A K-shaped recovery occurs when different parts of the economy recover at different rates, times, or magnitudes. For instance, technology and large corporate sectors grew, while MSMEs and contact-intensive sectors struggled.

The Rolling Plan (1978-80) was introduced by the Janata Party government. It involved a plan for the current year, a plan for a fixed number of years, and a perspective plan, which were revised annually.

GVA at Basic Prices = GDP at Market Prices - (Product Taxes - Product Subsidies). Conversely, GDP at Market Prices = GVA at Basic Prices + Net Product Taxes.

Micro: Inv<1Cr, Turn<5Cr. Small: Inv<10Cr, Turn<50Cr. Medium: Inv<50Cr, Turn<250Cr.

Regulation of Capital Markets is the function of SEBI. NITI Aayog is a policy think tank with functions like policy design, cooperative federalism, and monitoring.

RRBs and SFBs have a mandatory PSL target of 75% of their Adjusted Net Bank Credit (ANBC). Domestic commercial banks generally have a target of 40%.

In the BOT-Toll model, the private partner builds, operates, and maintains the infrastructure and recovers the investment by collecting tolls from users. In EPC, the government funds the project.

FDI indicates a long-term interest and control (usually >10% stake), whereas FPI involves buying shares/bonds for shorter-term gains without seeking control.

First generation reforms (1991) focused on product markets (liberalization). Second generation reforms focus on factor markets like labor laws, land acquisition, and legal frameworks.

RODTEP replaced MEIS because MEIS was found to be non-compliant with WTO rules. RODTEP ensures that exporters are refunded embedded taxes/duties that were not previously rebated.

A mixed economy involves both public and private sectors. "Complete state ownership" is a characteristic of a Socialist/Command economy, not a mixed one.

NITI Aayog released the comprehensive national strategy document titled "Strategy for New India @ 75" to define objectives for 2022-23.

The Services sector is the largest contributor to India's GVA, accounting for over 53% of the total economy.

PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) provides direct income support of ?6,000 per year to landholding farmer families.

Within the 18% target for Agriculture, a specific sub-target of 10% of Adjusted Net Bank Credit (ANBC) is mandated for Small and Marginal Farmers.

Social infrastructure refers to structures that support social services like healthcare (hospitals) and education (schools), improving the quality of human capital. Roads and power are "Physical Infrastructure".

Outsourcing involves contracting work out to a third party, often in another country (offshoring), to reduce costs or access specialized skills (e.g., BPO services in India).

While Narasimham-I dealt with deregulation, Narasimham-II focused on "Second Generation Reforms" like stricter prudential norms, capital adequacy (CAR), and cleaning up NPAs.

ECGC Limited is a government enterprise that provides export credit insurance facilities to exporters and banks to protect them from the risk of non-payment by foreign buyers.

The World Bank consists of two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

The new composite criteria for Medium Enterprises requires Investment in Plant and Machinery or Equipment does not exceed ?50 crore and Annual Turnover does not exceed ?250 crore. Both conditions must be met. Exports are excluded from the turnover calculation.

The NIP envisages an investment of ?111 lakh crore with a funding share of 39% by the Centre, 40% (revised to 39%) by States, and 21-22% by the Private Sector to boost infrastructure.

India accepted full Current Account Convertibility in August 1994 (adhering to IMF Article VIII). However, Capital Account Convertibility is still partial/managed, with restrictions on debt flows and individual remittances (LRS limits).

While first-generation reforms (1991) focused on product markets and liberalization, second-generation reforms aim at difficult structural changes in factor markets like labor laws, land acquisition, and legal/judicial reforms.

SEZ units enjoy 100% income tax exemption on export income for the first 5 years, 50% for the next 5 years, and 50% of the plowed-back export profit for the next 5 years (Section 10AA of Income Tax Act).

IDA is known as the "soft loan window" of the World Bank. It offers concessional loans with zero or very low interest rates and long repayment periods to the world's poorest developing countries.

While many developed nations target 2050, India has committed to achieving Net Zero emissions by 2070, balancing its development needs with climate responsibility. Other targets like 500GW non-fossil capacity apply to 2030.

NITI Aayog, in partnership with the Institute of Competitiveness, releases the Export Preparedness Index to evaluate states' readiness and performance in exports, promoting competitive federalism.

Cyclical unemployment is directly related to the business cycle. When demand falls (recession), businesses fire workers; when demand rises (expansion), they hire. It implies a lack of aggregate demand.

Under the MCLR system, banks were slow to pass on Repo Rate cuts to customers. EBLR links lending rates directly to an external benchmark (like Repo), ensuring that any policy rate change by RBI is immediately reflected in the borrower's interest rate.

The 14th FC recommended 42%. The 15th FC adjusted this to 41%, accounting for the reorganization of the state of Jammu & Kashmir into two Union Territories (J&K and Ladakh), which are now funded by the Centre.

The RBI Act was amended in 2016 to provide a statutory basis for this framework. The target is 4% Consumer Price Index (CPI) inflation, with an upper limit of 6% and a lower limit of 2%.

Mudra loans have three categories: Shishu (up to ?50k), Kishore (?50k to ?5L), and Tarun (?5L to ?10L) for funding the non-corporate, non-farm small/micro enterprises.

MFN status means that if a country grants a trade advantage (like lower tariffs) to one WTO member, it must immediately grant the same advantage to all other WTO members. It prevents discrimination.

Sovereign Green Bonds are issued by the government to mobilize resources for green infrastructure projects (like renewable energy, clean transport) that help reduce carbon intensity.

Industrial licensing is kept only for 5 specific sectors related to security, strategic, and environmental concerns: Electronic Aerospace/Defence, Industrial Explosives, Hazardous Chemicals, Tobacco products, and Alcohol for consumption.

The GST Council, a constitutional body (Article 279A), is chaired by the Union Finance Minister. It includes the Union Minister of State for Finance and Finance Ministers of all States.

The Suresh Tendulkar Committee moved away from calorie-based estimation to a broader consumption basket including health and education expenditure, adopting the MPCE method.

The Clean Note Policy ensures the supply of good quality banknotes to the public and prevents writing on notes, enhancing their life and usability.

Nidhi companies are governed by the MCA under the Companies Act. However, the RBI has powers to issue directions regarding their deposit acceptance activities to protect depositors.

Trade Balance specifically refers to the difference between exports and imports of physical goods. If Exports > Imports, it is a Surplus.

PSLCs are traded on the RBI's CBS platform (e-Kuber). Banks buy/sell these certificates to meet their PSL targets without physically transferring the loans.

The Eight Core Industries are: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. Textiles is not part of this group.

SATH aims to identify and build three 'role model' states for the Health and Education sectors to improve service delivery.

NEER is the weighted average of bilateral nominal exchange rates of the home currency in terms of foreign currencies. REER (Real Effective Exchange Rate) adjusts NEER for inflation.

M3 (Broad Money) = M1 + Time Deposits with banking system. It captures the total money supply available in the economy. M1 is Narrow Money. M0 is Reserve Money.

The automatic monetization of the fiscal deficit through the issuance of ad-hoc Treasury Bills to the RBI was abolished to check inflation and ensure RBI autonomy. It was replaced by Ways and Means Advances (WMA).

The Gig Economy involves temporary, flexible jobs where companies tend to hire independent contractors and freelancers instead of full-time employees (e.g., Uber, Zomato workers).

Kerala has consistently topped the SDG India Index due to its strong performance in health, education, and gender equality goals.

BRBNMPL was established by RBI in 1995 to manage the currency note printing presses at Mysore and Salboni.

The **SEBI Act, 1992** provides the statutory framework for the establishment, powers, and functions of the Securities and Exchange Board of India. It explicitly mandates SEBI to protect the interests of investors in securities, promote the development of the securities market, and regulate it to ensure market integrity, transparency, and fair practices.

The RBI uses two types of credit control: Quantitative and Qualitative. **Quantitative tools** (like **CRR, SLR, Repo Rate**) affect the overall *volume* of credit in the economy. **Qualitative (Selective) tools** (like Moral Suasion, Margin Requirements, Rationing) affect the *distribution* or direction of credit to specific sectors. Therefore, changing CRR/SLR is a quantitative, not qualitative, tool.

The **3-Year Action Agenda** is a dynamic document designed to respond to changing economic conditions. Unlike the rigid Five-Year Plans, the Action Agenda is aligned with the government’s financial planning and is meant to be reviewed and updated **Annually** to ensure that the targets remain relevant and the implementation is on track with the annual budget allocations.

**Transfer Payments** involve the government giving money to individuals (like pensions, scholarships, subsidies) without receiving any goods or services in return. Since these payments do not create any physical or financial asset for the government and do not reduce any liability, they are strictly classified as **Revenue Expenditure**. They are essentially redistribution of income.

The term **"Hindu Rate of Growth"** was coined by economist Raj Krishna to describe the slow, sluggish, and stagnant annual growth rate of the Indian economy, which averaged around **3.5%** from the **1950s to the 1980s**. This period was characterized by the License Raj, inward-looking policies, and low capital formation, before the acceleration seen after the 1991 reforms.

Within the Tertiary (Services) Sector, the sub-segment comprising **Financial, Real Estate, and Professional Services** is consistently the largest contributor to India's GDP. This segment reflects the high value-added activities of banking, insurance, IT services, and corporate real estate, which have grown faster than traditional services like trade or transport.

The **Reserve Bank of India (RBI)** is the sole authority vested with the power to grant licenses for commencing banking business in India. This power is derived from **Section 22 of the Banking Regulation Act, 1949**. No company can carry on banking business in India without a license issued by the RBI, ensuring strict regulatory oversight.

The **Reverse Repo Rate** is the interest rate at which the RBI absorbs liquidity from banks against the collateral of eligible government securities. When there is **excess liquidity** in the system (which could fuel inflation), the RBI increases the Reverse Repo Rate or conducts VRRR auctions to encourage banks to park their surplus funds with the central bank, thereby removing money from circulation.

