Today we are going to increase our vocabulary knowledge
related to banking sector. I m going to tell you some basic terms which are
used in day to day life and always asking in bank exam.
Debit
balance: It means account holder don’t have any cash in his
account and if he withdraws cash then he uses bank cash or over drawn the cash.
Credit
balance: It means account holder has a cash in his account.
Debit
card: It is a plastic card with the help of it card
holder can withdraw cash from his account by using retail outlet.
Credit
card: A card which facilitates the card holder to make
payments up to certain limit and after
certain period the card holders have to pay cash to card company or issuing
bank.
ATM:
It is a (Automated Teller Machine) machine in which debit or credit card
holders insert their card to withdraw cash.
EFT(Electronic
Fund Transfer ): The computer based fund transfer from
one bank account to another bank account of same financial institution or
different.
APR(Annual
Percentage Rate): It is annual cost of borrowing
funds.It is a simple interest.
EAR
(Effective Annual Rate): It is a rate of interest
calculated with the help of compounding
methods.
Overdraft:
Bank provides facility to its customer to over withdraw cash from own account.
Bank
draft: It is a form of large payments in which customer has to deposit that amount to issuing bank
with fees and then the bank guarantees to make payments to beneficiary account.
Traveller's
cheque: It is cheque issued by bank for reducing the risk
of carrying huge cash while travelling and it can use in any bank.
Cash
credit: It is a short term secured loan issued to its
customer to fulfill the needs of working capital in which separate account is created and bank
deposit loan amount in that account and if account holder uses not whole amount
of loan then interest is charged on withdrawn amount only.
Current
account: An account open by businessmen or professional and
there is no limit for cash withdrawn from that account. No interest earn by
account holders.
Saving
account: An account open for saving purpose and account
holder earn interest on cash balance in that account. There is a limit for cash
withdrawn.
Fixed deposit:
It is a deposit of cash for fixed period and after lock in period the holder
withdraws limited cash .
PPF:
It is a long term investment in which minimum Rs.500 and maximum Rs.1,50,000
deposited in a year by holder. The interest received is tax free.
Bank rate: It is the rate of interest charged by
central bank on long term loan from commercial bank.
Repo
rate: It is the rate of interest charged by central bank
on granting short term loan to commercial bank against securities. The rate
charged for repurchasing the securities.
Reverse repo rate:It is the rate charged by commercial
bank on loan provided to central bank.
SLR(Statutory
Liquidity Ratio): It is the minimum percentage of
deposits that banks keep in the form of government securities, gold etc.
CRR
(Cash Reserve Ratio): It is the minimum amount that
commercial bank keep with RBI.
MSF
(Marginal Standing Facility): It is
the interest rate at which scheduled bank borrow money from RBI in overnight.It
means fund borrow for shorter period.
Garnishing
order: In case if debtor fails to pay creditor fund then
creditor may apply on court. The court issue garnishing order in which bank
account of a debtor’s is freezes and the order is divided into two parts: Order Nishi- court ask the reason for non-payment and in Order Absolute- order debtor’s
bank to pay creditor amount full or part of it.
Basel
1: Basel committee form a norm to regulate banking
sector.It help to standardised In Basel 1 norm focus on capital requirement and reduces the credit risk.It is
introduced in 1988.
Basel
2: It is introduced in 2004, It focuses on capital adequacy, risk
management and disclosure requirement.
Basel
3: It is introduced in 2010 and it is form due to the failure of Basel 2 norm. It focuses on promoting capital,liquidity, funding and
leverage.
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