1. Repo
Rate
o When RBI provides a loan
to the bank for short-term between 1 to 90, RBI takes some interest from the bank
which is termed as Repo Rate.
2.
Reverse Repo Rate
o When bank deposit it's
excess money in RBI then RBI provides some interest to that bank. This interest
is known as Reverse Repo Rate.
3. SLR
– (Statutory Liquidity Ratio)
o Every bank has to
maintain a certain % of their total deposits in the form of (Gold + Cash +
bonds + Securities) with themselves at the end of every business days. Current
SLR is 20.75%.
4.
Retail banking
o Retail banking is a
type of banking in which direct dealing with the retail customers is
done.
o This type of banking is
also popularly known as consumer banking or personal banking.
o It is the visible face
of banking to the general public.
5.
Bitcoin
o Bitcoin is
a virtual currency/ crypto currency and a payment system.
o It can be defined as
decentralized means of tracking and assigning wealth or economy, it is a
software protocol.
o Bitcoin uses two
cryptographic keys, one public (username) and one private (password) are
generated.
o 1 Bitcoin= 108
Satoshi.
6. Call
money
o Call money is the money
borrowed on demand for a very short period. When money is lent for a day it is
known as Call Money.
7.
Notice money
o When the money is
borrowed or lent for more than a day up to 14 days it is called Notice
Money.
8. Difference between Capital market and Money market
o A capital market is an organized
market which provides long-term finance for business.
o Whereas Money market
provides short-term finance for business
9.
Scheduled bank
Banks
which are included in 2nd Schedule of RBI Act 1934 are known as a scheduled
commercial bank. These banks should fulfill two conditions:
o Paid up capital and
collected funds should not be less than Rs.5 Lacs.
o Any activity of the Bank
should not adversely affect the interests of the customers.
10. Non Performing Assets
o NPA is
an asset of a bank which is not producing any income.
o Bank Usually classify as
nonperforming assets any commercial loans which are more than 90 days overdue
and any consumer loans which are more than 180 days overdue.
11.
Money Inflation
o Money Inflation is
a State in which the Value of Money is Falling and the Prices are rising, over
a period of time.
12.
Negative interest rate
o When there is less
demand for loans the banks park their excess fund with the central bank by
which they get an interest.
o Negative interest rate policy (NIRP) means that central banks will deduct
money from commercial banks for depositing their money with the central bank.
Commercial banks, in turn, will do the same to common people.
o So the end effect is
that people will have to pay money to banks to hold their cash.
13.
Green Banking
o Green banking means
promoting environmentally friendly practices and reducing your carbon
footprints from your banking activities.
o Green banking aims at
improving the operations and technology along with making the clients habits
environment-friendly in the banking business.
o It is like normal
banking along with the consideration for social as well as environmental
factors for protecting the environment.
14. Blockchain system
o These days the
transactions in the banking sector are becoming a very tedious task and so as
to ensure that this tedious task to be removed, our banking sector is trying to
emerge towards block chain technology.
o To simplify the
transactions without the help of any third party in a secure manner is really a
great challenge, but to overcome this challenge an anonymous online ledger
(collection of financial accounts) which uses the data structure to simplify it
is called block chain technology.
15.
Balloon mortgage
o A mortgage is
a transfer of a right to stable property for the security purpose of a loan
amount.
o Balloon mortgages are
just for short term and it has fixed rate mortgage.
o In balloon mortgage, a
monthly payment is lower because of large payment at the end of a term.
o A balloon payment is for
the honest and qualified borrowers who have the good credit history.
16.
Retail credit operations
o Retail Credit Operations means the sequential process which involves
screening, evaluation of risk(s), and ensuring that the bank lends to a
creditworthy client from the asset products applications sourced.
17.
Skimming
o Skimming is a method
used by fraudsters to capture customer's personal or account information of
credit card.
o Customer's card is
swiped through the skimmer and the information contained in the magnetic strip
on the card is then read into and stored on the skimmer or an attached
computer.
o Skimming is a tactic
used predominantly for credit-card fraud, but it is also a tactic that is
gaining in popularity among identity thieves.
18.
Money laundering
o Money laundering is a process of conversion of illegal money from
various sources to appear to have originated from legitimated (Legal)
source.
o The major sources of
illegal money are tax evasion, bribe, Smuggling etc.
19.
