What are 4 types of banking?

The 4 different types of banks are Central Bank, Commercial Bank, Cooperative Banks, Regional Rural Banks.

What are the banking terms in RBI?

RBI terms include Company Finance, Cash Reserve Ratio, Capital Receipts, National Account Statistics, Capital Funds, Market Risk, Leverage and many more.

The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are instructions by the RBI on the banking system in India to deploy a minimum proportion of their deposits in particular forms.

Banking Terminologies For UPSC Exam Check List of Bank Terms

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Banking Terminologies: Banking terminologies encompass a wide range of terms and concepts that are utilized by banks across India. These terminologies can sometimes be perplexing and challenging even for finance and banking professionals. Nevertheless, as banking has become an integral part of both personal and business life, familiarizing oneself with these terminologies can prove immensely beneficial.

Banking terminologies refer to the specific terms and phrases employed within the banking industry, crucial for comprehending the functioning of banks and effectively managing personal finances. Some commonly encountered banking terminologies include APR, APY, ACH, ATM, bank run, basis point, checking account, certificate of deposit, and credit union.

List of Banking Terminologies

Banking Terminologies: Here is a list of commonly used banking terminologies mentioned below. Check the following list of banking terminologies.

APR (Annual Percentage Rate): It represents the annual interest rate charged on loans or credit cards, including additional fees and charges.
APY (Annual Percentage Yield): APY is the effective annual rate of return on an investment or deposit, taking into account compounding interest.
ACH (Automated Clearing House): ACH is an electronic network used for processing financial transactions, such as direct deposits and bill payments.
ATM (Automated Teller Machine): An ATM is a self-service machine that allows individuals to perform various banking transactions, such as cash withdrawals and balance inquiries.
Bank Run: A bank run occurs when a large number of depositors withdraw their funds from a bank due to concerns about its financial stability.
Basis Point: A basis point is a unit of measurement used to express changes in interest rates or yields. One basis point is equivalent to 0.01%.
Checking Account: Also known as a current account, it is a bank account that enables frequent deposits, withdrawals, and payments through methods like checks and debit cards.
Certificate of Deposit (CD): A CD is a time deposit offered by banks with a fixed term and fixed interest rate. The funds are inaccessible until the maturity date.
Credit Union: A credit union is a cooperative financial institution owned and operated by its members, providing banking services like savings accounts and loans.
EFT (Electronic Funds Transfer): EFT is the electronic transfer of funds between different accounts or financial institutions, facilitating payments and money transfers.
FDIC (Federal Deposit Insurance Corporation): The FDIC is a government agency that provides deposit insurance to protect depositors’ funds in case of bank failures.
KYC (Know Your Customer): KYC refers to the process through which banks verify and authenticate the identity of their customers to prevent fraud and money laundering.
NEFT (National Electronic Funds Transfer): NEFT is an electronic payment system in India that enables individuals and businesses to transfer funds between banks.
RTGS (Real-Time Gross Settlement): RTGS is a real-time funds transfer system that allows large-value transactions between banks on a one-to-one basis.
NPA (Non-Performing Asset): NPA refers to a loan or advance that has stopped generating interest income for the bank due to non-payment by the borrower.

These are just a few examples of banking terminologies, and the banking industry has many more specialized terms and concepts.

Meaning of Banking Terminologies

Check the following Bank Terminologies with their meanings from A to Z in the table mentioned below:

