DEAR MONEY BARREN MONEY

“The money which is available at high “Money which is not earning any
interest rates and hence restricts interest”
expenditure by companies.” OR
“Money which is not invested
AND anywhere”
OR
“ Due to restricted money supply, interest
“Money which is kept in a safe deposit
rates will be pushed up. Hence, it is very
locker”
difficult to raise money during this period
of dear money.”
 NARROW BANKING SHADOW BANKING
“The obsession of the banks to invest The activities / services undertaken by
more in risk free securities like Govt. NBFCs / Unincorporated bodies, similar to
securities or Govt. approved securities” the activities undertaken by banks

OR AND
“Tendency of banks to play safe” They are unregulated / loosely regulated
and hence the risks associated with shadow
banking are very high in the financial
system.
More risk comes from
 Finance companies (not in the ambit of RBI)
 Unincorporated bodies
 Collective investment schemes
 UNIVERSAL BANKS DIFFERENTIATED BANKS

 Payment banks
 Small finance banks
(for the first time, in principle
approval is given by RBI for
differentiated banks in 2015)

AND

 They can undertake only limited

“These can undertake multiple financial range / narrow range of activities.
activities under one roof”  They are also called “niche” banks.

Project Finance

Loans & Advances Insurance

Investment Banking Mutual Funds

Credit Cards
DOVISH MONETARY POLICY

MORE MONEY
CIRCULATION

LOWER
INTEREST
RATES
HAWKISH MONETARY POLICY

LESS MONEY IN
CIRCULATION

INCREASE IN
INTEREST
RATES
 HOT MONEY

INDIA

USA

ILLUSTRATION OF
HOT MONEY

MEXICO
 It moves from one country to another
 Moves from low interest rate yielding countries to high interest rate yielding countries
 To maximize interest gain
HARD CURRENCY

 Currency, which is normally expected to be relatively

stable over a shorter period of time
 Widely accepted around the world for payments for
goods and services
 Highly liquid in the foreign exchange market
 They normally belong to politically and economically
stable countries
 TERM LOANS
 House loans
 Vehicle loans
 Personal loans
 Corporate loans
LOAN
(RS)
REVOLVING CREDIT
 Overdraft Account
 Cash Credit Account
 Credit Card Advances
 Kisan Credit Card
LOAN LIMIT IS FIXED
TIME (Months)
GREENFIELD PROJECT BROWNFIELD PROJECT

Starting project afresh, Expanding / modifying /

without any link to the upgrading / extending the

previous project existing project