Hello Friends
We are sharing Some banking terms which can asked in IBPS/SBI and other banking interviews and written examination.Hope you like it
1. Why do you want to join banking sector?
Banking is one of the fastest growing sectors in India with more stable and high growth and more over providing wide range of career opportunities for graduates. So I want to take an opportunity to join in a bank.
2. What is the difference between Cheque and Demand Draft?
Cheque: Cheuqe is a negotiable instrument instructing a bank to pay a specific amount from a specific account held in the maker/depositor name with that Bank.
Demand Draft: A demand draft is an instrument used for effecting transfer of money. It is a negotiable instrument.
3. What is a Non-Banking Financial Company (NBFC)?
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of
loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other
marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any
institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than
securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is
a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in
installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary nonbanking
company)
4. NBFCs are doing functions similar to banks. What is difference between banks & NBFCs ?
NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as
given below:
NBFC cannot accept demand deposits; NBFCs do not form part of the payment and settlement system and cannot issue
cheques drawn on itself;deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to
depositors of NBFCs, unlike in case of banks.
5 . What is Private Banking?
Banking services offered to high net-worth individuals. Private banking institution assists the high net-worth individual in
investing his/her money in exchange for commissions and fees. The term "private" refers to the customer service being
rendered on a more personal basis.
6. What is BSBDA?
Under the guidelines issued on August 10, 2012 by RBI: Any individual, including poor or those from weaker section of the
society, can open zero balance account in any bank. BSBDA guidelines are applicable to "all scheduled commercial banks in
India, including foreign banks having branches in India". All the accounts opened earlier as 'no-frills' account should be renamed
as BSBDA. Banks are required to convert the existing 'no-frills' accounts‟ into 'Basic Savings Bank Deposit Accounts'. The 'Basic
Savings Bank Deposit Account' should be considered as a normal banking service available to all customers, through branches .
The aim of introducing 'Basic Savings Bank Deposit Account' is very much part of the efforts of RBI for furthering Financial
Inclusion objectives.
7. What is BPS (Basis Points)?
BPS (Basis point) : - BPS is an acronym for basic points is used to indicate changes in rate of interest and other financial
instrument. BASIC POINT IS EQUAL TO 0.01% So when we say that repo rate has been increased by 25 bps, it means that the
rate has been increased by 0.25%
8. What is KYC?
The Reserve Bank of India (RBI) has advised banks to follow „KYC guidelines‟, wherein certain personal information of the
account-opening prospect or the customer is obtained. The objective of doing so is to enable the Bank to have positive
identification of its customers. This is also in the interest of customers to safeguard their hard earned money. The KYC
guidelines of RBI mandate banks to collect three proofs from their customers. They arePhotograph
Proof of identity
Proof of address
9. What is Sub-prime crisis?
The current Subprime crisis is due to sub-prime lending. These are the loans given to the people having low credit rating.
10. What is Base Rate?
It is the minimum rate of interest that a bank is allowed to charge from its customers. Unless mandated by the government, RBI
rule stipulates that no bank can offer loans at a rate lower than BR to any of its customers. It is effective from, July 1, 2010.
However, all existing loans, including home loans and car loans, will continue to be at the current rate. Only the new loans
taken on or after July 1 and old loans being renewed after this date will be linked to BR.
11. What is SWIFT?
SWIFT :- Society for worldwide Interbank financial tele- communication. India was 74th Nation to join SWIFT Network. SWIFT
Code is a standard format of bank Identifier code. This code is used particularly in International transfer of money between
banks. A majority of FOREX related message are sent to correspondent banks abroad through SWIFT. SWIFT Code consist 8 or
11 character when code is 8 digit, It is referred to primary office 4 – bank code 2 – country code 2 – location code 3 – branch
code (optional).
13. What is NOSTRO and VOSTRO account?
NOSTRO Account: A NOSTRO account is maintained by an Indian bank in the foreign countries.
VOSTRO Account: a vostro a/c is maintained by a foreign bank in India with their corresponding bank.
14. What is a DeMat Account?
DeMat is nothing but a dematerialized account. If one has to save money or make cheque payments, then he/she needs to
open a bank account. Similarly, one needs to open a DeMat account if he/she wants to buy or sell stocks. Thus, DeMat account
is similar to a bank account wherein the actual money is being replaced by shares. In order to open a DeMat account, one
needs to approach the Depository Participants [DPs]. In India, a DeMat account is a type of banking account that dematerializes
paperbased physical stock shares. The DeMat account is used to avoid holding of physical shares: the shares are bought as well
as sold through a stock broker. In this case, the advantage is that one does not need any physical evidence for possessing these
shares. All the things are taken care of by the DPs. This account is very popular in India. Physically only 500 shares can be traded
as per the provision given by SEBI. From April 2006, it has become mandatory for any person holding a DeMat account to
possess a Permanent Account Number (PAN).
