D5699 Types Of Money

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D5699 Types Of Money

  1. 1. Types of Money
  2. 2. Major sectors of the Economy <ul><li>Asset Management </li></ul><ul><li>Media & communication </li></ul><ul><li>Export & Import </li></ul><ul><li>Financial services </li></ul><ul><li>Insurance </li></ul><ul><li>Telecom </li></ul><ul><li>FMCG </li></ul><ul><li>IT </li></ul><ul><li>Pharmaceuticals </li></ul><ul><li>Chemicals & fertilizers </li></ul><ul><li>Tourism & Hospitality </li></ul><ul><li>Bio technology </li></ul><ul><li>Education </li></ul><ul><li>Aviation </li></ul><ul><li>Beverages and Food </li></ul><ul><li>Food processing </li></ul><ul><li>MNC (BPO/KPO) </li></ul><ul><li>Consultancy </li></ul><ul><li>ITES </li></ul><ul><li>Event Management </li></ul><ul><li>Consultancy & Engineering </li></ul><ul><li>Electric and Electronic Materials </li></ul><ul><li>Power </li></ul><ul><li>Agro Technology </li></ul><ul><li>Health Care </li></ul><ul><li>Real Estate & Infrastructure </li></ul><ul><li>Packaging Sector </li></ul><ul><li>Advertising </li></ul><ul><li>Service sector </li></ul><ul><li>Environment Services </li></ul><ul><li>Automobiles </li></ul><ul><li>Consumer Durable </li></ul><ul><li>Retailing </li></ul><ul><li>Logistics </li></ul>
  3. 3. Types of Money <ul><li>Money supply in India is composed of as under: </li></ul><ul><li>(Narrow Money)M1= (a+b+c) </li></ul><ul><li>a-Currency with public </li></ul><ul><li>b-Demand deposits with banks </li></ul><ul><li>c-Other deposits with the central bank </li></ul><ul><li>M2= (M1+ Post office savings Bank deposits) </li></ul><ul><li>M3= (M1+Time deposits with banks) </li></ul><ul><li>M4= (M3+ Total post office deposits) </li></ul><ul><li>The commonly used money stock measure is M3. </li></ul>
  4. 4. Sources of M3 <ul><li>M3= (1+2+3+4+5) </li></ul><ul><li>Net bank credit to Government (A+B) </li></ul><ul><li>A. Central bank’s Net credit to Government (i+ii) </li></ul><ul><li>Net claims on Central Government (a-b) </li></ul><ul><li>Claims on Central Government </li></ul><ul><li>Deposit of Central government </li></ul><ul><li>ii) Net claims on Central Government (a-b) </li></ul><ul><li>Claims on State Governments </li></ul><ul><li>Deposits of State Governments </li></ul><ul><li>B. Other bank’s credit to Government </li></ul><ul><li>2. Bank credit to Commercial Sector (A+B) </li></ul><ul><li>A. Central bank is credit to Commercial sector (excluding refinance to banks) </li></ul><ul><li>B. Other Bank’s credit to Commercial sector (i+ii+iii) </li></ul><ul><li>Bank credit by commercial banks </li></ul><ul><li>Bank credit by co operative banks </li></ul><ul><li>Investment by commercial and co operative banks in other approved scurities </li></ul>
  5. 5. <ul><li>3. Net foreign exchange assets of Banking sector (A+B) </li></ul><ul><li>A. Central Bank’s foreign exchange assets (i-ii) </li></ul><ul><li>(i) Gross foreign assets </li></ul><ul><li>(ii) Foreign liabilities </li></ul><ul><li>B. Other banks’ net foreign exchange assets </li></ul><ul><li>4. Government currency liabilities to the Public </li></ul><ul><li>5. Banking sector’s Net Non-monetary liabilities other than time deposits (A+B) </li></ul><ul><li>A. Net non-monetary liabilities in Central bank </li></ul><ul><li>B. Net non- monetary liabilities of other banks (residual) </li></ul>
  6. 6. Altman’s Ratio Analysis Method <ul><li>A unit can be treated as sick or weak if following ratios are more than the indicated and their aggregate score exceeds 20 as below: </li></ul><ul><li>1.) CL/CA = 1 </li></ul><ul><li>2.) Total amt side liability/Net worth = 3 </li></ul><ul><li>3.) Long term liabilities/Internal cash generations </li></ul><ul><li>= 5 </li></ul><ul><li>4.) Net worth/Profit after tax = 10 </li></ul><ul><li>5.) Share capital/ Net worth = 1 </li></ul><ul><li>______ </li></ul><ul><li>20 </li></ul><ul><li>______ </li></ul><ul><li>Higher the score , the more intense is its sickness </li></ul>
  7. 7. Secured advances: <ul><li>Types of securities: </li></ul><ul><li>Land and building </li></ul><ul><li>Stock exchange securities: valuation of stock exchange securities, liquidity and margin for stock exchange securities, memorandum of deposit </li></ul><ul><li>Negotiable securities: legal title </li></ul><ul><li>Shares in private companies: unquoted shares, shares in foreign companies not considered </li></ul><ul><li>Produce and goods: insured, retaining of little clauses </li></ul><ul><li>Documents of title to goods: Right of lien and right of stoppage in transit, bill of lading, dock and warehouse warrants: warehouse keeper’s certificate, life insurance policies </li></ul><ul><li>Security against term loan </li></ul><ul><li>Unsecured loans: guarantees, Indemnity, guarantees as banker’s security </li></ul>
  8. 8. Statutory and other restrictions: <ul><li>Advances against bank’s own shares </li></ul><ul><li>Advances to bank’s directors </li></ul><ul><li>Restrictions on holding shares in companies </li></ul><ul><li>Restrictions on credit to companies for buy back of their securities </li></ul><ul><li>Granting loans and advances to relatives of directors </li></ul><ul><li>Restrictions on grant of loans and advances to officers and relatives of senior officers in banks </li></ul><ul><li>Restrictions on grant of financial assistance to industries producing or consuming ozone depleting substances (ODS) </li></ul><ul><li>Restrictions on advances against sensitive commodities under selective credit control (SEC) </li></ul>
  9. 9. Restrictions on other loans and advances: <ul><li>Loans and advances against shares, debentures, and bonds </li></ul><ul><li>Advances against money market mutual funds </li></ul><ul><li>Advances to agents/intermediaries based on consideration of deposit mobilization </li></ul><ul><li>Loans against certificate of deposits (CDS) </li></ul><ul><li>Bank finance to non-banking financial companies (NBFCs) </li></ul><ul><li>Bank finance to equipment, leasing companies </li></ul><ul><li>Bank finance for purchase/lease of existing assets </li></ul><ul><li>Financing of infrastructure projects- funded through budgetary allocations, viability and bankability of such projects </li></ul><ul><li>Issue of bank guarantees in favour of financial institutions </li></ul><ul><li>Discounting/rediscounting of bills by banks, accommodation bills should never be discounted </li></ul><ul><li>Advances against gold, silver, bullion </li></ul><ul><li>Loan and advances to small scale industries : loan system for delivery of bank credit: working capital finance to information technology ad software industry </li></ul>

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