ROOTS DEGREE COLLEGE

BBV VI SEM (FINANCE) E3

Information bank

Banking and Insurance Services

1. Commercial banks/Deposit banks accept deposits from public and lend them mainly for
commercial purposes for comparatively shorter periods are called Commercial Banks.
2. Industrial banks/Investment banks Industrial banks are those banks which provide fixed
capital to industries. They are also called Investment banks, as they invest their funds in
subscribing to the shares and debentures of industrial concerns
3. Savings banks are those banks which specialize in the mobilization of small savings of
the middle and low income group
4. Bank: A commercial institution licensed to receive deposits. Banks are mainly concerned
with making and receiving payments as well as supplying short-term loans to public and
institutions. In most countries, banks are supervised by the national government or the
central bank like the RBI.
5. Bank statement: A periodic record of a customer's account that is issued at regular
intervals, showing all transactions recorded for the period in question.
6. Demand deposits: An account from which deposited funds can be withdrawn at any time
without any notice to the depository institution.
7. Fixed deposits: A fixed deposit is meant for those investors who want to deposit a lump
sum of money for a fixed period; say for a minimum period of 15 days to five years and
above, thereby earning a higher rate of interest in return. Investor gets a lump sum
(principal + interest) at the maturity of the deposit
8. A central bank, reserve bank, or monetary authority, is an entity responsible for the
monetary policy of its country.
9. The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934
(II of 1934) provides the statutory basis of the functioning of the Bank.
10. Agricultural Finance: Loans given to boost agricultural activities
11. Industrial Finance: Loans given to boost business activities.
12. Monetary Policy: Monetary policy is the process by which the government, central bank,
or monetary authority of a country controls (i) the supply of money, (ii) availability of
money, and (iii) cost of money or rate of interest, in order to attain a set of objectives
oriented towards the growth and stability of the economy. Monetary theory provides
insight into how to craft optimal monetary policy.
13. Open Market Operations: Open market operations are the means of implementing
monetary policy by which a central bank controls its national money supply by buying
and selling government securities, or other financial instruments in open market.
14. Risk Management: Risk Management is the identification, assessment, and prioritisation
of risks followed by coordinated and economical application of resources to minimize,
monitor, and control the probability and/or impact of unfortunate events.
15. Statutory Liquidity Ratio (SLR): Statutory Liquidity Ratio or SLR refers to the amount
that all banks require to maintain in cash or in the form of gold or approved securities.
16. Time Liabilities: The liabilities, which the commercial banks are liable to pay to the
customers on their anytime demand
17. Savings Bank Accounts can be opened for eligible person/persons and certain
organizations/agencies (as advised by Reserve Bank of India (RBI) from time to time
18. Current Accounts can be opened by individuals/partnership firms/Private and Public
Limited Companies/HUFs/Specified Associates/Societies/Trusts, etc.
19. Term Deposits Accounts can be opened by individuals/partnership firms/Private and
Public Limited Companies/HUFs/Specified Associates/Societies/Trusts, etc
20. Operation of Joint Account: The Joint Account opened by more than one individual can
be operated by single individual or by more than one individual jointly
21. Secrecy of Customer’s Accounts: The bank shall not disclose details/particulars of the
customer’s account to a third person or party without the expressed or implied consent
from the customer.
22. Corporate banking represents a wide range of banking and financial services provided to
domestic and international operations of large local Corporate and local operations of
multinational corporations
23. A corporate bond: It is a bond issued by a corporation. It is a bond that a corporation
issues to raise money in order to expand its business.
24. Retail Banking: It refers to the efforts of the bankers to reach up to the customers on both
fronts of the balance sheet i.e., Liabilities side as well as Assets side.
25. Electronic Clearing Service (ECS): Electronic Clearing Service (ECS) is a retail payment
system that can be used to make bulk payments/receipts of a similar nature especially
where each individual payment is of a repetitive nature and of relatively smaller amount.
26. MICR Clearing: This is one of the automated clearing systems used by banks. Under this
system, specific type of paper is used for printing the cheque
27. Cheque Truncation is a system of cheque clearing and settlement between banks based on
electronic data/images or both, without physical exchange of instrument.
28. NEFT National Electronic Funds Transfer
29. RTGS Real Time Gross Settlement
30. Core Banking Solutions or Centralised Banking Solutions: wherein the customers can
transact business any banking branch of the country which is under the system
31. Credit Card : credit card involves provision of credit to the card user which is paid by the
card user on receipt of the bill either in full or partially in installments.
32. Debit Card: Debit Card is a direct account access card (amount transacted gets debited
immediately).
33. Electronic Funds Transfer (EFT): Electronic Funds Transfer (EFT) is a system whereby
anyone who wants to make payment to another person/company etc. can approach his
bank and make cash payment or give instructions/authorization to transfer funds directly
from his own account to the bank account of the receiver/beneficiary.
34. MICR Clearing: Under this system, specific type of paper is used for printing the cheque.
The cheque conforms to required specification as laid down and are having two white
bands at the top and another at the bottom.
35. SWIFT stands for: Society for Worldwide Interbank Financial Telecommunications. In
an era of information technology SWIFT offers unique message processing services and
provides a very fast, accurate and authenticated transfer of financial messages on global
basis.
36. 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.
37. EFT and NEFT: These are electronic fund transfer modes that operate on a deferred net
settlement (DNS) basis
38. Bank Identification Code: This BIC is drawn in accordance with norms/instructions of
international organization for standardization (ISO) and International Chamber of
Commerce.
39. KYC Norms: The activities of customer due diligence that financial institutions and other
regulated companies must perform to identify their clients and ascertain relevant
information pertinent to doing financial business with them.
40. Retail lending: It is the practice of loaning money to individuals rather than institutions
41. Repo rate refers to the rate at which commercial banks borrow money from the Reserve
Bank of India (RBI) in case of shortage of funds. It is one of the main tools of RBI to
keep inflation under control.
42. A Reverse Repo Rate is a rate that RBI offers to banks when they deposit their surplus
cash with RBI for shorter periods
43. An overdraft is an extension of credit from a lending institution when an account reaches
zero. An overdraft allows the individual to continue withdrawing money even when the
account has no funds in it or insufficient money to cover the amount of the withdrawal.
44. Overdraft interest is interest charged on money withdrawn in excess of the credit
balance of a bank.
45. Cash Reserve Ratio (CRR) is the share of a bank’s total deposit that is mandated by the
Reserve Bank of India (RBI) to be maintained with the latter in the form liquid cash