Cheque
o Cheque is
an unconditional order addressed to a banker, signed by the person who has
deposited money with a banker, requesting him to pay on demand a certain sum of
money only to the order of the certain person or to the bearer of the
instrument.
20.
Direct Debit
o Direct Debit is
a financial activity in which one person withdraws funds from another person's
bank account.
o It is a facility in
which the payee withdraws the amount from the payer's account, the payer has
instructed the bank to allow the payee directly withdraw the amount from the
account.
21.
Cash Credit
o Cash Credit is
a proper limit sanctioned by the bank to the borrowing manufacturing/trading
unit against the value of the raw materials, semi-finished goods and finished
goods including stores.
22.
Bill of Exchange
o A bill of exchange is a non- interest bearing written order which is
used primarily in foreign trade which binds one party to pay a fixed amount of
money to another party at a decided future date.
o A bill of exchange is
signed by the creditor and accepted by a debtor.
23.
Cash Reserves Ratio
o Every bank Maintain
certain % of their total deposits with RBI in the form of Cash and Net demand
& Time Liabilities.
o Current CRR is 4%. Every
Bank has to pay the amount to RBI on every 15 Days.
24.
Bank Rate
o Bank rate is also termed
as “Discount Rate”
o The rate through which
RBI charges certain % for providing money to other banks without any security
for a Long period of time for 90 Days & Current Bank Rate is 6.75%.
25.
Marginal standing facility
o MSF is the rate through
which bank can borrow funds for Short time – Overnight basis.
o Current MSF is
6.75%.
26.
Minimum Reserve system of RBI
o The current system of
the Indian government to issue notes is “Minimum Reserve System”.
o Under this policy, the
minimum reserves to be maintained in the form of gold and foreign exchange
should consist of rupees 200 crores.
o Out this reserve, the
value of gold to be maintained is rupees 115 crores.
o This system was
introduced in 1956 replacing the proportional reserve system.
27. Clean note policy of RBI
o Lots of people in our
country have a bad habit of writing something on the currency note, folding
currency note, also somebody staple it which spoils the Note and reduces notes
durability.
o So to avoid such
occurrences RBI introduced the Clean Note Policy in 2001 in an order to
increase the life of currency notes.
o The main objective of
this Clean Note Policy is to provide good quality currency notes and coins to
the citizens of our country.
28. CAMELS rating system
o CAMELS is a rating
system developed in the US that is used by supervisory authorities to rate
banks and other financial institutions.
o It applies to every bank
in the U.S and is also used by various financial institutions outside the
U.S.
Each
factor is assigned a weight as follows:
o Capital adequacy 20
%
o Asset quality 20%
o Management 25%
o Earnings 15%
o Liquidity 10%
o Sensitivity 10%
29. Masala Bonds
o The bonds listed on the
London Stock Exchange (LSE) is termed as Masala Bonds.
o These bonds are offered
and settled in US dollar to hike Indian Rupee in International market .
o These bonds help to
raise Indian rupees from International investors for infrastructural development
in India.
o International Financial
Corporation (IFC) converts bond from dollars into rupees and uses the rupees to
finance private sector investment in India.
30.
Core Banking Solutions
o Core Banking Solution (CBS) is networking of branches, which enables
customers to operate their accounts, and avail banking services from any branch
of the Bank on CBS network, regardless of where he maintains his account.
o The customer is no more
the customer of a Branch.
o He becomes the Bank’s
Customer.
o This interface will
integrate the entire payment systems in India.
o It uses a single
application programme interface with a series of Application Programme
interface (API’S).
o The mobile devices are
the primary object for all the payments.
32.
Micro ATM S
o Micro ATMs are not any special type of ATMs
o It is the advanced
version of Point of Sale (PoS) having an additional feature of Bio metric scanning.
o It is also known as a
mini version of ATMs.
o These machines are
connected with the GPRS (General Packet Radio Service) mobile internet and it
uses Core Banking Solution (CBS) platform to perform the different types of
services.
33.
Letter of Credit
o The letter of credit is one of the negotiable instrument.
o It is given by the bank,
that guarantee’s buyer’s payment to the seller shall be received on time along
with the proposed amount to be paid.
o In this instinct, if the
buyer is unable to make the agreed payment to the seller, then the bank will
cover the full or remaining amount of purchase.
34.
