RBI –
The
Reserve Bank of India is the apex bank of the country, which was constituted
under the RBI Act, 1934 to regulate the other banks, issue of bank notes and
maintenance of reserves with a view to securing the monetary stability in
India.
Demand
Deposit – A
Demand deposit is the one which can be withdrawn at any time, without any
notice or penalty; e.g. money deposited in a checking account or savings
account in a bank.
Time
Deposit – Time
deposit is a money deposit at a banking institution that cannot be withdrawn
for a certain "term" or period of time. When the term is over it can
be withdrawn or it can be held for another term.
Fixed
Deposits –
FDs are the deposits that are repayable on fixed maturity date along with the
principal and agreed interest rate for the period. Banks pay higher interest
rates on FDs than the savings bank account.
Recurring
Deposits
– These are also called cumulative deposits and in recurring deposit accounts,
a certain amounts of savings are required to be compulsorily deposited at
specific intervals for a specified period.
Savings
Account
– Savings account is an account generally maintained by retail customers that
deposit money (i.e. their savings) and can withdraw them whenever they need.
Funds in these accounts are subjected to low rates of interest.
Current
Accounts
– These accounts are maintained by the corporate clients that may be operated
any number of times in a day. There is a maintenance charge for the current
accounts for which the holders enjoy facilities of easy handling, overdraft
facility etc.
FCNR
Accounts – Foreign
Currency Non-Resident accounts are the ones that are maintained by the NRIs in
foreign currencies like USD, DM, and GBP etc. The account is a term deposit
with interest rates linked to the international rates of interest of the
respective currencies.
NRE
Accounts
– Non-Resident External accounts are the ones in which NRIs remit money in any
permitted foreign currency and the remittance is converted to Indian rupees for
credit to NRE accounts. The accounts can be in the form of current, saving,
FDs, recurring deposits. The interest rates and other terms of these accounts
are as per the RBI directives.
Cheque
Book
- A small, bound booklet of cheques. A cheque is a piece of paper produced by your
bank with your account number, sort-code and cheque number printed on it. The
account number distinguishes your account from other accounts; the sort-code is
your bank's special code which distinguishes it from any other bank.
Cheque
Clearing
- This is the process of getting the money from the cheque-writer's account
into the cheque receiver's account.
Clearing
Bank
- This is a bank that can clear funds between banks. For general purposes, this
is any institution which we know of as a bank or as a provider of banking
services.
Bounced
Cheque
- when the bank has not enough funds in the relevant account or the account
holder
requests that the cheque is bounced (under exceptional circumstances) then the
bank will return the cheque to the account holder.
Credit
Rating
- This is the rating which an individual (or company) gets from the credit
industry. This is obtained by the individual's credit history, the details of
which are available from specialist organisations like CRISIL in India.
Credit-Worthiness -
This is the judgement of an organization which is assessing whether or not to
take a particular individual on as a customer. An individual might be
considered credit-worthy by one organisation but not by another. Much depends
on whether an organization is involved with high risk customers or not.
Interest -
The amount paid or charged on money over time. If you borrow money interest
will be charged on the loan. If you invest money, interest will be paid (where
appropriate to the investment).
Overdraft -
This is when a person has a minus figure in their account. It can be authorized
(agreed to in advance or retrospect) or unauthorized (where the bank has not
agreed to the overdraft either because the account holder represents too great
a risk to lend to in this way or because the account holder has not asked for
an overdraft facility).
Payee -
The person who receives a payment. This often applies to cheques. If you
receive a cheque you are the payee and the person or company who wrote the
cheque is the payer.
Payer -
The person who makes a payment. This often applies to cheques. If you write a
cheque you are the payer and the recipient of the cheque is the payee.
Security
for Loans
- Where large loans are required the lending institution often needs to have a
guarantee that the loan will be paid back. This takes the form of a large item
of capital outlay (typically a house) which is owned or partly owned and the
amount owned is at least equivalent to the loan required.
Internet
Banking - Online
banking (or Internet banking) allows customers to conduct financial
transactions on a secure website operated by the bank.
Credit
Card - A
credit card is one of the systems of payments named after the small plastic
card issued to users of the system. It is a card entitling its holder to buy
goods and services based on the holder's promise to pay for these goods and
services.
Debit
Card
– Debit card allows for direct withdrawal of funds from customers bank
accounts. The spending limit is determined by the available balance in the
account.
Loan - A
loan is a type of debt. In a loan, the
borrower initially receives or borrows an amount of money, called the
principal, from the lender, and is obligated to pay back or repay an equal
amount of money to the lender at a later time. There are different kinds of
loan such as the house loan, auto loan etc.
Bank
Rate -
This is the rate at which central bank (RBI) lends money to other banks or
financial institutions. If the bank
rate goes up, long-term interest rates also tend to move up, and vice-versa.
CRR - Cash reserve Ratio (CRR) is the amount of funds that
the banks have to keep with RBI. If RBI decides to increase the percent of
this, the available amount with the banks comes down. RBI is using this method
(increase of CRR rate), to drain out the excessive money from the banks.
SLR -
SLR
stands for Statutory Liquidity Ratio. This term is used by bankers and
indicates the minimum percentage of deposits that the bank has to maintain in
form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and
some other approved to liabilities (deposits). It regulates the credit growth
in India.
ATM - An
automated teller machine (ATM) is a computerised telecommunications device that
provides the clients with access to financial transactions in a public space
without the need for a cashier, human clerk or bank teller. On most modern
ATMs, the customer is identified by inserting a plastic ATM card with a
magnetic stripe or a plastic smart card with a chip, that contains a unique
card number and some security information such as an expiration date or CVV.
Authentication is provided by the customer entering a personal identification
number (PIN)
REPO RATE: - Under repo transaction
the borrower places with the lender certain acceptable securities against funds
received and agree to reverse this transaction on a predetermined future date
at agreed interest cost. Repo rate is also called (repurchase agreement or
repurchase option).
REVERSE REPO RATE: is the interest
rate earned by the bank for lending money tothe RBI in exchange of govt.
securities or "lender buys securities with agreement to sell them back at
a predetermined rate".
CASH RESERVE RATIO: specifies the
percentage of their total deposits the commercial bank must keep with central
bank or RBI. Higher the CRR lower will be the capacity of bank to create
credit.
SLR: known as Statutorily
Liquidity Ratio. Each bank is required statutorily maintain a prescribed
minimum proportion of its demand and time liabilities in the form of designated
liquid asset.
OR
"Every bank has to maintain a
percentage of its demand and time liabilities by way of cash, gold etc".
BANK RATE: is the rate of interest
which is charged by RBI on its advances to commercial banks. When reserve bank
desires to restrict expansion of credit it raises the bank rate there by making
the credit costlier to commercial bank.
OVERDRAFT: It is the loan facility
on customer current account at a bank permitting him to overdraw up to a
certain agreed limit for a agreed period ,interest is payable only on the
amount of loan taken up.
PRIME LENDING RATE: It is the rate
at which commercial banks give loan to its prime customers.
