Banking terms and concepts can sometimes be challenging to understand even for industry professionals. Most of us have seen monetary policy in the past where we often come to hear that there has been a change in CRR, SLR, Repo rate, Reverse repo, rate and so on.
But still, some people are not clear about these terms.
However, since banking is a significant part of our business and personal life, it is useful for consumers to learn some common banking terms.
Essential Banking Terms You Need To Know:
Let’s understand some of the banking key terms-
1.ATM (Automatic Teller Machines): Machines which dispense cash, receive cash, accept cheques, and also give balance details and mini statements to the customers.
Suggested Read: 4 Safeguards for Failed ATM transaction
2. Bancassurance: It refers to the distribution of insurance products and policies of insurance companies by banks through their branches.
3. Bank Account: It is an account used for the personal purpose having some restrictions on withdrawal.
Suggested Read: How to Open a Bank Account?
4. Bank Rate: It is the rate of interest which is charged by a central bank to commercial banks on the loans and advances it gives to the borrowers.
5. Basis Point: It is used for indicating the cost of finance.
6. Call Money: It is a loan made for a very short period, say a few days only with a low rate of interest.
7. Cheque: It is written by an individual for transferring the amount between two accounts of the same bank or a different bank and the money is withdrawn from the account.
Suggested Read: How to write a Cheque?
8. CRR (Cash Reverse Ratio): It is the amount of funds which a bank keeps with the RBI.
9. Debit Card: It is a card which is issued by the bank to their customers for withdrawing their money from their account electronically.
10. Dishonour of Cheque: Non-payment of a cheque by the paying banker.
Suggested Read: 12 reasons for Dishonour of Cheque
11. E-Banking: It is a type of banking where we can conduct financial transactions electronically, such as RTGS, Credit cards, Debit cards etc.
12. Electronic Fund Transfer: We use Automatic teller machine, wire transfer, and computer for moving funds between different accounts in different or same bank.
13. Fiscal Deficit: It is the amount of Funds which is borrowed by the government to meet the expenditures.
14. Monetary Policy: It is a Central Government policy regarding the quantity of money in the economy, the rate of interest as well as the exchange rate
15. Non-performing Assets (NPAs): NPAs are the loans which are given by a bank on which interest payments are not being made on time.
Suggested Read: Banking NPA- the Black Hole
16. Repo Rate: Commercial banks borrow funds by the RBI at this rate
17. Reverse Repo Rate: It is the rate at which RBI borrows money from banks when there is too much money floating in the banking system
18. 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
19. SLR (Statutory Liquidity Ratio): It is an amount that a commercial bank should have before giving credits to its customers either in the form of gold, money or bonds.
20. Universal Banking: When financial institutions and banks undertake activities including investment, issue of debit and credit card etc.
21. Virtual Banking: Internet banking is also known as virtual banking.
22. Wholesale Banking: Type of banking which mainly focuses on the financial needs of the institutional clients as well as the industry.
I hope that next time you see the monetary policy, you are in a better position to understand them.