MONETARY POLICY AND FISCAL POLICY

Monetary Policy –

The process by which the Govt., central bank or monetary authority of country controls –

A.      Supply of money

B.      Availability of money

C.      Cost of money or rate of interest

Monetary policy is referred to as either being an expansionary policy or a contractionary policy

Expansionary policy	Contractionary policy
Increase total supply of money in economy	Decrease the total supply of money
Combat unemployment in a recession by lowering interest rate	Raising interest rate in order to combat inflation

  

Monetary policy is contrasted with fiscal policy, which refer to Govt. borrowing, spending & taxation.

Tools of Monetary policy –

A.      Bank Rate

B.      Cash Reserve Ratio (CRR)

C.      Statutory Liquidity Ratio (SLR)

D.      Market Stabilization Scheme (MSS)

E.       Repo Rate

F.       Reverse Repo

G.     Open Market Operations (OMO)

Bank Rate

Ø  Also refer to discount rate

Ø  The rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries.

Ø  Used by central bank to control the money supply

Cash Reserve Ratio (CRR)

Ø  Banks have to maintain with RBI as a certain percentage of their total deposit (net demand & time deposit) in the form of liquid cash.

Ø  When RBI feels that money supply is increasing and causing an upward pressure on inflation, then RBI has option of increasing the CRR thereby reducing the deposit available with bank to make loan and hence reducing the money supply and inflation

Statutory Liquidity Ratio (SLR)

Ø  It refer to the amount that all banks require maintaining in cash or in the form of Gold or approved securities (i.e dated securities, Govt. bonds & share)

Ø  SLR is maintained in order to control the expansion of bank credit.

Ø  SLR is a way to ensure the solvency of commercial banks.

Market Stabilization Scheme (MSS)

Ø  Under this scheme, the Govt. would issue existing instrument such as Treasury Bill & or dated securities by way of auction under MSS

Repo Rate

Ø  The rate at which RBI lends short-term money to the banks

Ø  When Repo rate increases, borrowing from RBI becomes more expensive.

Ø  Bank lending rates are determined by the movement of repo rate

Reverse Repo

Ø  The rate at which bank park their short-term excess liquidity with RBI

Ø  An increase in the reverse repo means that the RBI will borrow money from banks at a higher rate of interest.

Open Market Operation (OMO)

Ø  Under the OMO, RBI buys or sells Govt. bonds in the secondary market.

FISCAL POLICY

Ø  Fiscal policy is the use of Govt. spending & revenue collection to influence the economy.

Ø  The two main instrument of fiscal policy are Govt. spending & taxation.

Ø  Govt. use fiscal policy to influence the level of aggregate demand in economy, in an effort to achieve economic objective of price stability, full employment & economic growth.

FRBM Acts

Ø  (Fiscal Responsibility & Budget Management Acts)

Ø  Committee headed by Dr. E. A. S. Sarma in Jan 2000 to recommended draft legislation on fiscal responsibility.

Ø  Submitted in July 2000, introduce in parliament in Dec 2000 & enacted as law in Aug. 2003.

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Key highlights: Interim Budget 2019-20

Taxes changes
1. No income tax for income up to Rs 6.5 lakh (Rs 5 lakh + Rs 1.5 lakh under 80C of the Income Tax Act)
2. Full tax rebate for income up to Rs 5 lakh per annum
3. No tax on notional rent on second self-occupied house
4. Capital Gains exemption under Section 54 to be available on two house properties
5. Tax benefit of Rs 18,500 crore given to three crore middle-class tax payers
6. Standard deduction raised to Rs 50,000 from Rs 40,000
7. TDS limit hiked from Rs 10,000 to Rs 40,000 on post-office savings

8. Group of Ministers looking at ways to ease GST burden on homebuyers

Economy
1. FY20 fiscal deficit target set at 3.4 percent.
2. Expenditure target for FY20 set at Rs 27.84 lakh crore.
3. Capital expenditure for FY20 set at Rs 3.36 lakh crore.

4. FY19 fiscal deficit pegged at 3.4 percent of GDP; current account deficit at 2.5 percent of GDP

Farmers
1. Farmers with less than two hectares to be offered Rs 6,000 per year as direct transfer under PM Kisaan Samman Nidhi. The benefit will be transferred directly into the bank account of beneficiary farmers in three installments of Rs 2,000 each. Around 12 crore farmers to benefit from the scheme. This scheme will cost the government around Rs 75,000 crore.

2. Mahatma Gandhi National Rural Employment Guarantee program’s allocation increased by Rs 5,000 crore to Rs 60,000 crore for FY20

3. Farmers struck by natural calamities will now receive 2-5 percent interest subvention under insurance scheme

4. Two percent interest subsidy to be given to farmers involved in animal husbandry activities via kisaan credit card scheme. An additional three percent subsidy will be paid on timely payment of loans

5. Government announces setting up of Rashtriya Kamdhenu Aayog to enhance productivity of cows

Rural infrastructure
Pradhan Mantra Gram Sadak Yojana allocation set at Rs 19,000 crore, the same as FY19

Workers
1. Monthly pension of Rs 3,000 for workers in the unorganized sector to be paid out after retirement. 

