CHSE Odisha Vocational Banking (BANK) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Banking definition, Section 5(b)

Banking Regulation Act, 1949 defines banking as accepting deposits of money from the public, repayable on demand or otherwise, for lending or investment, withdrawable by cheque, draft, order or otherwise.

Scheduled bank

A bank included in the Second Schedule of the RBI Act, 1934, having paid-up capital and reserves of at least Rs 5 lakh and whose affairs are not conducted in a manner detrimental to depositors' interests.

Cash Reserve Ratio

The share of net demand and time liabilities that a scheduled bank must hold as cash balance with RBI under Section 42 of the RBI Act, 1934. It earns no interest.

Statutory Liquidity Ratio

The minimum share of net demand and time liabilities a bank must hold in cash, gold or approved securities under Section 24 of the Banking Regulation Act, 1949.

Repo rate

The rate at which RBI lends short-term funds to banks against government securities, used to absorb or inject liquidity and to signal the monetary policy stance.

Monetary Policy Committee

Six-member body under the amended RBI Act, with three RBI members and three Government appointees, chaired by the Governor, that sets the policy repo rate to meet the inflation target.

Current account

A deposit account meant for business and professional customers, operated by cheque, paying no interest, and permitting frequent transactions subject to KYC and cash deposit rules.

Fixed deposit

A deposit placed for a fixed term at a fixed rate of interest, repayable at maturity; premature withdrawal is allowed with a penalty as per the bank's terms.

Nomination, Section 45ZA

A depositor may nominate a person to receive the deposit on death. The nominee acts as a trustee for legal heirs and does not become the absolute owner.

Dormant account

A deposit account with no customer-induced transaction for the period specified by RBI, currently two years; reactivation requires a written request and fresh KYC.

Negotiable instrument, Section 13

Under the Negotiable Instruments Act, 1881, a promissory note, bill of exchange or cheque payable either to order or to bearer, freely transferable by endorsement or delivery.

General crossing

Two parallel transverse lines on the face of a cheque, with or without the words 'and company', requiring payment only through a collecting banker and not at the counter.

Account payee crossing

A crossing directing the collecting bank to credit the proceeds only to the payee's account; the cheque cannot be negotiated further by endorsement to another person.

Holder in due course

A person who obtains a negotiable instrument for value, before maturity, in good faith and without notice of any defect in the transferor's title, as defined in Section 9.

Section 138 dishonour

Dishonour of a cheque for insufficiency of funds is an offence after a 30-day demand notice and 15-day payment period, punishable with imprisonment up to two years or fine up to twice the amount.

RTGS

Real Time Gross Settlement, operated by RBI, settles high-value interbank payments individually and in real time, with a minimum transaction value of Rs 2 lakh.

Pledge

A mode of security in which the borrower delivers possession of movable goods to the banker as security for a loan, with the banker entitled to sell on default.

Hypothecation

A charge created on movable assets, usually stock and receivables, while possession stays with the borrower; the bank may take possession on default as per the agreement.

Mortgage

Transfer of an interest in immovable property to secure a loan, effected by a registered instrument, deposit of title deeds, or other modes under the Transfer of Property Act.

Non-performing asset

A loan or advance on which interest or principal remains overdue for more than 90 days; income on it is not recognised and provisions must be maintained.

Cash credit

A running working capital facility sanctioned against hypothecation of stock and book debts, operated through a separate account, with interest charged on the amount actually used.

Priority sector lending

A target of 40% of adjusted net bank credit for commercial banks, including 18% for agriculture and 7.5% for micro enterprises, aimed at directing credit to specified sectors.

General lien

A banker's right under Section 171 of the Indian Contract Act, 1872 to retain the customer's goods and securities until the general balance of the account is paid.

Right of set-off

The banker's right to combine two accounts of the same customer held in the same right and capacity, adjusting a debit balance against a credit balance.

Banker's duty of secrecy

An obligation to keep the customer's account information confidential, subject to exceptions such as statutory disclosure, court orders, RBI inspection and the customer's own consent.

Integrated Ombudsman Scheme

A 2021 RBI scheme providing a single window for complaints against regulated entities; a complainant must first approach the entity and may escalate after 30 days.

Bancassurance

Distribution of insurance products by banks acting as corporate agents under IRDAI regulations, typically for one life, one general and one health insurer.

Insurable interest

A financial or legal interest in the subject matter of insurance that would be lost by the occurrence of the insured event, required for a valid insurance contract.

Financial inclusion

Access by vulnerable and low-income groups to timely and adequate credit and other financial services such as savings, insurance and payments at an affordable cost.

Lead Bank Scheme

A 1969 scheme assigning a lead bank in each district to coordinate credit planning, branch expansion and implementation of government schemes through the District Consultative Committee.

Bank reconciliation statement

A statement prepared to explain the difference between the cash book balance and the pass book balance, caused by unpresented cheques, uncollected deposits, bank charges and interest.

Trial balance

A statement listing debit and credit balances of all ledger accounts on a given date; equality of totals verifies arithmetical accuracy of the double-entry records.