The structure of **NITI Aayog** mandates that the **Prime Minister of India** serves as its **Chairperson**. This high-level leadership ensures that the think tank's strategic policy directions have the highest political backing and can effectively coordinate between the Central Ministries and State Governments. The NDC is effectively defunct, and MPC is chaired by the RBI Governor.

**Disinvestment** is the specific term used for the government action of selling or liquidating its assets, usually shareholding in Central Public Sector Enterprises (CPSEs). When the government sells a minority stake (less than 50%) but retains control, it is disinvestment. If it sells a majority stake and transfers control to a private entity, it becomes **Strategic Disinvestment** or Privatization. All disinvestment proceeds are treated as Capital Receipts.

Economic activities are broadly grouped into three sectors: Primary (Agriculture/Extraction), Secondary (Manufacturing/Construction), and **Tertiary (Services)**. The Tertiary sector involves the provision of intangible goods or services to consumers and businesses, such as banking, education, healthcare, tourism, and transport. It is currently the largest contributor to India's GDP.

The **1991 Economic Crisis** was triggered by a severe **Balance of Payments (BOP) crisis**. India’s foreign exchange reserves had fallen to critically low levels (barely enough to cover 3 weeks of imports), and the country was on the verge of defaulting on its external debt obligations. This crisis forced the government to approach the IMF for a bailout, which came with conditionality that led to the structural LPG reforms.

The **Insurance Regulatory and Development Authority of India (IRDAI)** is the statutory body formed under the IRDA Act, 1999. Its preamble explicitly states its mission: "to protect the interests of the holders of insurance policies, to regulate, promote and ensure **orderly growth of the insurance industry**." It covers life, non-life, and health insurance sectors.

The **Bank Rate** is defined in Section 49 of the RBI Act as the "standard rate at which the Bank is prepared to buy or re-discount bills of exchange." In modern practice, it acts as a penal rate (aligned with the MSF rate) charged by the RBI on banks for shortfalls in meeting reserve requirements (CRR/SLR) or for long-term lending. Unlike Repo, it does not necessarily involve the sale/repurchase of securities.

The fundamental shift from Planning Commission to **NITI Aayog** was to move away from the "command and control" approach of centralized planning to a **knowledge-based** approach. NITI Aayog acts as a **"Think Tank"** and a "Knowledge and Innovation Hub," providing research, data, and strategic advice to the Centre and States to foster competitive and cooperative federalism, rather than just allocating funds.

**Corporate Tax** (or Corporation Tax) is a direct tax imposed on the net income or profit of corporate entities (companies). It is one of the largest sources of revenue for the Central Government in India. Unlike Income Tax (levied on individuals) or GST (levied on supply of goods/services), Corporate Tax specifically targets the earnings of businesses.

The **Industrial Policy Resolution of 1956** is often called the "Economic Constitution of India." It classified industries into three schedules, with Schedule A (17 industries) reserved exclusively for the State. This policy cemented the **Public Sector's (PSUs)** role as the prime mover of industrial development, relegating the private sector to a supplementary role, subject to strict licensing (License Raj).

The **Human Development Index (HDI)**, published by the UNDP, measures development using a composite statistic of three dimensions: 1. **Health**: Measured by **Life Expectancy at Birth**. 2. **Education**: Measured by Mean Years of Schooling and Expected Years of Schooling. 3. **Standard of Living**: Measured by **Gross National Income (GNI) per capita** (PPP). Therefore, "All of the above" covers the key components.

Although the Pension Fund Regulatory and Development Authority (PFRDA) was initially established through an executive order in 2003 to oversee the National Pension System (NPS), it received its full **statutory status** and legal powers only after the passage of the **PFRDA Act, 2013**. This Act empowers PFRDA to regulate, promote, and ensure the orderly growth of the National Pension System.

The amended RBI Act (2016) specifies the mandate of the Monetary Policy Committee (MPC). Its primary objective is to maintain **price stability** (controlling inflation within the 2-6% band). However, the Act explicitly states that this must be done **"while keeping in mind the objective of growth."** This dual mandate acknowledges that extremely tight monetary policy to control inflation could harm economic growth, so a balance must be struck.

The **Planning Commission** operated as a central authority that dictated plans and funding. **NITI Aayog** was established to serve as a **Knowledge and Innovation Hub**. Its role is to accumulate best practices from across the world and within India, disseminate this knowledge to states, and provide technical expertise for policy formulation, thereby acting as a strategic resource center rather than a funding authority.

This is the technical definition of **Fiscal Deficit**. Formula: Fiscal Deficit = Total Expenditure - (Revenue Receipts + Non-Debt Capital Receipts). Non-debt capital receipts include recovery of loans and disinvestment proceeds. The Fiscal Deficit represents the **total borrowing requirement** of the government from all sources to bridge the gap between its spending and its non-borrowed income.

A **Mixed Economy** is an economic system that combines elements of both capitalism (market economy) and socialism (planned economy). It ensures the **coexistence of both the Private Sector and the Public Sector**. In India, this model was adopted to allow the government to control strategic industries (public welfare) while allowing private enterprise to drive other sectors (efficiency and innovation).

Developing economies share certain common characteristics. India is classified as such primarily due to its **low per capita income** (compared to developed nations) and a continued heavy **dependence on agriculture** for employment (even though the service sector contributes more to GDP). Other features include high poverty levels, income inequality, and infrastructural challenges.

The **Securities and Exchange Board of India (SEBI)** is the designated regulator for the **Capital Market** (Securities Market). Its statutory mandate includes three key objectives: to protect the interests of investors in securities, to promote the development of the securities market, and to regulate the securities market to ensure it functions in an orderly and healthy manner.

The **Repo Rate** (Repurchase Rate) is the key policy rate signaled by the RBI. It is the rate at which the RBI lends money to commercial banks for the short term against government securities. Being the benchmark policy rate, changes in the Repo Rate directly influence the cost of funds for banks, which in turn affects the lending and deposit rates for the entire economy. It anchors the money market interest rates.

Within the NITI Aayog's planning framework, the **3-Year Action Agenda** serves as the short-term planning document. It is designed to be actionable and details specific policy changes and programs to be implemented within a three-year timeframe. This timeframe allows for better alignment with the government’s expenditure planning and political cycle, offering more flexibility than the rigid Five-Year Plans.

In economics, variables are classified as Stock or Flow. A **Stock** variable is measured **at a specific point in time** (e.g., Wealth, Public Debt, Money Supply as on 31st March). In contrast, a **Flow** variable is measured **over a period of time** (e.g., GDP, Income, Deficit during the year 2023-24). Understanding this distinction is fundamental to fiscal and monetary analysis.

While the RBI sets KYC/AML guidelines and FIU-IND analyzes suspicious transactions, the **Directorate of Enforcement (ED)** is the specialized financial investigation agency under the Ministry of Finance. It has the primary statutory power to investigate and prosecute cases of Money Laundering under the **Prevention of Money Laundering Act (PMLA), 2002**, including the attachment and confiscation of property derived from crime.

The **Reverse Repo Rate** is the rate banks earn when they deposit surplus funds with the RBI. By **increasing** this rate, the RBI makes it more attractive and profitable for banks to keep their money with the central bank rather than lending it out in the market. This action effectively **absorbs liquidity** from the banking system, reducing the money supply available for lending, which helps in controlling inflation.

The Standing Deposit Facility (SDF) was operationalized in April 2022 to act as the floor of the LAF corridor, replacing the Fixed Rate Reverse Repo Rate. Unlike Reverse Repo, the SDF allows banks to park excess liquidity with the RBI without the need for the RBI to provide collateral (government securities) in return. This empowers the RBI to absorb unlimited liquidity without being constrained by its holding of government securities.

Tax Buoyancy explains the relationship between the changes in the government's tax revenue growth and the changes in GDP. A buoyancy greater than 1 implies that tax revenues are growing faster than the GDP (economy), indicating a robust and efficient tax system. It accounts for both automatic growth in revenue due to economic growth and discretionary changes in tax policies.

The PLI scheme offers financial incentives to companies based on the incremental sales of products manufactured in India. It aims to create global manufacturing champions in India across strategic sectors (like electronics, pharma, auto, textiles), create jobs, and reduce the reliance on imports, thereby strengthening the "Atmanirbhar Bharat" initiative.

IFSCA is a unified authority established to regulate all financial services in International Financial Services Centres (IFSCs) in India. Prior to its establishment, domestic regulators like RBI, SEBI, PFRDA, and IRDAI regulated business in IFSCs. The first IFSC in India has been set up at GIFT City, Gandhinagar, Gujarat.

Operation Twist is a special Open Market Operation (OMO) where the RBI buys long-term government securities and simultaneously sells short-term securities. The goal is to lower long-term interest rates (yields) to spur investment and growth, while keeping short-term liquidity largely unchanged.

Contrary to what one might expect from private industrialists (like JRD Tata and GD Birla), the Bombay Plan argued that the Indian economy could not grow without significant government intervention, protectionism, and a central planning authority to build infrastructure and heavy industries, as private capital was insufficient at that time.

Foreign banks with < 20 branches have a total PSL target of 40% of Adjusted Net Bank Credit (ANBC). However, they are treated differently regarding sub-targets; they can fulfill up to 32% of this target through Export Credit, which is not the case for domestic banks where export credit limits are much lower/specific.

Brownfield projects involve purchasing or leasing existing production facilities/infrastructure to launch a new production activity. This contrasts with Greenfield investments, which involve building new facilities from the ground up. Brownfield is often faster but may come with legacy issues.

When the government borrows heavily from the market to fund its deficit, it competes with the private sector for limited funds. This increased demand for loanable funds drives up interest rates (cost of borrowing), making it expensive for private companies to invest, thus "crowding them out" of the market.

The CWMI creates a sense of cooperative and competitive federalism among states. By ranking states on various water management parameters (like irrigation, restoration of water bodies, etc.), it encourages them to improve their water security practices based on data-backed performance.