15. What is RuPay Card?
RuPay is the Indian domestic card payment network set up by National Payments Corporation of India (NPCI) at the behest of
banks in India. The RuPay project had been conceived by Indian Banks Association (IBA) and had the approval of Reserve Bank
of India (RBI). RuPay LogoNational Payments Corporation of India (NPCI) has a plan to provide a full range of card payment
services including the RuPay ATM, RuPay MicroATM, Debit, Prepaid and Credit Cards which will be accepted in India and
abroad, across various channels like POS, Internet, IVR and mobile etc. The initial focus of NPCI would be to approach those
banks who have not been issuing any payment card at all more specifically – Regional Rural Banks (RRBs) and urban cooperative banks. All Public Sector Undertakings (PSU) banks set to join RuPay system by the end of year 2012. RuPay-based
debit cards can be used by the consumers on the Internet from September, 2012. The government of India had launched
India‟s first domestic payment card network, RuPay, to compete with Visa Inc and Mastercard Inc.
16. What is foreign exchange reservers?
Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreign currency deposits and bonds held by
central banks and monetary authorities.However, the term in popular usage commonly includes foreign exchange and
gold,SDRs and IMF reserve positions.
17. What is Bancassurance ?
Bancassurance stands for distribution of financial products particularly the insurance policies (both the life and non-life), also
called referral business, by banks as corporate agents, through their branches located in different parts of the country.
18. What is Money Laundering ?
Money laundering is the processes of concealing the source of obtain money.Money or funds obtained through illegal activities
are presented as legitimate.
19. What is the difference between Nationalized bank and Private Bank ?
A Nationalized bank is one that is owned by the government of the country. Since the people decide who the government is,
they are also referred to as public sector banks. The government is responsible for the money deposited into the accounts of
these banks. Where as a private sector bank is one that is owned by an independent individual or a company that is controlled
by a few individuals. In short, the bank is owned by someone else and they run the bank. The person owning/running the bank
is responsible for the money deposited into the accounts of these banks.
20. What are non-perfoming assets?
A classification used by financial institutions that refer to loans that are in jeopardy of default. Once the borrower has failed to
make interest or principal payments for 90 days the loan is considered to be a non-performing asset. Also known as "nonperforming loan".
21. What is the Functions of RBI?
The Reserve Bank of India is the central bank of India, was established on April 1, 1935 in accordance with the provisions of the
Reserve Bank of India Act, 1934.The Reserve Bank of India was set up on the recommendations of the Hilton Young
Commission. The commission submitted its report in the year 1926, though the bank was not set up for nine years.To regulate
the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the
currency and credit system of the country to its advantage." Banker to the Government: performs merchant banking function
for the central and the state governments; also acts as their banker.Banker to banks: maintains banking accounts of all
scheduled banks.
29 What is monetary policy?
A Monetary policy is the process by which the government, central bank, of a country controls
(i) the supply of money,
(ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the
economy.
22. What is SEZ?
SEZ means Special Economic Zone is the one of the part of government‟s policies in India. A special Economic zone is a
geographical region that economic laws which are more liberal than the usual economic laws in the country. The basic motto
behind this is to increase foreign investment, development of infrastructure, job opportunities and increase the income level of
the people.
23. What is SIDBI?
The Small Industries Development Bank of India is a state-run bank aimed to aid the growth and development of micro, small
and medium scale industries in India. Set up in 1990 through an act of parliament, it was incorporated initially as a wholly
owned subsidiary of Industrial Development Bank of India.
24. What is TREASURY BILLS (TB)?
Treasury bills (T-Bills) are the short term liabilities of the central government .theoretically government of India issued three
types of T-bills through auctions, namely 91 days, 182days,and 364 days. There are no treasury bills issued by state
government. Minimum amount of T –Bills is Rs. 2500and in multiple of RS. 2500.T-bills are issued at a discount and are
redeemed at par from 1st April 1997 treasury bills have been replaced by WAYS AND MEANS ADVANCES .
