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What is budget? 



It is financial document in which government plan for income , expenditure and borrowing. 

Here income and expenditures divided into two parts 


  1. Capital receipt 
  2. Revenue receipt 


  1. Revenue expenditure (salary) 
  2. Capital expenditure (project) 

Capital receipt : Receipt by way of disinvestment, sell of treasury bill  and another government securities, loan , recovery of loans etc. Is comes under capital receipt. Borrowing from RBI, WB, ADB, IMF and ECB (external commercial borrowing). 

Revenue receipt : Receipt by way of direct and indirect tax is considered as Revenue receipt.

Revenue expenditure : salary of government employees. 

Capital expenditure : investment on government  project. 

Budget is divided into 3 parts 

  1. Balanced budget 
  2. Surplus budget 
  3. Deficit budget 

Balanced budget : if Income  and expenditures are same. Before 13 years balanced budget is presented by yashwant sinha. 

Surplus budget : if income  is more and expenditure is less than it is called  Surplus budget.

Deficit budget : if income is less and expenditure is more than that situation is called Deficit budget.

Deficit budget is divided into three parts 

  1. Fiscal Deficit
  2. Primary Deficit
  3. Revenue Deficit

Fiscal Deficit : it is excess of capital expenditure over capital receipt and revenue expenditure over  revenue receipt expenditure borrowing is called  Fiscal Deficit.

Primary Deficit : Fiscal deficit  – Interest payments 

Revenue deficit : when salary of worker is more than income or tax is revenue deficit. 

What is GST (goods and services tax)? 


GST (goods and services tax) 

  • Govt.  Announce 1 July celebrated as GST day ,first time in the country. 
  • Main objective of GST to reduce Cascading (tax on tax)  problem in the country. 
  • The slogan of GST is  “one nation,  one market,  one tax “.

GST number consist fifteen digit 

  • First two digit represent state govt. Code.
  • Next ten digit represent pan number. 
  • Next one digit state registration .
  • Next one digit Alphabet. 
  • Next last digit sum of digit. 

  • If a company turnover is less than 20 lakhs.  It not comes under GST. 
  • For north east state 10 lakhs. 
  • If a company turnover is  above upto 1.5 crore in this condition 90% tax distributed to state govt.  And 10% tax is  distributed to central government. 
  • If a company turnover is above 1.5 crore to infinite than 50 % tax is distributed to central government and 50 % tax distributed to state govt. 

GST is divided into 3 parts 

  1. CGST
  2. SGST
  3. IGST 

CGST ( central goods and services tax)

CGST ( central goods and services tax)Where the revenue  will be collected by central govt. 

SGST  ( State goods and services tax )

SGST  ( State goods and services tax ) : Where the revenue will be collected by the state government.

IGST (integrated goods and services tax) 

IGST (integrated goods and services tax)Where the revenue will be collected by central government and 

25 % tax is distributed to manufactured state + 25 % tax is distributed to delivered state + 50 % to central government. 

What is retail banking? 


Retail banking, also known as consumer banking, is the provision of services by a bank to individual consumers, rather than to companies, corporations or other banks. Services offered include savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards.

Offshore banking 

If Indian bank open a branch in foreign that banking is called offshore banking.

Inshore banking 

If foreign bank open a branch in India is called inshore banking.

Wholesale banking refers to banking services between merchant banks and other financial institutions. This type of banking deals with larger clients, such as large corporations and other banks, whereas retail banking focuses more on the individual or small business.

Personal banking is a type of banking service and product line offered by banks to retail customers, that is consumers rather than businesses, intermediaries and institutions.

Narrow banking is a proposed type ofbank called a narrow bank also called a safe bankNarrow banking would restrict banks to holding liquid and safe government bonds. Loans would be made by other financial intermediaries.

Para banking 

If bank provides addinital services like

  • Demat account
  • Mutual fund
  • Bancassurance
  • Portfolio management

Is called Para banking.

Universal banking : If bank provides all types of banking and financial services at single door step is Universal banking.

Unit banking : In unit banking bank open limited branch  in the country. 

Home banking : If banking facility is provide at door step of customers us called Home banking.

Merchant banking : This is mainly related to trade. Regulated by RBI and SEBI. 

Loan  syndicationIf two or more banks  come together to finance a single project then it is called Loan syndication.

CBS ( Core Banking  Solution )

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What is Mortgage ?


Mortgage : a legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Ex: land & building 

Immovable propertyImmovable property is an immovable object, an item of property that cannot be moved without destroying or altering it – property that is fixed to the earth, such as land or a house.

  • Plegde word used for loan against gold. 
  • Hypotheation word used for loan against automobile. 

reverse mortgage is a type of home loan for older homeowners that requires no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner’s insurance.

  • It is also called life mortgage. 
  • It is only for senior citizen. 
  • Under property citizen take out a loan using their property, then loan is repaid after passes of borrower. 

What is repo rate? 


Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money (for 2 to 14 days) to commercial banks in the event of any shortfall of funds.Repo rate is used by monetary authorities to control inflation.

Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.

In other words. If the commercial bank keep there surplus fund with RBI and RBI  provides some interest on the amount is called reverse repo rate. 

Bank rate is the rate charged by the central bank for lending funds to commercial banks. Description: Bank rates influence lending rates of commercial banks. … Base rate is the minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customers.

DEFINITION of ‘Liquidity Adjustment Facility’ A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financial markets.

Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the commercial banks in India require to maintain in the form of gold, government approved securities before providing credit to the customers. … The SLR is determined by a percentage of total demand and time liabilities.

NDTL is sum of demand and time liabilities (deposits) of banks with public and other banks wherein assets with other banks is subtracted to getnet liability of other banks. Deposits of banks are its liability and consist ofdemand and time deposits of public and other banks.

Cash Reserve Ratio (CRR) is a certain minimum amount of deposit that the commercial banks have to hold as reserves with the central bank. CRR is set according to the guidelines of the central bank of a country.

  • It is only in cash form. 
  • CRR comes under RBI Act 1934 & section 42.

Marginal Standing Facility (MSF) rate refers to the rate at which the scheduled banks can borrow funds overnight from RBI against government securities. MSF is a very short term borrowing scheme for scheduled commercial banks.

  • Under MSF bank can borrow 2 percent of their NDTL. 
  • MSF loan is without security.