A Cess (e.g., Health and Education Cess) is levied for a specific predetermined purpose and cannot be used for anything else. A Surcharge is an additional charge on tax for general revenue purposes. Crucially, proceeds from both Cess and Surcharge are NOT shared with state governments (they are not part of the divisible pool).

Legal Tender is money that cannot be refused in settlement of a debt. Currency notes and coins are legal tender. Cheques are "fiduciary money" because they can be refused (e.g., if bounces) and represent a claim rather than cash itself.

The Regional Rural Banks were established under the provisions of an Ordinance passed in September 1975 and the RRB Act 1976, based on the recommendations of the Narasimham Working Group, to improve rural credit delivery.

Demographic Dividend is the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older). India is currently passing through this phase.

NaBFID was established by an Act of Parliament in 2021 as a specialized Development Financial Institution (DFI) to support the country's infrastructure sector, bridging the gap for long-term non-recourse finance.

Launched in 2015, the Smart Cities Mission aims to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment, and application of 'Smart' Solutions.

The Phillips Curve suggests that lower unemployment is associated with higher inflation (trade-off). When employment is high (unemployment low), demand rises, pushing up prices.

As the Lender of Last Resort, RBI provides financial assistance to commercial banks when they face temporary liquidity crises and have exhausted all other sources. It also provides Ways and Means Advances (WMA) to State Governments.

The 101st Constitution Amendment Act, 2016 inserted Article 279A, empowering the President to constitute the GST Council, which is the governing body for GST implementation.

The EPCG scheme allows exporters to import capital goods (machinery) at zero customs duty, provided they fulfill an export obligation equivalent to 6 times the duty saved within 6 years.

The International Monetary Fund (IMF) and the World Bank (IBRD) were both created at the Bretton Woods Conference in 1944, hence the name.

The reforms introduced the LERMS (Liberalized Exchange Rate Management System) in 1992, moving towards a market-determined exchange rate where demand and supply decide the Rupee's value.

GFCF measures the value of new or existing fixed assets (infrastructure, machinery, etc.) acquired by the government and private sector. It is the standard indicator for Investment in the GDP calculation.

Basel III is a global regulatory framework that mandates banks to maintain higher capital (CAR), leverage ratios, and liquidity (LCR/NSFR) to withstand financial stress and prevent systemic failure.

WMA is a temporary liquidity support given by the RBI to the government (Central & State) to bridge short-term gaps between their revenue receipts and expenditures. It must be repaid within 90 days.

Udyam Registration is the new, simplified, online, and paperless process for registering MSMEs in India, replacing the Udyog Aadhaar Memorandum (UAM).

Primary Deficit = Fiscal Deficit - Interest Payments. It shows how much the government needs to borrow to meet its current year's expenses, excluding the obligation of interest on old loans.

ESG is a framework used to assess the sustainability and ethical impact of an investment in a company, focusing on Environmental impact, Social responsibility, and Corporate Governance.

Supply-side (or Cost-Push) inflation occurs when the cost of production increases (e.g., raw material shocks like oil) or supply is constrained, forcing prices up, independent of demand.

M1 is known as Narrow Money because it includes the most liquid assets: Currency with public + Demand Deposits with banking system + Other deposits with RBI.

Microeconomics focuses on the behavior of individual agents (consumers, firms) and price determination in specific markets. Macroeconomics analyzes the economy-wide phenomena such as total output (GDP), unemployment, and inflation.

Perfectly inelastic demand means the demand curve is a vertical line (quantity demanded does not change with price). If supply increases (supply curve shifts right), the intersection point moves down along the vertical demand line, resulting in a lower price but the exact same quantity.

The Money Multiplier indicates the maximum amount of money the banking system generates with each unit of excess reserves. It decreases if people hold more cash (higher Currency Deposit Ratio) or if banks hold more reserves (higher Reserve Deposit Ratio), as both leakages reduce the bank's ability to lend and create money.

Keynes identified three motives for holding cash: Transaction (for daily needs), Precautionary (for emergencies), and Speculative (to take advantage of future interest rate movements). "Inflationary Motive" is not a component of this theory.

In a recession, aggregate demand falls. Producers are initially unable to cut production fast enough, leading to an involuntary accumulation of inventories (unsold stock), which eventually forces them to cut production and employment.

The GDP Deflator measures the level of prices of all new, domestically produced, final goods and services in an economy. It compares Nominal GDP (current prices) with Real GDP (base year prices).

The Phillips Curve postulates an inverse relationship: lower unemployment is associated with higher inflation (due to wage pressures and demand), and higher unemployment is associated with lower inflation.

Opportunity cost is a fundamental concept representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Primary Deficit = Fiscal Deficit - Interest Payments. It shows the gap between the government's spending and receipts for the current year alone, removing the legacy cost of past borrowings.

Core Inflation measures the long-term trend in the price level. It excludes items with volatile prices, specifically Food and Fuel , to give a clearer picture of underlying inflation trends.

In Monopolistic Competition (e.g., toothpaste, soaps), many sellers offer differentiated products. This differentiation allows them to act as price makers to a limited extent, unlike Perfect Competition where products are identical.

For a Giffen good (e.g., staple food like bread/rice for the very poor), the income effect of a price rise is so strong (consumers feel poorer and cut back on expensive foods like meat) that they end up buying MORE of the staple Giffen good, despite the price rise.

Velocity is the rate at which money circulates in the economy. A higher velocity implies a more active economy where the same money is used for multiple transactions.

The IS (Investment-Saving) curve shows combinations of interest rates and output where the goods market is in equilibrium (Investment = Saving). The LM curve represents the Money Market.

GDP measures production within borders. GNP measures production by nationals, regardless of location. Therefore, GNP = GDP + Net Factor Income from Abroad (Income earned by residents abroad minus income earned by foreigners domestically).

In a boom, demand outstrips supply, causing inflation. A "Dear Money Policy" (tight monetary policy) raises interest rates to discourage borrowing and spending, thereby cooling down the economy.

Recovery of Loans is a Capital Receipt because it reduces the government's financial assets (the outstanding loan). The others are Revenue Receipts (Taxes, Dividends, Fees) as they are recurring and create no liability/asset change.

M = Money Supply, V = Velocity of Circulation, P = Price Level, T = Volume of Transactions. The theory states that Money Supply * Velocity = Total Value of Transactions.

Points on the PPF curve represent full efficiency. Points outside are unattainable with current resources. Points inside indicate that resources are idle or inefficiently used.

Real GDP Growth ˜ Nominal GDP Growth - Inflation Rate. (8% - 5% = 3%). Real GDP represents purchasing power growth.

A change in the price of the good causes movement *along* the curve. A change in non-price determinants (Income, Tastes, Price of substitutes) shifts the entire curve left or right.

The Classical Theory posits that interest is the reward for saving (abstinence) and the price paid for the use of capital (investment). It is a real phenomenon determined by real factors: Saving (Supply) and Investment (Demand).

M1 = Currency + Demand Deposits + Other Deposits with RBI. Time Deposits (FDs) are not liquid enough for M1 and are included in M3 (Broad Money).

Keynes argued that fluctuations in Aggregate Demand, particularly Investment demand driven by "animal spirits" (business confidence), are the main drivers of the business cycle.

NDP at Factor Cost represents the total income earned by factors of production within the domestic territory. NNP at Factor Cost is called "National Income".

The Fiscal Responsibility and Budget Management (FRBM) Act requires the government to present three policy statements: Medium-term Fiscal Policy, Fiscal Policy Strategy, and Macro-economic Framework.

While total utility may increase, the *additional* satisfaction gained from consuming each subsequent unit declines. This explains the downward sloping demand curve.

Positive cross elasticity means if the price of Good A rises, the demand for Good B rises. This happens with substitutes (people switch from expensive Tea to cheaper Coffee). For complements, it is negative.

Cost-Push inflation arises from the supply side when production costs increase, forcing firms to raise prices to maintain margins. The others are Demand-Pull factors.

Real Interest Rate represents the true purchasing power gained from an investment. It subtracts the erosion of value caused by inflation from the nominal rate (Fisher Equation approximation).

Market prices include indirect taxes (which increase price) and exclude subsidies (which lower price). To get back to the actual cost of production (Factor Cost), one must remove the tax component (Subtract Indirect Taxes) and add back the government support (Add Subsidies).

WPI measures inflation at the wholesale level and tracks only goods. CPI measures inflation at the retail level and includes both goods and services (like medical care, education, housing). RBI adopted CPI as the key measure for inflation targeting in 2014.

Leading indicators change *before* the economy as a whole changes. "New orders for capital goods" signal future production activity. Unemployment is a lagging indicator (changes after the economy turns), and CPI is often a lagging or coincident indicator.

High Powered Money (H or M0) is the base for money creation. It includes all currency issued by the central bank (held by public and banks) plus the reserves banks keep with the RBI.

In a Liquidity Trap, prevailing interest rates are low and savings rates are high, making monetary policy ineffective. Investors expect interest rates to rise in the future (bond prices to fall), so they hoard cash to avoid capital losses.

Automatic stabilizers cushion the economy without direct government intervention. In a boom, progressive taxes rise (cooling demand). In a recession, taxes fall and benefits rise (boosting demand), automatically countering the cycle.

Operation Twist involves buying long-term securities (raising their price, lowering yield) and selling short-term securities. This flattens the yield curve and reduces the cost of long-term borrowing for investment.

As you produce more of Good A, you have to give up increasingly larger amounts of Good B because resources are not perfectly adaptable. This increasing trade-off creates the concave shape.

Direct monetization involves printing new money (High Powered Money) to fund government spending. This increases the monetary base and money supply, often fueling demand-pull inflation.

A negative cross elasticity means that if the price of X rises, the demand for Y falls. This happens with complementary goods because they are consumed together (e.g., if the price of Petrol rises, demand for Cars may fall).

National Income accounts for production activity. Transfer payments are merely a redistribution of existing income from one group (taxpayers) to another (beneficiaries) without any corresponding economic output.

