Inquisitive Mind

We often hear people talking about the rising prices and how they could buy more things earlier with the same amount of money. Containing inflation is also one of the prime goals of every government. But what is inflation? What is inflation? Inflation is a sustained / persistent rise in the general level of prices of (most of) the goods and services in the economy. Why the prices rise? The rise in prices is generally caused due to mismatch in the demand and supply of goods and services. Depending on the source / reason of the price rise, the inflation is categorised as – Demand-pull inflation Cost-push inflation Demand-pull inflation When the demand for goods and services is more than its supply, it creates an upward pressure on the prices. Such inflation is known as demand-pull inflation. The factors such as increasing population, rise in income levels, increase in money supply and liquidity in the economy, etc. lead to higher demand for goods and services.  The central bank of a ...

We often come across the news headlines about rise or fall in GDP, commonly referred to as growth rate of a country. But what is GDP and how is it calculated? What is Gross Domestic Product (GDP)? Gross Domestic Product (GDP) is the value of all final goods and services produced in the domestic territory of a country during a financial year.  How is GDP calculated? GDP is measured at – Constant prices (at prices of base year 2011-12) also known as Real GDP Current prices also known as Nominal GDP When growth rate of a country is talked about, it refers to rise or fall in GDP (at constant prices). GDP can be calculated using following methods – Income / production / supply-side components Expenditure components GDP calculation using income / production / supply-side components GDP = GVA at basic prices (+) Net taxes on products Gross Value Added (GVA) at basic prices Gross Value Added (GVA) measures the difference between the value of the final goods and the cost of ingredients used...

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on August 05, 2022. Here are some of the highlights of the monetary policy announcement. Rates and reserves   Change Revised rate Policy repo rate Increase by 50 basis points 5.40% Standing deposit facility (SDF) rate 5.15% Marginal standing facility (MSF) rate 5.65% Bank rate 5.65% India’s foreign exchange reserves (as on July 29, 2022)   US$ 573.9 billion Monetary policy stance Withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. Economy    GDP growth projection CPI inflation projection FY 2022-23 7.2% 6.7% Q1 of FY 2022-23 16.2% - Q2 of FY 2022-23 6.2% 7.1% Q3 of ...

Monetary policy is a policy of central bank of the country (for India, its RBI) whereby it aims to control the money supply in the country to manage inflation and promote growth. RBI uses various instruments to manage liquidity in the system with the objective to achieve the desired level of inflation and growth. Which are the monetary policy instruments used by RBI? Repo Rate – Repo rate or policy repo rate is a rate at which banks borrow funds from RBI against a collateral of approved government and other securities. Reverse Repo Rate – Reserve repo rate is the rate at which banks can park their surplus liquidity with RBI against a collateral of approved government securities.  Standing Deposit Facility (SDF) – SDF rate is the rate at which banks can park their surplus liquidity with RBI without the collateral of government securities. Marginal Standing Facility (MSF) – MSF rate is the rate at which banks can borrow funds from RBI by dipping up to 2% into their Statutory Liqu...

Transferring funds to another account but transaction failed? Withdrawing cash at ATM but cash not received? Executing an online purchase but the payment page timed out? By when shall the bank reverse the amount debited from your account? Reserve Bank of India (RBI) has prescribed the Turn Around Time (TAT) for such failed transactions. What is Turn Around Time (TAT)? TAT is the timeline by which the banks shall reverse the amounts involved in failed financial transactions to the customer’s account.  What is failed transaction? A ‘failed transaction’ is a transaction – Which has not been fully completed due to any reason not attributable to the customer such as failure in communication links, non-availability of cash in an ATM, time-out of sessions, etc.  Wherein amount could not be credited to the beneficiary account due to lack of full information or lack of proper information or delay in initiating a reversal transaction. What is TAT for various transactions? As per the RBI...

Filed a complaint against a bank / financial institution but haven’t received a reply for more 30 days? Or received a reply but not satisfied with the resolution offered by the bank / financial institution? Or the complaint was rejected by the bank / financial institution? You can approach RBI Ombudsman under the RBI Integrated Ombudsman Scheme, 2021. What is RBI Integrated Ombudsman Scheme (RBI-IOS), 2021? RBI-IOS was launched on November 12, 2021, by integrating the existing 3 Ombudsman schemes of RBI. RBI-IOS adopts ‘One Nation One Ombudsman’ approach by making the RBI Ombudsman mechanism jurisdiction neutral. It provides cost-free redress of customer complaints involving deficiency in services rendered by entities regulated by RBI. Which schemes are integrated in RBI-IOS? RBI-IOS integrates following existing schemes of RBI – Schemes Powers derived from Entities covered Banking Ombudsman Scheme, 2006 Section 35A of BR Act, 1949 Sched...