Sunday 14 September 2014

ICICI Bank presents ‘Cardless Cash Withdrawal’ – Withdraw cash from ATM without a card

ICICI Bank has initiated ‘Cardless Cash Withdrawal’, a facility that permits its customers to transfer money from their account to anybody in India with a mobile number. The recipient can withdraw money anytime without using a debit card from ATMs of ICICI Bank all over India. The receiver can do this even without having a bank account of any bank.
Currently, electronic remittances are probable for only those with a bank account. Beneficiaries who don’t have a bank account can receive cash only via money order which is an expensive and time consuming course for remittances.
The ‘Cardless Cash Withdrawal’ service can be started by any ICICI Bank savings account customer (sender):
  • ICICI Bank savings account customer (sender) logs into the Internet banking.
  • Register the recipient’s name, mobile number and address.
  • The sender receives a 4-digit verification code
  • The recipient receives a 6-digit reference code, over SMS on his mobile.
  • The recipient can now go and withdraw cash from any ICICI Bank ATM by entering the mobile number, cash amount along with the verification and reference code, within 2 days of the transaction.
This service can also be used by the ICICI Bank’s account holders to withdraw cash from their own accounts without using a debit card.

New Payment Gateway Integrated to e-Filing System; Indian Patent Office (IPO) becomes first IPO in the World to begin Real Time Transparency

Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India launched a new payment gateway integrated to the e-filing system of the Intellectual Property Office (IPO). This new facility will be dedicated to the working of the Indian Patent Office as International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) under the Patent Cooperation Treaty (PCT).
The new facility will facilitate payment by means of internet banking, credit cards or debit cards of more than 70 Banks as against internet banking of 2 banks previously. This will result in rise in online filing of forms for patent and trademarks by 25 to 75%.
Fresh initiatives:
Fresh office of IPO: This new facility will be dedicated to the working of the Indian Patent Office as International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) under the Patent Cooperation Treaty (PCT).
IP Expressions: First issue of IP Expressions, a technical magazine released. The magazine offers a stage for the officials of Intellectual Property Office (IPO) to share the experience acquired in the field of Intellectual Property. Initially it will start as a twice-a-year publication, the IP Expressions is likely to help the IP groups, researchers, scholars, academicians and public at large as a source of IP information.
Stock and Flow: This facility at present existing for trademarks has now been extended to patents also. Via this service the work occurring in the whole Patent office will be now open to the world. The stock and flow in the Patent Offices at various places is shown on a real time basis on the official website. IPO is the first amongst intellectual property offices throughout the world to attain this extreme transparency.

Saturday 13 September 2014

List of Public Sector Banks Head offices


S.NO
Bank Name
Head Office
Chairmen
Slogan
1
Allahabad Bank
Kolkata
Rakesh Sethi
A tradition of trust
2
Andhra Bank
Hyderabad
C.V.R RAjendran
Much more to do. With YOU in focus
3
Bank of Baroda
Mumbai
S.S. Mundra
India’s International Bank
4
Bank of India
Mumbai
V.R.Iyer
Relationships beyond Banking
5
Bank of Maharashtra
Pune
Sushil Muhnot
One Family One Bank
6
Canara Bank
Bangalore
R.K.Dubey
It’s easy to change for those who you love, Together we Can
7
Central Bank of India 
Mumbai
Rajeev Rishi
Build A Better Life Around Us, Central to you since 1911
8
Corporation Bank
Mangalore
Sadhu Ram Bansal
Prosperity for all
9
Dena Bank
Mumbai
Aswini Kumar
Trusted Family Bank
10
Indian Bank
Chennai
T.M.Bhasin
Taking Banking Technology to Common Man, Your Tech-friendly bank
11
Indian Overseas Bank
Chennai
M.Narendra
Good people to grow with
12
Oriental Bank of Commerce
New Delhi
S.L.Bansal
Where every individual is committed
13
Punjab National Bank
New Delhi
K.R.Kamath
The Name you can Bank Upon
14
Punjab & Sind Bank
New Delhi
Jatinder Bir Singh
Where series is a way of life
15
Syndicate Bank
Manipal
Sudhir Kumar Jain
Your Faithful And Friendly Financial Partner
16
Union Bank of India
Mumbai
Arun Kaul
Good people to bank with
17
United Bank of India
Kolkata
Vacant
The Bank that begins with “U”
18
UCO Bank
Kolkata
Arun kaul
Honors Your Trust
19
Vijaya Bank
Bangalore
V. Kannan
A friend You can Bank Upon
20
IDBI Bank Ltd
Mumbai
M.S. Raghavan
Banking for all; “ Aao Schein Bada”
21
Bharatiya Mahila Bank
New Delhi
Usha Ananthasubramanyan
Empowering women, Empowering India
State Bank Group
1
State Bank of India
Mumbai
Arundhati Bhattacharya
The Nation banks on us; Pure Banking Nothing Else; With you all the way
2
State Bank of Bikaner & Jaipur
Rajasthan
Arundhati Bhattacharya

3
State Bank of Patiala
Punjab
Arundhati Bhattacharya
Blending Modernity with Tradition
4
State Bank of Hyderabad
Hyderabad
Arundhati Bhattacharya
You can always bank on us
5
State Bank of Mysore
Bangalore
Arundhati Bhattacharya
Working for a better tomorrow
6
State Bank of Travancore
Thiruvananthapuram
Arundhati Bhattacharya
A Long Tradition of Trust