List of Banking Terminologies and Their Meaning
Banking Terminologies	Meaning
Account	It refers to the running record of transactions that take place between two parties. In the banking sector, the two individuals are the banks and the customers. Simply put, it is the account of nominal interest.
ATM (Automated Teller Machine)	ATMs are machines that help in dispensing and/ or receiving cash, accepting deposits, checking details of bank balances, etc.
Annuity	It is the fixed amount of money that is paid to somebody each year, usually for the rest of his/ her life.
Assets	It is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide benefits in the future.
Bailout	It is done to rescue the company facing financial difficulties at an extreme level
Balance Sheet	It is a financial statement that reports a company’s assets, liabilities, and shareholder’s equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure
Bank Credit	It refers to the lending by banks to customers through various means such as loans, discounting of bills of exchange, etc
Bank deposits	It is the opposite of bank credit. It implies depositing own savings with the banks for various purposes ranging from safety to earning interest
Banknote	A note issued by the bank promising to pay a certain specified amount of money when being presented
Bank Rate	It is the rate of interest charged by a central bank to commercial banks on the advances and the loans it extends. It is also the rate of discount at which the Reserve Bank of India (RBI) discounts the first-class bills. Bank rate is one of the quantitative methods of monetary policy.
Bankruptcy	It is a legal process through which people or other entities cannot repay debts to creditors and may seek relief from some or all of their debts.
Bridge Loan	It is a loan made by the bank for a very short period to make up for the temporary shortage of cash
Bancassurance	It refers to the distribution of insurance products and the insurance policies of the insurance companies by the banks as corporate agents through the bank’s branches. Banks generally charge a fee for this service from insurance companies.
Bouncing of a cheque	It is a situation when an account has insufficient funds and any type of cheque is not payable and thus returned by the bank with a reason “Exceeds arrangement” or “funds insufficient”
Base Rate	It is the rate of interest on which the banks generally base their lending rates. It is seen that the loans are given at a rate higher than the base rates and the saving rate is below the base rate.
Basis point	It is one-hundredth of 1% point which is normally used for indicating the cost of finance
Bills of exchange	According to section 5 of the Negotiable Instruments Act of 1881, a bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain amount of money, only to, or to the order of, a certain person, or the bearer of the instrument.
Call Money	It is a loan that is made available for a very short period of a few days only with a low rate of interest.
Capital Assets	The asset which is not bought or sold as part of the everyday running of the business
Cash	It refers to that money which is in the form of banknotes and/ or coins
Capital Expenditure	Non Recurring nature of expenditure is used in purchasing capital assets.
Cash cow	Those enterprises that yield high earnings but often have low growth potential
Cheque	It is written by an individual to transfer an amount between two accounts of the same and/ or different bank
Core Banking	It is a general term used to describe the services provided by a group of networked bank branches
Core Banking Solutions (CBS)	In CBS, all the branches of the bank are connected and the customer can access their funds and/ or transactions from any other branch.
Cash Reserve Ratio (CRR)	It refers to the number of funds that a bank has to keep with the Reserve Bank of India (RBI). If the percentage of CRR increases, then the amount with the bank goes down and vice versa.
Current Account	It is an account that can be opened generally for business purposes with no restrictions on withdrawals and no interest paid
Cash Discount	It is the discount given at the time of payment
Cash flow	It refers to the movement of money into and out of a business as goods are bought and sold
Cheap money	It is a loan or credit with a low-rate interest to the setting of low-interest rate by the RBI
Certificate of Deposit	It is the certificate issued by a bank to a person depositing money for a specified length of time at a specified rate of interest
Collateral Security	It is the asset that a borrower is required to deposit with or pledge to a lender as a condition of obtaining a loan that can be sold off if the loan is not repaid
Commercial Banks	They are a financial institution that accepts deposits, offers checking account services, extends various loans, and offers basic financial products like the certificate of deposits, and savings accounts to individuals and small businesses.
Credit Card	It is a payment card issued to the users to enable the cardholder to pay a merchant for goods and services based on the cardholder’s promise to the card issuer to pay them for the amounts plus the other agreed charges
Crossing the Cheque	It is instructing the banker to pay a specified sum through the banker only, that is, the amount on the cheque has to be deposited directly to the bank account of the payee
Debit card	It is a card issued by the bank so that the customers can withdraw their money from their account through digital banking.
Demat Account	It refers to how a bank keeps money in a deposit account in the same way the depository company converts share certificates into electronic form and keeps them in a Demat account
