Banking Terminalogy - 140 Q&A

7/30/2019 Banking Terminalogy - 140 Q&A

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What is Balance of Trade?

The value of a countrys exports minus the value of its imports. Unless specified as the balance of merchandise tradit normally incorporates trade in services, including earnings (interest, dividends, etc.) on financial assets.

What is Balanced Trade?

When A balance of trade equal to zero. (exports-imports=0)

What is Balance of merchandise trade?

The value of a countrys merchandise exports minus the value of its merchandise imports.

What is a favorable balance of trade?

It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroaand domestic investments abroad. Credit items include exports, foreign spending in the domestic economy andforeign investments in the domestic economy. A country has a trade deficit if it imports more than it exports; theopposite scenario is a trade surplus.

What is Balance of Payments?

A list, or accounting, of all of a countrys international transactions for a given time period, usually one year.Payments into the country (receipts) are entered as positive numbers, called credits; payments out of the country(payments) are entered as negative numbers called debits. A single number summarizing all of a countrys

international transactions: the balance of payments surplus.

What is Balance of payments adjustment mechanism?

Any process, especially any automatic one, by which a country with a payments imbalance moves toward balance opayments equilibrium

What is Monopolistic Competition?

A market structure in which there are many sellers each producing a differentiated product. Each can set its own prand quantity, but is too small for that to matter for prices and quantities of other producers in the industry.

What is MFN?

MFN stands for Most Favoured Nation. The principle, fundamental to the GATT, of treating imports from a countryon the same basis as that given to the most favored other nation. That is, and with some exceptions, every country gthe lowest tariff that any country gets, and reductions in tariffs to one country are provided also to others.

What is Gold Standard?

A monetary system in which both the value of a unit of the currency and the quantity of it in circulation are specifiein terms of gold. If two currencies are both on the gold standard, then the exchange rate between them isapproximately determined by their two prices in terms of gold.

What is Balance on capital account?

A countrys receipts minus payments for capital account transactions.

What is Balance on current account ?

A countrys receipts minus payments for current account transactions. Equals the balance of trade plus net inflows transfer payments.

What is a Balanced budget ?

A government budget surplus that is zero, thus with net tax revenue equaling expenditure. A balanced budget changin policy or behavior is one in which a component of the government budget, usually taxes, is adjusted as necessarymaintain a balanced budget.

What is balanced growth of an Economy?

Growth of an economy in which all aspects of it, especially factors of production, grow at the same rate.


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What is a Bank rate The interest rate charged by a central bank to commercial banks for very short term loans.

What is a Repo? Repo is Repurchase Agreement. An agreement to sell a security for a specified price and to buyback later at another specified price. A repo is essentially a secured loan.

What is Repo Rate? Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is thrate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at acheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. On March 4, 2009 it was5% in India (please check the latest figure by RBI)

What is CRR Rate in India?

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase tpercent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), drain out the excessive money from the banks.

What is a Reverse Repo Rate?

Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. Banks are alwayshappy to lend money to RBI since their money are in safe hands with a good interest. An increase in Reverse repo rcan cause the banks to transfer more funds to RBI due to this attractive interest rates. It can cause the money to bedrawn out of the banking system. Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate and

Reverse Repo rate our banks adjust their lending or investment rates for common man. On March 4, 2009 ReverseRepo Rate is 3.5% (please check latest rate by RBI)

What is SLR Rate?

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold orgovt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained bthe RBI (Reserve Bank of India) in order to control the expansion of bank credit.

How is SLR determined?

SLR is determined as the percentage of total demand and percentage of time liabilities. Time Liabilities are theliabilities a commercial bank liable to pay to the customers on their anytime demand. .

What is the Need of SLR?

With the SLR (Statutory Liquidity Ratio), the RBI can ensure the solvency a commercial bank. It is also helpful tocontrol the expansion of Bank Credits. By changing the SLR rates, RBI can increase or decrease bank creditexpansion. Also through SLR, RBI compels the commercial banks to invest in government securities like governmbonds..

What is the main use of SLR? SLR is used to control inflation and propel growth. Through SLR rate tuning themoney supply in the system can be controlled efficiently.

What is Inflation in India?