CROP INSURANCE

Crop insurance is an insurance arrangement aiming at mitigating the financiallosses suffered by the farmers due to damage and destruction of their crops as a result of various production risks. The vast majorities of India's  about116 million farms cultivates rainfed crops and are particularly vulnerable to the vagaries of the Indian monsoon. In this context, agricultural risk management products, particularly for the small and marginal farmers, are of critical importance. In order to address some of the shortcomings and improve the scope and contents of Compre hensive Insurance Scheme replacing the Comprehensive Crop Insurance Scheme (CCIS) which was in operation in the country since1985.Government of India expre ssed its intentions to launch a new crop insurance scheme during 1998-99 budget speech. A broad-based National Agricultural Insurance Scheme (NAIS) or Rashtriya Krishi Bima Yojana (RKBY) was introduced with effect from the Rabi  season of 1999-2000. Thes cheme was designed to cover all the farmers irrespective of the size of holding and both borrowers and non-borrowers. NAIS provides for greater coverage of crops and sum insured when compared with Comprehensive Insurance Scheme. The new crop insurance scheme was intended to address the issue of financial viability by raising the premium to 4 per cent for food crops and still higher premium for cash crops like sugarcane, potato, groundnut, etc. The government also  set-up a separate subsidiary company, Agriculture Insurance Compa ny of India Ltd., under GIC to operate the sche me and give it freedom to alter or modify insurance charges to make the venture internally viable.
Objectives of National Agricultural Insurance Scheme (NAIS):
i. To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typh oon, Tempest, Hurricane, Tornado Flood, Inundation and Landslide, Drought, Dry spells,pests & diseases so as to restore their credit worthiness for ensuing season.
ii. To encourage the farmers to adopt progressive farming practices, high value in-puts and higher technology in Agriculture.
iii. To help stabilize farm incomes, particularly in disaster years.
States participating in the scheme:
National Agricultural InsuranceScheme is being implemented in 23 States and UTs
Crops covered under the scheme:
i. Food Crops (Cereals, Millets & Pulses): Paddy,Wheat, Jowar, Bajra, Maize, Ragi, Green gram, Horse gram
ii. Oilseeds: Groundnuet,Sunflower,Soya bean, Castor, Sesamum
iii. Annual Commercial/ Annual Horti cultural crops: Potato,Onion, Ginger, Turme ric,Banana, Pineapple, Jute, Tapioca, Cumin, Coriander, Methi etc.
The crops are selected for insurance if the past yield data for 10 years are available, and the State Govt agrees to conduct requisite number of Crop Cutting Experiments (CCEs) during the proposed season. At present there are 35 different crops during Kharif and 30 different Rabi season are being insured under National Agricultural Insurance Scheme in the country.  
Who is eligible to be covered under the scheme?
Ans: All farmers growing insurable crops and availing Seasonal Agricultural Operat ions (SAO) loans from Banks / PACS are compulsorily covered under the Scheme by the Banks/ PACS, whereas the non-borrowing farmers growing insurable crops can also avail the benefit of the Scheme by submitting prescribed proposal forms at the nearest Banks/ PACS.
Claims: The claims are released to banks and the banks in turn credit the amount in the account of the beneficiary farmers and display the particulars of beneficiaries on their notice board.
How Indemnity claims are worked out?
Ans: It is  as per the following formula:
Shortfall in yield------- X Sum Insured for the farmer Threshold Yield
(Shortfall = Threshold Yield - Actual Yield for the Defined Area).
The scheme is optional for States/UTs.  Since inception of the Pilot, 33.26 lakh farmers have been covered over an area of 36.27 lakh hectares insuring a sum amounting to Rs.8063.73 crore. The claims amounting to about Rs. 234.27 crores have become payable against the premium of about 824.38 crore benefiting about 2.29 lakh farmers (uptoKharif 2012 season).
What are the benefits expected from the Scheme?
Ans : This Scheme is expected to
1. Be a critical instrument of development in the field of crop production,providing financial support to the farmers in the event of crop failure.
2. Encourage farmers to adopt progressive farming practices and higher technology in Agriculture.
3. Help in maintaining flow of agricultural credit.
4. Provides significant benefits not merely to the insured farmers, but, to theentire community directly and indirectly through spillover and multiplier effects in terms of maintaining production & employment.
5. Streamline loss assessment procedures and help in building up huge andaccurate statistical base for crop production.
What is the Unit of Insurance?
Ans : The scheme operates on the basis of Area Approach i.e. defined areas for each notified crop for widespread calamities and individual assessment is done on experimental basis for localised calamities, such as, hailstorm, landslide, cyclone and flood in certain pre-notified areas. The size of unit area varies from State to State and crop to crop. Presently, the defined area is Block/ Mandal/ Taluka/ Patwarihalka/ Nyayapa nchayat/ Gram anchayat/ Village, etc.
What' s amount of sum insured under NAIS?
Ans : A. For loanee farmers:-
i. Compulsory coverage: The amount of crop loan availed for the notified crop is the minimum amount of sum insured covered on compulsory basis.
ii. Optional Coverage: If the loanee-farmer so wishes he may insured his crop for a higher Sum Insured i.e, upto the value of Threshold Yield (i.e., guaranteed yield) which is called normal coverge even go for addtional coverage upto 150% value of average yield in the notified area. However, for additional coverage, the farmer has to pay premium at actuarial rate as notified by the State Government. The value of Sum Insured in such cases is arrived at by multiplying the threshold yield/ average yield with the latest available Minimum Support Price (MSP) announced by the Govt. or the market price provided by the State Govt. in case the MSP is not announced.
B. For Non-loanee farmers:  Coverage at normal rates of premium is available upto the value of ThresholdYield . Additional coverage upto 150% of the value of Actual Yield can be obtained by payment of premium at actuarial rates. Note : It may however be noted that in case of annual commercial and horticultural crops, only actuarial rates of premium are charged at all the slabs of sum insured.  
How much premium a farmer has to pay to get the insurance cover?
Ans : A. For Kharif crops: Premium is 3.5 % of Sum insured for all Oilseed crops andBajra and 2.5% for all others foodcrops including pulses
B. For Rabi crops: Premium rates are 1.5% for wheat and 2% for all other foodcrops including pulses and oilseeds.
 However, of the above flat rates and the actuarial rate whichever is lower shall apply.
C. For Annual Commercial and Horticultural crops:Atuarial premium rates are charged.
D. The premium for Small & Marginal farmers is subsidised to the extent of 10% which is shared by the State Govt. and Govt. of India.
Does a non-loanee farmer need to produce some documents for obtaining insurance cover?
Ans : The non-loanee farmer has to produce a proof (copy of land pass book / 7/12
extract / land revenue receipt etc.) to prove that he / she is the owner of theland. In case of sharecroppers and tenant farmers (who are not availing crop loan), a proof showing crop sharing / tenancy arrangement need to be produced.
How can a farmer get insurance coverage?
Ans: All loanee farmers automatically and get compulsorily covered under this Insu rance Scheme through the PACS/Bank branches, as and when crop loans for insured crops are disbursed to them. All non-loanee farmers desirous of availing insurance coverage should contact nearest Bank Branches before the stipulated time frame with a proposal for insurance. Non-loanee farmer should have a Bank A/c with the bank and pay the requisite premium to get insurance coverage.
Are crop loans disbursed through Kisan Credit Cards (KCCs) eligible for insurance coverage under the NAIS?
Ans: Crop loans disbursed/withdrawn through KCCs are also eligible for coverage as per the terms and conditions applicable to the regular crop loans.
When and how, the claims are settled under NAIS?
Ans: In case of widespread calamities leading to damage and loss of crops, claims are settled on area approach basis. Any insured crop in a notified area recording lower actual yield than the guaranteed yield as per the crop estimation surveys conducted by the state govt., shall automatically become eligible for compensation/ claim. The shortfall in yield is determined for each crop and is the difference between the guaranteed yield and the current season's actual yield. Shortfall % is determined by expressing the shortfall as a proportion of guaranteed Yield. Claim is then computed by multiplying the sum insured with the shortfall %. Therefore no claims would be admissible/payable in case the current season's actual yield is more than the threshold yield. Applicable amounts of claims so arrived at are routed to the farmers through the banks in case of those farmers who are covered through the banks.Even in case of non-loanee farmers who approach Agriculture Insurance Company directly for insurance coverage, the claim amounts are paid by way of cheques or throughdesignated bank branches such that claim amounts get credited to their accounts. The claim assessment and payment would be done after receipt of the requisite yield data from the concerned agencies. The methodology of claim assessment based on individual appro ach shall be intimated to all concerned upon finalising the areas and modalities.
Whether insured farmers whose crops are damaged need to intimate crop losses to bank  to be eligible for claim?
Ans: In case of "Area approach", the farmers need not intimate crop losses toBank. The crop losses if any or reduction in yield as compared to Guaranteed yield shall be reflected in Crop Estimation surveys and the shortfall in yield, if any shall be paid as claim through the Bank. In case of areas notified for experimentation of individual loss assessment, the farmer need to intimate the crop loss within 48 hours with the local revenue/ agriculture dept.
What are the essential requirements before a farmer becomes eligible for claim under the Scheme?
Ans: The essential requirements are:
i) The farmer should have availed a crop loan for the insured crop. In case of non-loanee farmer, he should have submitted a proposal for insurance with requisite premium.
ii)The proposal/crop insurance Declaration with accurate and complete particulars should have been sent  by the Bank along with requisite premium.  iii) The State Govt. conducts requisite number of Crop Cutting Experiments for the insured crop in the insurance unit and submits the yield data  within the prescribed date.  iv) The yield data so submitted by the State Govt. shows short fall as compared to the Guaranteed yield.
Modified National Agricultural Insurance Scheme(MNAIS):
To improve further and make the scheme easier & more farmer friendly, a Joint Group was constituted by Government of India  to study the existing crop insurance schemes. Based on the recommendations of the Joint Group and view/comments of various stakeholders, aproposal on Modified National Agricultural Insurance Scheme (MNAIS) was prepared was approved for implementation on pilot basis in 50 districts during the remaining period of 11th Plan from Rabi 2010-11. The salient improvements made in MNAIS (over NAIS) are as under:
a) Actuarial premium with subsidy in premium ranging upto 75% to all farmers;
b) Only upfront premium subsidy is shared by the Central and State Government on 50:50 basis and all claims liability is on the insurance Company.
c) Unit area of insurance reduced to village/ village panchayat level for major crops.
d) Indemnity for prevented sowing/planting risk and for post-harvest losses due to cyclone (coastal areas); e) On account payment up to 25% of likely claims as immediate relief to farmers; f) Uniform seasonality discipline for loanee and non-loanee farmers;
g) More proficient basis for calculation of threshold yield; and minimum indemnity level increased to 70% instead of earlier 60%; h)The scheme is compulsory for loanee farmers and voluntary for non-loanee farmers;  i) Participation of private sector insurers for creation of competitive environment
for crop insurance. j) Setting up a catastrophic fund at the national level contributed by the central and the state government on 50:50 basis to provide protection to the insurance companies in the event of premium to claim ratio exceeds 1:5 at national level and failure to procure appropriate reinsurance cover at competitive rates;
k) National Agricultural Insurance Scheme is withdrawn from those area(s)/crop(s) where MNAIS is implemented.
- See more at: http://education.abn-andhrajyothy.com/crop-insurancebank#sthash.rpAANZQU.dpuf

