AZOWAD ABRAR

Asset Transformation: Asset Transformation is turning something into asset and changing the shape of the asset. Most of the case loan is transformed into assets. Banks turn the deposits into loan. This action transform deposits which is a liability for banks into loan which is an asset for the bank. Asset transformation is often performed by banks, insurance companies and financial intermediaries.

In this article, I am going to write what Repo Rate is and how it affect us due to its change. What is Repo Rate? It is the rate at which the central bank gives credit to the commercial banks in the form of securities. Increase in repo rate increases the interest rate and demand for credit reduction. When the central bank increases repo rate, commercial banks also have to increase interest rate. This will slow down the money flow. When the central bank decreases bank rate, commercial bank also can reduce the rate. This will increase money flow in the financial market. How does Repo Rate Affect Us? Repo rate is a great tool to control money flow to the economy. Businesses take money from Banks, stock market and bond market. If loan is very cheap, aggressive loan distribution may take place. It will increase NPL. You can read my article what NPL is by clicking this link. What is Non-Performing Loan - Meaning, Examples, Calculation . When NPL rises the cost of borrowing or the...

[ CASH RESERVE RATIO, STATUARY RESERVE RATIO. Capital Adequacy Ratio Formula and Explanation. Senior Bond. Subordinated bond. Hybrid Capital] I don't like drama. So, let us dive into this topic specifically. CRR is Cash Reserve Ratio: Cash reserve is a reserve that has to be kept in central bank and the bank doesn't get any interest for depositing an amount of cash in the central bank. The central bank set the ratio on the amount of difference between demand deposit and term deposit. The main intention of CRR is to control the cash supply in economy by narrowing range of loan of banks.  SLR is Statuary Reserve Ratio: Statuary reserve is a reserve that has to be kept as government bond. The bank must purchase government bond to preserve the ability to pay the money whenever the depositor ask the bank to return his money. The bank get interest rate on this reserve.   Demand Deposits: A demand deposit is a deposit that is kept by the banks and have to pay back...

[ Keywords: NON-PERFORMING LOANS MEANING, HOW IS IT CALCULATED, NON-PERFORMING LOANS EXAMPLE ] The definition of Non-Performing Loan is different because this is not a theoretical issue, and the authority has the rights to determine which is a non-performing loan. In this article I will firstly discuss what is actually the non-performing loan generally. Non-Performing Loan Meaning: Non performing loan is the due amount of loan for a specific period defined by the central bank of a country. If the all of the due loan is paid, it becomes performing loan again.  How Non-Performing Loan is calculated? IMF consider a loan non-performing if the loan is due for more than 90 days. Of course if it is mentioned in the agreement that the borrower will start paying after two month then the countdown will start after two month. IMF has a definition. Every central bank have their own definition based on duration. Non-Performing Loans Example: Imagine, You have taken loan for 12 month o...

When I searched "Types of Currency" on Google, I saw the names of currencies and etc. But that was not what I was looking for. I wasn't looking for the term Dollar, TAKA or Rupi. I was just looking for how many types of currency exists on the world today. If you don't know the answer, this article is for you. Types of Currency: Fiat Money: Without intrinsic value (It doesn't have any metal layer) Representative Money: Very little intrinsic value (It has gold or silver certificate or layer on it) Commodity Money: Consist of objects that have their own value (( Such as gold and silver) Fiat Money:  This type of currency doesn't have any intrinsic value. What does that mean? What is intrinsic value? Well just remember that when a money has intrinsic value this means the money does have a certain amount of valuable metal such as gold or silver. So, Fiat money doesn't have any metal layer. This kind of money was found in Mongol Empire. The value ...

Due Diligence Checklist: 1. Evaluate The Total Market Share of The Industry: You must evaluate the total market share of the industry because it shows the maximum profitability of your business. For example: A region has 100 people. They need 100 Kg bread every month. The price of 100 Kg bread is $10000. So, no matter how many business exist; their total revenue will not cross $10000. 2. Evaluate The Future Potential of The Industry A region has 100 people but there will not be always 100 people. It may increase or decrease. If the population increase, this means more people will need bread. So, the total market share may increase in future. 3. Evaluate The Business Process of The Company Check how the business you are going to acquire runs. If there is any flaw in the business process, can you make it correct? If the answer is yes, you can acquire the company.  4. Evaluate The Quality of The Materials of The Company: If the company has quality materials, i...

Hi guys. In this article I am going to cover due diligence, what are the goals of due diligence, about their types and examples. I will be very specific to this topics and try to make you understand this term very easily. What is Due Diligence? Due diligence is an evaluation of a company often done during an acquisition, merger or before issuing IPO by considering some facts. Some people confuse Due Diligence with Audit. Both of the terms are not same. We are going to learn about it in this article. Audit vs Due Diligence: Some people mix the term Due Diligence with Audit but due diligence is more than that. Due diligence is very similar to audit but it is not audit. Due Diligence doesn't always have to follow accounting rules. You must follow accounting rules or GAAP for auditing. Goals of Due Diligence: To make sure that financial, business process and operational details to look right. To look for inconsistency in best practices of business op...