25. What is COMMERCIAL PAPER (CP)?
commercial paper was introduced by RBI in 1991. It is a short term money market instrument issued in the form of promissory
note .Corporate; primary dealers and the all India financial institution are eligible to issue CP. The maturity period of each
commercial paper is 7days to 1year from the date of issue .CP can be issued denominations of Rs. 5lakh or multiples thereof.
Only a schedule bank can act as an issuing and paying agent (IPA) for issuance of CP.
26. What is CRM?
Customer Relationship Management (CRM) refers to the ability to understand, anticipate and manage the needs of the
customer, interaction and relationship resulting in increased profitability through revenue and margin growth and operational
efficiencies.
27. What is Right to information Act?
The Right to Information act is a law enacted by the Parliament of India giving citizens of India access to records of the Central
Government and State overnments.The Act applies to all States and Union Territories of India, except the State of Jammu and
Kashmir - which is covered under a State-level law. This law was passed by Parliament on 15 June 2005 and came fully into
force on 13 October 2005.
28. What is Recession?
A true economic recession can only be confirmed if GDP (Gross Domestic Product)growth is negative for a period of two or
more consecutive quarters.
29. What is dematerialisation ?
Dematerialisation is a process by which the paper certificates of an investor are taken back by the company/registrar and
actually destroyed and an equivalent number of securities are credited in electronic holdings of that investor.
30. What is Defivative ?
A derivative is a financial contract that derives its value from another financial product/commodity (say spot rate) called
underlying (that may be a stock, stock index, a foreign currency, a commodity). Forward contract in foreign exchange
transaction, is a simple form of a derivative.
31. What is LAF ?
Liquidity Adjustment Facility (LAF) was introduced by RBI during June, 2000 in phases, to ensure smooth transition and keeping
pace with technological upgradation.
32. What is a Repo Rate?
Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of funds they can
borrow it from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases,
borrowing from RBI becomes more expensive
33. What is Reverse Repo Rate?
This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from
banks. RBI uses this tool when it feels there is too much money floating in the banking system. Banks are always happy to lend
money to RBI since their money is in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to
transfer more funds to RBI due to this attractive interest rates.
34. What is CRR Rate?
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.
35. What is Bank Rate?
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances
that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central
banks to control the money supply.
36. What is PLR?
The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent
and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime rate are
made by banks at the same time; although, the prime rate
does not adjust on any regular basis. The Prime Rate is usually adjusted at the same time and in correlation to the adjustments
of the Fed Funds Rate. The rates reported below are based upon the prime rates on the first day of each respective
month. Some banks use the name "Reference Rate" or "Base Lending Rate" to refer to their Prime Lending Rate.
37. what is Bitcoin?
Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized
peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective,
Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping
system in existence.
38. What is SLR Rate?
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt.
approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the
RBI (Reserve Bank of India) in order to control the expansion of bank credit. SLR is determined as the percentage of total
demand and percentage of time liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the customers
on their anytime demand. SLR is used to control inflation and propel growth. Through SLR rate tuning the money supply in the
system can be controlled efficiently.
39. What is Deposit Rate?
Interest Rates paid by a depository institution on the cash on deposit.
40. What is Fiscal Policy?
Fiscal policy is the use of government spending and revenue collection to influence the economy. These policies affect tax rates,
interest rates and government spending, in an effort to control the economy. Fiscal policy is an additional method to determine
public revenue and public expenditure.
41. What is the Banking Ombudsman Scheme?
The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A
of the Banking Regulation Act, 1949 by RBI with effect from 1995.
42. Which are the banks covered under the Banking Ombudsman Scheme,2006?
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the
Scheme.
43. What is Inflation?
Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation
figures occurs when there is an increase in the average level of prices in Goods and services. Inflation happens when there are
fewer Goods and more buyers; this will result in increase in the price of Goods, since there is more demand and less supply of
the goods.
44. What is Deflation?
Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation rate becomes negative
(below zero) and stays there for a longer period.
45. What is FII?
FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An institution established
outside India, which proposes to invest in Indian market, in other words buying Indian stocks. FII's generally buy in large
volumes which has an impact on the stock markets. Institutional Investors includes pension funds, mutual funds, Insurance
Companies, Banks, etc.
46. What is FDI?
FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant amount of ownership (stock) of
a company in another country in order to gain a measure of management control” (Or) A foreign company having a
stake in a Indian Company.
47. What is IPO?
IPO is Initial Public Offering. This is the first offering of shares to the general public from a company wishes to list on the stock
exchanges.
48. What is GDP?
The Gross Domestic Product or GDP is a measure of all of the services and goods produced in a country over a specific period;
classically a year.