Tuesday 9 September 2014

SBI launches multi-currency international debit card

State Bank of India (SBI) in tie-up with MasterCard on Monday launched its first multi-currency international debit card to allow consumers to use a single card to pay in multiple currencies.
To begin with, the prepaid debit card will enable customers to load four currencies – US dollar, euro, Great Britain pound and Singapore dollar. 
The multi-currency foreign travel card gives an option to load currencies of choice at SBI’s branch network.
At present, the card can be issued at an annual fee of Rs. 100 without any interchange fee to customers.
Customers will have to pay the traditional ATM withdrawal charges of $1.75 in the US, €1.5 in Europe, £1.25 in Britain and S$2 in Singapore.
The card is aimed at corporates and professionals, tourists and students travelling abroad and will be available at 100 SBI branches in four major cities.

India slips to 62nd spot in effective stock market regulation ranking

Indian capital markets may be riding high on positive investor sentiments, but the latest report by World Economic Forum (WEF) shows that the country has plunged 35 places to 62nd rank in terms of effective regulation of the stock exchanges.

The country, last year, stood at the 27th spot for effective regulation and supervision of securities exchanges.

South Africa is on the top followed by Finland, Hong Kong SAR, Luxembourg and Singapore in this category, says the report.

Besides, neighbouring countries Pakistan and China are also placed at a better position than India on the parameters at 51 and 58 positions, respectively.

Note: i. The findings are part of WEF’s Global Competitiveness report 2014-15, where India has been ranked among 144 countries across the globe.
ii. The performance review was based on 12 pillars, including development of the financial markets. A value of 1 for regulation of exchanges implies ‘not at all effective’ while 7 represents ‘extremely effective’.

Sunday 7 September 2014

Deposits

Dealing with Deposits and Credits is the principle function of banks. Deposits mean money accepted from public. Bank's deposits are classified as two types (a) Demand deposits and (b) Time deposits.

 Demand deposits: 
As name says the deposit is payable on demand either fully or partly as per the demand of customer. Bank pay returns to the deposits in the form of interest. These deposits are withdrawable as per the demand of customer through a cheque or draft or written order (withdrawal
slip). Demand deposits in the bank are deposits in saving and current account.
These are major sources of funds for banks.

Savings Account deposits: 
The main purpose of this account is to inculcate the habit of savings in public. Deposits in this
accounts are paid interest as per the guidelines of RBI, presently RBI has set 4% per annum is calculated on daily balances in the account and paid quarterly.
★ This deposit product of bank, savings account has a nomination facility. And customer
is allowed to withdraw funds whenever he wants through a cheque or draft or written order. Saving account also chargeable if the customer is failed to maintain Quarterly Average Balance (QAB) and if the cheques are bounced for not having balance in the account.
★ As per new guidelines of RBI zero balance account also can be opened which is known as no frill account. Recently, Prime Minister Narendra Modi has launched a scheme 'Prime Minister's Jan Dhan Yojana' with an aim of every Indian must have a bank account. The savings accounts
opened in this scheme are no frill accounts with more added advantages.

Current account: 
Generally Current accounts are opened by business units to meet their financial transactions. The
deposits in this account are not entitled to any interest paid to customers. As current account is a demand deposit funds can be withdrawn at demand of customer through cheque. Even an individual also can open a current account.

Time deposits: 
These are also known as term deposits and classified into two types - Fixed deposits and Recurring deposits.

Fixed deposits: 
These are limited with time and fixed rate of interest (differ from bank to bank). The amount along with interest will be paid on maturity. This amount cannot be withdrawn on demand
before maturity date, if early withdrawals are to be made the account has to be closed and settled with a penalty on interest rate. These deposits can also be used as securities for loans.

Recurring deposits: 
Same as fixed deposits as they are also deposited for a particular period and held till maturity. But the major difference is they are credited in equal installments on monthly bases to deposit account by the customer.

Banking


Any institution accepting deposits from public with or without purpose of lending and investment cannot be termed as bank. If the institution is allowing the depositor to withdraw the deposits whenever he / she wants by a cheque or draft or any written order, then only it will be considered as bank.
 Banks are also authorized to carry out certain other transactions such as:
1. Hiring safe deposit lockers
2. Safe custody of articles
3. Remittances 4. Bill discounting
5. Foreign exchange services
6. Trade services
7. Collection of cheques and bills
8. Governments' financial services.

