BANKING AFFAIRS

Detailed explanation-1: -In the final norms, a bank can enter insurance broking only if the capital to risk (weighted) assets ratio is 10 per cent or above and the level of net non-performing assets is three per cent or below. RBI said the bank’s net worth should not be less than Rs 1, 000 crore, double the Rs 500 crore proposed earlier.

Detailed explanation-2: -What make the RBI-commercial bank relationship a key factor in the economy is that the RBI is the regulator and supervisor of the commercial banking system. RBI’s monetary policy has an objective called financial stability which ensures that banks should be healthy and capable of withstanding crisis.

Detailed explanation-3: -Both CRR and SLR are crucial to the economy as they maintain cash flow and regulate liquidity in the country. These financial rates have an undeniable impact on the loan market of the country. The rates also change as per the changes in the economic climate of the country.

Detailed explanation-4: -Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within which the country’s banking and financial system functions. Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public.