49. What is GNP?
Gross National Product is measured as GDP plus income of residents from investments made abroad minus income earned by
foreigners in domestic market.
50. What is Revenue deficit?
It defines that, where the net amount received (by taxes & other forms) fails to meet the predicted net amount to be received
by the government.
51. What is Disinvestment?
The Selling of the government stake in public sector undertakings.
52. What is Fiscal Deficit?
It is the difference between the government‟s total receipts (excluding borrowings) and total expenditure.
53. What is National Income?
National Income is the money value of all goods and services produced in a Country during the year.
54. What is bank and its features and types?
A bank is a financial organization where people deposit their money to keep it safe.Banks play an important role in the financial
system and the economy. As a key component of the financial system, banks allocate funds from savers to borrowers in an
efficient manner.
55. What are Mutual funds?
Mutual funds are investment companies that pool money from investors at large and offer to sell and buy back its shares on a
continuous basis and use the capital thus raised to invest in securities of different companies. The mutual fund will have a fund
manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the
investors annually. A company that invests its clients' pooled fund into securities that match its declared financial objectives.
Asset management companies provide investors with more diversification and investing options than they would have by
themselves. Mutual funds, hedge funds and pension plans are all run by asset management companies.
These companies earn income by charging service fees to their clients.
56. What is Cheque?
Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account held in the
maker/depositor's name with that Bank.A bill of exchange drawn on a specified banker and payable on demand.“Written order
directing a bank to pay money”.
57. What is demand Draft?
A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument. Cheque and Demand-Draft
both are used for Transfer of money. You can 100% trust a DD. It is a banker's check. A check may be dishonored for lack of
funds a DD can not. Cheque is written by an individual and Demand draft is issued by a bank. People believe banks more than
individuals.
58. What is NABARD?
NABARD was established by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural
Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of
Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premiere agency to
provide credit in rural areas. NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for
promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural
crafts.
59. What is SENSEX and NIFTY?
SENSEX is the short term for the words "Sensitive Index" and is associated with the Bombay (Mumbai) Stock Exchange (BSE).
The SENSEX was first formed on 1-1-1986 and used the market capitalization of the 30 most traded stocks of BSE.
Where as NSE has 50 most traded stocks of NSE.SENSEX IS THE INDEX OF BSE. AND NIFTY IS THE INDEX OF NSE.BOTH WILL
SHOW DAILY TRADING MARKS. Sensex and Nifty both are an "index”. An index is basically an indicator it indicates whether most
of the stocks have gone up or most of the stocks have gone down.
60. What is SEBI?
SEBI is the regulator for the Securities Market in India. Originally set up by the Government of India in 1988, it acquired
statutory form in 1992 with SEBI Act 1992 being passed by the Indian Parliament Chaired by C B Bhave.
61.What are the Open Market Operations (OMOs)?
Ans: OMOs are the market operations conducted by the Reserve Bank of India by way of sale/ purchase of Government
securities to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis. For Ex:
When the RBI feels there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity.
Similarly, when the liquidity conditions are tight, the RBI will buy securities from the market, thereby releasing liquidity into the
market.
62. What is RRB'S (regional rural banks)?
Ans. Regional Rural Banks are the banking organizations being operated in different states of India. They have been created to
serve the rural areas with banking and financial services. Share capital in RRB’s: Central government: 50%, Sponsored bank:
35%, State government: 15%Prathama Bank is the first Regional Rural Bank of India, sponsored by Syndicate Bank established
on 2nd October, 1975, with its Head Office at Moradabad.RRBs works under supervision of NABARD (National Bank for
Agriculture and Rural Development).NABARD head office is at MUMBAI.Note: Example of RRB'S: Prathma Gramin Bank,Pragathi
Gramin bank etc. Every Gramin bank is sponsored by its nationalized bank.Example: Pragathi grameena bank is sponsored by
"Canara bank".
63. What are Co-operative banks?
Ans. The main purpose of co-operative banks is to co-operate small scale industries, and to provide small loans.Example: Bellary
dist co-op bank etc.
64. What are Industrial banks?
Ans. The main purpose of industrial banks is to provide big loans to large scale industries. Examples: IDBI bank, Industrial bank
of India etc.
65. Types of accounts in banks?
Ans. Savings bank account [SB a/c]: The main purpose of SB a/c is to encourage small savings from the public. Interest paid on
SB a/c is 4 percent. Any individual can open SB a/c. An Indian residing at abroad can open a NRI a/c. NRI represents non resident Indians.
