Functions of Commercial Banks

Functions of Commercial Banks As shown in the figure, the functions of commercial banks can be broadly classified into three parts: Primary Functions of Commercial Banks The primary functions of commercial banks are also known as the ‘acid test’ functions of commercial banks. The following are the primary functions of a commercial bank: Accepting Deposits

Term Structure of Interest Rates in India

Other things being the same, rates of interest also differ according to the term to maturity of the debt. The resulting is called the term structure of interest rates and the curve showing the relationship between yield and term to maturity is called the yield curve. Low short-term interest rates and high long-term rates indicate

Asset Liability Management ALM: Principles, Process, Tools

What is Asset Liability Management? Asset Liability Management is the ongoing process of formulating, implementing, monitoring, and revising strategies related to assets and liabilities to achieve financial objectives, for a given set of risk tolerances and constraints. Asset Liability Management (ALM) is a part of the overall risk management system in the banks. It is

Risk Management in Banks: Types, Credit Risk Tools

What is Risk in Banks? The word “Risk” has been derived from the Latin word Rescum. Risk is the potentiality that both the expected and unexpected events may have an adverse impact on the bank‘s capital or earnings. Risk arises due to uncertainty or unpredictability of the future due to changes in internal and external

WTO: Meaning, Objectives, Advantages and Disadvantages

What is WTO? After the Second World War, many countries planned down to be together to work on ways and means to promote international trade. The result was the signing of (the GATT) General Agreement on Tariffs and Trade by 23 countries in 1947. India was one of the founding members of GATT. GATT was

EXIM Policy: 1997 to 2002 and 2002 to 2007

What is EXIM Policy? In India, economic reforms took place in 1991 with the introduction of the LPG (Liberalization, Privatization, and Globalization) Policy. In order to liberalize imports and boost exports, the Government of India for the first time introduced the Indian EXIM Policy on April I, 1992. In order to bring stability and continuity,

International Trade: Features, Importance, Advantages, and Disadvantages

What is International Trade? External trade is also called International Trade. It implies buying and selling of goods or services between two or more countries. For instance, If Mr. A who is a trader from Delhi, sells his goods to Mr. B another trader from China then this is an example of foreign trade or

7 Role of Commercial Bank in Economic Development

In India, there was an acute shortage of capital and people lacked initiative and enterprise. Means of transport were undeveloped and as such Industry was in bad condition. Thus there is a need for an institution that removes all the above deficiencies and this led to the emergence of Banks. “A bank is an Institution,

Monetary Policy: Definition, Objectives, Features, Limitations

What is Monetary Policy? Monetary policy refers to the use of instruments under the control of the central bank to regulate the availability, cost, and use of money and credit. The goal: achieving specific economic objectives, such as low and stable inflation and promoting growth. The monetary policy of a nation involves the overall set