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Demand deposit is the one which can be withdrawn at any time, without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withdrawn for a certain "term" or period of time.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it can be withdrawn or it can be held for another term.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. The beneficiary of the cheque will have not been paid. This
normally incurs a fee from the bank.
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 -
CRR means Cash Reserve Ratio. Banks in India are required to hold a
certain proportion of their deposits in the form of cash with Reserve
Bank of India (RBI). This minimum ratio is stipulated by the RBI and is
known as the CRR or Cash Reserve Ratio. Thus, When a bank’s deposits
increase by Rs100, and if the cash reserve ratio is 9%, the banks will
have to hold additional Rs 9 with RBI and Bank will be able to use only
Rs 91 for investments and lending / credit purpose. Therefore, higher
the ratio (i.e. CRR), the lower is the amount that banks will be able
to use for lending and investment. This power of RBI to reduce the
lendable amount by increasing the CRR makes it an instrument in the
hands of a central bank through which it can control the amount that
banks lend. Thus, it is a tool used by RBI to control liquidity in the
banking system.
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)
