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Important Banking Terms

Financial Inclusion: 

Delivering and expanding banking services at affordable costs to low income group people especially in rural areas.

Through finacial inclusion banks provide banking services and products to the public with affordable cost in order to manage their money effectively.

Types of Currency Notes:

Solid Note – Dirty Note

Mutilated Note – Currency note which is having missing part.

Imperfect – Washed

Counterfeit Note – Fake note.

Types of Money Market:

Call Money: It is a short term loan .The money lend for 1 day which can be payable on demand for 1 day.

Notice Money: The loan amount which should be repayable on demand from 1 to 15 days.

Term Money:  Its long term loan which should be repayable on demand after 15 days to 1 year.

Leverage Ratio:

Any ratio used to calculate the financial leverage of a company to get an idea of company’s ability to meet financial obligations. There are several different ratio’s but the main factors looked at include debt, equity, assets and interest expenses.

Bull Market: A financial market of a group of securities in which prices are rising or expected to rise.

Bear Market: A market condition in which the prices of securities are expected to falling down.

NOSTRO Account: A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. NOSTRO Accounts are used to facilitate settlement of foreign exchange and trade transactions.

VOSTRO A/c: Accounts which are held by the domestic bank in its home country for foreign banks are called as Vostro a/c.

Treasury Bills (T-Bills):

Treasury bills are the instruments of short term borrowing by the central/state govt.

They are promissory notes issued at discount and for a fixed period. These were first issued in India in 1917.

Maturity of T-Bills: 91 days and 364 days. These are issued by RBI and sold through for nightly or monthly auctions at varying discount rates depending upon the bids.

No limit for purchasing and selling.

Difference between FDI & FII:

FDI (Foreign Direct Investment): It is an investment that a parent company makes in a foreign country.

FII (Foreign Investors Investment): Foreign investors invests in shares of Indian company.

             

Demand Liabilities: The liabilities which a bank has to pay on demand.

Eg: current account deposits.

Time Liabilities: The liabilities which a bank has to pay after specific time period.

Eg: Fixed deposits.

 

TDS (Tax Deductions on Savings): It is essentially an indirect method of collecting tax which combines the concepts of a pay as you earn.

NHB (National Housing Bank):

It is owned by RBI and was established in 1988 to promote private real estate acquisition.

NHB is regulating and refinancing social housing programs.

DICGC (Deposit Insurance and Credit Guarantee Corporation):

DICGC insures all bank deposits such as savings, fixed, current, recurring deposits for up to the limit of Rs.100000 of each deposits in a bank.

Hard Money: gold/silver/platinum.

Soft Money: Currency notes.

MICR (Magnetic Ink Character Recognition): The MICR code is a numeric code that uniquely identifies a bank branch participating in the ECS credit scheme.

MICR code consists of 9 digits- 1st 3 digits indicates city name where bank is located and 2nd 3 digits indicates bank name and last 3 digits indicates branch name.

IFSC (Indian Financial System Code): The payment system applications such as RTGS (Real Time Gross Settlements) and NEFT (National Electronic Funds Transfer) developed by the RBI use these codes to transfer money.