What is Minimum Reserve System? How new currencies are issued by the RBI?

The relationship between note issue and its reserve backing is usually done on the basis of a reserve system by central banks across the world. The reserve system provides guidelines for the issue of new currencies.

In India, currencies are issued by the RBI with the backing of reserves comprised of gold and foreign exchange (foreign currencies). For the issue of currency the RBI follows Minimum Reserve System at present. The Minimum Reserve System (MRS) is followed from 1956 onwards.

Under the Minimum Reserve System, the RBI has to keep a minimum reserve of Rs 200 crore comprising of gold coin and gold bullion and foreign currencies. Out of the total Rs 200 crores, Rs115 crore should be in the form of gold coins or gold bullion. The purpose of shifting to MRS was to expand money supply to meet the needs of increasing transactions in the economy.

The minimum reserve is a token of confidence and doesn’t have any practical connection with amount new currencies issued by the RBI. Under the Minimum Reserve System, RBI can issue unlimited amount of currency by keeping the reserve. But RBI follows some principle or rule for issuing new currencies based upon economic growth and transaction needs of the people.

How RBI issues new currencies?

For every year, RBI makes a money supply expansion target based on the expected economic growth. Higher the economic growth, higher will be the expansion of newly issued money by the RBI. This strategy helps RBI to contain inflation as well as enabling people to meet their transaction needs.

Similarly, the RBI secures assets while issuing new currency into the economy. These assets are foreign currencies or government bonds. Every unit of new currency is a liability of the RBI. To match this liability, there should be equal volume of assets as well. The procured foreign currency and government bonds constitute to the assets of the RBI whereas the newly issued currency is its liability. Foreign currencies purchased by the RBI are kept at Banking Department whereas the resaves used for issuing new currency (under MRS) is kept at Issue Department.

- See more at: http://www.indianeconomy.net/

Your guide to investing in the National Pension Scheme

The pension scheme launched by the Pension Fund Regulatory and Development Authority ( PFRDA) is the cheapest market-linked retirement option available in India. Here's how you can invest in this low-cost scheme.

Take-Out Financing for Project loans

Take-out financing applies to projects that have started commercial operations, considered standard, have a good cash flow.

"A BANANA A DAY" keeps the doctor away

This is interesting. After reading this, you’ll never look at a banana in the same way again.

Bananas contain three natural sugars – sucrose, fructose and glucose combined with fibre. A banana gives an instant, sustained and substantial boost of energy.

Research has proven that just two bananas provide enough energy for a strenuous 90-minute workout. No wonder the banana is the number one fruit with the world’s leading athletes.

But energy isn’t the only way a banana can help us keep fit. It can also help overcome or prevent a substantial number of illnesses and conditions, making it a must to add to our daily diet.

Depression: According to a recent survey undertaken by MIND amongst people suffering from depression, many felt much better after eating a banana. This is because bananas contain tryptophan, a type of protein that the body converts into serotonin, known to make you relax, improve your mood and generally make you feel happier. Forget the pills – eat a banana. The vitamin B6 it contains regulates blood glucose levels, which can affect your mood.

Anaemia: High in iron, bananas can stimulate the production of haemoglobin in the blood and so helps in cases of anaemia.

Blood Pressure: This unique tropical fruit is extremely high in potassium yet low in salt, making it perfect to beat blood pressure So much so, the US Food and Drug Administration has just allowed the banana industry to make official claims for the fruit’s ability to reduce the risk of blood pressure and stroke.

Brain Power: 200 students at a Twickenham school ( England ) were helped through their exams this year by eating bananas at breakfast, break, and lunch in a bid to boost their brain power. Research has shown that the potassium-packed fruit can assist learning by making pupils more alert.

Constipation: High in fibre, including bananas in the diet can help restore normal bowel action, helping to overcome the problem without resorting to laxatives.

Hangovers: One of the quickest ways of curing a hangover is to make a banana milkshake, sweetened with honey. The banana calms the stomach and, with the help of the honey, builds up depleted blood sugar levels, while the milk soothes and re-hydrates your system.

Heartburn: Bananas have a natural antacid effect in the body, so if you suffer from heartburn, try eating a banana for soothing relief.

Morning Sickness: Snacking on bananas between meals helps to keep blood sugar levels up and avoid morning sickness.

Mosquito Bites: Before reaching for the insect bite cream, try rubbing the affected area with the inside of a banana skin. Many people find it amazingly successful at reducing swelling and irritation.

Nerves: Bananas are high in B vitamins that help calm the nervous system. Overweight and at work? Studies at the Institute of Psychology in Austria found pressure at work leads to gorging on comfort food like chocolate and chips. Looking at 5,000 hospital patients, researchers found the most obese were more likely to be in high-pressure jobs. The report concluded that, to avoid panic-induced food cravings, we need to control our blood sugar levels by snacking on high carbohydrate foods every two hours to keep levels steady.

