what is RTGS and NEFT?


RTGS- Real Time Gross Settlement. Means a system where you can transfer funds from the one bank to another bank in quick time interval. You just need the bank details of the party, whom you want to transfer fund. Like Name of Bank, IFSC code, Name of Party and His account number.
its like clearing on same day. NEFT is also like RTGS. It's National Election Fund Transfer.
Difference between RTGS and NEFT is NEFT is for less than rs. 200000 and RTGS is for more than 200000.

Statutory liquidity ratio

Statutory liquidity ratio:

Statutory liquidity ratio refers amount that the commercial banks require to maintain in the form of gold or govt. approved securities before providing credit to the customers. Here by approved securities we mean, bond and shares of different companies. Statutory Liquidity Ratio is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit. It is determined as percentage of total demand and time liabilities. Time Liabilities refer to the liabilities, which the commercial banks are liable to pay to the customers after a certain period mutually agreed upon and demand liabilities are such deposits of the customers which are payable on demand. Example of time liability is a fixed deposits for 6 months, which is not payable on demand but after six months. Example of demand liability is deposit maintained in saving account or current account, which are payable on demand through a withdrawal form of a cheque. SLR is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved liabilities (deposits). It regulates the credit growth in India

The liabilities that the banks are liable to pay within one month's time, due to completion of maturity period, are also considered as time liabilities. The maximum limit of SLR is 40% and minimum limit of SLR is 23% In India, Reserve Bank of India always determines the percentage of SLR. There are some statutory requirements for temporarily placing the money in government bonds. Following this requirement, Reserve Bank of India fixes the level of SLR. At present, the minimum limit of SLO that can be set by the Reserve Bank is23% AS ON September 2013.

Objectives of SLR:

·         To control the expansion of bank credit. By changing the level of SLR, the Reserve Bank of India can increase or decrease bank credit expansion.

·         To ensure the solvency of commercial banks.

·         To compel the commercial banks to invest in government securities like government bonds.

If any Indian bank fails to maintain the required level of Statutory Liquidity Ratio, then it becomes liable to pay penalty to Reserve Bank of India. The defaulter bank pays penal interest at the rate of 3% per annum above the Bank Rate, on the shortfall amount for that particular day. But, according to the Circular, released by the Department of Banking Operations and Development, Reserve Bank of India; if the defaulter bank continues to default on the next working day, then the rate of penal interest can be increased to 5% per annum above the Bank Rate. This restriction is imposed by RBI on banks to make funds available to customers on demand as soon as possible. Gold and government securities (or gilts) are included along with cash because they are highly liquid and safe assets.

The RBI can increase the SLR to contain inflation, suck liquidity in the market, to tighten the measure to safeguard the customers’ money. In a growing economy banks would like to invest in stock market, not in government securities or gold as the latter would yield less returns. One more reason is long term government securities (or any bond) are sensitive to interest rate changes. But in an emerging economy interest rate change is a common activity.

Statutory liquidity ratio is the amount of liquid assets such as precious metals (gold) or other approved securities that a financial institution must maintain as reserves other than the cash. The statutory liquidity ratio is a term most commonly used in India.

The objectives of SLR are to restrict the expansion of bank credit.

·         To augment the investment of the banks in government securities.

·         To ensure solvency of banks. A reduction of SLR rates looks eminent to support the credit growth in India.

The SLR is commonly used to contain inflation and fuel growth, by increasing or decreasing it respectively. This counter acts by decreasing or increasing the money supply in the system respectively. Indian banks’ holdings of government securities (Government securities) are now close to the statutory minimum that banks are required to hold to comply with existing regulation. When measured in rupees, such holdings decreased for the first time in a little less than 40 years (since the nationalization of banks in 1969) in 2005–06.

CAUSES OF UNEMPLOYMENT IN INDIA

· CAUSES OF UNEMPLOYMENT IN INDIA



1) Excessive population growth :

· Population growth is the most important factors responsible for the employment problem in the country.

· Population of India was 36.2 cores in 1951 when planning started in India.

· According to the latest census conducted in the country the population is about 102 corers. With the population there is a corresponding increase in the lab our supply.



2) Low economic growth :



· The other fundamental reason for unemployment in India is the economic growth in India during the plan period.

