Article archive
Finance for Importers
18/12/2009 23:20
Import Finance:
Import Letter of Credit: Importers get LC limits sanctioned from his bank & establish LC on DA basis, thereby getting credit from overseas suppliers.
Import Loan: it is granted against imported raw material or goods meant for trading. Loan is sanctioned...
External Commercial Borrowing (ECB)
18/12/2009 23:17
ECB: any credit which is extended for 3 years or more is External Commercial Borrowing.
It is governed by Sec 6 of FEMA.
It can be availed under Automatic Route or Approval Route. Through Automatic Route, approval of RBI / Government Of India is not required and this route is not...
Escrow Account
18/12/2009 23:14
Escrow Account: are USD account opened in India. Counter trade proposals involving adjustments of value of goods imported into India against the value of goods exported from India, in terms of an arrangement voluntarily entered into between an Indian party and an overseas party can be...
Capital of a Bank
17/12/2009 05:23
i. Tier I capital includes Paid up Capital(Equity & Investment in Subsidiaries, Intangible assets & Losses), Reserves & Surplus & Innovative Perpetual Debt Instruments Less Deferred Tax .
ii. ...
Repo Rate
17/12/2009 05:18
Repo: a simultaneous sale & purchase of a security.
It is a structure to borrow money at fine rates on a secured basis.
The institution borrows money by selling a security for one delivery date with a simultaneous repurchase of the same security for a different delivery...
Reverse Repo Rate
17/12/2009 05:17
Reverse Repo: the transaction undertaken by counterparty to a repo. In involves the purchase of security for a particular delivery date with a simultaneously sale of same security for a different delivery date. Central Bank use this to pump liquidity into the system.
Value at Risk (VAR)
17/12/2009 05:15
Value at Risk – probable worst case scenario for a position calculated using a statistical model to a given confidence level, typically 95% over a specified holding period. It is a single, summary, statistical measure that provides a reading of the worst possible scenario for a particular...
Indicators that most influence the USD
17/12/2009 05:07
Employment Report – published on 1st Friday of the month. If Payroll employment is Up, it results to Bond market down, Stock market up & dollar up. If Unemployment rate is UP, it results to bond market up, stock market down,...
Capital Adequecy Ratio
17/12/2009 05:02
Capital adequacy ratio is the ratio which determines the capacity of the bank in terms of meeting the time liabilities and other risk such as credit risk, operational risk. Capital adequacy ratios ("CAR") are a measure of the amount of a bank's capital expressed as a percentage of its...
Letter of Credit - 3
17/12/2009 04:50
Tenor: Sight LC, Acceptance LC, Deferred LC, Negotiation LC.
Sight LC – beneficiary get the payment on presentation of documents.
Acceptance LC (Usuance LC) – bill of exchange or drafts are drawn with certain Usuance period.
Deferred LC – it is similar to Usuance LC except no bill of...
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