Core Banking

1387 WordsSep 20, 20116 Pages
Core Banking System Meaning:- Core banking is a general term used to describe the services provided by a group of networked bank branches. Bank customers may access their funds and other simple transactions from any of the member branch offices. Core Banking system or CBS is one of the recent developments in the field of banking, and has proved to be very useful. It is a facility provided by banks in which a person, having an account in one branch, can operate his account, in another branch. This has become possible, because each account holder is given a specialised, computerised and unique account number. In simple terms, CBS is a type of banking, in which a person, who opens a bank account in a particular branch of a bank,…show more content…
This, essentially, is what gives central banks leverage over interest rates. Central banks try to control inflation by moving a short term interest rate, typically the overnight interest rate in the interbank market. Expectations of future short term interest rates then determine long term interest rates. • Controlling the nation 's entire money supply Through open market operations, a central bank influences the money supply in an economy directly. Each time it buys securities, exchanging money for the security, it raises the money supply. Conversely, selling of securities lowers the money supply. Buying of securities thus amounts to printing new money while lowering supply of the specific security. • The Government 's banker and the bankers ' bank ("lender of last resort") It acts as a banker to both the state and the central government in India. It has the exclusive right to issue currency, notes in the country. All the commercial banks operating in India are mandatory to keep a cash reserve with RBI. Further, they have to maintain their current accounts with it. As a banker 's bank, the Reserve Bank of India facilitates the clearing of cheques between commercial banks and helps in interbank transfer of funds. It also acts as "Lender of Last Resort" by providing emergency advances to banks. • Managing the country 's foreign exchange and

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