Bancassurance
o Bancassurance is
the concept of selling insurance products of insurance companies by
banks.
o The bank acts as an
agent and promotes Banca (bancassurance) products under section 6(1)(o) of the
Banking Regulation Act, 1949.
o It was originated in
Europe in the 1980s and was successful.
o The bancassurance
business model is a globally accepted profitable business.
35.
Banking Ombudsmen
o Banking Ombudsman is a senior official appointed by RBI.
o He handles and redresses
customer complaints against deficiency in certain banking services.
o The Banking Ombudsman
Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949 by
RBI with effect from 1995.
36. The
Balance of Trade
o The difference of the
country’s exports and the value of its imports are known as the Balance of
Trade.
o It normally incorporates
trade in services unless mentioned as the balance of merchandise trade.
o It includes earnings
(interest, dividends, etc.) on financial assets.
37. A
Balance of Payments
o A list that states a
country’s transactions with other countries for a certain time period
(generally 1 year).
o Payments into the
country (receipts) are entered as positive numbers, called credits.
o Payments out of the
country (payments) are entered as negative numbers called debts.
o A single number summarizes
the country’s international transactions: the balance of payments
surplus.
38.
NOSTRO Account
o A NOSTRO account is one
which is maintained by an Indian Bank in the foreign countries.
39.
VOSTRO Account
o A VOSTRO account is one
which is maintained in India by a foreign bank with their corresponding
bank.
40.
LIBOR
o The full form of LIBOR is
London Inter bank Offered Rate.
o It is the interest rate
at which funds are borrowed by banks in marketable size, from other banks in
the London inter bank market.
41.
MIBOR
o The full form of MIBOR is
Mumbai Inter bank Offered Rate.
o It is the interest rate
at which funds are borrowed by banks in marketable size, from other banks in
the Mumbai inter bank market.
42.
CASA Account
o CASA stands for Current
Account Savings Account.
o The CASA ratio displays
the value of deposits maintained in a bank in the form of current and savings
account deposits in the total deposit.
o A higher CASA ratio
means the better operating efficiency of the bank.
43.
RAFA Account
o RAFA stands for
Recurring Deposit Account Fixed Deposit Account.
o The RAFA ratio shows how
much deposit a bank has in the form of Recurring and fixed deposits.
44.
DEMAT account
o The full form of Demat
Account is Dematerialized account.
o This is a type of bank account for citizens in India so that they can trade in
stocks or debentures which are listed in the stock market.
o Just as a savings
account contains money saved, a demat account has stocks saved.
45.
Legal Tender
o As per provisions of
coinage Act 1996, bank notes, currency notes and coins (Re. 1 and above) are
legal tender for the unlimited amount.
o The subsidiary coins
(below Re. 1) are legal tenders for the sum not exceeding Re 1.
o Issue of 1, 2 and 3
paisa coins discontinued wef Sep 16, 1981.
46.
Currency Chest
o Currency chests are
operated by the Reserve Bank of India (RBI) so that they can provide good
quality currency notes to the public.
o However, RBI has appointed
commercial banks to open and monitor currency chests on behalf of RBI.
o The money kept in
currency chests in the commercial banks is considered to be kept in RBI.
47.
Insolvency
o An organization, a
family, person, or company is declared as insolvent when they are unable to pay
their debts back on time.
o One of the most common
solutions for insolvency is
bankruptcy.
48.
Bankruptcy
o Bankruptcy is a legal
declaration of person who is unable to pay off debts.
o In generally, Bankruptcy
is of two types- Reorganization and Liquidation bankruptcy.
o Under the bankruptcy of
reorganization, debtors should restructure their bill plans to make them more
easily met.
o Whereas under
liquidation bankruptcy, Debtors has to sell their assets to make money so that
they can pay off their creditors.
49.
Amortisation
o Amortization is a
periodic payment of a debt like a loan or a mortgage.
o Amortization is the
arrangement of a lump sum cash flow into many periodic installments over a span
of time, which is also called amortization agenda.
50.
Credit Crunch
o A credit crunch is also
known as a Credit squeeze or credit crisis.
o A credit crunch is a
condition in which there is an immediate decline in the availability of a loan
or the credit.
o A situation in which
suddenly the credit becomes difficult to get.
o Sometimes it can be done
by reverse actions like by strict rules and regulations to avail the fund from
the financial institutions like banks, NBFCs, and many other lenders.
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