CHSE Odisha Vocational Banking (BANK) key terms

A financial institution licensed to accept deposits from the public, repayable on demand, and to lend or invest that money at a margin while providing payment services.

The process by which banks multiply total deposits in the economy by lending out a portion of the deposits they receive, keeping only a fraction as reserves.

A bank included in the Second Schedule of the Reserve Bank of India Act, 1934, having paid-up capital and reserves of at least five lakh rupees and satisfying RBI conditions.

India's central bank, established on 1 April 1935 under the RBI Act 1934, which issues currency, conducts monetary policy and regulates banks and payment systems.

The interest rate at which the Reserve Bank lends short-term funds to commercial banks against the security of government securities, used as a key monetary policy signal.

The rate at which the Reserve Bank absorbs surplus liquidity from banks by borrowing against government securities, normally set below the repo rate.

The share of a bank's net demand and time liabilities that must be held as cash balances with the Reserve Bank, earning no interest for the bank.

The minimum percentage of net demand and time liabilities a bank must hold in safe liquid assets such as cash, gold or approved government securities.

The ease and speed with which an asset can be converted into cash without significant loss of value, or a bank's ability to meet its maturing obligations.

A deposit repayable on demand, such as a savings or current account balance, which the customer may withdraw at any time without prior notice.

A deposit placed for a fixed period, such as a fixed or recurring deposit, which is repayable only after the agreed term or with a penalty for early withdrawal.

A running deposit account meant for businesses, offering unlimited withdrawals and no interest, generally requiring a minimum balance and charging service charges.

A deposit account for individuals that earns a modest rate of interest and carries restrictions on the number of withdrawals permitted each month.

The price paid for the use of money, calculated as a percentage of the principal over a period, either credited to depositors or charged to borrowers.

Interest computed only on the original principal for the whole period, using the formula principal multiplied by rate multiplied by time divided by one hundred.

Interest calculated on the principal plus previously accumulated interest, so that the amount grows faster than under simple interest over the same period.

Know Your Customer: the mandatory process of identifying a customer and verifying address and identity through documents before opening an account or granting credit.

Laws and procedures requiring banks to detect, report and prevent the movement of funds derived from crime, including reporting suspicious transactions to the authorities.

A written instrument entitling the holder to a sum of money, transferable by delivery or endorsement, such as a cheque, bill of exchange or promissory note.

A bill of exchange drawn on a specified banker and payable on demand, containing an unconditional order to pay a certain sum to a named person or bearer.

Two parallel transverse lines drawn on the face of a cheque, directing the paying bank to pay only through a collecting banker and not across the counter.

The signature of the holder on the back of a negotiable instrument, often with a direction to pay a named person, which transfers the right to receive payment.

A person who takes a negotiable instrument for value, in good faith and before maturity, and thereby obtains a better title than the transferor had.

Refusal by the drawee to accept or pay an instrument, or by the banker to pay a cheque, for reasons such as insufficient funds or irregular signature.

A customer's written instruction to the bank not to pay a particular cheque or range of cheques, which the bank must record and honour until revoked.

National Electronic Funds Transfer: an RBI-operated system for transferring funds between bank accounts in batches, settling in half-hourly cycles throughout the day.

Real Time Gross Settlement: a system for transferring large-value funds individually and immediately, with each transaction settled in real time without netting.

Unified Payments Interface: a mobile platform allowing instant account-to-account transfers between banks using a virtual payment address, operated by NPCI.

A sum of money advanced by a bank to a borrower, repayable with interest over an agreed period, usually as a lump sum credited to the account.

A short-term facility allowing a borrower to draw funds repeatedly up to a sanctioned limit against the security of stock or receivables, interest being charged on actual use.

A facility permitting a current account holder to withdraw more than the balance, up to an agreed limit, with interest charged on the amount actually overdrawn.

The transfer of an interest in specific immovable property as security for a loan, giving the lender the right to sell the property on default.

The delivery of goods or securities to a lender as security for a debt, with the lender entitled to retain and sell them if the borrower defaults.

The right of a banker to retain goods or securities belonging to a customer until a debt owed to the bank is discharged, unless there is a contract to the contrary.

The banker's right to combine two or more accounts of the same customer and adjust a debit balance in one against a credit balance in another.

The obligation of a bank not to disclose a customer's account details or transactions to third parties, subject to exceptions such as legal compulsion or the customer's consent.

The assessment a bank makes of a borrower's repayment capacity, character, capital, collateral and business prospects before sanctioning a loan.

A loan or advance on which principal or interest has remained overdue for more than ninety days, requiring the bank to make provisions for the loss.

The arrangement by which banks distribute insurance products of insurance companies to their customers, earning commission while widening insurance reach.

The process of ensuring that vulnerable groups have access to affordable financial services such as savings accounts, credit, insurance and remittances.

Safe deposit facilities hired out by a bank to customers for keeping valuables, where the bank provides the vault but is not liable for the contents.

A booklet issued to a deposit customer in which the bank records deposits, withdrawals and balance, serving as a running statement of the account.

The process of comparing the bank's records with the customer's or the bank's own ledger to explain differences and confirm that balances agree.

A statement listing all ledger account balances at a date, with debits and credits in separate columns, used to test arithmetical accuracy of the books.