Important Banking Terms and Terminologies
Important Banking Terms and Terminologies
Important Banking Terms and Terminologies
Banking terms and concepts have always been part of our economics book. But they are hard to
remember and tricky to apply. We all know that monetary policy revolves around repo rates, bank
rates, and multiple other rates. This can lead to confusion between the concepts.
1. Repo Rate
In India, it is the rate at which the Resfloaerve bank of India lends
money to commercial banks in need, with collateral. This
situation usually arrives at the time of inflation. 40% is the
current repo rate in India. Bank rate is similar to this but doesn’t
require collateral to provide loans. The current bank rate is
4.25%.
5. Retail Banking
It is a service offered by many banks across the country. This
allows every consumer to manage their accounts, enjoy access to
their credits, and secure their money conveniently. This is also
called consumer banking.
6. Bitcoin
It is a cryptocurrency that can be sent from one person to
another without any intermediaries. It is not administered by the
RBI.
7. Call Money
It is a short-term loan with usually higher interest. The maturity
period of this is between 1 to 14 days. The lender can ask for the
money anytime they want. If it is repaid within a day then it
becomes call money. And if it is repaid after more than a day
then it becomes notice money.
9. Scheduled Bank
Reserve Bank of India Act, 1934 led to the formation of the
Reserve Bank of India. This act has certain sections. The Second
Schedule of the Act has banks listed in it called the Scheduled
Banks. The banks not listed there are Non-Scheduled Banks.
18. Cheque
It is a paper that instructs the bank to pay a specific amount from
one account to another account to whom the cheque is issued.
28. Bancassurance
It is an agreement between banks and insurance companies. In
this, the bank offers insurance benefits to its customers.
32. MIBOR
The Mumbai Interbank Offered Rate is the rate at which a bank
offers a short term loan to other banks. The current MIBOR rate
is 4.28%.
38. Insolvency
It is a situation in which the person/company is unable to pay its
debts on time.
39. Bankruptcy
After a person or company becomes insolvent, they can seek
relief from some or all debts. This legal process is Bankruptcy.
40. Amortization
It is the process of distributing the payments in smaller
instalments. And amortization of assets is allotting a price to an
intangible asset.
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50,000/- PF
BECR7840V
A home equity loan comes with fixed payments and a fixed interest rate for the term of the
loan. HELOCs are revolving credit lines that come with variable interest rates and, as a
result, variable minimum payment amounts.