Banking & General Financial Awareness

Notes:
London accounts for about 38% of global foreign exchange trading turnover according to the Bank for International Settlements Triennial Central Bank Survey published in April 2025. London surpassed other financial centers such as New York, Tokyo, and Singapore based on daily transaction volumes. The city has maintained this status since the 1980s due to its favorable time zone and established financial infrastructure.

Notes:
Most credit rating agencies across the world use a revenue model where the issuer pays for the credit rating. In India, the issuer company pays for the credit rating.

Notes:
The need for venture capital financing was first highlighted in 1972 by the Committee on Development of small and medium entrepreneurs under the chairmanship of R.S.Bhatt (popularly known as the Bhatt Committee) which drew attention to the problems of new entrepreneurs and technologists in setting up industries.

Notes:
Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable.

Notes:
Factoring is often used by haulage companies to cover upfront expenses, such as fuel. The healthcare industry makes for a special case in which factoring is much needed because of long payment cycles from government, private insurance companies and other third party payers.

Notes:
A lease is a contract. It outlines the terms under which one party agrees to rent property owned by another party. It guarantees the lessee, also known as the tenant, use of an asset and guarantees the lessor, regular payments from the lessee for a specified number of months or years.

Notes:
Leasing activity was initiated in India in 1973. The first leasing company of India, named First Leasing Company of India Ltd. was set up in that year by Farouk Irani, with industrialist A C Muthia. For several years, this company remained the only company in the country

Notes:
Local Area Banks were set up with the twin objectives of providing an institutional mechanism for promoting rural and semi urban savings and for providing credit for viable economic activities in the local areas. They were established as public limited companies in the private sector. They are promoted either by individuals , corporate, trusts or societies. The minimum paid up capital of such banks was Rs. 5 crores. The promoter’s contribution should be at least Rs. 2 crores. Local area banks can operate and open their branches in a maximum of three geographically contiguous districts. They are governed by the provisions of Reserve Bank of India act 1934, Banking Regulation act 1949 and other relevant statutes. They are to be registered as public limited companies under the Indian companies act 1956. Since they are non scheduled banks, they cannot borrow funds from Reserve Bank of India like other scheduled commercial banks.

Notes:
The Reserve Bank of India functioned as Pakistan’s central bank until June 1948. Thereafter, the State Bank of Pakistan was established and assumed all central banking responsibilities, including currency issuance, from July 1, 1948.

Notes:
The bank rate is fixed by the Reserve Bank of India as the rate at which it lends long-term funds to commercial banks without collateral. As of February 2024, the bank rate is 6.75%. It differs from the repo rate, which is used for short-term secured lending. The RBI uses the bank rate as a monetary policy tool to control credit.