BANKING AWARENESS PRACTICE QUESTIONS FOR ALL BANK EXAMS

1. What are the characteristics that need to be present in an instrument to be said as negotiable instrument?
a) Written instrument with signature
b) Instrument made or drawn for consideration
c) Transfer/ negotiation by endorsement/ delivery
d) Bonafide and valuable
e) All the above

2. BCBS stands for ......
a) Banks Commission for Basel Supervision
b) Basel Committee on Banking Supervision
c) Banking Companies and Business System
d) Banks Committee on Business Supervision
e) None of the above

3. 'Depository services' means ......
a) An agency for safe keeping of securities
b) A bank accepting deposits from customers and service the customers
c) Bank accepting deposits from other bank as a depository services
d) Both b and c
e) None of these

4. Identify the following rates decided by bank .........
a) Bank rate
b) Repo rate
c) Base rate
d) CAR
e) None

5. Which of the following is also known as 'Smart Money' ?
a) Credit cards
b) Electronic cheques
c) Plastic money
d) All the above
e) None of these

6. Statutory Liquid Ratio (SLR), is a mechanism used by commercial banks to ......
a) Provide cash deposits to RBI
b) Liquidate the government fixed properties
c) Avoid government monetary policies with the help of RBI statutory planning
d) Provide credit to government
e) None of these

7. What do you mean by term 'Gilt-edged security'?
a) Government security that is a claim on the government and is a secure financial instrument which guarantees both capital and interest.
b) A financial instrument which is a coupon for corporate security, and payable on demand by corporate to the banks along with the demanded interest.
c) Is a security which is widely used in of day to day banking and commercial financial transactions.
d) It is a security which is easily transferable. And banks can widely accept from public for encashment, providing loans, as securities etc.
e) None of these

8. Identify the bank reasons for returning the cheque unpaid ......
a) No agreement
b) Payment stopped
c) Refer to drawer
d) Exceeds agreement
e) All the above

9. Coins with the value of 50 paise and below are called as ......
a) Small coins
b) Paise value coins
c) Mint coins
d) RBI coins
e) None of these

10. If a cheque is crossed then the status of the cheque is ......
a) It is an invalid document
b) Cheque cannot be enchased even though it is deposited in the payee account
c) The cheque is ineligible to get cash across the counter
d) The cheque is considered as cancelled cheque
e) None of these

11. Banks dishonouring the cheque is called as ......
a) Bank cancelling the cheque
b) Stopping cheque without payment
c) Nullifying of the cheque
d) Truncating the cheque
e) None of these

12. Which of the following is not an instructional credit agency ?
a) Money lenders
b) Commercial banks
c) NBFCs
d) Regional rural banks
e) Co-operative societies

13. Whose signature is found on an one-rupee currency note of india?
a) RBI Governor
b) Finance Secretary of India
c) Deputy Governor of RBI
d) Prime Minister of India
e) Finance Minister of India

14. Who among the following cannot open a savings bank account?
a) A business entity
b) Two persons jointly
c) Both a and b
d) An individual
e) Trusts

15. Interest rate policy belongs to .......
a) Fiscal policy
b) Monetary policy
c) Bank policy
d) Banking Business policy
e) None of these

16. Mr.X an indivical can open following account (s) with a bank ......
a) Savings account
b) Current account
c) Fixed deposit account
d) All the above
e) Only a and c

17. What are the first six numbers indicate in MICR cheque?
a) Cheque number
b) City code
c) Bank code
d) Branch code
e) All the above

18. Which of the following is excluded from NI Act?
a) Promissory note
b) Bill of exchange
c) Cheque
d) Currency note
e) None of these

19. Banks will be happy to lend money to RBI if the following rate is increased ......
a) Repo rate
b) Base rate
c) Reverse repo rate
d) Bank rate
e) None of these

20. Savings account can be opened in following institutions ......
a) Commercial banks
b) Co-operative banks
c) Public sector banks
d) Postal departments
e) All the above

21. What is the maximum period of holdings in a saving account?
a) There is no maximum period of holdings
b) 10 year
c) 6 months to 1 year (depending on bank)
d) More than 10 years
e) None of these

22. A person who draws the cheque is known as .......
a) Drawee
b) Drawer
c) Payee
d) Barer
e) None of these

23. Resolution and settlement of grievance of public against banks is done by ......
a) Reserve Bank
b) Indian Banking association
c) Customer himself
d) Banking ombudsman
e) None of these

24. An introduction while opening an account is ......
a) Optional
b) Compulsory
c) Not necessary under NI Act
d) Both b and c
e) None of these

25. According to RBI a savings bank account is treated as inoperative or dormant if there are no transactions in the account over a period of .......
a) 2 years
b) 18 months
c) 1 year
d) 5 years
e) None of these

ANSWER:
1-e, 2-b, 3-a, 4-c, 5-b, 6-d, 7-a, 8-e, 9-a, 10-c
11-c, 12-a, 13-b, 14-a, 15-b, 16-d, 17-a, 18-d, 19-c, 20-e, 21-a, 22-b, 23-d, 24-b, 25-a

Friday 29 August 2014

BANKING TERMS

Account Agreement: The contract governing your open-end credit account, it provides information on changes that may occur to the account.
Account History: The payment history of an account over a specific period of time, including the number of times the account was past due or over limit.
Account Holder: Any and all persons designated and authorized to transact business on behalf of an account. Each account holder's signature needs to be on file with the bank. The signature authorizes that person to conduct business on behalf of the account.

Acquiring Bank: In a merger, the bank that absorbs the bank acquired.
Accrued interest: Interest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price.
Adjustable-Rate Mortgages (ARMS): Also known as variable-rate mortgages. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the loan as market conditions change.  There is typically a maximum (or ceiling) and a minimum (or floor) defined in the loan agreement. If interest rates rise, so does the loan payment. If interest rates fall, the loan payment may as well.
Arbitrage: Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.
Adverse Action: Under the Equal Credit Opportunity Act, a creditor's refusal to grant credit on the terms requested, termination of an existing account, or an unfavorable change in an existing account.
Adverse Action Notice: The notice required by the Equal Credit Opportunity Act advising a credit applicant or existing debtor of the denial of their request for credit or advising of a change in terms considered unfavorable to the account holder.
AER: Annual earnings rate on an investment.
Affidavit: A sworn statement in writing before a proper official, such as a notary public.
Alteration: Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument.
Amortization: The process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity.
Anytime Banking: With introduction of ATMs, Tele-Banking and internet banking, customers can conduct their business anytime of the day and night. The 'Banking Hours' is not a constraint for transacting banking business.
Anywhere Banking : Refers to banking not only by ATMs, Tele-Banking and internet banking, but also to core banking solutions brought in by banks where customer can deposit his money, cheques and also withdraw money from any branch connected with the system. All major banks in India have brought in core banking in their operations to make banking truly anywhere banking.
Annual Percentage Rate (APR): The cost of credit on a yearly basis, expressed as a percentage.
Annual Percentage Yield (APY): A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a 365-day year.
Annuity : A life insurance product which pays income over the course of a set period. Deferred annuities allow assets to grow before the income is received and immediate annuities (usually taken from a year after purchase) allow payments to start from about a year after purchase.
APR:  The annual percentage rate of interest, usually on a loan or mortgage, usually displayed in brackets and representing the true cost of the loan or mortgage as it shows any additional payments beyond the interest rate.
Application: Under the Equal Credit Opportunity Act (ECOA), an oral or written request for an extension of credit that is made in accordance with the procedures established by a creditor for the type of credit requested.
Appraisal: The act of evaluating and setting the value of a specific piece of personal or real property.
Ask Price: The lowest price at which a dealer is willing to sell a given security.
Asset-Backed Securities (ABS): A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards – these issues are very similar to mortgage-backed securities.
At-the-money: The exercise price of a derivative that is closest to the market price of the underlying instrument.
ATM:  ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense cash, receive cash, accept cheques, give balances in the accounts and also give mini-statements to the customers.
Authorization: The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction.
Automated Clearing House (ACH): A computerized facility used by member depository institutions to electronically combine, sort, and distribute inter-bank credits and debits. ACHs process electronic transfers of government securities and provided customer services, such as direct deposit of customers' salaries and government benefit payments (i.e., social security, welfare, and veterans' entitlements), and preauthorized transfers.
Automated Teller Machine (ATM): A machine, activated by a magnetically encoded card or other medium that can process a variety of banking transactions. These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts.
Automatic Bill Payment: A checkless system for paying recurring bills with one authorization statement to a financial institution. For example, the customer would only have to provide one authorization form/letter/document to pay the cable bill each month. The necessary debits and credits are made through an Automated Clearing House (ACH).
Availability Date: Bank's policy as to when funds deposited into an account will be available for withdrawal.
Availability Policy: Bank's policy as to when funds deposited into an account will be available for withdrawal.
Available Balance: The balance of an account less any hold, uncollected funds, and restrictions against the account.
Available Credit: The difference between the credit limit assigned to a cardholder account and the present balance of the account.

