBI received crores from aam-admi under savings account, current account, fixed deposit etc. Reverse repo Rate Although self-explanatory. What if police raids this gambling-den, and Rajan runs away to Nepal? What have we learned so far? That Rajan controls money supply using monetary policy.

Policy dear money cheap money Tool To fight inflation To fight deflation Reserve Ratio CRR, SLR Increase them. Result: it explaijed expensive esplained SBI to borrow from Rajan. Just like how things roll in Onion biz. Consequences: SBI raises its loan interest rate to keep profit margin same Businessmen borrow less money from SBI.

Donot expand tradung business. Less jobs Less income Less demand Ultimately shopkeeper will bring down the prices to attract people into buying more things. Agreed that prices of onion, sugar, pulses and food are subject to vagaries of monsoon and black marketeering. Rajan cannot do anything about it. The forfx system is following: Banks are free to decide their base rate.

SBI will link all of its loan products with Base rate. Foex Rajan explaiined his repo rate, will SBI change her base rate? Because those common men are the main suppliers of money to SBI. RBI is not the main supplier of money to SBI. Epxlained it mean Repo rate system is bogus and ineffective? In developing countries like India, most people park their money in only four things: savings account, fixed deposit FDprovident fund and LIC.

So, trrading those American banks, their own Central bank US Feds is a significant money supplier. Commercial banks have large deposits. Rajan hdfd not the main or even prominent money supplier for these banks. Whatever Rajan does, its effect will tading felt only after months but by that time, new factors would cause another rise in inflation and Rajan will have to start from scratch again. Non-Monetized economy: in rural areas, many transactions are still of barter nature.

Lack of financial inclusion. Since most people are not in the banking net. They rely on Shroffs and moneylenders. Rajan has no control over them. Monsoon uncertainty, cyclone, flood, draughts and their effect on food production. Fiscal deficit, illogical schemes. Subsidy leakage, Black money, underground economy. And most importantly, because Rajan uses Multi-indicator approach, he focuses on WPI minus fores and fuel. More on that in next article. Using this tool, Rajan can control money supply.

If Rajan changes repo rate, it is not compulsory for SBI to change her loan interest rates. But if Rajan changes margin requirements, then SBI and all other banks must obey it. In other words, this tool has direct impact on money supply. It means customer must bring Rs. How can Rajan fight inflation with this tool? Thus, Rajan can control money supply by changing downpayment and installment EMI rules.

Example Please reduce giving automobile loans- instead park your money in foeex securities. Additional loans cannot be given to that borrowers from hdfc forex trading explained sector. This also controls money supply. Direct action Means RBI gives punishment to erring banks. Punishment can involve: penal interest, yrading to lend them money from LAF etc.

Selective- can affect money supply in a specific sector of economy e. This would imply which of the following? Other banks retain their deposits with RBI RBI lends funds to commercial banks in the times of need. RBI advises commercial banks on monetary matters. We still have three choices left. Trzding statement 1: Other banks retain their deposits with RBI. That is correct with respect to cash reserve ratio.

CRR is one type of deposit that banks make to RBI. Therefore statement 3 is hdfc forex trading explained. RBI does advice those banks. Therefore, Statement 3 is definitely wrong. Money Banking and finance, E Narayan Hffc PHI publication. Answer B Answer D So, is it B or is it D? Final judge is UPSC. They had uploaded CSAt official answer key on their site.

If you face such MCQ in exam, what should be your approach? You should either change explaned study method or change the game- try for some easier exam. Appendix These are the topics I wanted to discuss in the article, but they would break the flow of other topics. Hence writing them bottom: 1: Why High SLR and High CRR are bad? From the discussion so far, you might think why Rajan only focuses on Repo rate to control money supply. Demand Deposit Savings account, current account Using this money, bank has to count its Net Demand and Time liabilities NDTLevery fortnight.

Suppose its crores. Both CRR and SLR are counted on this figure. Money left for big borrowers i. The local politicians would coerce the branch manager expllained give PSL-loans to ineligible people. They default on loans, Branch manager cannot recover money because defaulter will goto civil court then taarikh pe taarikh. So, bank would have to forget about most of those 18 crores given in PSL loans. What are the consequences for businessmen?

High cost of credit because bank will try to make maximum profit from those 27 crores- so bank will charge very high interest rate on the business loans- to pay off for the staff salaries, branch office rents and everything. Businessman cannot expand his business. Less tax income for the government. Recommendations were: Deregulate interest rates. Let the banks decide their loan interest rates.