Stagflation contradicts the standard Phillips Curve trade-off. It involves a stagnant economy (high unemployment) coexisting with rising prices (high inflation), often caused by supply shocks.

One person's spending becomes another's income, who then spends a part of it, creating a chain reaction. Thus, an initial injection of spending raises National Income by a multiple of that amount.

The simple Money Multiplier is calculated as 1/r. If r = 10% (or 0.1), then Multiplier = 1 / 0.1 = 10. This means an initial deposit can create 10 times the money supply.

This theory (Neo-Classical) improved upon the Classical theory by including monetary factors like bank credit and hoarding alongside real factors like saving and investment.

Primary Deficit = Fiscal Deficit - Interest Payments. If PD = 0, then Fiscal Deficit = Interest Payments. This means new borrowing is used solely to service old debt, not for new expenditure.

Currently, the RBI maintains a corridor width where the MSF (ceiling) is 25 bps above the Repo Rate. (Note: This spread can change based on RBI policy, but standard practice is a fixed spread).

The law states that as you add more variable inputs (labor) to a fixed input (land), marginal product will eventually decline. This distinction of fixed vs variable inputs defines the Short Run.

It is not a separate budget but a tool to translate gender commitments into budgetary commitments by inspecting inflows/outflows through a gender lens.

If a consumer is willing to pay ?100 for a product but buys it for ?80, the Consumer Surplus is ?20. It represents the net benefit to consumers.

Green GDP accounts for the environmental consequences of economic growth. It subtracts the value of natural capital loss (pollution, resource depletion) from traditional GDP.

CPI tracks a fixed basket of consumer goods. GDP Deflator tracks price changes in ALL goods and services produced in the economy (investment goods, government services, exports), making it broader.

A depression is an extreme form of recession. It lasts longer (years vs months) and involves a much sharper decline in GDP (e.g., >10%), massive unemployment, and deflation.

If people receive income more frequently (weekly vs monthly), they hold less idle cash and spend money faster, increasing velocity. Saving or hoarding money decreases velocity.

In a liquidity trap, people are willing to hold any amount of money supplied by the central bank (demand curve is horizontal/flat) because opportunity costs are near zero. Injecting more money doesn't lower rates further or stimulate spending.

Due to the pandemic stimulus, the original target of 3% was relaxed. The Union Budget 2021-22 announced a glide path to reduce fiscal deficit to below 4.5% by 2025-26.

Qualitative tools target specific sectors. By increasing the margin (down payment) required for loans against shares or commodities, RBI selectively restricts credit to those sectors without affecting the whole economy. The others are Quantitative tools.

Internal economies are cost advantages that a specific firm reaps as it grows larger (e.g., purchasing bulk raw materials cheaper, specialized machinery). External economies benefit the whole industry.

Under Article 267, the Contingency Fund is held by the Finance Secretary on behalf of the President. It is used for unforeseen expenditure (like disasters) pending parliamentary authorization.

An increase in demand shifts the demand curve to the right. With a fixed upward-sloping supply curve, this leads to a higher equilibrium price and a higher equilibrium quantity.

National Income includes the value of goods and services produced. Imputed rent is the estimated rent a house owner would pay to live in their own house if they were renting it. It represents the value of housing services produced. Transfer payments, second-hand sales, and non-economic activities (housewife services) are excluded.

Money Multiplier (m) is inversely related to the Currency Deposit Ratio (c) and Reserve Deposit Ratio (r). Formula: m = (1+c)/(c+r). If people hold more cash (higher CDR) instead of depositing it in banks, the banks' ability to create credit reduces, lowering the multiplier.

Since the adoption of the Flexible Inflation Targeting framework in 2016 (based on Urjit Patel Committee recommendations), the RBI targets Headline Inflation measured by the CPI-Combined (Rural + Urban).

Expansionary fiscal policy shifts the IS curve to the right. This increases output (Income). However, higher income increases money demand, which pushes up interest rates (assuming money supply is fixed). Thus, both Y and r increase.

The Accelerator theory suggests that net investment is a function of the growth in output. If demand for consumer goods rises, firms need more machines (capital) to produce them, leading to a more than proportionate rise in investment demand.

Expenditures charged on the Consolidated Fund of India (Article 112(3)) include emoluments of the President, Judges of SC/HC, CAG, and debt service charges (interest + sinking fund) of the government. These are not subject to the vote of Parliament.

Public Goods (like national defense, street lights) are non-excludable (you can't stop people from using it) and non-rivalrous (one person's use doesn't reduce availability for others).

Veblen goods are luxury goods for which demand increases as price increases, because the higher price confers status (Conspicuous Consumption). This is an exception to the Law of Demand.

Equation: MV = PY. Here M=500, P=2, Y=1000 (Real GDP). So, 500 * V = 2 * 1000. 500V = 2000. V = 4. Velocity is 4.

Increasing CRR means banks must park more funds with RBI, leaving less money available for lending to the public, thereby contracting the money supply.

The Laffer Curve shows that as tax rates increase, tax revenue increases up to an optimal point, after which further increases in tax rates actually decrease total revenue due to disincentives to work/produce.

Market Price - Net Indirect Taxes = Factor Cost. Therefore, NNP(MP) - NIT = NNP(FC), which is technically defined as National Income.

Joseph Kitchin identified short business cycles of about 40 months driven by lags in information and decision making regarding inventory levels.

DA for central government employees is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), compiled by the Labour Bureau.

Fisher Equation: Real Interest Rate ˜ Nominal Interest Rate - Inflation Rate. 8% - 3% = 5%.

Positive economics relies on facts and data (descriptive). Normative economics involves value judgments and opinions about economic fairness and goals (prescriptive). Both definitions are correct.

Vote on Account (Article 116) enables the government to meet essential expenses (like salaries) for the first few months of the new fiscal year until the full Appropriation Bill is passed.

Movement along the supply curve (expansion or contraction) is caused ONLY by a change in the price of the good itself. All other factors shift the curve.

PDI is the income actually available to individuals for consumption or saving. It is obtained by subtracting personal direct taxes (like income tax) and fees/fines paid to the government from Personal Income.

During a boom, optimism encourages spending and investment. Money changes hands faster as people buy more goods and services, increasing the velocity of circulation.

Borrowings create debt. Disinvestment (selling government assets) is a capital receipt because it reduces assets, but it does not create any future repayment obligation, hence it is non-debt creating.

Sir John Hicks and Alvin Hansen developed the IS-LM model to summarize Keynesian economics, integrating the real (Goods) and monetary (Money) markets.

Joseph Schumpeter argued that business cycles are caused by waves of innovation (creative destruction). Entrepreneurs introduce new products/processes, causing booms, followed by adjustments.

A decrease in supply shifts the supply curve to the left. With constant demand, this creates a shortage at the old price, pushing the equilibrium price up and quantity down.

The Product Method sums up the Gross Value Added (GVA) by all sectors of the economy to avoid double counting of intermediate goods.

Disinflation is a decrease in the rate of inflation (e.g., from 6% to 4%). Prices are still rising, but slower. Deflation is negative inflation (prices falling).

A Money Bill deals with taxes, borrowing, etc., and can only be introduced in the Lok Sabha with the President's recommendation. Rajya Sabha has limited powers over it.

Unitary elasticity means the percentage change in quantity demanded is exactly equal to the percentage change in price.

M3 = M1 (Currency + Demand Deposits) + Time Deposits (Fixed/Recurring Deposits) with banks. It is the most common measure of money supply.

Expectations Theory explains the term structure of interest rates (Yield Curve), positing that long-term rates are an average of current and expected future short-term rates.

Land is considered a primary factor of production with a fixed supply. Unlike capital or labor, which can be increased or decreased based on demand and investment, the total physical availability of land is geographically limited and cannot be significantly expanded, making its supply curve perfectly vertical (inelastic).

When both demand and supply curves shift to the right by the same magnitude, the upward pressure on price from increased demand is exactly offset by the downward pressure on price from increased supply. However, both shifts contribute to an increase in the quantity traded, resulting in a higher equilibrium quantity at the same price.

M3, or Broad Money, includes Currency with the public, Demand Deposits, and Time Deposits with banks. It is the most comprehensive measure of the money supply that is liquid enough to impact economic activity. The RBI primarily tracks M3 growth to decide on liquidity management and interest rates.

Speculative demand arises from the desire to hold cash to take advantage of future changes in bond prices. When interest rates are high, bond prices are low, so people buy bonds (low cash holding). When rates are low, bond prices are high, so people sell bonds and hold cash (high cash holding), anticipating rates to rise. Thus, it has an inverse relationship.

The Recovery phase starts after the Trough. It is marked by a gradual return of confidence. Firms begin to replace worn-out machinery (investment kicks in), employment starts to pick up slowly, and banking lending begins to ease, leading to a slow rise in aggregate demand.

Policy lags are critical in economics. "Recognition Lag" is the time delay between an economic shock (like a sudden drop in demand) and the moment policymakers identify it from the data. This delay can sometimes lead to policy actions being taken too late, potentially destabilizing the economy further.

The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, originally targeted limiting the Fiscal Deficit to 3% of GDP by 2008. While this target has been amended and relaxed multiple times due to economic crises, the 3% figure remains the benchmark for long-term fiscal prudence.

Standard GDP ignores the environmental costs of production. Green GDP deducts the cost of pollution, depletion of natural resources (like oil or forests), and degradation of ecosystems from the GDP figure. This provides a more sustainable measure of economic welfare.

WPI tracks the price of goods at the wholesale level. The "Manufactured Products" group (including chemicals, metals, textiles, food products) holds the highest weight (approx 64%), followed by Primary Articles (approx 22%) and Fuel & Power (approx 13%). Services are not included in WPI.

Normative economics expresses values, judgments, or opinions about what "should" or "ought" to happen. It involves subjective statements that cannot be proven true or false. The other options are Positive Economics, which state factual or testable relationships.

A Price Ceiling sets a maximum legal price below the equilibrium price. At this lower price, quantity demanded increases (people want more cheap goods) while quantity supplied decreases (producers make less profit), resulting in excess demand or a shortage .