[ Keywords: Asset Transformation can be described as, Asset Transformation by Banks, Asset Transformation by Financial Intermediary, Transformation Examples ] Asset Transformation can be described as: Asset transformation can be described into two ways. One is the way of bank and another is in the way of financial intermediary. They are quite different from one another. But there is a common. Both of them means turning something into asset or changing the shape of asset. So, read this article to know about asset transformation clearly. (BY AA) What is asset transformation by banks? Asset transformation by bank is  turning liabilities (Deposits)   into assets (Loan). For Example: Bank accept deposit from individuals. The term of deposits can be different. Bank pool their entire investable deposit and make small pieces which will be offered to the borrower. Every pieces will consists of different amount of money, condition and time to repay. An...

Definition of Mode of Finance: Mode of finance is the way we finance a business. Introduction: Hi guys. This is Azowad Abrar. Today I am going to talk about Mode or Method of finance. I am studying Bachelor of Business Study. So, the information here will be a little bit of bookish but genuine. So let's start. Types, Definition and Comparison There are two modes or method of finance. One is direct finance and the other is indirect finance. Direct Finance:  Direct finance is one of the two method of financing in which the borrower borrow funds from financial market without any connection of the third party institutions. We can consider it as direct financing when you buy an asset that wasn't transformed by the third party. We will know what is asset transformation shortly.  When a person purchase a government bond from a broker who haven't transformed the bond yet, it will be a direct financing because there was no asset transformation. Indirect ...

[ Principles of Note Issue. Currency Principle. Banking Principle. Methods of Note Issue. Simple Deposit System. Fixed Fiduciary System. Minimum Reserve System. Comparison. Fixed Fiduciary System vs Maximum Fiduciary System. Full Reserve System Vs Fixed Fiduciary System. Which is the best method? Which is the worst method? ] The central bank issues currency on the basis of principles and methods. In this article I am going to write about the principles and methods of issuing notes by central banks. Principle of Note Issue: Central banks follow two principles for note issue. One is currency principles and the other is banking principle. In this section I am going to write about both of them. Currency Principle: According to this principle central bank must issue currency against gold reserve or any kinds of reserve. The condition of the reserve is that the central bank can easily convert the reserves into cash at the time of urgent need. This princi...

In this article we are discussing about the functions of Commercial banks;  Central banks;  Financial institutions; Functions of Commercial Banks: To give loans, accept deposits and act as a financial intermediary. To take interest for loan investment to give interest to depositors and to help in overseas transactions. To collect and clear cheques, dividends and interest warrant. To make payment of rent, insurance premium To help in foreign exchange transactions To purchase to sell securities To act as trustee, attorney, correspondent and executor. To accept tax proceeds and tax returns To provide money transfer facility. To issue travelers' cheque. Functions of Central Banks: Implementation of monetary policies. To make banking regulations and supervise banks and Financial Institutions. To manage the reserve of international currencies Act as bankers for the government Prevent money laundering Functions of Financial Institutions: ...

[Repo Rate Meaning, Bank Rate, OMO, Reserves, CRR, SLR] Banks Rate or Repo Rate is: It is the rate at which the central bank gives credit to the commercial banks. Increase in bank rate increases the interest rate and demand for credit reduction. When the credit is given in the form of gvt securities the rate is called repo rate. When the central bank increases bank rate or repo rate, commercial banks also have to increase interest rate. This will slow down the money flow. When the central bank decreases bank rate, commercial bank also can reduce the rate. This will increase money flow in the financial market. What is OMO (Open Market Operation): It affects the quantity of money in circulation by buying or selling government securities. When it buys Government securities which is owned by private sector or individuals, it floods financial markets with money. This technique tend to fail when the money isn't growing. The central bank sells Government securities to...

Bank is a business organization that allows people to deposit money, take loans and act as an financial intermediary. Types of Banking: There are many types of banking services. We can sort them all in three types. They are, Retail Banking Wholesale Banking Investment Banking Retail Banking: It is also known as Consumer Banking. It mainly involves with individual unlike wholesale banking. Banks generally offers certain services to certain class of people. For example: In Bangladesh, Banks offer credit card to the people who earns good amount of money per month. The banks are doing business with people not with any other business. This is the main feature of retail banking. For another example: We deposit money either for fixed term or demand term. When we don't create account for business purpose, it is part of retail banking. Wholesale Banking: Wholesale banking mainly involves with business organization such as Larger customers or organizations such as mo...

[ Types of deposit. Primary Deposits. Derivative Deposit. Demand Deposit. Term Deposit. Types of Primary Deposit. Special Notice Deposit. ] INTRODUCTION: There are two types of deposit that banks offer. One is Primary Deposit and the other is demand deposit. In this article I am going to write about types of deposits. WHAT IS DEPOSIT? Deposit is an account created in bank by the people who wants to store money in a safe place. The bank guarantees safety to the money. People can deposit and withdraw money from their account according to the terms and condition.  TYPES OF DEPOSITS: Primary Deposits:  When a customer is the direct creator of deposit it is called primary deposit. Some time it is called as the passive deposit as the role of bank to create the account is passive. Types of primary deposits: Demand Deposits Term Deposits The demand deposits: The bank is liable to allow the depositors to withdraw money whenever they want for a dema...