Increase in the overall price level of an economy, usually as measured by the CPI /WPI or by the implicit pricedeflator. Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. Anincrease in inflation figures occurs when there is an increase in the average level of prices in Goods and services.Inflation happens when there are less Goods and more buyers, this will result in increase in the price of Goods, sincthere is more demand and less supply of the goods..

What is Deflation?

A fall in the general level of prices. Unlikely unless the rate of inflation is already low, it may then be due either to surge in productivity or, less favorably, to a recession. Deflation is the continuous decrease in prices of goods andservices. Deflation occurs when the inflation rate becomes negative (below zero) and stays there for a longer period


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What is a Barter economy?

An economic model of international trade in which goods are exchanged for goods without the existence of moneyMost theoretical trade models take this form in order to abstract from macroeconomic and monetary considerations

26.What is Basel I?

Also known at Basel Capital Accord, this was an agreement in 1988 by the Basel Committee of central bankers tomeasure the credit risk of commercial banks and set minimum standards for bank capital in order to reduce thelikelihood of international repercussions due to bank failures.

27.What is Basel II?The Basel II Framework describes a more comprehensive measure and minimum standard for capital adequacy thatnational supervisory authorities are now working to implement through domestic rule-making and adoptionprocedures. It seeks to improve on the existing rules by aligning regulatory capital requirements more closely to theunderlying risks that banks face. In addition, the Basel II Framework is intended to promote a more forward-lookinapproach to capital supervision, one that encourages banks to identify the risks they may face, today and in the futuand to develop or improve their ability to manage those risks. As a result, it is intended to be more flexible and bettable to evolve with advances in markets and risk management practices.The efforts of the Basel Committee on Banking Supervision to revise the standards governing the capital adequacy internationally active banks achieved a critical milestone in the publication of an agreed text in June 2004.

28.What is a Beggar thy neighbor policy?For a country to use a policy for its own benefit that harms other countries. Examples are optimal tariffs and, in arecession, tariffs and/or devaluation to create employment.

29. What is a Bill of Lading?

This term is normally used in shipping industry. The receipt given by a transportation company to an exporter whenthe former accepts goods for transport. It includes the contract specifying what transport service will be provided anthe limits of liability.

30. What is the use of color boxes in WTO category of subsidies?

Used with a color, a category of subsidies based on status in WTO: red=forbidden, amber or orange=go slow,

green=permitted, blue=subsidies tied to production limits. Terminology seems only to be used in agriculture, wherefact there is no red box.

31. What is a fiscal deficit?

A deficit in the government budget of a country and represents the excess of expenditure over income. So this is theamount of borrowed funds required by the government to meet its expenditures completely.Indias fiscal deficit widened to Rs. 541.58 billion in April, 2009 as compared to Rs. 329.39 billion rupees in April2008.

32. What is Black Money ?

Black Money is the unaccounted money concealed from the tax authorities. The black money runs a parallel econom

adversely affecting the distribution of wealth & income in the economy.

The total amount of black money globally is estimated between $2.1 and 2.5 trillion. This is roughly about sevenpercent of the worlds GDP.

33.What is a Black Market?

A black market is an illegal market, in which something is bought and sold outside of official government-sanctionchannels. Black markets tend to arise when a government tries to fix a price without itself providing all of thenecessary supply or demand. Black markets in foreign exchange almost always exist when there are exchangecontrols.


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34.What is a blue chip company? Why it is blue color only used in such companies?

A blue chip is concerned with stocks & shares of company, which are well established and whose purchase isconsidered extremely safe. Due to stable earnings and no extensive liabilities these companies are called blue chipcompanies.The term blue chip comes from casinos, where blue chips stand for counters of the highest value. Most blue chipstocks pay regular dividends, even when business is faring worse than usual.

35.What is a direct Tax?

A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are examples

direct tax. They are not shifted to somebody else.

36.What is an Indirect Tax?

This type of tax is not paid by someone directly to the authorities and it is actually passed on to the other in the formof increased cost. They are levied on goods and services produced or purchased. Excise tax, Sales tax, VAT areindirect taxes.

37.What are LDCs or Least Developed Countries?

Least Developed Countries (LDCs) are countries which as per United Nations show the lowest indicators ofsocioeconomic development.They have lowest Human Development Index ratings of all countries in the world.