Ulcers: The banana is used as the dietary food against intestinal disorders because of its soft texture and smoothness. It is the only raw fruit that can be eaten without distress in over-chroniclercases. It also neutralizes over-acidity and reduces irritation by coating the lining of the stomach.

Temperature Control: Many other cultures see bananas as a ‘cooling’ fruit that can lower both the physical and emotional temperature of expectant mothers. In Thailand, for example, pregnant women eat bananas to ensure their baby is born with a cool temperature.

So, a banana really is a natural remedy for many ills. When you compare it to an apple, it has FOUR TIMES the protein, TWICE the carbohydrate, THREE TIMES the phosphorus, five times the vitamin A and iron, and twice the other vitamins and minerals.. It is also rich in potassium and is one of the best value foods around

So maybe its time to change that well known phrase so that we say, ‘A BANANA a day keeps the doctor away!’

How the government taxes you

The central government imposes many taxes, but they can be divided into two broad categories: Direct Tax and Indirect Tax

Direct tax
This is the tax that business, companies , firms and partnerships and we all pay from our income or wealth. It is called direct tax because the person who pays the tax has to also bear the burden of the tax.

Corporation (corporate) tax: It is the tax that India Inc pays on its profits. It is the single biggest source of tax for govt.
Taxes on income other than corporation tax: It's income-tax paid by 'non-corporate assesses' such as individuals and Hindu undivided family (HUF).

Securities transaction tax (STT): STT is the small tax you need to pay on the total amount you pay or receive when you buy or sell shares on stock exchanges or transact in mutual funds. This is in the nature of a transaction tax.

Wealth tax: This is the tax individuals pay on their accumulated wealth. It is levied on individuals, HUFs and companies at the rate of 1% on the amount by which the net wealth exceeds Rs 30 lakh.

Capital gains tax: It is the tax levied on profit or gain made on sale of a capital asset such as shares, house, commercial property. Long-term capital gains tax is levied at 10% & short term at the marginal income-tax rate of an assesse.

Dividend distribution tax (DDT): Dividends are tax free in the hands of investors but the entity distributing dividends to investors pays DDT to govt.

Minimum alternate tax (MAT): It is often the case that companies report profits but pay no tax. Such cos have to pay a certain minimum tax on their book profits.

Withholding tax: This is a small tax deducted whenever a payment is made that is like an income for the receiver such as dividends, interest, royalty or even capital gains.

Indirect tax
It's essentially a tax on our expenditure, and includes customs, excise and service tax. It is called indirect tax because the tax is paid to the government by the person selling the good or providing service but its final burden is on the consumer. It is considered a 'regressive' tax as the burden is equal whether you're rich or poor.

Customs: Anything purchased from another country and brought into India is subject to this tax. It serves a twin purpose, yielding revenues for the government and protecting Indian industry.

Union excise duty: This is a duty imposed on goods manufactured in the country.

Service tax: It is a tax on services rendered.

GST: A proposed single tax that will replace the plethora of indirect taxes. This will make tax administration effective, compliance easy and evasion difficult. Consumers will benefit from the decline in the incidence of tax.


Source: Economic Times

Pakistan's blasphemy law

The Pakistan Penal Code prohibits blasphemy against any recognized religion, providing penalties ranging from a fine to death. However, in practice, it is only applied to Islam. An accusation of blasphemy commonly subjects the accused, police, lawyers, and judges to harassment, threats, and attacks.

CAT-31 for Banking Exams

1. As per data released by Central Statistical Organization, Per Capita Income of Indians in 2010-11 (calculated on the prices of 2004-05 prices) in rupees is…………….
A) 35,917
B) 33,731
C) 54,835
D) 46,492

SBI Associates heading for mass recruitment

Important dates:Date of Commencement of Application:June 4, 2011
Date of Closure: June 25, 2011
Start Date for Fee deposit:June 25, 2011
Last Date for Fee deposit : June 2, 2011
Last Date for Reprint: July 10, 2011

15th Census 2011 highlights

Importance of census
Census 2011 will be the 15th National Census of the Country
The Indian Census is the most credible source of information on Demography (Population characterstics), Economic Activity, Literacy and Education, Housing & Household Amenities, Urbanisation, Fertility and Mortality, Scheduled Castes and Scheduled Tribes, Language, Religion, Migration, Disability and many other socio-cultural and demographic data since 1872. . This is the only source of primary data in the village ,town and ward level, It provides valuable information for planning and formulation policies for Central and the State Governments and is widely used by National and International Agencies, Scholars, business people, industrialists, and many more.

CAT-30 for Banking Exams and Other Public Service Exams

1) Which of the following book is not written by Jhumpa Lahiri?
a) Unaccustomed Earth
b) The Namesake
c) Interpreter of Maladies
d) The God of Small Things