Banking: Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on demand or otherwise and withdraw able by cheques, drafts, order, etc.
Bank Ombudsman: Bank Ombudsman is the authority to look into complaints against Banks in the main areas of collection of cheque / bills, issue of demand drafts, non-adherence to prescribed hours of working, failure to honour guarantee / letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances where banks flout directions / instructions of RBI. This Scheme was announced in 1995 and is functioning with new guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks.
Bancassurance:  Bancassurance refers to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies like home insurance - car insurance, medi-policies and others, by banks as corporate agents through their branches located in different parts of the country by charging a fee.
Banker's Lien: Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary.
Basel-II: The Committee on Banking Regulations and Supervisory Practices, popularity known as Basel Committee, submitted its revised version of norms in June, 2004. Under the revised accord the capital requirement is to be calculated for credit, market and operational risks. The minimum requirement continues to be 8% of capital fund (Tier I & II Capital) Tier II shall continue to be not more than 100% of Tier I Capital.
Brick & Mortar Banking: Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking, tele banking etc.
Business of Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Travelers’ Cheques, doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central Government may notify in the official Gazette.
Bouncing of a cheque: Where an account does not have sufficient balance to honour the cheque issued by the customer, the cheque is returned by the bank with the reason "funds insufficient" or "Exceeds arrangement”. This is known as 'Bouncing of a cheque’.
Basis Point: One hundredth of 1%. A measure normally used in the statement of interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis points. Bear Markets: Unfavorable markets associated with falling prices and investor pessimism.
Bid-ask Spread: The difference between a dealers’s bid and ask price.
Bid Price: The highest price offered by a dealer to purchase a given security.
Blue Chips: Blue chips are unsurpassed in quality and have a long and stable record of earnings and dividends. They are issued by large and well-established firms that have impeccable financial credentials.
Bond: Publicly traded long-term debt securities, issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal at maturity.
Book Value: The amount of stockholders’ equity in a firm equals the amount of the firm’s assets minus the firm’s liabilities and preferred stock.
Broker: Individuals licensed by stock exchanges to enable investors to buy and sell securities.
Brokerage Fee: The commission charged by a broker.
Bull Markets: Favorable markets associated with rising prices and investor optimism.

Call Option: The right to buy the underlying securities at a specified exercise price on or before a specified expiration date.
Callable Bonds: Bonds that give the issuer the right to redeem the bonds before their stated maturity.
Capital Gain: The amount by which the proceeds from the sale of a capital asset exceed its original purchase price.
Capital Markets: The market in which long-term securities such as stocks and bonds are bought and sold.
Certificate of Deposits (CDs): Savings instrument in which funds must remain on deposit for a specified period and premature withdrawals incur interest penalties.
Certificate of Deposit:. Certificate of Deposits are negotiable receipts in bearer form which can be freely traded among investors. This is also a money market instrument,issued for a period ranging from 7 days to f one year .The minimum deposit amount is Rs. 1 lakh and they are transferable by endorsement and delivery.
Cheque: Cheque is a bill of exchange drawn on a specified banker ordering the banker to pay a certain sum of money to the drawer of cheque or another person. Money is generally withdrawn by clients by cheques. Cheque is always payable on demand.
Cheque Truncation: Cheque truncation truncates or stops the flow of cheques through the banking system. Generally truncation takes place at the collecting branch, which sends the electronic image of the cheques to the paying branch through the clearing house and stores the paper cheques with it.
Closed-end (Mutual) Fund: A fund with a fixed number of shares issued, and all trading is done between investors in the open market. The share prices are determined by market prices instead of their net asset value.
Collateral: A specific asset pledged against possible default on a bond. Mortgage bonds are backed by claims on property. Collateral trusts bonds are backed by claims on other securities. Equipment obligation bonds are backed by claims on equipment.
Commercial Paper: Short-term and unsecured promissory notes issued by corporations with very high credit standings.
Common Stock: Equity investment representing ownership in a corporation; each share represents a fractional ownership interest in the firm.
Compound Interest: Interest paid not only on the initial deposit but also on any interest accumulated from one period to the next.
Contract Note:  A note which must accompany every security transaction which contains information such as the dealer’s name (whether he is acting as principal or agent) and the date of contract.
Controlling Shareholder: Any person who is, or group of persons who together are, entitled to exercise or control the exercise of a certain amount of shares in a company at a level (which differs by jurisdiction) that triggers a mandatory general offer, or more of the voting power at general meetings of the issuer, or who is or are in a position to control the composition of a majority of the board of directors of the issuer.
Convertible Bond: A bond with an option, allowing the bondholder to exchange the bond for a specified number of shares of common stock in the firm. A conversion price is the specified value of the shares for which the bond may be exchanged. The conversion premium is the excess of the bond’s value over the conversion price.
Corporate Bond: Long-term debt issued by private corporations.
Coupon: The feature on a bond that defines the amount of annual interest income.
Coupon Frequency: The number of coupon payments per year.
Coupon Rate: The annual rate of interest on the bond’s face value that a bond’s issuer promises to pay the bondholder. It is the bond’s interest payment per dollar of par value.
Covered Warrants:  Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.
Credit Rating: An assessment of the likelihood of an individual or business being able to meet its financial obligations. Credit ratings are provided by credit agencies or rating agencies to verify the financial strength of the issuer for investors.
Collecting Banker: Also called receiving banker, who collects on instruments like a cheque, draft or bill of exchange, lodged with himself for the credit of his customer's account.
Consumer Protection Act: It is implemented from 1987 to enforce consumer rights through a simple legal procedure. Banks also are covered under the Act. A consumer can file complaint for deficiency of service with Consumer District Forum for amounts upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to Rs.1 Crore in State Commission and for amounts above Rs.1 Crore in National Commission.
Co-operative Bank : An association of persons who collectively own and operate a bank for the benefit of consumers / customers, like Saraswat Co-operative Bank or Abhyudaya Co-operative Bank and other such banks.
Co-operative Society : When an association of persons collectively own and operate a unit for the benefit of those using its services like Apna Bazar Co-operative Society or Sahakar Bhandar or a Co-operative Housing Society.
Core Banking Solutions (CBS): Core Banking Solutions is a buzz word in Indian banking at present, where branches of the bank are connected to a central host and the customers of connected branches can do banking at any breach with core banking facility.
Creditworthiness: It is the capacity of a borrower to repay the loan / advance in time along with interest as per agreed terms.
Crossing of Cheques: Crossing refers to drawing two parallel lines across the face of the cheque. A crossed cheque cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing. A general crossing means that cheque can be paid through any bank and a special crossing, where the name of a bank is indicated on the cheque, can be paid only through the named bank.
Customer: A person who maintains any type of account with a bank is a bank customer. Consumer Protection Act has a wider definition for consumer as the one who purchases any service for a fee like purchasing a demand draft or a pay order. The term customer is defined differently by Laws, softwares and countries.
Current Account: Current account with a bank can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. No interest is paid in this type of account.
Currency Board: A monetary system in which the monetary base is fully backed by foreign reserves. Any changes in the size of the monetary base have to be fully matched by corresponding changes in the foreign reserves.
Current Yield: A return measure that indicates the amount of current income a bond provides relative to its market price. It is shown as: Coupon Rate divided by Price multiplied by 100%.
Custody of Securities: Registration of securities in the name of the person to whom a bank is accountable, or in the name of the bank’s nominee; plus deposition of securities in a designated account with the bank’s bankers or with any other institution providing custodial services.