A country which has three-year average Gross national Income per capita of less than US $750 is tagged as LDC. aLDC must have an income of $ 900 to escape this tag. Besides if thse countries show human resource weakness bason indicators of nutrition, health, education and adult literacy and also or economic vulnerability based on instabilitof economy . Currently UN has tagged 49 countries in LDC. India is not an LDC.

38.What are Middle Income Countries ?

Middle-income countries (MICs) are the 86 countries that fall into the middle-income range set by the Banks WorDevelopment Indicators. They account for just under half of the worlds population; are home to one-third of peoplacross the globe living on less than $2 per day; and are found in all six of the Banks geographical regions. Theycover a wide income range, with the highest income MIC having a per capita income 10 times that of the lowest.

39.What is Policy of Laissez Faire?Laissez Faire is a French term and means no interference. It is a doctrine that states that government generally shounot intervene in the marketplace.

40.What is the difference between Monopoly and Monopsony ?

In monopsony only one buyer faces many sellers. So this is called Buyers Monopoly. It is a rare situation in todayeconomy.In monopoly one seller faces many buyers. As the only purchaser of a good or service, the monopsonist may dictterms to its suppliers in the same manner that a monopolist controls the market for its buyers.

41.What is the main function of Competition Commission of India?

CCI is an independent body which become operational w.e.f. May 20, 2009 and is responsible for investigating themergers, market shares & conditions besides regulating firms. CCI will ultimately replace the Monopolies andRestrictive Trade Practices Commission (MRTPC) ofIndia.

42.What is Lead Bank Scheme?

Lead bank scheme was introduced around 40 years ago and recently it was in the news as a high level committeechaired by RBI Deputy Governor Usha Thorat was constituted to review and revitalize this scheme. The scheme aimat facilitating credit delivery to the farfetched areas ofIndia. There are members of the committee from NABARD aSIDBI. Thus the scheme focuses upon financial inclusion.The Opinion of this committee is that full financial inclusion is possible only if it makes a facility of opening of nofrill accounts backed by other specialized services.


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43.What are Nostro & Vostro Accounts ?

A nostro account is maintained by an Indian Bank in the foreign countries for a facility of easy clearing of theirtransactions. For instance, if the bank pays a demand drawn on it by its correspondent bank, there is no delay becauthe foreign corresponded bank would already have credited the nostro account of the paying bank while issuing thedemand draft.A vostro account is maintained by a foreign bank in India with their corresponding bank.

44.From which country India imports maximum?

From China. Import from China was $ 24.16 billion in 2008-09, which got doubled in 3 years. This is 10.3 % of all

the imports of India.

45.What is Gold Standard?

A system of setting currency values whereby the participating countries commit to fix the prices of their domesticcurrencies in terms of a specified amount of gold.

46.What is a Free Float Exchange Rate system?

An exchange rate system characterized by the absence of government intervention. Also known as a clean float.

47.What are Special Drawing rights SDR?

SDR are new form of international reserve assets, created by the International Monetary Funds in 1967. The value o

SDR is based on a portfolio of widely used currencies and they are maintained as accounting entries and not as hardcurrency or physical assets like Gold.

48.What are the requirements to open a New Branch in Rural Area?

Since 2006, RBI has approved the opening of new branches only on the condition that at least half of such branchesare opened in under-banked areas as notified by the regulator.The opening of branches by banks is governed by the provisions of Section 23 of the Banking Regulation Act, 1949In terms of these provisions, banks cannot open a new place of business inIndia or abroad or change otherwise thanwithin the same city, town or village, the location of the existing place of business without the prior approval of theReserveBank of India (RBI). Thus, it is mandatory for RRBs to seek prior approval/ license from Rural Planning anCredit Department (RPCD) of RBI before opening of new branches/offices.

RRB should fulfill the following conditions to become eligible for opening of new branch/es.1. It should not have defaulted in maintenance of SLR and CRR during the last two years.2. The RRB should be making operational profits, its net worth should show improvement 3. Its net NPA ratio shounot exceed 8 per cent.

49.What is concept sustainable Development?

Meeting the needs of the present without compromising the ability of future generations to meet their needs is callesustainable development. This concept is popular in present context of development.

50.What is the meaning of Financial Inclusion?

Today is is well recognized that large population of India is out of reach of the formal banking services. Financial

inclusion is the concept which has been floated to bring the most of the rural population / area under the net of thefinancial and banking services.

