Banking Terms

Banking Terms

Banking Terms

Bancassurance: Bancassurance mentions to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies like home insurance, car insurance, medi policies and others, by bank as corporate agents through their branches located in different parts of the country by charging fee.

Bank Rate: it is the rate at which the RBI allows finance to commercial banks. Bank Rate is a instrument which central bank uses for Short-term purposes.

Bouncing of Cheque: Where an account does not have sufficient balance to honour the cheque issued by the customer (Account holder), the cheque is returned by the bank with the reason that “Funds insufficient” or “Exceeds arrangements’. This is termed as “Bouncing of Cheque””.

Cash Reserve Ratio: Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks do not hold these as cash with them, but deposit such cash with RBI/Currency Chests, which is consider as equivalent to holding cash with themselves. This minimum ratio as stipulated by the RBI is known as CRR or cash Reserve Ratio.

Core Banking Solutions (CBS): Core Banking is a buzz word in Indian Banking at present, where branches of the Bank are connected to a central host and the customers of connected branches can do banking at any breach with core banking facility.

Creditworthiness: It is the capacity of the borrower to repay the loan/advance in time along with interest as per agreed terms.

Current Account: Current account with a bank can opened generally for the purpose of business. There are no limitations on withdrawals in this type of account. No interest is paid for amount deposited in Current account.

Demand Drafts: Deposits which are withdrawn on demand by customers. Example: Savings bank and current account deposits.

NPA Account: In interest and installments and other bank dues are not paid in any loan account within a specified time limit, it is being treated as Non-performing assets of a bank.

Plastic Money: Credit cards and Debit cards and ATM cards and International cards are considered plastic money as like money they can able us to get goods and services.

Post-Dated Cheque: A cheque which bears the date, which is subsequent to the date of issue. For Example a cheque drawn on 12th of May, 2013 bears the date of 18th of May 2013.  

Prime Lending Rate (PLR): The rate at which banks lend to their best (prime) customers.

Promissory Note: Promissory note is a promise / undertaking given by one person in writing to another person, to pay to that person, a certain sum of money on demand or on a future date.

Public Sector Bank: A bank entirely or partly owned by the Government.

Repo (Repurchase): Repo rate is the rate at which the RBI lends short-term money to the banks. When the repo rate is increased borrowing from RBI becomes more expensive.

Reverse Repo Rate: It is the rate at which banks park their short-term excess liquidity with the Reserve Bank of India. The Reserve Bank of India uses this instrument when it feels there is too much money floating in the banking system.

Statutory Liquidity Ratio: Every bank is required to maintain at the close of trade every day, a minimum percentage of their Net Demand and Time Liabilities as liquid assets in the form of cash, golden and unencumbered approved securities.

Teller:Teller is a staff of a bank; he receives deposits, Cash, Cheque and does other banking services for the public.

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