Gradually, we moved to the Base Rate system. PSL loans should be given at normal interest rates. Result: Debt recovery tribunal created in Ultimately SARFAESI Act in Allow Private banks and foreign banks. RBI invited applications in ICICI, Axis, HDFC and many others got license. Liberate Branch expansion policy. Prepare NBFC regulatory framework. Government should reduce shareholding and thereby its official influence in the public sector banks.

Suggested additional Legal reforms for loan recovery. By which of the following methods, government can reduce money supply in the tradingg IF prices are lowered without causing unemployment, tading call it: stagflation reflation disflaction Disinflation. Which of the following contains correct set of quantitative instruments of monetary policy?

To counter inflation, which of the following steps should RBI initiate? Increase reserve ratios sell government securities through open market operation Increase policy rate Answer choices only 1 and 2 only 2 and forez only 1 and 3 1, 2 and 3 Q9. Which of the following firex cause deflation in the economy? RBI raises policy rate RBI raises cash reserve ratio RBI sells securities Choices: only 1 and 2 only 2 and 3 only 1 and 3 all 1,2 and 3 Q Hdfc forex trading explained supply in the economy, is affected by Cheap money frading and dear money policy.

Open market operation and Moral Suasion. Consumer credit regulation and loan to value ratio. Choices: only exxplained and 2 only 2 and 3 only 1 and 3 all 1, 2 and 3 Q Hints can increase by buying, can decrease by selling both [or only B, depending on how Forez examiner interprets the effect of taxation on money supply.

In one of the reputed book on Banking and finance, author Narayan Nadar claimed taxation can affect money supply. If government reduces tax- then its revenue collection will drastically reduce. Unless you nitpick and drag the logic too much. So far Comments posted Reply Ravinder Nain Well explanation all concept for easy understading ,tganku so explainev mrunal sir Reply ankita Its awsm…. Reply Lakshmana Perumal Awesome!!! Reply Pankaj pradhan Phenomenal vignette!!!!! Reply JIGAR SHAH GR8 MATERIAL SIR, THANK YOU VERY MUCH.

Reply subbu very good material. Reply Srikanth Hi sir, I found a base rate definition as — rate decided udfc RBI? Saxena Tradnig you so much…Sir, I specially appreciate of your artical work because it is very esay explanied understand for me… Reply Shanna Begun, the great internet edctouian has. Reply khalid Explained nicely. Thanks for your hard work. Thank u sir… Reply seema Sir, superb explanation! Reply Pratikhya Rath Sir,kindly rtading me plz clear my doubt of these questions.

Reply Gulshan Gangber Sir, superb explanation! Reply rupa is base rate n bank rate ttrading. Reply vineeth Hello sir, i was just looking up for some posts regarding RBI Gr B …can you please haelp us?? Reply Dhananjay Gokhale Clap for this. Reply SAHIN HOSSAIN Excellent, to be honest…………. Reply Ratika Chawla Thanks a lot for explaining in such a lucid manner. Reply shubham dubey When RBI varies Reserve Ratios hdfc forex trading explained fight inflation or deflationbanks change their Interest Rates hfdc keep their profit margin stagnant.

Please clarify Reply Bidyut Baruah Superb explanation. Thank you so much Mrunal. Reply shalu thank you for this simple explanation sir…. Par agar jaroorat padi hdfc forex trading explained 5th attempt tak denge. Current affairs to prelims me jyaada aata nahi to isko revise nahi karoonga. Biotechnology ki ek book padh Sir plz complete the lecture hdfv.

Please Sir, ye bata do tradinh tak tentative date hai lectures ki. A Bank has to set aside this much explzined reserve. If client borrows money from RBI for short term then client has to pay this much interest rate to RBI. Means RBI gives punishment to erring banks. General- they affect tfading supply in entire economy- be it housing, automobile, manufacturing- everything.

Belajar Forex Trading Dasar 1 (

Thomson Reuters Elektron. A data and trading suite to power the enterprise and connect global markets. Standard Life Plc % Potential Upside Indicated by Macquarie Posted by: Amilia Stone 20th March Standard Life Plc with EPIC/TICKER LON:SL has had its. trading platforms explained [Help you]. Are You Searching For trading platforms explained,I know that most traders lose more than they make in Forex.

Add a comment

Your e-mail will not be published. Required fields are marked *