51. What is SATMO?

SATMO is Satellite Money Order Service introduced by Postal Department Govt. of India on December 16, 1994.However this scheme could not make its headway due to functional complicacies.

52. What is Vande Mataram Scheme ?

Vande mataram schem is a nationwide programme aimed at improving ante and post-natal carewhich was launcheon February 9, 2004. The scheme envisages free ante and post-natal check-ups, tips to avoid nutritional problems aanemia and counseling on small family norm and is a major initiative in Public Private partnerships during

emergency.


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53. What is Golden Handshake Scheme?

Golden handshake scheme is a Govt. of India scheme introduced as a Voluntary retirement Scheme (VRS) inIndustrial Policy Resolution 1991 for reducing the pressure of extra employees on public sector enterprises.

54. What is India Brand Equity Fund?

This is a scheme to promote Indian Brands in Overseas Markets with the primary objective of brand promotion andnot export promotion. To make the Made in India label a symbol of quality, competitive price, reliability andservice to the customer & to project India as a reliable supplier of quality goods and services. It was established onJuly 11, 1996.

55. What is Jago Grahak Jago?

The Consumer Awareness Scheme for the XI Plan amounting to a total of Rs. 409 crores has been approved by theCabinet Committee on Economic Affairs on 24.01.08. This scheme has been formulated to give an increased thrusta multi media publicity campaign to make consumers aware of their rights. The slogan Jago Grahak Jago is part othe publicity campaign undertaken in the last few years.Jago Grahak Jago has become the focal theme through which issues concerning the functioning of almost allGovernment Departments having a consumer interface can been addressed. To achieve this objective joint campaighave been undertaken/are being undertaken with a number of Government Departments.

56. What is a revolving credit?

Revolving credit is a type of credit that does not have a fixed number of payments. Corporate revolving creditfacilities are typically used to provide liquidity for a companys day-to-day operations.The credit cards are exampleof revolving credit. They are renewed automatically until the notice of cancellation is receieved. The time ofrepayment is specified.

57. What is Gender Budgeting?

Gender budgeting is the process of conceiving, planning, approving, executing, monitoring, analyzing and auditingbudgets in a gender-sensitive way. Gender Budgeting is actually an attempt to women upliftment without any sexdiscrimination while formulating the policies and making allocation for them.Gender Budgeting is a process that entails incorporating a gender perspective at various stages- planning/ policy/programme formulation, assessment of needs of target groups, allocation of resources, implementation, impact

assessment, reprioritization of resources.Gender Responsive Budget and Gender Mainstreaming are outcomes of Gender Budgeting.

58. What is Soft Currency?

Soft currency is opposite of hard currency and it indicates a type of currency whose value may depreciate rapidly othat is difficult to convert into other currencies. Soft currency can be in the form of paper, electronic or debt-basedIOUs which have in the past been used in place of hard currency. This currency has limited convertibility into goand other currencies.

59. What are factors of production?

The resources and the inputs which are required to produce a good or service is called factor of production. The bas

categories are land labor and capital.

60. What is the principle of Diminishing returns?

This principle says that if one factor of production is fixed and constant additions of other factors are combined witthis, the marginal productivity of variable factors will eventually decline. According to this relationship, in aproduction system with fixed and variable inputs (say factory size and labor), beyond some point, each additional uof the variable input yields smaller and smaller increases in output. Conversely, producing one more unit of outputcosts more and more in variable inputs.

What is Open Market operations(OMO)?

The buying and selling of government securities in the open market in order to expand or contract the amount of

money in the banking system by RBI. Open market operations are the principal tools of monetary policy.


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What is Micro Credit?

It is a term used to extend small loans to very poor people for self-employment projects that generate income,allowing them to care for themselves and their families. What is Liquidity Adjustment Facility(LAF)?

A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangemeallows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financialmarkets. What is RTGS System?

The acronym RTGS stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where

transfer of money takes place from one bank to another on a real time and on gross basis. This is the fastestpossible money transfer system through the banking channel. Settlement in real time means payment transaction inot subjected to any waiting period. The transactions are settled as soon as they are processed. Gross settlementmeans the transaction is settled on one to one basis without bunching with any other transaction. What is Bancassurance?

