Saturday, 16 June 2012

Banking and Financial Awareness 2

FII & FDI

 

What is FII?
A: FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An institution established outside India, which proposes to invest in Indian market, in other words buying Indian stocks. FII’s generally buy in large volumes which has an impact on the stock markets. Institutional Investors includes pension funds, mutual funds, Insurance Companies, Banks, etc.
What is FDI?
A: FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant amount of ownership (stock) of a company in another country in order to gain a measure of management control” (Or) A foreign company having a stake in a Indian Company.

Repo Rate & Reverse Repo Rate (Revised)

Thius is to inform you all that
Repo Rate
Reverse Repo Rate
have been changed BY .25%.
Our team has already posted Definition of Repo Rate & Reverse Repo Rate in earlier posts, so in this post we are just telling about
revised Rates
REPO RATE
Earlier : 5.25 %
New : 5.50 %

REVERSE REPO RATE
Earlier : 3.75 %
New : 4 %


Cash Reverse Ratio (CRR)

What is CRR Rate?
Answer: Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.
CURRENT CRR : 6.0%

Repo Rate & Reverse Repo Rate

Repo Rate (RR)
Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases, borrowing from RBI becomes more expensive.
## CURRENT REPO RATE IS : 6.50% (updated)##
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Reverse Repo Rate (RRR)
This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels there is too much money floating in the banking system. Banks are always happy to lend money to RBI since their money is in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates.

 


 

 


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