2. Pension scheme to benefit 10 crore workers in the unorganized sector.

3. Those who join at 18 years of age will have to contribute a mere Rs 55 per month.

4. The government will contribute equal matching share in the pension account. This scheme will cost the government Rs 500 crore

5. Employees’ State Insurance eligibility cover limit has been raised to Rs 21,000 per month from Rs 15,000 per month

6. Gratuity limit increased from Rs 10 lakh to Rs 30 lakh

7. Workers who suffer grievous injuries will now receive Rs 6 lakh from Rs 2.5 lakh through Employee Provident Fund Organisation (EPFO)

Education
Rs 38,572 crore allocated for the National Education Mission

Medical
Another All India Institutes of Medical Sciences to be set up in Haryana

Society
1. Rs 76,800 crore allocated for welfare of Scheduled Castes (SCs) and Scheduled Tribes (STs)

2.  Centre to implement special strategy for uplift of nomadic tribes

Filmmakers

Single window clearance for film-makers. Anti-camcording provision to be introduced to Cinematography Act to combat film privacy

Railways
Railway capital expenditure raised to Rs 64,586 crore in FY20 from Rs 53,060 crore in FY19

Defence

Defence budget for FY20 raised to Rs 3 lakh crore

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General Awarnes Question of Promotion Exercise Clerck to Officer Dated 23.12.18

1. Solicitor general of India – Tushar Mehta

2. ASEAN Summit held at – Singapore

3. NSP – National Scholarship Portal

4. Mobile application to locate the banking infrastructure service – JAN DHAN DARSHAK

5. K J Alphons launched tribal circuit – Chhatisgarh

6. Samudra Maitri exercise for tsunami effecting area – Indonesia

7. Indirect Tax – GST

8. Chail Wildlife sanctuary – Himachal Pradesh

9. Under water Robotics drone – eyeROV TUNA

10. 3 year contact with Australian open – Infosys

11. Biggest coastline – Gujarat

12. Highest Gallantry Award – Paramvir Chakra

13. SEBI committee Head for foreign relaxation – H R Khan

14. Swaraj mera janm sidha adhikar hai – Bal Gangadhar Tilak

15. NITI aayog Atal Innovation – IBM

16. One buyer one purchaser – Monophony

17. In Mumbai, BSNL internet telephony - WINGS

18. Max loan provide in PSB loan in 59 Minutes – 1 crore

19. WHO Alcohal - Safer

20. Shri Piyush Goyal, Minister of Railways & Coal launched a new App- ‘Menu on Rails' or web portal – Rail Sahyog

...By Sources....

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Quiz on Digital Product

Digital Product

1. In Baroda Connect, how many beneficiaries can be registered in one day?

1
2
4
5


2. What is the per transaction limit without debit card in our Cash Deposit Machine?

10,000
15,000
20,000
25,000


3. Baroda Travel Easy Card is not available in

USD
EURO
YEN
GBP


4. In IMPS P2P what are the main beneficiaries credentials

Mobile number and Account number
Mobile number and MMID
Aadhar number and MMID
Account number and MMID


5. In IMPS Menu in Finacle which mode is not available?

P2B
P2A
A2C
P2M


6. In Full form of IMPS what “S” stands for?

System
Services
Solution
Sources


7. Direct access codes are related with –

USSD in Banking
Baroda Connect
Mobile Snippets
EMV chip card


8. Maximum amount which can be remitted through NUUP in a day –

5,000
10,000
15,000
25,000


9. Per day ATM Cash withdrawal limit in RUPAY PLATINUM CARD is –

10,000
1,00,000
50,000
25,000


10. The premium on accident insurance under PMJDY will be borne by?

NPCI
Customer
Bank
DFS

Also Solve : Quiz on Finacle 10

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MCQ ON FINACLE 10

1. What is the menu option to change customer constitution code in Finacle 10?

a. MRCR b. MCEC c. CUSTMOD d. CUSTCONS

2. Menu option to change interest rate for loan accounts?

a. HINTTM b. HLINTTM C. HACMLA d. HACINT

3. Menu option to link aadhaar card in Finacle 10?

a. UIDLNK b. ASBR c. HABPSLN d. HAEPSLN

4. Menu option to change Sanction limit or Drawing power of CCOD Loan accounts?

a. HACM b. HACMLA c. HACLHM d. HLNM

5. For arriving drawing power in LABOD account in Finacle 10?

a. HCLM to be used

b. During account opening

c. HALM

d. HCLL

6. Menu Option for opening Packing Credit?

a. OAACPC b. OAACPS c. HOAACPS d. HOAACPC

7. Menu option for generation of GL PL from Finacle 10?

a. GR b. HGR c. HGR1 d. HGR2

8. Menu option for generation of account due for Review report?

a. ACDREV b. HACDMTR c. HACDREV d. ACDMTR

9. For attaching inventory for the first time in CC account, menu option to be used?

a. HCLM only

b. HCLM and HSCLM

c. HSCLM only

d. HALM

10. Menu for disbursement of packing credit in Finacle 10?

a. RPCTM b. HRPCTM c. HLADISB d. MTFT

11. Entering of Form 15G 15H is done through the menu?

a. FORM 15G

b. HTDSCON

c. HACM

d. TDSCON

12. Account ledger enquiry for the accounts in Finacle 10 ?

a. HACLI b. ACLI c. HACLINQ a. HAFI

13. Menu option to know customer summary?

a. CUSUM b. HCUSUM C. HCUALI d. HCUACC

14. Menu option to make payment of Sundry Charges for photo copying?

a. PLHTM b. VENPAY c. HTM d. TM

15. Entering of Form 15 CA and form 15 CB in Finacle 10 thorough?

a. Form 15 CA b. Form 15 CB c. Form 15CC d. not required

Answer Key                 

Q.	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
A.	C	B	A	C	B	B	C	B	B	D	D	C	B	B	C

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