It is the term used to describe the partnership or relationship between a bank and an insurance company whereby thinsurance company uses the bank sales channel in order to sell insurance products. What is Wholesale Price Index(WPI)?

The Wholesale Price Index (WPI) is the index used to measure the changes in the average price level of goods tradein wholesale market. A total of 435 commodity prices make up the index. It is available on a weekly basis. It isgenerally taken as an indicator of the inflation rate in the Indian economy. The Indian Wholesale Price Index (WPI

was first published in 1902, and was used by policy makers until it was replaced by the Producer Price Index (PPI) 1978. What is Consumer price Index(CPI)?

It is a measure estimating the average price of consumer goods and services purchased by households. What is Venture Capital?

Venture capital is money provided by an outside investor to finance a new, growing, or troubled business. Theventure capitalist provides the funding knowing that theres a significant risk associated with the companys futureprofits and cash flow. Capital is invested in exchange for an equity stake in the business rather than given as a loanand the investor hopes the investment will yield a better-than-average return. What is a Treasury Bills?

Treasury Bills (T-Bills) are short term, Rupee denominated obligations issued by the Reserve Bank of India (RBI)

behalf of the Government of India. They are thus useful in managing short-term liquidity. At present, the Governmof India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are notreasury bills issued by State Governments. What is Banking Ombudsmen Scheme?

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution complaints relating to certain services rendered by banks.The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complainagainst deficiency in certain banking services.The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The current schebecame operative from the 1 January 2006, and replaced and superseded the banking Ombudsman Scheme 2002. What is Subsidy?

A subsidy is a form of financial assistance paid to a business or economic sector. Most subsidies are made by thegovernment to producers or distributors in an industry to prevent the decline of that industry or an increase in theprices of its products or to encourage it to hire more labor. What is a Debenture? How many types of debentures are there? What are they?

A debenture is basically an unsecured loan to a corporation. A type of debt instrument that is not secured by physicasset. Debentures are backed only by the general creditworthiness and reputation of the issuer.i)Convertible Debentures: Any type of debenture that can be converted into some other security or it can be converinto stock..ii)Non-Convertibility Debentures(NCB): Non Convertible Debentures are those that cannot be converted into equitshares of the issuing company, as opposed to Convertible debentures. Non-convertible debentures normally earn ahigher interest rate than convertible debentures do.


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What is a hedge fund?

Hedge means to reduce financial risk.A hedge fund is an investment fund open to a limited range of investors and requires a very large initial minimuminvestment. It is important to note that hedging is actually the practice of attempting to reduce risk, but the goal ofmost hedge funds is to maximize return on investment. What is FCCB?

A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than theissuers domestic currency. In other words, the money being raised by the issuing company is in the form of a forei

currency. A company may issue an FCCB if it intends to make a large investment in a country using that foreigncurrency. What is Capital Account Convertibility(CAC)?

It is the freedom to convert local financial assets into foreign financial assets and vice versa at market determinedrates of exchange. This means that capital account convertibility allows anyone to freely move from local currencyinto foreign currency and back.The Reserve Bank of India has appointed a committee to set out the framework for fuller Capital AccountConvertibility.Capital account convertibility is considered to be one of the major features of a developed economy. It helps attractforeign investment. capital account convertibility makes it easier for domestic companies to tap foreign markets. What is Current Account Convertibility?

It defines at one can import and export goods or receive or make payments for services rendered. However,investments and borrowings are restricted. What is Arbitrage?

The opportunity to buy an asset at a low price then immediately selling it on a different market for a higher price. What is Capitalism?

Capitalism as an economy is based on a democratic political ideology and produces a free market economy, wherebusinesses are privately owned and operated for profit; in capitalism, all of the capital investments and decisionsabout production, distribution, and the prices of goods, services, and labor, are determined in the free market andaffected by the forces of supply and demand. What is Socialism?

Socialism as an economy is based on a collectivist type of political ideology and involves the running of businesses

benefit the common good of a vast majority of people rather than of a small upper class segment of society.What is corporate governance?

The way in which a company is governed and how it deals with the various interests of its customers, shareholders,employees and society at large. Corporate governance is the set of processes, customs, policies, laws, and institutioaffecting the way a corporation (or company) is directed, administered or controlled.Is defined as the general set ofcustoms, regulations, habits, and laws that determine to what end a firm should be run.Functions of RBI?

