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Top 50 Banking Terms for Interview

By January 15, 2023 No Comments

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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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).

  1. 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.

  1. NOTICE MONEY

Notice Money is money borrowed or lent for more than a day and up to 14 days.

  1. 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.

  1. 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:

  1. The paid-up capital and cash acquired should not be less than Rs.5 lacs.
  2. 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.

  1. MONEY INFLATION

Money inflation is a condition in which the value of money falls while prices rise over time.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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%.

  1. 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.

  1. 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.

  1. 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.

  1. MARGINAL STANDING FACILITY

MSF is the rate at which a bank can borrow cash on a short-term, overnight basis.

  1. 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%

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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).

  1. 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.

  1. NOSTRO ACCOUNT

A NOSTRO account is one that is kept in a foreign country by an Indian bank.

  1. VOSTRO ACCOUNT

A VOSTRO account is one that a foreign bank maintains in India with their corresponding bank.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.