Debit Card: A plastic card issued by banks to customers to withdraw money electronically from their accounts. When you purchase things on the basis of Debit Card the amount due is debited immediately to the account. Many banks issue Debit-Cum-ATM Cards.
Debtor: A person who takes some money on loan from another person.
Demand Deposits: Deposits which are withdrawn on demand by customers. E.g.  savings bank and current account deposits.
Demat Account: Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account.
Derivative Call (Put) Warrants: Warrants issued by a third party which grant the holder the right to buy (sell) the shares of a listed company at a specified price.
Derivative Instrument: Financial instrument whose value depends on the value of another asset.
Discount Bond:  A bond selling below par, as interest in-lieu to the bondholders.
Dishonour of Cheque: Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment. Default Risk: The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner.
Diversification: The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.
Duration: A measure of bond price volatility, it captures both price and reinvestment risks to indicate how a bond will react to different interest rate environments.

Earnings: The total profits of a company after taxation and interest.
Earnings per Share (EPS): The amount of annual earnings available to common stockholders as stated on a per share basis.
Earnings Yield: The ratio of earnings to price (E/P). The reciprocal is price earnings ratio (P/E).
E-Banking : E-Banking or electronic banking is a form of banking where funds are transferred through exchange of electronic signals between banks and financial institution and customers ATMs, Credit Cards, Debit Cards, International Cards, Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this category.
EFT - (Electronic Fund Transfer): EFT is a device to facilitate automatic transmission and processing of messages as well as funds from one bank branch to another bank branch and even from one branch of a bank to a branch of another bank. EFT allows transfer of funds electronically with debit and credit to relative accounts.
Either or Survivor: Refers to operation of the account opened in two names with a bank. It means that any one of the account holders have powers to withdraw money from the account, issue cheques, give stop payment instructions etc. In the event of death of one of the account holder, the surviving account holder gets all the powers of operation.
Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce where the exchange of business takes place by Electronic means.
Endorsement: When a Negotiable Instrument contains, on the back of the instrument an endorsement, signed by the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement.
Bouncing of a cheque: Where the name of the endorsee or transferee is not mentioned on the instrument.
Endorsement in Full: Where the name of the endorsee or transferee appears on the instrument while making endorsement.
Equity: Ownership of the company in the form of shares of common stock.
Equity Call Warrants: Warrants issued by a company which give the holder the right to acquire new shares in that company at a specified price and for a specified period of time.
Ex-dividend (XD): A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment (usually two days before the record date). For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is usually indicated in newspapers with an (x) next to the stock’s or unit trust’s name.
Execution of Documents: Execution of documents is done by putting signature of the person, or affixing his thumb impression or putting signature with stamp or affixing common seal of the company on the documents with or without signatures of directors as per articles of association of the company.

Face Value/ Nominal Value: The value of a financial instrument as stated on the instrument. Interest is calculated on face/nominal value.
Fixed-income Securities: Investment vehicles that offer a fixed periodic return.
Fixed Rate Bonds:  Bonds bearing fixed interest payments until maturity date.
Floating Rate Bonds: Bonds bearing interest payments that are tied to current interest rates.
Factoring: Business of buying trade debts at a discount and making a profit when debt is realized and also taking over collection of trade debts at agreed prices.
Foreign Banks: Banks incorporated outside India but operating in India and regulated by the Reserve Bank of India (RBI),. e..g., Barclays Bank, HSBC, Citibank, Standard Chartered Bank, etc.
Forfeiting: In International Trade when an exporter finds it difficult to realize money from the importer, he sells the right to receive money at a discount to a forfaiter, who undertakes inherent political and commercial risks to finance the exporter, of course with assumption of a profit in the venture.
Forgery: when a material alteration is made on a document or a Negotiable Instrument like a cheque, to change the mandate of the drawer, with intention to defraud.
Fundamental Analysis: Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates and risk evaluation of the firm.
Future Value: The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest.
Future Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will grow over a period of time when it is placed in an account paying compound interest.
Futures Contract: A commitment to deliver a certain amount of some specified item at some specified date in the future.

Garnishee Order: When a Court directs a bank to attach the funds to the credit of customer's account under provisions of Section 60 of the Code of Civil Procedure, 1908.
General Lien: A right of the creditors to retain possession of all goods given in security to him by the debtor for any outstanding debt.
Guarantee: A contract between guarantor and beneficiary to ensure performance of a promise or discharge the liability of a third person. If promise is broken or not performed, the guarantor pays contracted amount to the beneficiary.

Hedge: A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.
Holder: Holder means any person entitled in his own name to the possession of the cheque, bill of exchange or promissory note and who is entitled to receive or recover the amount due on it from the parties. For example, if I give a cheque to my friend to withdraw money from my bank,he becomes holder of that cheque. Even if he loses the cheque, he continues to be holder. Finder cannot become the holder.
Holder in due course : A person who receives a Negotiable Instrument for value, before it was due and in good faith, without notice of any defect in it, he is called holder in due course as per Negotiable Instrument Act. In the earlier example if my friend lends some money to me on the basis of the cheque, which I have given to him for encashment, he becomes holder-in-due course.
Hypothecation: Charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. In pledge, possession of property is passed on to the lender but in hypothecation, the property remains with the borrower in trust for the lender.