The RBI publishes Liquidity Aggregates in addition to Monetary Aggregates. L1 is defined as New Broad Money (NM3) plus All Deposits with the Post Office Savings Banks (excluding National Savings Certificates). It provides a wider measure of liquidity than M3.

The Classical theory viewed interest purely as a real phenomenon (savings vs investment). The Neo-Classical Loanable Funds theory recognized that the supply of loanable funds also comes from monetary sources like new money created by banks (credit) and dis-hoarding of cash, not just real savings.

A global recession reduces the income and demand in foreign countries. This leads to a fall in demand for Indian exports (software, gems, textiles). Additionally, global investors become risk-averse, often pulling capital (FPI) out of emerging markets like India, affecting the stock market and rupee value.

By buying long-term bonds, the RBI increases their price and lowers their yield (interest rate), making long-term borrowing cheaper for infrastructure and housing. By selling short-term bonds, it keeps short-term rates steady or higher. This simultaneous action twists the yield curve.

The Budget is divided into Revenue and Capital. Capital Budget deals with assets and liabilities. Loans given to States create an asset (receivable) for the Central Government, so they fall under Capital Expenditure. Interest, salaries, and subsidies are recurring expenses (Revenue Expenditure).

Per Capita Income = Total Income / Total Population. For the average person to be better off in real terms, the total economic pie (Real GDP) must expand at a rate higher than the number of people sharing it (Population growth).

Stagflation involves both high inflation and high unemployment (stagnation). Typical tools to fight inflation (raising rates) slow down the economy, worsening unemployment. Tools to fight unemployment (lowering rates, stimulus) can worsen inflation. This trade-off makes it the hardest condition to manage.

The Production Function (Q = f(K, L...)) mathematically shows the maximum amount of output that can be produced from a given set of physical inputs (like capital and labor), assuming a certain level of technology.

Perfect elasticity means that at a specific price, suppliers are willing to supply an infinite amount. Even a tiny drop in price reduces supply to zero. This is depicted by a horizontal line.

In hyperinflation, money loses value almost hourly. People try to get rid of cash immediately by buying goods, leading to a massive increase in the velocity of circulation, which further fuels inflation.

The Fisher Effect states that the Real Interest Rate is independent of monetary measures. Therefore, if expected inflation rises by 1%, the Nominal Interest Rate will also rise by 1% to keep the Real Rate constant.

Paul Samuelson utilized the interaction between the Keynesian Multiplier (consumption effect) and the Accelerator (investment effect) to build a model that explains the oscillatory nature (cycles) of economic activity.

To ensure transparency and accountability, the RBI Act mandates that the MPC must publish the minutes of the proceedings, including the voting record of each member, on the 14th day after the meeting.

Deficit financing increases the money supply in the hands of the public without a corresponding increase in goods supply. This excess money chases limited goods, leading to a rise in aggregate demand and causing Demand-Pull Inflation.

Nominal GDP can be misleading due to exchange rates. PPP adjusts GDP to reflect what that money can actually buy in each country (e.g., a haircut costs less in India than in USA). It provides a better comparison of real living standards.

Skewflation is a skewed inflation. For example, food prices might be skyrocketing (high inflation) while prices of electronics or real estate might be stagnant or falling. It indicates sectoral imbalances.

"For whom to produce" is about distribution. It determines who gets to consume the goods produced, which depends on how income is distributed (wages, rent, interest, profit) among the factors of production.

The Law of Demand states price and quantity are inversely related. Veblen goods (status symbols like diamonds) violate this because people buy MORE of them as their price rises to show off wealth.

Banks create money by lending out deposits. If people hold cash (leakage), less money enters the banking system as deposits. This reduces the banks' ability to lend and create credit, thereby lowering the value of the Money Multiplier.

The Unorganized Financial Market comprises Money Lenders, Indigenous Bankers, and Nidhi companies. Unlike the organized sector (Banks, NBFCs), it is largely unregulated by the RBI (Statement II is false). Furthermore, interest rates in this sector are typically much higher, not lower, than the organized sector due to higher risk and lack of collateral (Statement III is false).

A Scheduled Bank is one included in the Second Schedule of the RBI Act, 1934. To qualify, it must have a paid-up capital and reserves of not less than ?5 Lakhs and satisfy the RBI that its affairs are not conducted in a manner detrimental to the interests of its depositors.

NaBFID is a specialized DFI established to support long-term infrastructure projects. Unlike commercial banks, DFIs generally do not accept demand deposits (Savings/Current accounts) from the public; they raise funds through bonds, government grants, and multilateral institutions.

The SBR framework has four layers: Base, Middle, Upper, and Top. The Top Layer remains empty by default and is populated only if the RBI identifies specific NBFCs from the Upper Layer that pose extreme systemic risk and require tighter supervision.

Treasury Bills (T-Bills), Commercial Papers (CP), and Certificates of Deposit (CD) are all "Zero Coupon" instruments. They do not pay periodic interest; instead, they are issued at a discount to their face value, and the profit is the difference between the redemption value and the issue price.

The Primary Market is where new securities are issued for the first time (New Issue Market). IPOs (first sale) and FPOs (subsequent sale by existing companies) allow companies to raise fresh capital directly from investors.

As per RBI guidelines (revised), the minimum paid-up voting equity capital for Small Finance Banks is ?200 crore. (For Universal Banks, it is ?500 crore, later revised to ?1000 crore for new licenses).

High SLR and CRR meant a large portion of bank funds were locked up in low-yielding government securities or idle cash (pre-emption of funds). Narasimham-I recommended reducing these ratios to release funds for productive commercial lending, thereby improving bank profitability and efficiency.

The Insurance Amendment Act, 2021 increased the FDI limit in the insurance sector from 49% to 74% under the automatic route, subject to Indian management control safeguards.

To be registered as an NBFC-Factor, a company must have at least 50% of its total assets in the factoring business, and its income derived from factoring must not be less than 50% of its gross income.

"Call Money" refers to lending/borrowing for 1 day (overnight). "Notice Money" refers to lending/borrowing for a period of 2 to 14 days. "Term Money" is for 15 days to 1 year.

Payments Banks are designed to provide small savings accounts and payments/remittance services. They are strictly prohibited from undertaking lending activities or issuing credit cards to avoid credit risk.

SIDBI (Small Industries Development Bank of India) acts as the apex regulatory and financing body for the MSME sector in India.

SEBI regulates the securities market, which includes corporate bonds, shares, and mutual funds. G-Secs are primarily regulated by RBI. Currency is RBI's domain. Bank FDs are regulated by RBI.

Chit Fund companies are regulated by the State Governments under the Chit Funds Act, 1982. Housing Finance Companies are now regulated by RBI (transferred from NHB).

The AMC is the operational arm appointed by the Trustees to manage the funds. Fund Managers within the AMC make the buying/selling decisions.

UCBs operate under dual regulation: Banking functions are regulated by the RBI (Banking Regulation Act), while management/incorporation issues are regulated by the RCS of the State (or Central RCS for multi-state banks).

Following the amalgamation of 10 PSBs into 4 anchor banks, the total number of PSBs in India came down to 12, creating larger and stronger banks.

CP is an unsecured Promissory Note issued by corporates, primary dealers, and FIs to raise short-term funds.

Export-Import Bank of India (EXIM Bank) extends Lines of Credit (LOC) and Buyer's Credit to overseas entities to promote Indian exports.

NSDL and CDSL are Depositories. They hold securities (shares, debentures) in electronic form to facilitate paperless trading and settlement.

GIC Re is the "National Reinsurer". It provides reinsurance support to direct general insurance companies in India and abroad, helping them spread risk.

A CIC is a specialized NBFC whose business is acquisition of shares and securities. It must hold at least 90% of its net assets in the form of investment in group companies, with at least 60% in equity shares.

RBI classifies SBI, HDFC Bank, and ICICI Bank as D-SIBs. These are banks considered "Too Big To Fail" and are subject to higher capital conservation buffer requirements.

TREPS enables tri-party repo borrowing and lending, facilitated by a central counterparty (CCIL). It allows participants to borrow against government securities collateral with a third party mediating the transaction.

A Financial Lease is a long-term lease where the lessee bears the risks (maintenance, obsolescence) and enjoys the rewards of the asset, almost like ownership, though legal title remains with the lessor.

Basel Norms have 3 pillars: Pillar 1 (Minimum Capital Requirements), Pillar 2 (Supervisory Review Process - ICAAP), and Pillar 3 (Market Discipline - Disclosures).

Seed capital is for the idea stage. Start-up financing supports product development and initial marketing. Expansion is for scaling up. Bridge is for pre-IPO.

RIDF was set up in NABARD. Banks that fail to meet their Priority Sector Lending targets contribute to this fund, which NABARD uses to finance rural infrastructure projects by state governments.

A Green Shoe Option (Over-allotment Option) allows the issuer to authorize underwriters to sell additional shares (usually up to 15%) if demand is high, helping to stabilize the post-listing price.

The Integrated Ombudsman Scheme, 2021 integrates the three existing schemes (Banking Ombudsman, NBFC Ombudsman, and Digital Transactions Ombudsman) into a single centralized scheme, adopting the "One Nation One Ombudsman" approach to make the grievance redressal mechanism simpler and more responsive.

Currently, the Government of India issues Treasury Bills in three standard maturities: 91-day, 182-day, and 364-day. There is no standard 270-day T-Bill.

The Middle Layer includes all Deposit taking NBFCs (NBFC-Ds) irrespective of asset size, and Non-Deposit taking NBFCs with asset size of ?1000 Crore and above.

NAV is the per-unit price of the mutual fund. It is calculated as (Total Market Value of Assets + Cash - Liabilities) / Total Number of Units Outstanding.

NPCI, an umbrella organization for operating retail payments and settlement systems in India, developed and operates the UPI platform.

