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Why in the news? India’s current account showed a surplus in Q4 of 2023-24, marking the first surplus in 11 quarters. Movements in the current account are significant as they affect the rupee’s exchange rate, India’s sovereign ratings, and overall economic health. Source: Textbook What is Balance of Payments? Definition: The Balance of Payments (BoP) …
Read MoreWhy in the news? India’s public debt is nearly 82% of GDP, but it remains sustainable due to the country’s high growth rate and the higher share of local-currency debt. The high debt levels are manageable because of the higher real or nominal GDP and the predominance of rupee-denominated debt. Debt Levels Data: States hold …
Read MoreSyllabus: GS 2: Banking sector in India. Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth. Focus: The resurgence of discussions around Non-Performing Assets (NPAs) and bad banks stems from ongoing efforts to stabilize India’s banking sector. With a focus on resolving NPAs and easing bank balance sheets, …
Read MoreWhy in the news? The Reserve Bank of India (RBI) has suggested changes to regulations governing export and import transactions. This move aims to enhance the ease of doing business and enable banks to better serve their foreign exchange customers. Source: ResearchGate Proposed Regulations RBI issued the “Regulation of Foreign Trade under Foreign Exchange Management …
Read MoreWhy in the news? The Reserve Bank of India joined Project Nexus to enable instant cross-border retail payments by interlinking domestic Fast Payments Systems. The initiative aims to connect the FPSs of India, Malaysia, the Philippines, Singapore, and Thailand, enhancing cross-border payments.p source:scribd About Project Nexus: Purpose: Nexus connects multiple national payment systems into a …
Read MoreWhy in the news? RBI raises concerns over alleged unethical practices in asset reconstruction companies (ARCs). ARCs urged to prioritise governance and ethical conduct. Conference organised in Mumbai to address these issues. source:scribd About Asset Reconstruction Company (ARC): Specialised financial institution acquiring and managing distressed assets like NPAs. Banks offload troubled loans to ARCs at …
Read MoreFinancial System The concept of a financial system is integral to understanding how economies operate. It encompasses a broad array of components including instructions, actors, procedures, markets, transactions, claims, and liabilities that interact in complex ways to facilitate the flow of financial resources throughout an economy. The essence of finance itself involves the study of …
Read MoreMeaning of Central Bank A central bank is the primary financial institution of a country responsible for managing the nation’s monetary policy and regulating its banking system. Unlike commercial banks, a central bank has the exclusive authority to expand the nation’s monetary base. Central banks worldwide are tasked with ensuring the stability of the financial …
Read MoreHistory and Evolution of Banking in India Banking in India has evolved significantly over the years, reflecting the country’s broader economic, social, and political transformations. From its nascent stages in the 18th century to its current status as the backbone of the economy, Indian banking has undergone three distinct phases. Each phase has been marked …
Read MoreWhat is money? Money is a medium of exchange, a unit of account, and a store of value. It is a universally accepted means for people to trade goods and services. Historically, money has taken various forms, including coins, paper notes, and digital currencies. In modern economies, money is primarily created and regulated by central …
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