Dishonour of Cheque	It refers to the non-payment of a cheque by the paying banker with a return memo giving reasons for non-payment
E-banking	It is a type of banking in which individuals can conduct financial transactions digitally. RTGS, Credit cards, debit cards, UPI, etc. are included in e-banking
EFT (Electronic Fund Transfer)	Under this, an ATM, wire transfer, and computers are used to move funds between different accounts in different and/ or the same bank
Fiscal deficit	It is the number of funds borrowed by the government to meet the expenditures
Finance	It is a term for matters regarding the management, creation, and study of money and investments
Flat money	It is a currency established as money, often by government regulation that does not have an intrinsic value
Hot money	It is capital that investors regularly move between economies and financial markets to profit from the highest short-term interest rates
Hypothecation	It is the practice where a debtor pledges collateral to secure a debt or as a condition precedent to the debt, or a third party pledges collateral for the debtor. A letter of hypothecation is the usual instrument for carrying out the pledge.
Idle Money	It is the money that has not been invested and is therefore not earning interest or investment income of any kind.
Insolvency	It is a state of financial distress in which a person or business is unable to pay its debts.
Interest	It is the payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate.
Inflation	It is an increase in the quantity of money in circulation without any corresponding increase in goods, resulting in an abnormal rise in the price level.
Initial Public Offering (IPO)	It refers to the time when a company makes the first offering of the shares to the public.
Kiosk Banking	It refers to doing banking from a cubicle from which food, newspapers, etc. are also sold.
Leverage Ratio	It is a financial ratio that gives an idea or a measure of a company’s ability to meet its financial losses.
Letter of Credit	A letter issued by the bank to another bank (especially one in a different country) serves as a guarantee for payments made to a specified person under specified conditions.
Liabilities	It is something a person or a company owes, usually a sum of money
Lien	A right to keep possession of property belonging to another person until a debt owed by that person is discharged
Liquid Assets	It is an asset that can be easily converted into cash in a short duration of time.
Liquidity	It is the ability to convert an investment quickly into cash without any loss in its value.
Lease	A legal agreement that allows the use of a building or land for a fixed period in return for rent.
Market Capitalization	It is the product of the share price and the number of the company’s outstanding ordinary shares.
Mortgage	It is a kind of security that one offers for taking an advance or loan from a lender.
Mutual Fund	These are investment schemes that help pool money from various investors to purchase securities.
Microfinance	It is a category of financial services targeting individuals and small businesses that lack access to conventional banking and related services.
Monetary Policy	It refers to the central bank policy concerning the money in the economy, the rate of interest, and the exchange rate.
Non-Performing Assets (NPAs)	They are the loans given by a bank on which repayments and/ or interest payments are not being made on time.
Near Money	Near or quasi-money consists of highly liquid assets that are not cash but can easily be converted into cash.
Negotiable Instruments	It is a document guaranteeing the payment of a specific amount of money, either on demand or at a set time, whose payer is usually named on the document.
Overdraft	It occurs when money is withdrawn from a bank account and the available balance goes below zero. In such a situation, the account is said to be “overdrawn”
Permanent Account Number (PAN)	It is a number issued by the Income Tax department to the taxpayers
Plastic Money	It is a name given to credit cards, ATM cards, debit cards, and international cards issued by banks.
Point of Sale (PoS)	It refers to a location at which payment of a card transaction occurs.
Prime Lending Rate (PLR)	It is the rate of interest at which a bank gives a loan to its most reliable customer, that is, a customer with ‘zero risks’.
Pass Book	It is a book where all the bank transactions are recorded. They are mainly issued to current or savings bank account holders.
Repo Rate	It is seen that commercial banks borrow funds from the RBI if there is any shortage in their reserves. If the REPO rate increases, it becomes expensive to borrow money from the RBI and vice versa.
Reverse Repo Rate	It is the opposite of the repo rate as it is the rate at which the RBI borrows money from the banks when it observes that too much money is floating in the banking system.
Special Drawing Rights (SDR)	It is a reserve asset (Paper Gold) created within the framework of the IMF in a bid to increase international liquidity.
Teller	It is a staff member of the bank who cashes cheques, accepts deposits and performs various banking services for the bank’s customers.
Universal Banking	When financial institutions and banks undertake activities related to banking, like an investment, issue of debit and/ or credit card, etc. then it is generally known as universal banking.
Virtual Banking	Internet banking is also called virtual banking as there are no bricks or boundaries involved. It is mainly operated by the Internet.
Wholesale Banking	It is similar to retail banking with a slight difference in that it is mainly focused on the financial needs of the institutional clients and the industry.
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