We have compiled a list of 50 significant banking terminology that will help you prepare for your
forthcoming bank exam interview. You will find it simple to prepare for upcoming bank examinations
and interviews.
- REPO RATE
When the RBI provides a loan to a bank for a period of one to ninety days, it collects interest from the
bank, which is known as the repo rate.
- REVERSE REPO RATE
When a bank deposits excess funds in the RBI, the RBI pays the bank interest. This rate of interest is
known as the Reverse Repo Rate.
- SLR (STATUTORY LIQUIDITY RATIO)
At the end of each business day, every bank is required to keep a specific percentage of their total
deposits in the form of (Gold + Cash + Bonds + Securities) with themselves.
- RETAIL BANKING
Retail banking is a branch of banking that deals directly with retail customers. Consumer banking or
personal banking are other terms for this sort of banking. It is the public’s first impression of banking.
- BITCOIN
Bitcoin is both a virtual money and a payment method. It is a software protocol that can be defined as a
decentralised mechanism of tracking and allocating wealth or economy. Bitcoin generates two
cryptographic keys, one public (username) and one private (password).
- CALL MONEY
Call/Notice money is money borrowed on demand for a limited period of time. Call Money is money that
is lent for a single day.
- NOTICE MONEY
Notice Money is money borrowed or lent for more than a day and up to 14 days.
- DIFFERENCE BETWEEN THE CAPITAL AND MONEY MARKETS
A capital market is a regulated market that provides long-term financing to businesses. In contrast, the
money market provides short-term financing for businesses.
- SCHEDULED BANK
Scheduled commercial banks are those that are included on the second schedule of the RBI Act of 1934.
These banks must meet two requirements:
- The paid-up capital and cash acquired should not be less than Rs.5 lacs.
- The Bank’s activities should not jeopardise the interests of its customers.10. NON-PERFORMING ASSETS
A non-performing asset (NPA) is any asset of a bank that does not generate income. Non performing
assets are often commercial loans that are more than 90 days past due and consumer loans that are
more than 180 days past due.
- MONEY INFLATION
Money inflation is a condition in which the value of money falls while prices rise over time.
- NEGAIVE INTEREST RATE
When there is less demand for loans the banks store their excess fund with the central bank through
which they collect an interest. Negative interest rate policy (NIRP) states that central banks will deduct
money from commercial banks for depositing their money with the central bank.
- GREEN BANKING
Green banking entails supporting environmentally friendly practises and lowering your carbon footprint
as a result of your banking activity. Green banking attempts to improve operations and technology while
also making clients’ habits more environmentally friendly in the banking industry. It is similar to
traditional banking, but with a focus on social and environmental concerns in order to protect the
environment.
- BLOCK CHAIN SYSTEM
Transactions in the banking sector are becoming a very arduous chore these days, and in order to
ensure that this tedious task is abolished, our banking industry is attempting to emerge towards block
chain technology. It is a big problem to simplify transactions without the assistance of a third party in a
safe manner, but to overcome this challenge, an anonymous online ledger (collection of financial
accounts) that uses the data structure to simplify it is known as block chain technology.
- BALLOON MORTGAGE
A mortgage is the transfer of a right to stable property for the purpose of securing a debt
amount. Balloon mortgages are only available for a limited time and have set interest rates. A balloon
mortgage has a lower monthly payment due to a large payment at the conclusion of the term. A balloon
payment is intended for trustworthy and qualified borrowers with a strong credit history.
- RETAIL CREDIT OPERATIONS
Retail Credit Operations refers to the sequential process of screening, risk evaluation, and guaranteeing
that the bank lends to a creditworthy client from the asset product applications sourced.
- SKIMMING
Skimming is a technique used by fraudsters to get personal or account information from credit card
customers. The customer’s card is swiped through the skimmer, and the information contained in the
card’s magnetic strip is read into and saved on the skimmer or an associated computer. Skimming is a
technique used mostly for credit-card theft, although it is also becoming popular among identity thieves.18. MONEY LAUNDERING
Money laundering is the process of converting illegal money from multiple sources into money that
appears to have originated from a legitimated (Legal) source. Tax evasion, bribery, smuggling, and other
unlawful activities are key sources of illegal money.
