Banking and Finance
All about banking and finance
How Banks make money?
Banks makes money by following methods:
- Investment Banking: Most of the income The BarBank make is by being an advisor to big corporations, government and individuals.
- Corporate Banking: It provides services for multinationals and large domestic corporate. It charges fee, interests for loans from these companies.
- By charging interest from borrowers.
- By charging various fees on services like, a. Account Fees: For different products in bank, it charges fee for maintenance and services. b. ATM fees: This is charged for ATM usage outside limit and when using other bank’s ATM for services. c. Penalty charges: This can be for late credit card payment or missing a loan EMI. d. Commissions: They provide asset management for which brokers ask for commission.
- Merchant Service Charges: The BarBank help merchants accept payments. For this bank charges fee for services. It also helps merchant by data analysis for this as well it charges other fees for value added services.
Net Interest Margin (NIM)
- (Interest Earned) - (Interest Paid).
- NIM% = NIM / (Avg earning asset), where
- AEA = Average earning asset = (Assets at the beginning of the year + Assets at the end of the year) / 2.
- The difference between the interest income generated by banks and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets.
Retail banking (Consumer Banking)
- Individual consumers can manage their money, take credit, and deposit their money
- Services include checking and savings accounts, mortgages, personal loans, credit cards, FD/RD.
Income TAX
- Form 26as has information on FD interest
Credit Risk Management
Credit risk management is the practice of mitigating losses by understanding the adequacy of a bank's capital and loan loss reserves at any given time – a process that has long been a challenge for financial institutions.
Tick Data (Trade Data)
Tick-by-tick data, often referred to as "trade data" or "tick data" or "market data", is a type of financial market data that records every individual transaction (trade) that occurs for a particular financial instrument, such as a stock, commodity, or currency pair. It is the most granular level of market data and provides detailed information about each trade, including the price at which the trade occurred, the quantity of assets bought or sold, and the exact timestamp of the trade.
Tick Data is trade data, often know as "tick-by-tick" or "market data". It records each transaction that occurs for a financial instrument (stocks/commodity/currency etc). It is most granular market data. It has detailed information about each trade like price, quantity bought or sold, timestamp etc.
It can be millions in milliseconds. There are special databases and frameworks to deal with this velocity and volume of data, some of them are arcticdb.
Book Building
Book Building is the process by which an underwriter determines the price at which the shares must be sold in an Initial Public Offer (IPO)