Important Banking Terms
Bank awareness: One must have known the banking terms to get qualify in the bank exams. Seventy out of hundred unemployed youth are preparing for bank exams in now days. Every department conduct examination for the recruitment of vacancies. The 20 nationalised Banks and State Bank of India and its associates conducts the written examination for the recruitment every year for the three types of vaccines like Clerk cadre, Probationary Officer and Special Officer. In that written examination, Banking Awareness and banking terminology paper is mandatory. Many candidates have not an idea about these Banking terms for bank exam and they disqualify in this section. Here we are to help you in Banking terms and banking bits for competitive examinations.
Some of the important banking terms are given below for the bank exams like SBI and its associates, IBPS and RRB etc. The one who gets through in the exam is the one, who had worked smart and used to practice more. Practice is the only ladder you have to reach to the heights and reach your destination. In the examination paper questions will be based on the terminologies those are being used in the banking sector. So, Banking awareness or banking terms are the important topic which one cannot ignore. First of all must have to know what is the Bank? What it means? We know bank accepts the deposits, gives loans and saves our money. Other than this bank conducts more works which we may not know. We have given the simple banking terms and its definitions for the bank or competitive examinations.
In the exam paper, banking terms like repo rate, cross cheque, par cheque, loans, assurance, inflation, refunding and smart cards etc. Candidates who are preparing for bank job must have to know the banking terminology not only to get qualify in examination but to do a job in banking sector one must have to know the banking awareness. We have given the Banking Material and Banking terms for bank exams. Don’t by- heart the definitions or formulae to hit the exam, know the meaning of each word.
Important Bank Terminology
Cheque: Cheque is a negotiable instrument containing conditional order to pay sum of money to the person mentioned on it or to the bearer of the instrument.
Crossing: Two parallel lines drawn on the top left corner of the cheque
Account Payee Cheque: Account payee cheque can be routed only through accounts
Post dated Cheque: The date on the check beyond today’s date then cheque becomes post dated.
Stale Cheque: A cheque which has completed the stipulated validity period of the cheque is called as the stale cheque (The validity period of 6 months as at present)
Mutilated cheque: It is a damaged cheque
Bounced Cheque: It is nothing but an ordinary bank check that any bank can refuse to encash or pay because of the fact that there is no sufficient balance in the bank account of the originator
At Par cheque: It is payable anywhere in India
Multi city cheque: A cheque which is payable in any branch of a particular bank
Travelers Cheque: Cheques issued by a bank and function as cash but are protected against loss or theft when travelling.
Money Laundering: Conversion of money which is illegally obtained
Linked Account: Any account linked to another account in the same bank where funds can be transferred electronically between accounts and carry out other specified services as well
Consumer durables loans: Loan granted by banks for purchasing of white goods
Collateral: A borrower needs to provide some kind of security to the bank in case of high ticket loans, such security is called ‘collateral’
Floating Rate: An interest rate that is referenced to a market rate and is revised as per the change in the interest rates in the economy. When interest rates in the economy rise, floating rates rise and vice versa
Exchange Rate: Rate at which the domestic currency can be converted into foreign currency and vice versa
Inflation: Decreasing the value of money in this state money looses the value hence prices will go up
Deflation: Opposite to inflation here money will have more value and hence product looses the value
Electronic Clearing Service (ECS): It is a service provided by the banks to facilitate direct debit from your bank account towards an investment account (such as a mutual fund SIP) and/or paying regular loan EMIs.
Billing Cycle: A billing cycle is a time period that covers the credit statement that usually lasts for 25 days
Bridge Loan: It is also known as swing loan, which is basically a real estate loan or a home loan, where the current residence/real estate is pledged by the borrower as collateral in order to purchase a new residence
Debit cum ATM Card: Customer can deposit and withdraw cash by means of magnetic ATM Card
Core Banking: A centralized database with online connectivity to branches, internet as well as ATM network which has been adopted by almost all major banks of the country
Bank assurance: When the banks entertain in dealing with insurance business then it is called as bank assurance
Short term loan: If the repayment period of any loan is up to 36 months, then that loan is called Short term loans
Medium term loan: If the repayment period of any loan is up to 37 to 84 months , then that loan is called Medium term loans
Long term loan: If the repayment period of any loan more than 84 months , then that loan is called long term loans
Grace Period: It is an interest free period that is to be given by a creditor to a debtor after the period of the loan gets over, before initiating the process of loss recovery. The grace period depends on the amount of the loan and also the credit score of the borrower.
Internet Banking: It is also called as e-banking or online banking, where customer can conduct their transactions through the internet.
Life Cap: The upper and lower limit for changes in the borrower’s interest rate over the term of his/her loans
Net Income: The amount that is left after paying the taxes is called the net income.
Original Principal Balance: The amount borrowed by any borrower is called the original principal balance
Overdraft: It is a check or rather an amount of check, which is above the balance available in the account of the payer.
Refunding: The act of paying back the amount or returning the funds is called as refunding.
Repricing: Change in the rate of interest
Reserve Account: An account which is maintained by depositing undistributed parts of profits for future needs is called as a reserve account
Smart Cards: Unlike debit and credit cards, smart cards possess a computer chip with magnetic strips, which is used for data storage, processing and identification