The Reserve Bank of India is the central bank of India, was established on April 1, 1935 in accordance with theprovisions of the Reserve Bank of India Act, 1934. The Reserve Bank of India was set up on the recommendations the Hilton Young Commission. The commission submitted its report in the year 1926, though the bank was not set for nine years.To regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stabili

in India and generally to operate the currency and credit system of the country to its advantage. Banker to theGovernment: performs merchant banking function for the central and the state governments; also acts as theirbanker.Banker to banks: maintains banking accounts of all scheduled banks.What is monetary policy?

A Monetary policy is the process by which the government, central bank, of a country controls (i) the supply ofmoney, (ii) availability of money, and (iii) cost of money or rate of interest, in order to attain a set of objectivesoriented towards the growth and stability of the economy.What is Fiscal Policy?

Fiscal policy is the use of government spending and revenue collection to influence the economy. These policiesaffect tax rates, interest rates and government spending, in an effort to control the economy. Fiscal policy is anadditional method to determine public revenue and public expenditure.


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What is Core Banking Solutions?

Core banking is a general term used to describe the services provided by a group of networked bank branches. Bankcustomers may access their funds and other simple transactions from any of the member branch offices. It will cutdown time, working simultaneously on different issues and increasing efficiency. The platform where communicatitechnology and information technology are merged to suit core needs of banking is known as Core Banking SolutioWhat is bank and its features and types?

A bank is a financial organization where people deposit their money to keep it safe. Banks play an important role inthe financial system and the economy. As a key component of the financial system, banks allocate funds from saveto borrowers in an efficient manner.

i.Regional Rural Banks were established with an objective to ensure sufficient institutional credit for agriculture aother rural sectors. The RRBs mobilize financial resources from rural / semi-urban areas and grant loans and advanmostly to small and marginal farmers, agricultural labourers and rural artisans. The area of operation of RRBslimited to the area as notified by GoI covering one or more districts in the State.

ii. Banking services for individual customers is known as retail banking.iii. A bank that deals mostly in but international finance, long-term loans for companies and underwriting. Merchanbanks do not provide regular banking services to the general public.iv. Online banking (or Internet banking) allows customers to conduct financial transactions on a secure websiteoperated by their retail or virtual bank.v. Mobile Banking is a service that allows you to do banking transactions on your mobile phone without making a

, using the SMS facility. Is a term used for performing balance checks, account transactions, payments etc. via amobile device such as a mobile phone.vi. Traditional banking is the normal bank accounts we have. Like, put your money in the bank and they act as asecurity and you will get only the normal interests (decided by RBI in our case, FED bank in US).vii. Investment banking is entirely different. Here, people who are having so much money (money in excess whichwill yield only less interest if in Banks) will invest their money and get higher returns. For example, If i have moremoney instead of taking the pain of investing in share market, buying properties etc. I will give to investment banksand they will do the money management and give me higher returns when compared to traditional banks.What is E-Governance?

E-Governance is the public sectors use of information and communication technologies with the aim of improvinginformation and service delivery, encouraging citizen participation in the decision-making process and making

government more accountable,transparent and effective.What is Right to information Act?

The Right to Information act is a law enacted by the Parliament of India giving citizens of India access to records othe Central Government and State overnments.The Act applies to all States and Union Territories of India, except State of Jammu and Kashmir which is covered under a State-level law. This law was passed by Parliament on 15June 2005 and came fully into force on 13 October 2005.Credit Rating Agencies in India?

The credit rating agencies in India mainly include ICRA and CRISIL. ICRA wasformerly referred to the InvestmenInformation and Credit Rating Agency of India Limited. Their main function is to grade the different sector andcompanies in terms of performance and offer solutions for up gradation. The credit rating agencies in India mainlyinclude ICRA and CRISIL(Credit Rating Information Services of India Limited)

What is Cheque?Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account held in themaker/depositors name with that Bank.A bill of exchange drawn on a specified banker and payable ondemand.Written order directing a bank to pay money.What is demand Draft?

A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument. Cheque andDemand-Draft both are used for Transfer of money. You can 100% trust a DD. It is a bankers check. A check maydishonored for lack of funds a DD can not. Cheque is written by an individual and Demand draft is issued by a banPeople believe banks more than individuals.


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What is a NBFC?