Current account: It’s a running and active account. No interest is paid on current a/c.Current accounts can be opened on firm
names. Even individuals can also open current a/cs. But on firm names you cannot open SB a/c.Fixed Deposit account: Amount
is kept for a fixed period. Higher rate of interest will be paid on this a/c.Recurring deposit [RD a/c]: A fixed amount can be
deposited in monthly installments. Interest rate is same as fixed deposits.
66. What is Unclaimed Deposit Account?
Ans: Those saving or current accounts which have not been operated upon for 10 years or more, as at the end of each calendar
year.
67. What is Inoperative /Dormant Account?
Ans: A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account
for over a period of two years.The following services are not available for inactive / inoperative accounts:
(a) Request for address change
(b) ATM/Debit card renewal or issue
(c) Request for cheque book
(d) Transactions through ATM/Debit card, Internet Banking and Phone banking
(e) Transactions through issue of Clearing Cheque (applicable only for accounts in "Inoperative" status
68.What is Cheque Truncation?
i. Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting
bank en-route to the drawee bank branch.
ii. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant
information like data on the MICR band, date of presentation, presenting bank, etc.
iii. Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the
scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes
reconciliation-related and logistics-related problems, thus benefitting the system as a whole.
69.What is Marginal Standing Facility (MSF):
MSF rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government
securities.
ii. This came into effect in may 2011. Under the Marginal Standing Facility (MSF), currently banks avail funds from the RBI on
overnight basis against their excess statutory liquidity ratio (SLR) holdings.
iii. Additionally, they can also avail funds on overnight basi s below the stipulated SLR up to 1 per cent of their respective Net
Demand and Time Liabilities (NDTL) outstanding at the end of second preceding fortnight.Why (MSF) is it required: Banks
borrow money from RBI at MSF rate when there is an acute cash shortage or acute asset-liability mismatch. This does not carry
any stigma. Size of MSF: Minimum amount of Rs. One crore and in multiples of Rs. One crore thereafter.
70.What is CBS (Core Banking Solutions):
Core Banking Solutions is the process, 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.
Advantages for both to the customers & the banks:
Customer: i. Transactions of business from any branch.
ii. Lower incidence of errors.
iii. Better funds management due to immediate availability of funds.
Banks: i. Better customer service.
ii. Availability of accurate data.
iii. Increased business volume with better asset liability management and risk management.
71.What is Credit card?
Ans. Credit card is a plastic instrument that can be used for the purchase of goods and services. You can buy the services and
then pay the cash to the bank. Limits will be fixed based on the net worth of the customer.Leading credi t cards: VISA, MASTER.
72. What is NEFT & RTGS?
NEFT (National Electronic Fund Transfer): NEFT enables funds transfer from one bank to another but works a bit differently than
RTGS. NEFT is slower than RTGS. The transfer is not direct and RBI acts as the service provider to transfer the money from one
account to another. You can transfer any amount through NEFT, even a rupee.There is no Minimum & Maximum Limit in NEFT.
Need of NEFT: We can use this facility if we want to transfer funds online in a day or two. NEFT can make life easier for those
who need to send money to their parents or children living in another city. It cuts the trouble of issuing a cheque or draft and
posting it. It can also be done through internet banking.
RTGS (Real time gross settlement ): RTGS system is funds transfer systems where transfer of money or securities takes place
from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not
subjected to any waiting period. The transactions are settled as soon as they are processed. "Gross settlement" means the
transaction is settled on one to one basis without bunching or netting with any other transaction. Once processed, payments
are final and irrevocable.Minimum & Maximum Limit of RTGS: 2 lakh and no upper limit.
In an RTGS system, transactions are settled across accounts held at a Central Bank on a continuous gross basis. Settlement is
immediate, final and irrevocable (which cannot be changed or reversed).
73.What is a currency chest?
i. To facilitate the distribution of banknotes and rupee coins, the Reserve Bank has authorised select branches of scheduled
banks to establish Currency Chests.
ii. These are actually storehouses where banknotes and rupee coins are stocked on behalf of the Reserve Bank. As on June 30,
2006, there were 4428 Currency Chests and 4102 Small Coin Depots.
iii. The currency chest branches are expected to distribute banknotes and rupee coins to other bank branches in their area of
operation.
74. What is Online or Internet Banking?
Ans: The accessing of bank information, accounts and transactions with the help of a computer through the financial
institution's website on the Internet is called online banking. It is also called Internet banking or e -banking
75. What are soiled, mutilated and i