Unlike "Options" where the buyer has the right but not the obligation, "Futures" impose a binding obligation on both parties to fulfill the contract on the maturity date.

NHB was originally a subsidiary of RBI. However, the Government of India acquired the entire stake of RBI in NHB in 2019, making it a 100% govt-owned entity.

REER takes the NEER (weighted average of nominal exchange rates) and adjusts it for relative inflation rates. It is a better indicator of a country's trade competitiveness.

Credit Rating Information Services of India Limited (CRISIL) was incorporated in 1987 and started operations in 1988, becoming India's first credit rating agency.

In Hire Purchase, the hirer has the option to purchase the asset at the end of the term. Ownership passes only when the final installment is paid. In Lease, ownership typically remains with the lessor.

Forfaiting involves the purchase of export receivables (like bills of exchange) by a forfaiter on a "without recourse" basis. It is typically used for medium to long-term export financing.

Angel Investors invest their personal funds into early-stage companies (startups) that have high growth potential but high risk, often providing mentorship as well.

Tier I is the primary pension account which is restrictive in nature regarding withdrawals (corpus is locked till retirement). Tier II is a voluntary savings facility with unrestricted withdrawals.

Bancassurance is a partnership between a bank and an insurance company, where the bank uses its distribution channels to sell insurance products.

Merchant Bankers mainly facilitate capital raising for companies by managing IPOs, underwriting shares, and providing consultancy on mergers and acquisitions.

The ownership structure of RRBs is fixed: Central Government (50%), Sponsor Bank (35%), and State Government (15%).

CD is a negotiable money market instrument issued by Scheduled Commercial Banks and select FIs. The minimum maturity for a CD issued by banks is 7 days, not 1 day. It is unsecured.

ASBA is a process where the IPO application money remains blocked in the investor's bank account and is debited only if shares are allotted.

IDF-NBFCs are setup to facilitate long-term debt into infrastructure sectors. They raise resources through issue of bonds of minimum 5-year maturity.

REITs pool money to own and operate income-generating real estate. The regulations require at least 80% of the value of the REIT assets to be invested in completed and rent-generating properties.

Section 31(i) of the SARFAESI Act explicitly excludes "any security interest created in agricultural land" from its purview to protect farmers.

TReDS is an electronic platform for facilitating the financing / discounting of trade receivables of MSMEs through multiple financiers, helping them manage working capital.

A Regulatory Sandbox allows FinTech companies to test innovative products with real customers under regulatory supervision but with some relaxed norms for a limited period.

ULIPs combine insurance and investment. The premiums are invested in market-linked funds (equity/debt), and the value of the corpus fluctuates with market performance. Thus, the investment risk lies with the policyholder.

LABs were established as low-cost structures to mobilize rural savings and provide credit in a limited area of operation (typically 3 contiguous districts).

NARCL acquires stressed assets from commercial banks, cleaning up their balance sheets. The assets are then managed/resolved by the IDRCL (India Debt Resolution Company Ltd).

Banks and Primary Dealers act as both borrowers and lenders in the Call/Notice money market. Co-operative banks are also permitted. Corporates are not permitted.

India moved from T+2 to T+1 settlement cycle (Trade date + 1 day) for equities, making it one of the fastest settlement systems globally. SEBI is also testing optional T+0.

An Operating Lease is like a rental agreement (e.g., renting a car for a week). It is short-term, doesn't cover the full asset cost, and the lessor handles maintenance. Financial Lease is the opposite.

"AAA" ratings indicate the highest degree of safety regarding timely servicing of financial obligations and carry the lowest credit risk.

Hard Underwriting involves a firm commitment by the underwriter to subscribe to a certain number of shares even before the public issue opens, providing certainty to the issuer.

A Put Option allows the holder to sell the asset at the strike price. They will exercise this option if the market price falls below the strike price, profiting from the decline.

In non-recourse factoring, the Factor assumes the credit risk. If the debtor fails to pay due to insolvency, the Factor cannot claim the money back from the seller (client).

An IPO allows the VC firm to sell its shares to the public at a market valuation, often yielding significantly higher returns compared to other exit strategies like buybacks or secondary sales.

A typical forex swap consists of a spot transaction and a simultaneous forward transaction in the opposite direction. It is used to manage liquidity or hedge risk without open currency exposure.

Unlike universal banks (target 40%), SFBs have a higher mandate to serve the underserved, hence their Priority Sector Lending (PSL) target is set at 75% of ANBC.

Green Bonds are debt instruments specifically earmarked to raise money for climate and environmental projects like renewable energy, clean transportation, and water management.

TER covers investment management fees, registrar fees, trustee fees, audit fees, and marketing expenses. SEBI sets limits on the maximum TER that can be charged.

TPAs act as intermediaries between the insurance company and the policyholder/hospital. They handle the administrative aspects of claims processing, network hospital management, and cashless approvals.

APY provides five slabs of guaranteed minimum pension: ?1000, ?2000, ?3000, ?4000, and ?5000 per month, depending on the contribution amount and age of entry.

Under the Integrated Ombudsman Scheme, the Appellate Authority is the Executive Director in charge of the Consumer Education and Protection Department of RBI (Note: Earlier it was Deputy Governor, recently designated to ED level, but often referred to as Appellate Authority within RBI).

The Integrated Ombudsman Scheme covers NBFCs (both deposit-taking and non-deposit taking) having customer interface and asset size of ?100 crore or more.

To ensure safety and liquidity, Payment Banks are mandated to invest at least 75% of their demand deposit balances in Government Securities with maturity up to one year.

LCR promotes short-term resilience by ensuring banks have sufficient High-Quality Liquid Assets (HQLA) to survive a significant stress scenario lasting 30 calendar days.

The IBC mandates a time-bound resolution process. The initial deadline is 180 days from the date of admission, extendable by 90 days. The Supreme Court has emphasized a mandatory outer limit of 330 days including litigation time.

RBI raised the minimum Net Owned Fund requirement for ARCs from ?100 crore to ?300 crore to ensure they have sufficient financial strength to acquire distressed assets.

Reporting entities (banks) must maintain records of transactions and KYC information for a period of 5 years from the date of transaction or the end of the business relationship.

The CIBIL score ranges from 300 to 900. A score closer to 900 indicates high creditworthiness and lower risk for the lender.

For SGBs, the interest (2.5% p.a.) is taxable. However, capital gains arising on redemption of the bond (held till maturity) are exempt from tax for individual investors. No TDS is deducted on interest.

Masala Bonds are debt instruments issued outside India but denominated in Indian Rupees rather than foreign currency. This shifts the currency risk from the issuer to the investor.

Category I AIFs are those which invest in sectors which the government or regulators consider as socially or economically desirable (Venture Capital Funds, SME Funds, Social Venture Funds, Infrastructure Funds).

REITs are required to distribute at least 90% of their Net Distributable Cash Flows to investors at least once every six months, ensuring they function as income-generating vehicles.

To attract global financial institutions, the government provides a 100% income tax holiday for 10 consecutive years out of a block of 15 years for units in IFSC.

The target for Advances to Weaker Sections (which includes small and marginal farmers, SC/ST, beneficiaries of govt schemes) has been increased to 12% of ANBC (Adjusted Net Bank Credit).

The Lead Bank Scheme assigns a specific bank in each district the responsibility of surveying credit needs, developing credit plans, and coordinating with other banks and government agencies to ensure banking development in that district.

Under SAA, each rural and semi-urban bank branch was assigned a specific service area comprising 15 to 25 villages for planned and orderly development of that area.

Unlike standard Repo where G-Secs are used, Corporate Bond Repo allows borrowing funds by pledging Corporate Bonds. This aims to deepen the corporate bond market.

NBFC-ND-SI are those non-deposit taking NBFCs with an asset size of ?500 crore and above. They are subject to stricter prudential norms compared to smaller NBFCs.

SEBI mandates that a Large Cap Fund must invest a minimum of 80% of its total assets in equity and equity-related instruments of large-cap companies (top 100 companies by market capitalization).

Residual value is the expected fair market value of the leased asset at the conclusion of the lease period. In a financial lease, the lessee often guarantees this value.

Section 24 mandates that every banking company shall maintain in India, liquid assets (cash, gold, or unencumbered approved securities) valued at a price not exceeding the current market price, an amount not less than a prescribed percentage of its total Demand and Time Liabilities.

The Ombudsman has the power to award compensation up to ?20 Lakh for any loss suffered by the complainant due to the act or omission of the Regulated Entity. Additionally, up to ?1 Lakh can be awarded for mental harassment.

The Cut-off Price is finalized by the issuer in consultation with the Merchant Bankers based on the bids received. Investors bidding at the "Cut-off" agree to pay whatever final price is discovered.

While a trade bill acts as evidence of debt, it becomes a liquid money market instrument only when a commercial bank "Accepts" it, guaranteeing payment. It can then be discounted.

Subrogation allows the insurance company to claim legal rights against third parties that caused the loss, preventing the insured from collecting twice (once from insurer, once from the negligent party).

Both track an index (passive), but ETFs trade like stocks with real-time pricing, whereas Index Fund units are created/redeemed by the AMC at the day's closing NAV.

Under Active Choice, a subscriber can allocate up to 75% of their funds in Equity (Asset Class E). However, this limit tapers down as the subscriber's age increases beyond 50.

The committee suggested "Narrow Banking" for banks with high NPAs, aiming to restrict their activities to risk-free investments (like G-Secs) to ensure depositors' safety.

When Forward Rate > Spot Rate, the currency is at a Premium. When Forward Rate < Spot Rate, it is at a Discount.

Receivables Exchange of India Ltd (RXIL) is a joint venture promoted by SIDBI and NSE to operate the TReDS platform.

Both can accept deposits (Payment Banks have a limit). The critical difference is that SFBs can undertake lending activities, whereas Payment Banks are strictly prohibited from lending to minimize risk.

Forfaiting is a specialized form of export finance involving the purchase of medium to long-term export receivables (deferred payment obligations) on a non-recourse basis.