A non-banking financial company (NBFC) is a company registered under theCompanies Act, 1956 and is engaged in the business of loans and advances, acquisition ofshares/stock/bonds/debentures/securities issued by government, but does not include any institution whose principabusiness is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.NBFCs are doing functions akin to that of banks; however there are a few differences:(i)A NBFC cannot accept demand deposits (demand deposits are funds deposited at a depository institution that arepayable on demand immediately or within a very short period like your current or savings accounts.)(ii) it is not a part of the payment and settlement system and as such cannot issue cheques to its customers; and

(iii) Deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks.Diff between banking & Finance?

Finance is generally related to all types of financial, this could be accounting, insurances and policies. Whereasbanking is everything that happens in a bank only.The term Banking and Finance are two very different terms but aoften associated together. These two terms are often used to denote services that a bank and other financial institutiprovide to its customers.What is NASSCOM ?

The National Association of Software and Services Companies (NASSCOM), the Indian chamber of commerce is aconsortium that serves as an interface to the Indian software industry and Indian BPO industry. Maintaining closeinteraction with the Government of India in formulating National IT policies with specific focus on IT software andservices maintaining a state of the art information database of IT software and services related activities for use of

both the software developers as well as interested companies overseas. Mr. Som Mittal President. Chairman-PramBhasinWhat is ASSOCHAM?

The Associated Chambers of Commerce and Industry of India (ASSOCHAM), Indias premier apex chamber covermembership of over 2 lakh companies and professionals across the country. It was established in 1920 by promoterchambers, representing all regions of India. As an apex industry body, ASSOCHAM represents the interests ofindustry and trade, interfaces with Government on policy issues and interacts with counterpart internationalorganizations to promote bilateral economic issues. President-Swati PiramalWhat is NABARD?

NABARD was established by an act of Parliament on 12 July 1982 to implement the National Bank for Agricultureand Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and

Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC).is one of the premiere agency to provide credit in rural areas. NABARD is set up as an apex Development Bank wia mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottageand village industries, handicrafts and other rural crafts.What is SIDBI?

The Small Industries Development Bank of India is a state-run bank aimed to aid the growth and development ofmicro, small and medium scale industries in India. Set up in 1990 through an act of parliament, it was incorporatedinitially as a wholly owned subsidiary of Industrial Development Bank of India.What is SENSEX and NIFTY?

SENSEX is the short term for the words Sensitive Index and is associated with the Bombay (Mumbai) StockExchange (BSE). The SENSEX was first formed on 1-1-1986 and used the market capitalization of the 30 most

traded stocks of BSE. Where as NSE has 50 most traded stocks of NSE.SENSEX IS THE INDEX OF BSE. ANDNIFTY IS THE INDEX OF NSE.BOTH WILL SHOW DAILY TRADING MARKS. Sensex and Nifty both are anindex. An index is basically an indicator it indicates whether most of the stocks have gone up or most of the stockhave gone down.What is SEBI?

SEBI is the regulator for the Securities Market in India. Originally set up by the Government of India in 1988, itacquired statutory form in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chaired by C B BhaveWhat is Mutual funds?

Mutual funds are investment companies that pool money from investors at large and offer to sell and buy back itsshares on a continuous basis and use the capital thus raised to invest in securities of different companies. The mutufund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then

typically distributed to the investors annually.


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What is Asset Management Companies?

A company that invests its clients pooled fund into securities that match its declared financial objectives. Assetmanagement companies provide investors with more diversification and investing options than they would have bythemselves. Mutual funds, hedge funds and pension plans are all run by asset management companies. Thesecompanies earn income by charging service fees to their clients.What are non-perfoming assets?

Non-performing assets, also called non-performing loans, are loans,made by a bank or finance company, on whichrepayments or interest payments are not being made on time. A debt obligation where the borrower has not paid anypreviously agreed upon interest and principal repayments to the designated lender for an extended period of time. T

nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest paymenWhat is Recession?

A true economic recession can only be confirmed if GDP (Gross Domestic Product)growth is negative for a periodtwo or more consecutive quarters.What is foreign exchange reservers?

Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreign currency deposits andbonds held by central banks and monetary authorities.However, the term in popular usage commonly includes foreiexchange and gold,SDRs and IMF reserve positions.

Banking Terminalogy - 140 Q&A

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