Banking Terminology with Explanation for Govt Exams (IBPS, SSC)
Banking Terminology: Before sharing this month article I hope that you and your family members are safe.There are number of opportunities in banking sector and many more need to happens yet.
Basis on this theme, I am just sharing with you frequently used banking terminology to our readers, Because I believe that if we want to enter in this sector we must know the terms used in banking sector.
I hope that you will like/feel useful for your career. Thanks…
1. Repo Rate
When Reserve bank of India provides a loan to the bank for short term between 1 to 90 days, Reserver bank of India takes some interest from the bank which is termed as Repo Rate.
2. Reverse Repo Rate
When bank deposit excess money in RBI then RBI provides some interest to that bank. This interest is known as Reverse Repo Rate. Fixed interest rate at which the RBI absorbs liquidity, on an overnight basis, from banks against the collateral of eligible govt. securities under the LAF. The effect of increasing Reverse Repo rate, will lead to decrease in the money supply as commercial banks will get better interest rates to keep their funds with the Reserve bank of India. Therefore Reverse Repo rate also is used as an instrument of monetary control by RBI.
SLR –(Statutory Liquidity Ratio)
Each bank has to maintain a Some % of his total deposits in the form of (Gold + bonds + Cash + Securities) with themselves at the end of every business days. Current SLR is 18.00%. (as on 06.05.2020). SLR is the Indian govt term for the reserve requirement that the commercial banks in India are required to maintain in the form of cash, gold reserves, govt. approved securities before providing credit to the customers.
- Bitcoin is virtual currency/ cryptocurrency and a payment system.
- It defined as decentralized means of tracking and assigning wealth or economy, it’s a software protocol.
- Bitcoin uses combination of two cryptographic keys, one of them is public (username) and another is private (password) are generated.
- 1Bitcoin= 108 Satoshi.
- RBI not allowed Bitcoin in India
A scheduled bank is one which is included in the Second Schedule of RBI Act and enjoins it to have a minimum capital of Rs. 5 lacs and maintain reserves as per the directions of RBI. These banks should fulfil two conditions:
- Minimum Paid up capital and collected funds is Rs.5 Lacs.
Non Performing Assets
- An asset of a bank which is not producing any income called NPA.
- Bank Normally classify as non performing assets any commercial loans which are more than 90 days overdue and any custoner loans which are more than 180 days overdue
- In Current Scenario the transactions in the banking sector are becoming a very tedious task and so as to ensure that this complex task to be removed, our banking sector is trying to emerge towards blockchain technology.
- For simplify the transactions without the help of any third party in a secure manner is really a great challenge, but to overcome this challenge an anonymous online ledger (collection of financial accounts) which uses the data structure to simplify it is called blockchain technology.
- Skimming method used by fraudsters to capture customer’s personal or account information of credit card.
- Customer’s card is swiped by the skimmer and the information contained in the magnetic strip on the card is then read into and stored on the skimmer or an attached computer.
- Skimming is a term used predominantly for credit card frauds, but it is also a tactic that is gaining in popularity among identity thieves.
Cash Reserves Ratio
- Each bank Maintain certain % oftheir total deposits with RBI in the form of Cash and Net demand & Time Liabilities.
- Current CRR is 3%. Each Bank has to pay the amount to RBI on every 15 Days.
Core Banking Solutions
Core Banking Solution (CBS) is the networking of branches, which enables customers to manage their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account.
- The consumer is no more the customer of a Branch.
- He becomes the Bank’s Customer.
- Banking Ombudsman is senior official appointed by Reserve bank of India.
- He handles and redresses customer complaints against deficiency in certain banking services.
- The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
- One can file a complaint regarding banking issue online on RBI official website. Below screen short will help you.
- A NOSTRO account is maintained by an Indian Bank in the foreign countries.
chatbots have seen a lot of interest and have been implemented over the years. Chat bots are AI enabled conversational interfaces. Bots can conduct smart and compelling conversations on behalf of the bank with millions of customers, at a fraction of the cost. They promise to enhance the bank’s customer’s experience and their approachability.
Expectations of members : It is always discussed that our students also learned Financial Management (FM) subject during our CMA course like other professional students but still our students don’t get direct job in Banking sector like others. We have to think on this issue with the help of this write up