AS-19 criteria for Finance Lease include: transfer of ownership, option to purchase at bargain price, lease term covering major economic life, and PV of MLP essentially equaling fair value.

Angel investors are typically high-net-worth individuals investing their own money. Venture Capitalists are professional firms that invest money pooled from institutional investors (LPs).

While the FSDC is chaired by the Finance Minister, its Sub-Committee, which handles operational coordination, is chaired by the RBI Governor.

Sovereign ratings give investors insight into the level of risk associated with investing in the debt of a particular country (national government).

NARCL acts as the ARC (buying bad loans), while IDRCL acts as the AMC (managing and selling the assets).

SME Platform listing is for companies with post-issue paid-up capital up to ?25 Crore. If it exceeds this limit, they must migrate to the Main Board.

While RBI sets policy rates (Repo), the Call Money Rate is a market-determined rate based on the demand for and supply of overnight funds among banks.

MCLR replaced the Base Rate system in April 2016 to ensure better transmission of RBI rate cuts to borrowers. (Note: EBLR has now replaced MCLR for new retail/MSME loans).

To strengthen liquidity risk management, RBI mandated LCR for larger NBFCs (Asset size = ?5000 Cr) and all deposit-taking NBFCs.

Micro-insurance aims to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

SEBI introduced "Very High" as the sixth category in the Risk-o-meter (replacing the earlier 5 categories) to alert investors about schemes with the highest risk profile.

ASPs are IRDAI regulated insurance companies empanelled by PFRDA to provide annuity services (pension payments) to subscribers upon their exit/retirement from NPS.

NDF markets (like in Singapore or London for INR) allow trading in currencies that have restricted convertibility. Settlement is done in a convertible currency (usually USD), with no delivery of the underlying domestic currency.

Being a DFI for infrastructure, NaBFID has diverse funding sources, including government grants, loans from RBI/banks, and borrowings from international multilateral institutions.

Mission Indradhanush was a 7-pronged plan to resolve issues of PSBs, including Appointments, Banks Board Bureau, Capitalization, De-stressing, Empowerment, Framework of Accountability, and Governance Reforms.

The WOS model ensures that the Indian operations are a separate legal entity with its own capital and board, protecting it if the parent bank abroad fails (Ring-fencing).

TReDS brings together MSME sellers (to upload invoices), Buyers (to accept invoices), and Financiers (to bid and provide funding against invoices).

In a Leveraged Lease, the lessor borrows a large portion of the asset cost from a lender (non-recourse debt). The lessor provides only a small equity portion but enjoys tax benefits of ownership.

The Efficient Market Hypothesis asserts that financial markets are "informationally efficient". Since prices already reflect all known information, no investor can have an edge, and "beating the market" consistently is impossible except through luck.

The Call/Notice/Term Money market is classified by tenor: "Call Money" is for 1 day, "Notice Money" is for 2-14 days, and "Term Money" is for 15 days up to 1 year.

Application Supported by Blocked Amount (ASBA) ensures that funds are debited from the investor's account only when shares are actually allotted, allowing them to earn interest on the blocked amount in the interim.

A Direct Quote expresses the price of one unit of foreign currency in terms of domestic currency (e.g., how many Rupees for 1 Dollar). India follows the Direct Quote system. An Indirect Quote would be INR 1 = USD 0.012.

Merchant Bankers are capital market intermediaries regulated by SEBI. Unlike commercial banks, they are not allowed to carry out core banking functions like accepting demand deposits from the general public.

Futures are standardized contracts traded on exchanges with a central counterparty (clearinghouse), virtually eliminating counterparty risk. Forwards are customized, Over-the-Counter (OTC) contracts between two parties, carrying higher counterparty risk.

Ideally, the Factor advances about 80-90% of the invoice value immediately to the client. The balance (minus charges) is paid when the customer (debtor) makes the full payment.

Mezzanine Financing is a late-stage financing round, typically used by companies that are already generating revenue and looking to scale up significantly before going public (IPO). It often combines debt and equity features.

A Financial Lease is a non-cancellable contractual commitment where the lessee uses the asset for most of its economic life, bearing all risks and rewards, effectively acting like the owner.

CIBIL (TransUnion CIBIL) is a Credit Information Company (CIC) that maintains credit records of individuals/companies, not a Credit Rating Agency (CRA) that rates debt instruments. CRAs evaluate the creditworthiness of issuers of debt securities.

Hybrid Funds invest in more than one asset class (usually Equity and Debt) to achieve a balance between growth (from equity) and income/stability (from debt).

Insurance contracts require "Utmost Good Faith," meaning both the insurer and the insured must disclose all material facts relevant to the risk. Hiding information can lead to the policy being voided.

In NPS, Asset Class E is Equity, Class C is Corporate Bonds, Class G is Government Securities, and Class A is Alternative Investment Funds.

Para Banking activities are financial services undertaken by banks that are ancillary to their core banking business, such as Mutual Fund distribution, Insurance (Bancassurance), and Portfolio Management Services.

REITs are investment vehicles that pool funds to invest in real estate. They function like mutual funds and are regulated by SEBI under the REIT Regulations, 2014.

Commercial Papers can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue.

SEBI guidelines allow the Green Shoe Option (price stabilization mechanism) to be exercised for up to 15% of the total issue size.

PPP theory asserts that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. It is based on the "Law of One Price".

International factoring typically involves two factors: the Export Factor (in the exporter's country) who handles the client, and the Import Factor (in the importer's country) who handles credit assessment and collection from the buyer.

Venture Capital focuses on high-risk, early-stage companies with growth potential. Private Equity typically invests larger amounts in mature companies to restructure or expand them.

Obsolescence risk is the risk that the asset loses value faster than expected due to new technology or market changes. In an Operating Lease, this risk remains with the Lessor; in a Finance Lease, it is transferred to the Lessee.

Ratings of BBB- (or equivalent) and above signify adequate safety regarding timely payment and are termed "Investment Grade." Ratings below this (BB and lower) are "Speculative" or "Junk" grade.

Rupee Cost Averaging automatically adjusts the number of units purchased based on the NAV. When markets fall (NAV down), the fixed SIP amount buys more units, reducing the overall average cost of acquisition over time.

Term Insurance is a pure protection plan. It offers a high sum assured at a low premium because there is no savings or investment component, and no payout if the insured survives the term.

Section 80CCD(1B) provides an exclusive additional deduction of up to ?50,000 for contributions to the NPS Tier I account, over and above the ?1.5 Lakh limit under Section 80C.

In a Repo, the borrower sells securities to the lender with an agreement to repurchase them at a future date at a predetermined price. The securities act as collateral for the short-term loan.

A Rights Issue gives existing shareholders the "right" (but not obligation) to buy new shares in proportion to their existing holdings, usually at a discount to the market price.

Currency Futures are standardized contracts traded on exchanges (NSE, BSE, MSEI). In contrast, Currency Forwards are traded OTC between banks and clients.

Factors provide a comprehensive package including maintenance of the sales ledger, collection of dues from debtors, credit protection, and advisory services.

SEBI regulations classify Merchant Bankers into categories. Only Category I Merchant Bankers are authorized to act as Lead Managers for public issues (IPOs/FPOs). Other categories have restricted roles.

In an Interest Rate Swap (IRS), the principal is "Notional". It is never exchanged. Only the interest payment streams (e.g., fixed vs. floating) based on this notional principal are exchanged between the counterparties.

Financing on TReDS is "Without Recourse" to the MSME seller. Once the invoice is accepted by the buyer and financed, the financier takes the credit risk of the buyer. The MSME seller does not have to refund the money if the buyer defaults.

According to SEBI guidelines, Liquid Funds are debt funds that invest in instruments having a maturity of up to 91 days only. This minimizes interest rate risk.

Life Insurance is not a contract of indemnity because human life cannot be valued in monetary terms. The sum assured is paid regardless of the actual financial "loss" caused by death.

Under Auto Choice (LC-75), the equity exposure starts at 75% until age 35 and then gradually reduces every year as the subscriber ages, shifting towards safer debt assets.

Certificates of Deposit (CDs) can be issued in multiples of ?1 Lakh, subject to a minimum size of ?1 Lakh.

SEBI mandated that all categories of investors (Retail, HNI, QIB) must strictly apply through the ASBA mechanism to improve efficiency and reduce refunds.

FEDAI is an association of banks dealing in forex. It frames rules for the conduct of inter-bank forex business and issues guidelines to Authorized Dealers, under RBI's overall supervision.

SEBI made IPO Grading optional in 2014. Grading (on a scale of 1 to 5) reflects the assessment of the company's fundamentals, not the issue price or potential returns.

In Hire Purchase, the hirer is a bailee of the goods until the final installment is paid. The option to purchase is exercised only at the very end.

Sweat Equity acknowledges the non-monetary contribution (hard work, skills, IP) of founders and key employees. It is issued at a discount or for consideration other than cash.

Rating Shopping misleads investors about the true risk. SEBI has introduced strict disclosure norms to curb this, requiring issuers to disclose all ratings obtained, even those not accepted.

RBI permits eligible commercial banks to undertake Primary Dealership business departmentally (without forming a separate subsidiary), provided they meet specific prudential criteria.

This is the "Skin in the Game" requirement. Sponsors must hold at least 25% of the units for 3 years from the date of listing to ensure their continued commitment to the REIT.

Higher volatility increases the probability that the option will end up "In the Money" (profitable). Therefore, sellers demand a higher premium for taking on this higher risk. This applies to both Call and Put options.

For T-Bills and G-Secs in India, the convention is Actual/365. This means interest/discount is calculated based on the actual number of days elapsed divided by a 365-day year.

QIP allows listed companies to raise capital quickly from institutional investors without the lengthy regulatory process of a standard public issue.

Nostro (Latin for "Ours") refers to a bank's account held in a foreign bank in that foreign country's currency (e.g., SBI holding a USD account with Citibank NY).

FCI is the global representative body for factoring and receivables finance. GRIF provides a legal framework for international factoring transactions.

