Getting familiar with the fundamentals of banking and finance is indeed challenging even for quite a few industry professionals. Banking concepts have been an integral part of the economics book. Most of the people might have witnessed changes in monetary policy for the past few years. It revolves around certain terms like Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Reverse repo rate, repo rate, etc. In this article, we will be discussing some of the important banking & financial terms which help in managing your money properly.
- Routing Number: — It is a nine-digit number that helps you track the financial institution. Bigger banks might possess several routing numbers based on geographic location wherein the account is active.
- Automated Teller Machines (ATM):- This machine enables customers to accept cheques, deposit, and withdraw cash. Apart from that, they could even request balance details along with mini statements as well.
- National Electronic Funds Transfer (NEFT):– NEFT is an electronic medium in which money could be transferred from one bank to another or between the same branches. However, there will be variations in the minimum amount to be transferred and NEFT charges.
- Repo Rate: — It is a rate at which the Reserve Bank of India grants money to commercial banks along with collateral securities. However, this process is applicable only at the time of inflation. RBI had recently declared 40% of the repo rate in India. A Bank Rate share a similar feature to that of a Repo rate but collateral is not required to offer loans.
- Bancassurance: — It implies issuing insurance policies and products of various companies by the banks via branches.
- Linked account: —- Account which is linked to an individual’s account for transferring money.
- FDIC: — Federal Deposit Insurance Corporation is a government-owned organization that assures customer’s bank deposits if banks wind up.
- Reverse repo rate: — It is a rate at which the Reserve Bank of India raises funds through commercial banks. This process is normally carried out to manage the supply of money in the market. The existing reverse repo rate stands at around 3.35%.
- Base Rate: — Banks are allowed to lend money at a minimum rate and they are not permitted to exceed the threshold unless mentioned in the guidelines.
- Bank account: —- It is a type of account that is exclusively designed for personal purposes. Certain restrictions are imposed during withdrawal.
- Statutory Liquidity Ratio (SLR):— The banks located in our country are supposed to maintain a certain percentage of money, securities, and gold before granting loans to customers. The latest statutory liquidity ratio is approximately 18.50%.
- Certificate of Deposit: — It is often referred to as CD wherein customers are required to invest a sum of money and keep it intact for a certain period. Certificate of Deposit carried an attractive rate of interest to that of checking and standard accounts.
- Bank rate:— Rate of interest levied by central banks from commercial banks on loans and advances.
- APY: — Annual percentage yield is the volume of interest and compound interest you obtain by preserving money in your account within a year.
- Cash Reserve Ratio: — Each bank is supposed to retain a sum of money with the Reserve Bank of India. It would increase whenever the Reserve Bank of India prefers to regulate liquidity in the market. As per the reports, the latest cash reserve ratio stands at 3%.
- Basis Point: — It is yet another banking term that is meant to determine the cost of finance.
- Balance transfer: — It is a credit card payment option meant for those individuals who hold multiple credit cards at a time. The balance of a single credit card is transferred to another. Some credit cards are better than others when it comes to balance transfers, meaning research and due diligence are very important when choosing a credit card.
- Call money: — Raise loan for a short duration with a lower rate of interest.
- APR: — Annual percentage rate is the interest amount you receive while preserving the money in your account per year excluding the compound interest.
- Retail banking: —- Retail banking is a service provided by numerous banks across the nation. This would enable the customers to manage accounts and instant access to credits while securing the money.
- Cheque:– It is meant for transferring cash between two accounts of the same bank or other banks. The funds are withdrawn from the customer’s account.
- Cashback: — Cashback is a type of offer granted by credit card entities to the cardholders in the form of cash.
- Bitcoins: — Bitcoins are cryptocurrencies, which could be transferred from one individual to another in the absence of intermediaries. They are not governed by the Reserve Bank of India.
- Compound Interest: — Interest applies to the actual deposit and newly earned interest.
- Credit history: — It is referred to as behavioral patterns of a customer regarding loans in the past. The concerned credit bureau agency would gather information on a particular customer and rate them between 300 and 900. This process is referred to as credit score. You have to make sure that a higher credit score is achieved since it would increase the chances of being considered for a loan.
- Debit card: — It is a card that is provided by banks to their customers to redeem cash in electronic format.
- Call money: — A short-term loan with a higher rate of interest and the grace period is between one and fourteen days. The concerned lender has the right to request money at any point in time.
- Wholesale banking:— It is a type of banking that lays special emphasis on the financial requirements of institutional clients.
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Therefore, we have maximum banking terms as possible. It will be of great help for you to refer while attempting competitive examinations. Apart from that, whenever you come across monetary policies, the above-mentioned banking terms will be of great help for the readers.