Accounting and Finance Questions

Most modern banking systems are based on Fractional reserves.

Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank.

1. In a fractional reserve banking system banks can create money through the lending process.

2. A fractional reserve banking system is susceptible to bank panics.

3. Bank panics are a risk of fractional reserve banking, but are unlikely when banks are highly regulated and lend prudently.

Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary.

A loss (or losses) from previous years carried forward in order to offset future earnings. This reduces the tax burden for the years with profit as the accumulated losses are deducted from the taxable profit.

Tax Collected at Source (TCS) is income tax collected in India payable by the seller who collects in turn from the buyer and it is provided under section 206C of Income Tax Act, 1961 at the sale of some goods which are specified.

E - TCS  is the process of filing TCS returns through electronic media. It is necessary for government and corporate collectors to file TCS returns in its electronic form. Collectors (other than government) have the provision to file TCS returns in physical form or electronic form.

A credit may signify a decrease in an asset account or an increase in a liability or capital stock account. 

A debit may signify an increase in an asset account.

In ‘Bill Purchase’ the loan will be created for the full value of the draft and the interest will be recovered when the actual payment comes. For example, a ‘Sight draft’ is presented for which the loan is created for 100% of the draft value. The money is received after 7 days, and then the interest will be recovered for 7 days along with the principal amount.

Federal Bank has obtained RBI approval to open representative offices at Kuwait and Singapore.

The bank has been the preferred banker for NRI's and the NRI friendly measures have resulted in increasing inflow of foreign remittances.

The bank already has its representative offices in Abu Dhabi and Dubai and it has tied up with 110+ overseas banks/remittance partners.