Important terminologies for Bank exams
Published on Aug 19, 2020
Bank aspirants are studying hard for their upcoming exams. IBPS exams are just around the corner. Candidates might be worrying about the banking terminology and how to prepare learn them. The list very long and it is nearly impossible to learn it, to make it easy, we are enlisting some of the important bank terminologies from the exam's point of view. This can be very beneficial for you.
Important Terms for Bank Exams
- Banking ombudsman- it is a judicial authority which works under India's banking ombudsman scheme 2006. It is managed by the Government of India. The main purpose of this is to deal with customer complaints.
- Deflation- decrease in the price of goods and services
- Liquidity- this aims to describe the degree to which an asset can be purchased or sold into the market without affecting the original price
- Merchant banking- the combination of banks and consultancy services makes up merchant banking
- Monetary policies- RBI [ reserve bank of India] uses this to regulate the cost, availability and use of money and credits
- Plastic money- it originally refers to the plastic cards which we use in the place of cash to get rid of mental stress.
There are some direct instruments which are also used
- Cash reserve ratio- it is the fund hat the bank have to kee in RBI, simply like the minimum account balance
- Refinance facilities- this is done by RBI to help exporters by replacing an existing debt obligation with another
- Statutory liquidity ratio- the minimum proportion of net demand and time liabilities which a bank keeps at the end of each working day
There are some indirect instruments also
- Bank rate- the interest which reserve bank of India charges on loans
- Liquidity adjustments facility- this is a policy which permits the bank to lend money through repurchase agreements and adjusting the day to day mismatches in liquidity
- Marginal standing facility- the window through which a bank lends money from RBI in the case of finishing interbank liquidity completely
- Market stabilization scheme- securities that are issued with the aim to provide stock security to he RBI
- Open market operations- it is an activity dome RBI to take or give liquidity in its own currency to or from a bank to a group of banks
- Repo rate- the interest rate at which RBI lends money to commercial banks in the case of any shortfall of funds
- Reserve repo rate- the rate at which RBI lends money from commercial banks within the country
- Term repo- repurchasing of agreement with a term of more than one day
Here are some money market instruments also-
- Authorized capital- the maximum amount of share that the company is authorized by its constitutional documents to issue to shareholders
- Bonds- an instrument of indebtedness of the bond issuer to the holders
- Call money- money lent by a bank or any other institution and have to repay only on the demand
- Commercial bill- a bill exchange which is issued by the commercial organization to raise money for short term needs
- Commercial papers- a short term debt instrument which is issued by a corporation for the financing of accounts receivable, inventories and meeting short term liabilities. It is unsecured
- Certificates of deposits- a certificate entitling the bearer to receive interest
- Dated Government securities- long term securities which are fixed or floating depending upon the face value and are payable at fixed intervals of time
- Debentures- long term security which bears a fixed rate of interest and is issued by a company and secured against assets
- Issued capital- the capital that has bee issued to shareholders
- Mutual funds- this is an investment fund which is managee by professionals making investors purchase securities
- Net asset value- aa mutual fund's price per share or exchange-traded fund's per-share value
- Paid-up capital- the amount that a company has and is funded by shareholders
- Treasury bills- short-dated US/UK security bearing no interest
Negotiable instruments
- Cheques- this is like an order to the bank to transfer money from the sender's to receiver's account
- Antedated cheques- cheques which are written by a marker and are dated with past dates
- Bounced cheque- cheque which cannot be accepted due to any failure like the wrong signature of the sender
- Crossed cheques- the cheques directly deposited in the bank and is not credited into the account immediately
- Post-dated cheques- cheques which have future dates
- Stale cheques- cheques which are written before a certain number of months
- Cheques truncation- conversion of a physical cheque into an electronic form