Identification: When a person provides a document to a bank or is being identified by a person, who is known to the bank, it is called identification. Banks ask for identification before paying an order cheque or a demand draft across the counter.
Indemnifier: When a person indemnifies or guarantees to make good any loss caused to the lender from his actions or others' actions.
Indemnity: Indemnity is a bond where the indemnifier undertakes to reimburse the beneficiary from any loss arising due to his actions or third party actions.
Income: The amount of money an individual receives in a particular time period.
Index Fund:  A mutual fund that holds shares in proportion to their representation in a market index, such as the S&P 500.
Initial Public Offering (IPO): An event where a company sells its shares to the public for the first time. The company can be referred to as an IPO for a period of time after the event.
Inside Information: Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information.
Insider Trading: The illegal use of non-public information about a company to make profitable securities transactions
Insolvent: Insolvent is a person who is unable to pay his debts as they mature, as his liabilities are more than the assets . Civil Courts declare such persons insolvent. Banks do not open accounts of insolvent persons as they cannot enter into contract as per law.
Interest Warrant: When cheque is given by a company or an organization in payment of interest on deposit , it is called interest warrant. Interest warrant has all the characteristics of a cheque.
International Banking: involves more than two nations or countries. If an Indian Bank has branches in different countries like State Bank of India, it is said to do International Banking.
Introduction: Banks are careful in opening any account for a customer as the prospective customer has to be introduced by an existing account holder or a staff member or by any other person known to the bank for opening of account. If bank does not take introduction, it will amount to negligence and will not get protection under law.
Intrinsic Value: The difference of the exercise price over the market price of the underlying asset.
Investment: A vehicle for funds expected to increase its value and/or generate positive returns.
Investment Adviser: A person who carries on a business which provides investment advice with respect to securities and is registered with the relevant regulator as an investment adviser.
IPO price: The price of share set before being traded on the stock exchange. Once the company has gone Initial Public Offering, the stock price is determined by supply and demand.

JHF Account : Joint Hindu Family Account is account of a firm whose business is carried out by Karta of the Joint family, acting for all the family members.. The family members have common ancestor and generally maintain a common residence and are subject to common social, economic and religious regulations.
Joint Account: When two or more individuals jointly open an account with a bank.
Junk Bond: High-risk securities that have received low ratings (i.e. Standard & Poor’s BBB rating or below; or Moody’s BBB rating or below) and as such, produce high yields, so long as they do not go into default.

Karta: Manager of a Hindu Undivided Family (HUF) who handles the family business. He is usually the eldest male member of the undivided family.
Kiosk Banking: Doing banking from a cubicle from which food, newspapers, tickets etc. are also sold.
KYC Norms: Know your customer norms are imposed by R.B.I. on banks and other financial institutions to ensure that they know their customers and to ensure that customers deal only in legitimate banking operations and not in money laundering or frauds.

Law of Limitation: Limitation Act of 1963 fixes the limitation period of debts and obligations including banks loans and advances. If the period fixed for particular debt or loan expires, one cannot file a suit for is recovery, but the fact of the debt or loan is not denied. It is said that law of limitation bars the remedy but does not extinguish the right.
Lease Financing: Financing for the business of renting houses or lands for a specified period of time and also hiring out of an asset for the duration of its economic life. Leasing of a car or heavy machinery for a specific period at specific price is an example.
Letter of Credit: A document issued by importers bank to its branch or agent abroad authorizing the payment of a specified sum to a person named in Letter of Credit (usually exporter from abroad). Letters of Credit are covered by rules framed under Uniform Customs and Practices of Documentary Credits framed by International Chamber of Commerce in Paris.
Limited Companies Accounts: Accounts of companies incorporated under the Companies Act, 1956 . A company may be private or public. Liability of the shareholders of a company is generally limited to the face value of shares held by them.
Leverage Ratio: Financial ratios that measure the amount of debt being used to support operations and the ability of the firm to service its debt.
Libor: The London Interbank Offered Rate (or LIBOR) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). The LIBOR rate is published daily by the British Banker’s Association and will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.
Limit Order: An order to buy (sell) securities which specifies the highest (lowest) price at which the order is to be transacted.
Limited Company: The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions.
Liquidity: The ability to convert an investment into cash quickly and with little or no loss in value.
Listing: Quotation of the Initial Public Offering company’s shares on the stock exchange for public trading.
Listing Date: The date on which Initial Public Offering stocks are first traded on the stock exchange by the public

Margin Call: A notice to a client that it must provide money to satisfy a minimum margin requirement set by an Exchange or by a bank / broking firm.
Market Capitalization: The product of the number of the company’s outstanding ordinary shares and the market price of each share.
Market Maker: A dealer who maintains an inventory in one or more stocks and undertakes to make continuous two-sided quotes.
Market Order: An order to buy or an order to sell securities which is to be executed at the prevailing market price.
Money Market: Market in which short-term securities are bought and sold.
Marginal Standing Facility Rate: MSF scheme has become effective from 09th May, 2011 launched by the RBI. Under this scheme, Banks will be able to borrow upto 1% of their respective Net Demand and Time Liabilities.  The rate of interest on the amount accessed from this facility will be 100 basis points (i.e. 1%) above the repo rate. This scheme is likely to reduce volatility in the overnight rates and improve monetary transmission.
Mandate: Written authority issued by a customer to another person to act on his behalf, to sign cheques or to operate a bank account.
Material Alteration: Alteration in an instrument so as to alter the character of an instrument for example when date, amount, name of the payee are altered or making a cheque payable to bearer from an order one or opening the crossing on a cheque.
Merchant Banking : When a bank provides to a customer various types of financial services like accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice, information or assistance on starting new business, acquisitions, mergers and foreign exchange.
Micro Finance: Micro Finance aims at alleviation of poverty and empowerment of weaker sections in India. In micro finance, very small amounts are given as credit to poor in rural, semi-urban and urban areas to enable them to raise their income levels and improve living standards.
Minor Accounts: A minor is a person who has not attained legal age of 18 years. As per Contract Act a minor cannot enter into a contract but as per Negotiable Instrument Act, a minor can draw, negotiate, endorse, receive payment on a Negotiable Instrument so as to bind all the persons, except himself. In order to boost their deposits many banks open minor accounts with some restrictions.
Mobile Banking : With the help of M-Banking or mobile banking customer can check his bank balance, order a demand draft, stop payment of a cheque, request for a cheque book and have information about latest interest rates.
Money Laundering: When a customer uses banking channels to cover up his suspicious and unlawful financial activities, it is called money laundering.
Money Market: Money market is not an organized market like Bombay Stock Exchange but is an informal network of banks, financial institutions who deal in money market instruments of short term like CP, CD and Treasury bills of Government.
Moratorium: R.B.I. imposes moratorium on operations of a bank; if the affairs of the bank are not conducted as per banking norms. After moratorium R.B.I. and Government explore the options of safeguarding the interests of depositors by way of change in management, amalgamation or take over or by other means.
Mortgage: Transfer of an interest in specific immovable property for the purpose of offering a security for taking a loan or advance from another. It may be existing or future debt or performance of an agreement which may create monetary obligation for the transferor (mortgagor).
Mutual Fund: A company that invests in and professionally manages a diversified portfolio of securities and sells shares of the portfolio to investors.

NABARD: National Bank for Agriculture & Rural Development was setup in 1982 under the Act of 1981. NABARD finances and regulates rural financing and also is responsible for development agriculture and rural industries.
Negotiation: In the context of banking, negotiation means an act of transferring or assigning a money instrument from one person to another person in the course of business.
Net Asset Value: The underlying value of a share of stock in a particular mutual fund; also used with preferred stock.
Non-Fund Based Limits: Non-Fund Based Limits are those type of limits where banker does not part with the funds but may have to part with funds in case of default by the borrowers, like guarantees, letter of credit and acceptance facility.
Non-Resident: A person who is not a resident of India is a non-resident.
Non-Resident Accounts: Accounts of non-resident Indian citizens opened and maintained as per R.B.I. Rules.
Notary Public: A Lawyer who is authorized by Government to certify copies of documents .
NPA Account: If interest and instalments and other bank dues are not paid in any loan account within a specified time limit, it is being treated as non-performing assets of a bank.

