BANKING SECTOR TERMS

  • What is Base Rate?

Base Rate is the minimum rate beneath which Banks are not permitted to lend barring certain exceptions. It can also be stated as the minimum rate of interest that a Bank is allowed to charge from its customers. As per the RBI, according to the Base Rate rule, no Bank can offer loans at rate lower than base rate to any of its customers.

Present Base Rate- 9.70% to 10.50 %

 

  • What is RTGS (Real Time Gross Settlement)?

RTGS (Real Time Gross Settlement) System maintains by Reserve Bank of India that transfer money from one bank to another on a real time and on gross basis. This is the fastest money transfer system through the bank gateway. The term Gross settlement means the transaction is settled in one to one manner without clustering with any other transaction.

 

  • What is SLR Rate?

SLR (Statutory Liquidity Ratio) is the amount that a commercial Bank needs to maintain in the form of cash or gold or any kind of Govt. approved securities like Bonds before providing credits to its customers. This rate is maintained by the RBI in order to control the expansion of Bank Credit.

 

  • What is Bank Rate?

Bank Rate is also called as the discount rate and defined as the rate of interest which a central bank charges on loans and advances so that it extends to commercial banks and other financial intermediaries.

 

  • New provisioning norms to impact bank profits-

The Banking sector could bear a collective hit of around 13,000 crore on bottom line in the next two years if Reserve Bank of India (RBI) puts in place of fresh provisioning norms to restructured loans. To start with this provisioning norm, Banks will need to setup provisioning on the existing portfolio of restructured loans which is expected to about Rs. 3.25 lakh crore at the end of March latest by this year. And it would be considered from 2.75 % to 5% by 2015 March and this could cost them Rs. 7, 300 crore.

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