· During the period 1951 to 1997-1998 the average growth rate has been around 4%

· Actually we need 7% growth rate for providing employment to the constantly increasing lab our force.

· We can see that the growth is almost half than the required rate.

3) Heavy industry model :



· The 2nd five year plan onwards we have adopted heavy industry model recommended by Dr.MAHALNOBIS with the objective of promoting the growth of heavy industry in the country.

· These industries are highly capital – intensive industry.

· Their unemployment generation capacity per unit capital is highly limited and there for in spite of continuous increasing no. of productive enterprises both in public as well as private sector.



4) Faulty education system:



· Faulty education system is one more reason particularly responsible for the educated unemployment country.



· It provide only liberal education with every year produced a large no. of just literate people.



· However this people do not have any worth while training and vocational qualification if not possible to employee this people in any productive activity.







5) Absence of man power planning:



· This is short term as well as long term planning for archiving equilibrium between demand for supply of education and trend human resource.



· These types of planning have never been serious components of our five year plans.

· There for in India while on one hand millions of people who are illiterate UN trained and having only formal education are searching for job.



6) Modern technology in agriculture:



· While the introduction of new technology in agricultural the problem of rural unemployment has become quite serious.



· This new technology favors’ the use of labors saving Machines like tractor, harvesters, electric pumps and motors etc.













7)Industrial sickness :



· The industrial sickness is fast spreading into all

Industries large and small, private and public sectors.



· The problem is all the more serious in small industries which are generally employments generating?



8)Destruction of cottage industries :



· The cottage industries like furniture, cobbles, handloom etc, have been a major source of employment for the rural population.



· Now these industries are fast disappearing due to rapid growth of modern industries, which provide better and cheaper goods.



9)Inadequate irrigation :



· In India 64% of total agriculture land is without any irrigation.



· Millions of people in India remain unemployed in non monsoon seasons.







10) Poor infrastructure :



· Once of the factored responsible for unemployment is the poor quality of our infrastructure like road, railways, electricity etc.



· The lack of these facilities has restricted growth of industries in many sectors and has not allowed employment opportunities to increase.



11) Poor management of economy :



· Due to a variety of factors we have not been able to manage our economy property.



· The Indian industries and particularly the public sectors industries are having west unused production capacities.

Impact of Global Economy

http://globaleconomy7.blogspot.in/2014/02/impact-of-global-economy-is-inevitable.html

Mutual fund

Mutual fund

Ø  Mutual fund is a financial intermediary that pools the savings of investors for collective investment in a diversified portfolio of securities.

Ø  The SEBI (Mutual Fund) Regulations, 1996 defines mutual fund as a “ a fund established in the form of a trust to raise money through the sale of units to the public.

Ø  MF serves as a link between the investor and the securities market by mobilizing savings from the investors and investing them in the securities market to generate returns.

Ø  The basic objective of mutual fund is to provide continuous liquidity and higher yields

Benefits of Mutual Fund

Ø  Professional Management

Ø  Portfolio Diversification

Ø  Reduction in transaction cost

Ø  Liquidity

Ø  Convenience

Ø  Flexibility

Ø  Tax benefits

Ø  Transparency

Ø  Equity Research

Types of Mutual Fund Schemes

•       Open-ended Fund / Scheme

Ø  An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis.

Ø  These schemes do not have a fixed maturity period. The number of units outstanding goes up or down every time, the fund issues new units or repurchasing existing units. This means, the unit capital of an open-ended mutul fund is not fixed but its variable.

Ø  Not listed in the stock exchange

Ø  Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.

•       Close-ended Fund / Scheme

Ø  A close-ended fund or scheme has a stipulated maturity period.

Ø  Realization is possible at the end of maturity

Ø  In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices.

Ø   SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

Ø  And unit capital of a close-ended fund is fixed, because it makes a one time sale of a fixed number of units.

•       Growth / Equity Oriented Schemes

Ø  The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities.

Ø  Such funds have comparatively high risks.

Ø  These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences.

Ø  The mutual funds also allow the investors to change the options at a later date.

Ø  Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

•       Income/ Debt Oriented Schemes

Ø  The aim of income funds is to provide regular and steady income to investors.

Ø  Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments.

Ø  Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds.

Ø  The NAVs of such funds are affected because of change in the domestic interest rates. However, long term investors may not bother about these fluctuations.