Banking Awareness

List of Important Banking/Economic Terminologies

List of Important Banking/Economic Terminologies:

Dear Readers, Here we have provided the List of Important Banking/Economic Terminologies which was most expected topic in the examination. Candidates those who are preparing for upcoming IBPS 2017 Exams can make use of it.

Important Banking/Economic Terminologies

ATM (Automatic Teller Machines)They are machines that dispense cash, receive cash, accept cheques, and give balance details and mini statements to the customers through Computer network

BancassuranceIt is the distribution of insurance products and the insurance policies of insurance companies by banks as corporate agents through their branches. Banks charge a fee for this service from insurance companies

Bouncing of a chequeWhen an account has insufficient funds the cheque is not payable and is returned by the bank with a reason “Exceeds arrangement” or “funds insufficient”.

Bank Account: It is account of nominal interest which can only be used for personal purpose and which has some restrictions on withdrawal

Bank RateIt is the rate of interest charged by a central bank to commercial banks on the advances and the loans it extends.

Basis PointOne-hundredth of 1% point normally used for indicating cost of finance

Balanced budget: A budget is said to be a balanced budget when current income is same as current expenditure.

Balance of Trade: Refers to the relationship between the values of country’s imports and its export, i.e., the visible balance. These items only form part of the balance of payments which are (a) invisible items and (b) movements of capital.

Budget Deficit: When the expenditure of the Govt. exceeds the revenue, the balance between the two is the budget deficit.

Call MoneyIt is a loan that is made for a very short period of a few days only with a low rate of interest

ChequeIt is written by an individual to transfer amount between two accounts of the same bank or a different bank and the money is withdrawn from the account.

Core BankingIt is a general term used to describe the services provided by a group of networked bank branches

Core Banking Solutions (CBS): In this all the branches of the bank are connected together and the customer can access his/her funds or transactions from any other branch.

CRR (Cash Reverse Ratio): the amount of funds that a bank keep with the RBI. If the percentage of CRR increases then the amount with the bank comes down.

Current AccountIt is an account that can be opened generally for business purposes with no restrictions on withdrawals and no interest paid

Debit CardIt is a card issued by the bank so the customers can withdraw their money from their account electronically.

Deflation: Decline in the general price level of goods and services leading to rise in the value (purchasing power). A method of statistical conversion of a series of data to compensate for the general rise in prices.

Demat Account: The way in which a bank keeps money in a deposit account in the same way the Depository Company converts share certificates into electronic form and keep them in a Demat account.

Dishonour of Cheque
Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment

E-Banking
: It is a type of banking in which we can conduct financial transactions electronically. RTGS, Credit cards, Debit cards etc come under this category.

EFT – (Electronic Fund Transfer)
In this we use Automatic teller machine, wire transfer and computers to move funds between different accounts in different or same bank.

Fiscal policy:  
Government’s expenditure and tax policy, an important means of moderating the upswings and downswings of the business cycle.

Fiscal Deficit: It is the amount of Funds borrowed by the government to meet the expenditures.

Inflation
It is an increase in the quantity of money in circulation without any corresponding increase in goods thus leading to an abnormal rise in the price level

Initial Public Offering (IPO)
: It is the time when a company makes the first offering of the shares to the public.

Kiosk Banking: 
Doing banking from a cubicle from which food, newspapers, tickets, etc are also sold

Leverage Ratio
: It is a financial ratio which gives us an idea or a measure of a company’s ability to meet its financial losses.

Liquidity
: It is the ability of converting an investment quickly into cash with no loss in value.

Market Capitalization
: The product of the share price and number of the company’s outstanding ordinary shares.

Mortgage
: It is a kind of security which one offers for taking an advance or loan from someone.

Mutual Fund
: These are investment schemes. It pools money from various investors in order to purchase securities.

Monetary Policy
: it refers to the Central Government policy with respect to the quantity of money in the economy, the rate of interest and the exchange rate

Non-bank ATM / White labeled ATM
: An ATM or cash machine that does not prominently display a bank’s name or logo. A fee will be charged for cash withdrawals in these ATMs and they don’t accept deposits

Non-performing Assets (NPAs)
NPA or non-performing loans are loans given by a bank on which repayments or interest payments are not being made on time

Permanent Account Number (PAN): 
PAN is a number issued by the Income Tax Department to their tax payers.

Plastic Money
Plastic money is a name given to Credit cards, Debit cards, ATM cards anf International Cards issued by banks

Point of Sale (PoS)
PoS refers to a location at which a payment of a card transaction occurs

Prime Lending Rate (PLR)
Rate of interest at which a bank gives loan to its most reliable customer i.e., customer with ‘zero risk’

Pass Book
It is a book where all the bank transactions are recorded. They are mainly issued to Current or Savings Bank account holders.

Repo Rate
: Commercial banks borrow funds by the RBI if there is any shortage in the form of rupees. If this rate increases it becomes expensive to borrow money from RBI and vice versa.

Reverse Repo Rate
: It is the exact opposite of repo rate. It is the rate at which RBI borrows money from banks when it feels there is too much money floating in the banking system

Special Drawing Rights (SDR)
: It is a reserve asset (Paper Gold) created within the framework of the International Monetary Fund in an attempt to increase international liquidity

SLR (Statutory Liquidity Ratio)
It is amount that a commercial bank should have before giving credits to its customers which should be either in the form of gold, money or bonds.

Teller
: He/she is a staff member of the bank who cashes cheques, accepts deposits and perform different banking services for the general mass.

Universal Banking
: When financial institutions and banks undertake activities related to banking like investment, issue of debit and credit card etc then it is known as universal banking.

Value Added Tax (VAT): This form of tax has been in operation in some countries. If brings a value added tax, a tax levied on the values that is added to goods and services turned out by the producers during stages of production and distribution.

Virtual Banking: Internet banking is sometimes known as virtual banking. It is called so because it has no bricks and boundaries. It is controlled by the World Wide Web.

Wholesale Banking: It is similar to retail banking with a slight difference that it mainly focuses on the financial needs of the institutional clients and the industry.

Zero Based Budgeting:  The practice of justifying the utility in cost benefit terms of each government expenditure on projects. The ZBB technique, involves a serious review of every scheme before a budgetary provision is made in its favour. This form of financial planning is with an objective to ensure that every rupee spent is result oriented. If ZBB is properly implemented it could help to reverse the trend of large deficits on the revenue account of the Union Government.

Zero Coupon Bond: It is a bond that is sold at good discount as it has no coupon.