Treasury Bill :
Treasury bill is one kind of financial instrument issued by Bangladesh Bank. Bangladesh Bank sale this
instrument to the financial institution under fixed interest rate and duration and the proceeds against T-Bill provide to the government to meet up the deficit budget. The financial institutions purchased those instruments to meet their required SLR which is mandatory fixed by Bangladesh Bank.
Core Risk Management
It is a uniformed system/process in all banking sector to identify, manage, monitor & control the core risks
associated in the daily activities of the bank which may hamper achievement of the goals & objectives of the bank.
Five core risks identified in banking sector of Bangladesh Bank
1. Credit Risk.
2. Asset Liabilities Risk.
3. Foreign Exchange Risk.
4. Internal Control & Compliance Risk.
5. Money Laundering Risk.
SME : SME stands for Small to Medium Enterprise.
However, what exactly an SME or Small to Medium Enterprise is depends on who‘s doing the defining. Industry uses the term SME to refer to businesses with fewer than 100 employees, while classifying firms with 100 or more employees as "large" businesses.
Risk weighted asset
Risk-weighted asset is a bank's assets or off-balance sheet exposures, weighted according to risk. This sort
of asset calculation is used in determining the capital requirement or Capital Adequacy Ratio (CAR) for a financial institution. In the Basel I accord published by the Basel Committee on Banking Supervision, the Committee explains why using a risk-weight approach is the preferred methodology which banks should adopt for capital calculation
• it provides an easier approach to compare banks across different geographies
• off-balance-sheet exposures can be easily included in capital adequacy calculations
• banks are not deterred from carrying low risk liquid assets in their books
Currency Chest
To facilitate the distribution of banknotes and rupee coins, the central Bank has authorised select branches
of scheduled banks to establish Currency Chests. These are actually storehouses where banknotes and rupee coins are stocked on behalf of the central bank.
Credit Cards:
The Credit Cards have an element of free credit granted to card holders because the accounts are sent out
monthly, covering purchases of goods or services. The credit cards may be used when buying goods at shops and cash may be drawn at bank upto a certain limit. It is also called plastic money. It is an instrument which provides credit to shop variety of goods and services at the designated outlet/shops of the traders. All the famous banks have their own credit cards. IFIC Bank recently introduced IFIC Bank VISA Credit Card.
Repo
A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively representing interest,
sometimes called the repo rate. The party that originally buys the securities effectively acts as a lender. The original seller is effectively acting as a borrower, using their security as collateral for a secured cash loan at a fixed rate of interest.
A repo is equivalent to a cash transaction combined with a forward contract. The cash transaction results in transfer of money to the borrower in exchange for legal transfer of the security to the lender, while the forward contract ensures repayment of the loan to the lender and return of the collateral of the borrower. The difference between the forward price and the spot price is effectively the interest on the loan while one of the settlement date of the forward contract is the maturity date of the loan.
BB buys securities from a selling bank who agrees to repurchase them at a higher price on a certain date in the future. (Temporary increase in excess reserves.)
Reverse Repo A purchase of securities with an agreement to resell them at a higher price at a specific future date. This is essentially just a loan of the security at a specific rate. also called reverse repurchase agreement.
A reverse repo is simply the same repurchase agreement from the buyer's viewpoint, not the seller's. Hence, the seller executing the transaction would describe it as a "repo", while the buyer in the same transaction would describe it a "reverse repo". So "repo" and "reverse repo" are exactly the same kind of transaction, just described from opposite viewpoints. The term "reverse repo and sale" is commonly used to describe the creation of a short position in a debt instrument where the buyer in the repo transaction immediately sells the security provided by the seller on the open market. On the settlement date of the repo, the buyer acquires the relevant security on the open market and delivers it to the seller. In such a short transaction the seller is wagering that the relevant security will decline in value between the date of the repo and the settlement date.
BB sells securities and agrees to repurchase them at a higher price on a certain date in the future. (Temporary decrease in excess reserves.)