- CHEQUE
Cheque is an unconditional order addressed to a banker and signed by the person who has deposited
money with him, requiring him to pay a specified sum of money on demand solely to the order of the
specific person or to the bearer of the instrument.
- DIRECT DEBIT
Direct Debit is a financial transaction in which one person withdraws funds from the bank account of
another. It is a service in which the payee withdraws funds from the payer’s account after the payer has
directed the payer to do so.
- BANK RATE
The bank rate is also known as the “Discount Rate.” The rate at which the RBI charges a set percentage
for lending money to other banks without any security for a long period of time, usually 90 days, and the
current bank rate is 6.75%.
- CASH CREDIT
Cash Credit is a proper limit sanctioned by the bank to the borrowing manufacturing/trading unit against
the value of raw materials, semi-finished items, finished goods, and stores.
- BILL OF EXCHANGE
A bill of exchange is a non-interest bearing written order that binds one party to pay a specific amount
of money to another party at a predetermined future date. The creditor signs and the debtor accepts a
bill of exchange.
- CASH RESERVES RATIO
Every bank keeps a fixed percentage of their total deposits with the RBI in the form of cash, net demand,
and time liabilities. CRR is currently 4%. Every bank is required to pay the sum to the RBI on every 15
Days.
- MARGINAL STANDING FACILITY
MSF is the rate at which a bank can borrow cash on a short-term, overnight basis.
- RBI MINIMUM RESERVE SYSTEM
The Indian government currently uses the “Minimum Reserve System” to issue notes. The minimum
reserves to be kept in the form of gold and foreign exchange under this strategy should be Rs 200
crore. The value of gold to be kept in this reserve is Rs. 115 crore. This system was implemented in 1956
to replace the proportional reserve system.RBI’S CLEAN NOTE POLICY
Many people in our country have the bad habit of writing something on the money note, folding it, and
even staple it, which ruins the note and diminishes its longevity. To avert such situations, the RBI
implemented the Clean Note Policy in 2001 in order to extend the life of currency notes. The primary
goal of this Clean Note Policy is to offer our citizens with high-quality currency notes and coins.
CAMELS RATING SYSTEM
CAMELS is a US-developed rating system used by supervisory bodies to grade banks and other financial
institutions. It applies to all banks in the United States and is also utilised by other financial institutions
not in the U.S.
Each factor is given the following weight:
Capital adequacy- 20%
Asset quality- 20%
Management- 25%.
Earnings- 15%
Liquidity- 10%
Sensitivity- 10%
- MASALA BONDS
Masala Bonds are bonds that are listed on the London Stock Exchange (LSE). These bonds are offered
and settled in US dollars in order to strengthen the Indian rupee in the international market. These
bonds contribute to the collection of Indian rupees from international investors for infrastructure
development in India.
The International Financial Corporation (IFC) converts bonds from dollars to rupees and then utilises the
rupees to fund private sector investment in India.
- PRIMARY BANKING SOLUTIONS
Core Banking Solution (CBS) is a branch network that allows consumers to manage their accounts and
obtain banking services from any branch of the bank on the CBS network, regardless of where they keep
their account. The customer is no longer a Branch customer. He becomes a customer of the bank.
- UNIFIED PAYMENT INTERFACE
This interface will connect India’s overall payment system. It employs a single application
program interface (API) in conjunction with a variety of APIs. The primary object for all payments are
mobile devices.
- MICRO ATMS
Micro ATMs are not a subset of ATMs. It is a more advanced version of a point of sale (PoS) with the
inclusion of biometric scanning. It is also referred to as a little ATM. These machines are linked to the
GPRS (General Pocket Radio Service) mobile internet and use the Core Banking Solution (CBS) platform
to provide various services.33. CREDIT LETTER
One of the negotiable instruments is the letter of credit. The bank guarantees that the buyer’s payment
to the seller will be received on schedule, together with the proposed amount to be paid. If the buyer is
unable to make the agreed-upon payment to the seller, the bank will cover the full or remaining price of
the transaction.
