AP (Advanced Placement) Macroeconomics Financial Sector-Banking Terms and Persons (Page 4 of 51)

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BHIM (Bharat Interface for Money)

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BHIM (Bharat Interface for Money) is a digital payments solution app based on Unified Payments Interface (UPI) from the National Payments Corporation of India (NPCI) . BHIM is just like a cover what is inside is the UPI՚s fabulous payment mechanism. What makes BHIM important?

There are different digital wallets like Paytm, which are basically prepaid wallets that require to transfer money from your bank account to the prepaid wallet. But in the case of BHIM (UPI) , there is no such money transfer, no recharge as the money is stored with the bank. This type of arrangement became possible as both UPI and BHIM are sponsored by NPCI which is an offspring of RBI. The trust factor is big and the banks are ready to join UPI because of the ‘government factor’ . The authorization of the transaction under BHIM will be done by the banks themselves (mechanically) as money used under BHIM are with the bank accounts. The authentication (executing the payment) should be done by the customer through his mobile phone.

Bank Nationalization

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Government has nationalized 14 commercial banks in 1969 and 6 banks in 1980 to facilitate social banking.

Banker to the Government

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Banker to the government function is done by central banks like the RBI. As a banker to the government central banks carries out certain banking functions to the government. It holds custody of the cash balance of the government, gives temporary loans to both central and state governments and manages the debt operations of the central government. The Reserve Bank has traditionally managing government՚s banking transactions. Reserve Bank of India Act, 1934 requires the Central Government to entrust the Reserve Bank with all its money, remittance, exchange and banking transactions in India and the management of its public debt. The Government also deposits its cash balances with the Reserve Bank. The Reserve Bank may also, by agreement, act as the banker to a State Government. Currently, the Reserve Bank acts as banker to all the State Governments in India, except Sikkim. It has limited agreements for the management of the public debt of the Sikkim Government.