Off Balance Sheet Items: Those items which affect the financial position of a business concern, but do not appear in the Balance Sheet E,g guarantees, letters of credit . The mention "off Balance Sheet items" is often found in Auditors Reports or Directors Reports.
Offer for Sale: An offer to the public by, or on behalf of, the holders of securities already in issue.
Offer for Subscription: The offer of new securities to the public by the issuer or by someone on behalf of the issuer.
Online Banking: Banking through internet site of the bank which is made interactive.
Open-end (Mutual) Fund: There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.
Open Offer: An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.
Option: A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.
Oversubscribed: When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public’s perception of the business potential of the IPO company.

Pass Book: A record of all debit and credit entries in a customer's account. Generally all banks issue pass books to Savings Bank/Current Account Holders.
Par Bond: A bond selling at par (i.e. at its face value).
Par Value: The face value of a security.
Perpetual Bonds: Bonds which have no maturity date.
Placing: Obtaining subscriptions for, or the sale of, primary market, where the new securities of issuing companies are initially sold.
Personal Identification Number (PIN): Personal Identification Number is a number which an ATM card holder has to key in before he is authorized to do any banking transaction in a ATM .
Plastic Money: Credit Cards, Debit Cards, ATM Cards and International Cards are considered plastic money as like money they can enable us to get goods and services.
Pledge: A bailment of goods as security for payment of a debt or performance of a promise, e.g pledge of stock by a borrower to a banker for a credit limit. Pledge can be made in movable goods only.
Post-Dated Cheque:  A Cheque which bears the date which is subsequent to the date when it is drawn. For example, a cheque drawn on 8th of February, 2007 bears the date of 12th February, 2007.
Power of Attorney: It is a document executed by one person - Donor or Principal, in favour of another person, Donee or Agent - to act on behalf of the former, strictly as per authority given in the document.
Portfolio: A collection of investment vehicles assembled to meet one or more investment goals.
Preference Shares: A corporate security that pays a fixed dividend each period. It is senior to ordinary shares but junior to bonds in its claims on corporate income and assets in case of bankruptcy.
Premium (Warrants): The difference of the market price of a warrant over its intrinsic value.
Premium Bond: Bond selling above par.
Present Value: The amount to which a future deposit will discount back to present when it is depreciated in an account paying compound interest.
Present Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will discount back to present when it is depreciated in an account paying compound interest.
Price/Earnings Ratio (P/E): The measure to determine how the market is pricing the company’s common stock. The price/earnings (P/E) ratio relates the company’s earnings per share (EPS) to the market price of its stock.
Privatization: The sale of government-owned equity in nationalized industry or other commercial enterprises to private investors.
Prospectus: A detailed report published by the Initial Public Offering company, which includes all terms and conditions, application procedures, IPO prices etc, for the IPO
Put Option: The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.
Premature Withdrawals: Term deposits like Fixed Deposits, Call Deposits, Short Deposits and Recurring Deposits have to mature on a particular day. When these deposits are sought to be withdrawn before maturity , it is premature withdrawal.
Prime Lending Rate (PLR): The rate at which banks lend to their best (prime) customers.
Priority Sector Advances : consist of loans and advances to Agriculture, Small Scale Industry, Small Road and Water Transport Operators, Retail Trade, Small Business with limits on investment in equipments, professional and self employed persons, state sponsored organisations for lending to SC/ST, Educational Loans, Housing Finance up to certain limits, self-help groups and consumption loans.
Promissory Note: Promissory Note is a promise / undertaking given by one person in writing to another person, to pay to that person , a certain sum of money on demand or on a future day.
Provisioning:  Provisioning is made for the likely loss in the profit and loss account while finalizing accounts of banks. All banks are supposed to make assets classification and make appropriate provisions for likely losses in their balance sheets.
Public Sector Bank: A bank fully or partly owned by the Government.

Rate of Return: A percentage showing the amount of investment gain or loss against the initial investment.
Real Interest Rate: The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.
Redemption Value: The value of a bond when redeemed.
Reinvestment Value: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.
Relative Strength Index (RSI): A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.
Repurchase Agreement: An arrangement in which a security is sold and later bought back at an agreed price and time.
Resistance Level: A price at which sellers consistently outnumber buyers, preventing further price rises.
Return: Amount of investment gain or loss.
Rescheduling of Payment:  Rearranging the repayment of a debt over a longer period than originally agreed upon due to financial difficulties of the borrower.
Restrictive Endorsement: Where endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as "Pay to Ashok only". Now Ashok cannot negotiate the instrument further.
Right of Appropriation: As per Section 59 of the Indian Contract Act, 1972 while making the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. If the debtor does not do so, the banker can appropriate the payment to any debt of his customer.
Right of Set-Off : When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off. For example, debit balance of Rs.50,000/- in overdraft account can be set off against credit balance of Rs.75,000/- in the Savings Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the savings account.
Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
Risk-Averse, Risk-Neutral, Risk-Taking:
Risk-averse describes an investor who requires greater return in exchange for greater risk.
Risk-neutral describes an investor who does not require greater return in exchange for greater risk.
Risk-taking describes an investor who will accept a lower return in exchange for greater risk.

Safe Custody: When articles of value like jewellery, boxes, shares, debentures, Government bonds, Wills or other documents or articles are given to a bank for safe keeping in its safe vault, it is called safe custody.. Bank charges a fee from its clients for such safe custody.
Savings Bank Account: All banks in India are having the facility of opening savings bank account with a nominal balance. This account is used for personal purposes and not for business purpose and there are certain restrictions on withdrawals from this type of account. Account holder gets nominal interest in this account.
Senior Bond: A bond that has priority over other bonds in claiming assets and dividends.
Settlement: Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receive from the broker the proceeds of a sale.
Short Hedge: A transaction that protects the value of an asset held by taking a short position in a futures contract.
Short Position: Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.
Short Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.
Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.
Stock Splits: Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.
Subordinated Bond:  An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.
Substantial Shareholder: A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.
Support Level: A price at which buyers consistently outnumber sellers, preventing further price falls.

Teller : Teller is a staff member of a bank who accepts deposits, cashes cheques and performs other banking services for the public.
Technical Analysis: A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)
Time Horizon: The duration of time an investment is intended for.
Trading Rules: Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.
Trust Deed: A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.

Underwriting : is an agreement by the underwriter to buy on a fixed date and at a fixed rate, the unsubscribed portion of shares or debentures or other issues. Underwriter gets commission for this agreement.
Underlying Security:  The security subject to being purchased or sold upon exercise of the option contract.
Universal Banking : When Banks and Financial Institutions are allowed to undertake all types of activities related to banking like acceptance of deposits, granting of advances, investment, issue of credit cards, project finance, venture capital finance, foreign exchange business, insurance etc. it is called Universal Banking.

Valuation: Process by which an investor determines the worth of a security using risk and return concept.
Virtual Banking: Virtual banking is also called internet banking, through which financial and banking services are accessed via internet's World Wide Web. It is called virtual banking because an internet bank has no boundaries of brick and mortar and it exists only on the internet.

Warrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.
Wholesale Banking: Wholesale banking is different from Retail Banking as its focus is on providing for financial needs of industry and institutional clients.
Window Dressing: Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.

Yield (Internal rate of Return): The compound annual rate of return earned by an investment
Yield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investor’s capital gain or loss on the security are taken into account.

Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par value.