- BANCASSURANCE
Bancassurance is the practise of banks selling insurance products from insurance firms. Under section
6(1)(o) of the Banking Regulation Act of 1949, the bank works as an agent and promotes Banca
(bancassurance) products. It began in Europe in the 1980s and was a hit. The bancassurance business
concept is a worldwide recognised and profitable enterprise.
- BANKING OMBUDSMAN
The RBI appoints a senior officer as the Banking Ombudsman. He handles and resolves consumer
complaints about deficiencies in certain banking services.
The Banking Ombudsman Scheme was implemented by the RBI in 1995 under Section 35 A of the
Banking Regulation Act of 1949.
- THE BALANCE OF TRADE
The difference between the value of a country’s exports and imports is known as the Balance of Trade.
Unless specified as the balance of merchandise trade, it usually includes trade in services. It includes
financial asset earnings (interest, dividends, and so on).
- A BALANCE OF PAYMENT
A list of a country’s dealings with other countries over a specific time period (generally 1 year).
Payments into the country (receipts) are recorded as positive numbers, which are referred to as credits.
Payments made outside of the country (payments) are recorded as negative numbers known as debts.
The balance of payments surplus is a single number that summarises the country’s international
transactions.
- NOSTRO ACCOUNT
A NOSTRO account is one that is kept in a foreign country by an Indian bank.
- VOSTRO ACCOUNT
A VOSTRO account is one that a foreign bank maintains in India with their corresponding bank.
- LIBOR
LIBOR stands for London Interbank Offered Rate. It is the interest rate at which monies in marketable
size are borrowed from other banks in the London interbank market.
- MIBORMIBOR stands for Mumbai Interbank Offered Rate. It is the interest rate at which monies of marketable
size are borrowed from other banks in the Mumbai interbank market.
- CASA ACCOUNT
CASA is an acronym that stands for Current Account Savings Account. The CASA ratio shows the value of
deposits held in a bank in the form of current and savings account deposits as a percentage of total
deposits. A greater CASA ratio indicates that the bank is more efficient in its operations.
- RAFA ACCOUNT
RAFA is an acronym that stands for Recurring Deposit Account Fixed Deposit Account. The RAFA ratio
indicates how much money a bank has in recurring and fixed deposits.
- DEMAT ACCOUNT
Demat Account is an abbreviation for Dematerialized Account. This is a sort of bank account for Indian
nationals that allows them to trade in stocks or debentures that are listed on the stock exchange. A
demat account, like a savings account, holds stocks that have been saved.
- LEGAL TENDER
Bank notes, currency notes, and coins (Re. 1 and above) are legal tender for an infinite sum under the
rules of the Coinage Act 1996. The subsidiary coins (below Re. 1) are legal tender for amounts up to and
including Re 1. The production of 1, 2, and 3 paisa coins ceased on September 16, 1981.
- CURRENCY CHEST
The Reserve Bank of India (RBI) operates currency chests in order to provide the public with high-quality
currency notes. However, the RBI has designated commercial banks to open and oversee currency
chests on its behalf. Money maintained in commercial banks’ currency chests is deemed to be kept in
the RBI.
- INSOLVENCY
When an organisation, family, person, or firm is declared bankrupt, it is unable to repay its debts on
time. Bankruptcy is one of the most prevalent solutions for insolvency.
- BANKRUPTCY
Bankruptcy is a legal designation for a person who is unable to repay debts. Bankruptcy is classified into
two types: reorganisation bankruptcy and liquidation bankruptcy. Under the reorganisation bankruptcy,
Debtors should alter their payment schedules to make them more manageable. In contrast, in
liquidation bankruptcy, debtors must liquidate their assets to generate funds to pay off their creditors.
- AMORTISATION
Amortization is the payment of a debt on a regular basis, such as a loan or a mortgage. Amortization is
the process of dividing a lump sum cash flow into several periodic amounts over a period of time, often
known as an amortisation schedule.
- CREDIT CRUNCHA credit crunch can also be referred to as a credit squeeze or a credit crisis. A credit crunch is a condition
in which the availability of a loan or credit decreases abruptly. A condition in which credit becomes
increasingly difficult to get. It is sometimes possible to obtain funds from financial organisations such as
banks, NBFCs, and many other lenders through reverse activities such as tight laws and regulations.