Unlike Facultative Reinsurance (case-by-case), Treaty Reinsurance is an automatic agreement covering a block of business.

Liquid funds are unique. For purchases up to cut-off time (usually 1:30 PM), the applicable NAV is of the day *immediately preceding* the day of application (Historical NAV), provided funds are realized.

PoPs are the first point of contact for NPS subscribers. Banks and financial institutions registered as PoPs facilitate account opening and upload contributions.

In this arrangement, the owner sells an asset to a lessor and immediately leases it back. This frees up cash (capital) from the asset for working capital needs, without losing possession.

Prudential norms dictate conservatism. If there are two ratings, the lower rating (indicating higher risk) must be used to calculate capital requirements.

SEBI raised the minimum ticket size for PMS from ?25 Lakh to ?50 Lakh in 2020 to ensure that only high-net-worth individuals with risk-taking capacity enter this segment.

Since real estate valuations do not change daily, SEBI mandates REITs to declare NAV semi-annually based on a full valuation of assets.

In a CDS, the buyer pays a premium to the seller. In return, the seller agrees to compensate the buyer if the underlying debt issuer defaults. It transfers credit risk.

Anchor Investors are allocated shares one day before the IPO opens to boost confidence. They have a lock-in period (partially 30 days, partially 90 days).

TREPS replaced CBLO in 2018 to provide a more robust tri-party repo platform managed by CCIL.

Current regulations mandate a 5-year lock-in period for ULIPs, during which the policyholder cannot withdraw funds without surrendering the policy (with charges).

An IDR is an instrument in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with SEBI) against the underlying equity of issuing company to enable foreign companies to raise funds from the Indian securities market. It is denominated in Indian Rupees.

To find GBP/INR, we multiply GBP/USD by USD/INR. (1.25 * 82.00 = 102.50). This calculation is used when a direct quote between two currencies is not available or to check for arbitrage opportunities.

An FRA is a forward contract on interest rates. It allows a borrower or lender to lock in an interest rate for a future period, thereby protecting themselves against adverse movements in interest rates.

Unlike traditional factoring where the supplier initiates the process to get funds, Reverse Factoring is buyer-led. A large buyer arranges a financing program with a bank/factor to pay its suppliers early (at a discount), improving the supply chain stability.

PIPE involves the selling of publicly traded common shares or some form of preferred stock or convertible security to private investors (usually institutional investors) at a discount to the market price.

Since a Financial Lease transfers substantially all risks and rewards to the lessee, accounting standards require the lessee to capitalize the asset (show it on the Balance Sheet) and claim depreciation, even though legal title is with the lessor.

A Rating Outlook assesses the potential direction of a long-term credit rating over the intermediate term (usually 6 months to 2 years). A "Negative" outlook means the rating may be lowered.

Interest rate risk is directly proportional to the duration (maturity) of the bonds held. Long-duration funds like Gilt Funds (10-year) are highly sensitive to interest rate changes compared to short-duration funds.

Under the Motor Vehicles Act, Third Party Liability insurance is mandatory for all vehicles plying on public roads. It covers liability for death/injury to a third party or damage to third-party property.

At retirement (age 60), a subscriber can withdraw up to 60% of the corpus as a tax-free lump sum. The remaining 40% must be used to purchase an annuity.

P-Notes are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly.

Reverse Book Building is the mechanism used for price discovery when a company decides to delist its shares from the stock exchanges and buy back shares from the public.

The Non-Resident Ordinary (NRO) account is for managing income earned in India. Interest earned is taxable, and repatriation is limited (currently USD 1 million per financial year). NRE accounts are for foreign earnings and are fully repatriable.

ISIN is a 12-digit alphanumeric code that uniquely identifies a specific security (like equity share, debenture, etc.) admitted in the depository system.

Delta represents the rate of change of the option premium with respect to the change in the price of the underlying asset.

In Recourse Factoring, the client (seller) bears the risk of bad debts. In Non-Recourse Factoring, the Factor bears the risk if the customer fails to pay due to insolvency.

Throughout the lease term, the Lessor (the entity leasing out the asset) retains the legal title/ownership. The Lessee only gets the right to use the asset.

(Note: Recent Finance Act changes may have altered this for new investments, but historically/conceptually Indexation adjusts the buying price using the Cost Inflation Index (CII), lowering the tax burden.)

WLAs are set up, owned, and operated by non-bank entities incorporated under the Companies Act, authorized by RBI. They do not display any bank's branding.

If the REIT SPV has not opted for the lower tax regime (Section 115BAA), the dividend income is tax-free for unit holders. If SPV opts for lower tax, dividends are taxable for investors.

Although legal title passes, the economic substance is a collateralized loan. Thus, the borrower continues to recognize the securities in their Balance Sheet and recognizes a liability for the repurchase price.

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) sets out the compliance norms for listed entities to ensure transparency and protect investor interests.

Resident individuals can remit up to USD 250,000 per financial year for permissible current or capital account transactions under LRS.

It serves as a declaration by the Lead Manager that they have exercised reasonable care in verifying the disclosures made in the offer document.

BillDesk is a payment gateway. The three RBI-licensed TReDS platforms are RXIL, Invoicemart, and M1xchange.

Under Section 56(2)(viib), if a startup raises capital at a valuation higher than its Fair Market Value, the excess amount is treated as income and taxed. (Note: Recent budgets have eased this for DPIIT registered startups).

Sovereign ratings assess the government's ability to repay debt. Macro-economic indicators (Debt, Forex, Stability) matter, not the stock performance of individual private firms.

The Act specifies that the FDI limit in the pension sector shall be the same as the limit in the insurance sector (currently 74%).

In the Referral Model, the bank only refers clients (leads) to the insurance company and provides physical infrastructure/data, receiving a referral fee. The actual selling is done by the insurer's staff.

T+1 means settlement occurs on the next working day following the trade day, releasing capital faster and reducing counterparty risk compared to T+2.

SEBI mandates CRAs to disclose their rating criteria, methodology, and philosophy to the public to maintain transparency and help investors understand how the creditworthiness was assessed.

FCI is the global representative body for factoring. GRIF provides a uniform legal framework for international factoring transactions between export and import factors.

In an Operating Lease, the risks and rewards of ownership remain with the Lessor. Therefore, the Lessor retains the asset on their books and claims depreciation as a tax deduction. The Lessee claims the lease rental as an expense.

VCFs are now classified as Category I Alternative Investment Funds (AIFs) under the SEBI (AIF) Regulations, 2012. The older VCF regulations were repealed.

Mortality charge is the cost of insurance protection. It is deducted from the fund value by cancelling units and depends on the sum assured and the age of the policyholder.

Tier II is an add-on voluntary savings account. Unlike Tier I, it offers liquidity as subscribers can withdraw money anytime. However, it generally does not offer tax benefits (except for a specific scheme for govt employees with a 3-year lock-in).

SEBI follows a slab-based structure where the maximum TER % decreases as the AUM slab increases, ensuring that the benefits of economies of scale are passed on to investors.

When a customer wants to convert foreign currency into rupees, the bank "buys" the FCY. The rate applied is the TT Buying Rate or Bill Buying Rate, which is lower than the selling rate.

PDs have a mandatory obligation to underwrite the issuances of Government Securities to ensure that the government's borrowing program is successful.

SEBI regulations mandate that at least 80% of the value of the REIT assets must be invested in completed and revenue-generating properties to minimize development risk for investors.

Put-Call Parity defines the relationship between the price of a European Call option and a European Put option with the same strike price and expiration. It does not strictly hold for American options due to early exercise possibilities.

Domestic factoring usually involves a Single Factor who manages the receivables of the seller and collects from the buyer within the same country.

SEBI AIF Regulations stipulate that Category I and II AIFs (including VCFs) shall be close-ended and have a minimum tenure of 3 years.

In a Wet Lease, the lessor provides the aircraft, complete crew, maintenance, and insurance. A Dry Lease involves only the aircraft.

NeSL is the first Information Utility registered with IBBI under the Insolvency and Bankruptcy Code, 2016. It stores financial information (debts/defaults) to facilitate insolvency resolution.

SID provides all necessary details specific to a scheme that an investor needs to make an informed decision. General information is in the SAI (Statement of Additional Information).

NCB is a reward for not making a claim in the preceding year(s). It applies only to the Own Damage component of the premium, not the mandatory Third-Party component.

For premature exit (before superannuation/60), 80% of the corpus must be used to buy an annuity, and only 20% can be withdrawn as a lump sum.

Banks act as corporate agents or distributors registered with AMFI (Association of Mutual Funds in India) to sell MF schemes and earn commission.

Market-wide circuit breakers are triggered by 10%, 15%, or 20% movement in either BSE Sensex or Nifty 50, leading to a temporary halt in trading.

Under the revised monetary policy framework, the Bank Rate is aligned with the MSF Rate (usually 25 bps above the Repo Rate). They move in tandem.

In Undisclosed Factoring, the buyer is not aware of the factoring arrangement. The seller collects the payment in the usual course and passes it to the factor.

Arbitrage exploits price inefficiencies between markets for risk-free profit.

The Primary Period is the basic non-cancellable term of the lease aiming at cost recovery + profit. The Secondary Period follows, often with nominal rent.

SEBI amended regulations to grant permanent registration to intermediaries like Merchant Bankers, subject to payment of fees and compliance.

SISFS aims to provide capital at the earliest stage to help startups validate their ideas and reach a level where they can raise angel/VC funding.

The Standardized Approach for Credit Risk under Basel norms uses external ratings to assign risk weights (e.g., AAA = 20%, BBB = 50% or 100%) to bank exposures.

Listed REITs/InvITs must maintain a minimum public shareholding (float) of 25% to ensure liquidity and broad ownership.

Initial Margin acts as a security deposit (good faith deposit) to ensure that parties fulfill their obligations, covering the maximum probable loss in a single day.

E-Kuber is the Core Banking Solution (CBS) of the RBI. The auction of Government Securities and T-Bills is conducted on the E-Kuber platform.