Banking Terms

■ Cash Reserve Ratio (CRR) - Cash Reserve Ratio is the Certain percentage of the total bank deposits has to be kept in the current account with RBI.

■ Statutory Liquidity Ratio - SLR refers to that portion of total deposits of a commercial bank which it has to keep with itself in the form of cash reserves.

■ Repo and Reverse Repo Rate - Repo rate is the rate at which the RBI lends short-term money to the banks against securities. Reverse Repo Rate is the rate at which banks park their shortterm excess liquidity with the RBI.

■ ATM and CDM Machines - ATM is an abbreviation for Automated Teller Machine. This machine that dispenses money was first installed by HSBC Bank in India. CDM is Cash Deposit Machine. Through CDM machines, we can deposit money. They are also widespread today.

■ Base Rate - The lowest interest rate that commercial banks can offer to customers is the Base Rate.

■ Clearing House - Clearing House is the place where transactions between banks are carried out centrally on a daily basis. They are the place where each bank exchanges the checks and bills it receives with the other bank.

■ Lead Bank Scheme - Under the Lead Bank Scheme, a bank adopts a district for developmental purpose. On the basis of the recommendations of Gadgil study group and Nariman Committee, the lead bank scheme was introduced in 1969.

■ Core Banking - Networking of branches, which enables Customers to operate their accounts, and avail banking services from any branch of the Bank.

■ Internet Banking (E-banking) - Any user with a personal computer and a browser can get connected to his bank's website to perform any of the virtual banking functions. In Internet Banking System, the bank has a centralized database that is web-enabled. It is also known as Online Banking.

■ Real Time Gross Settlement Systems (RTGS) - RTGS are specialist fund transfer system where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period.

■ Digital Banking - With the advent of the internet and mobile apps, the number of people who visit banks in person has decreased to 10 percent, according to statistics. Today, 35 percent of people conduct banking transactions using mobile apps, 23 percent using computers, 21 percent using ATMs, and 11 percent over the telephone. To access mobile banking services, a mobile number must be linked to a bank account. Most financial transactions, such as paying various bills, making recharges, booking tickets, buying goods online, transferring funds, applying for a cheque book, and getting a mini statement of the account, can be done through a mobile phone without going to the bank.

■ Banking Ombudsman - It was introduced under Section 35A of the Banking Regulation Act, 1949 by RBI with effect from June 14th 1995 for giving solution for customer's complaints. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

■ Negotiable Instrument - Negotiable instrument is a document with a signature given to a person or to someone else designated by him for the payment of a specified amount of money. e.g. checks.

■ Merchant Banker - Merchant banks are those that provide financial advice and services to industrialists and others for a fixed fee. Merchant banker is a financial intermediary who has acquired special expertise in transferring and mobilizing capital from those who have it to those who need it.

■ Locker facility - Locker facility is a facility for customers to keep their valuables (gold, land paper deeds) safe.

■ Branch Banking System - Bank branches open and operating anywhere in the country are called Branch Banking System. Bank branches operating only within a certain area is a Unit Bank. Chain Banking is formed by families or individuals. Special services provided by the bank for the employees of any organization or other is called Group Banking.

■ Banking Correspondents - Non-banking financial institutions responsible for providing banking services to the public is called Banking Correspondents

■ Venture Capital - Financial assistance provided to startup companies by novice entrepreneurs who do not have much experience or tradition is called Venture Capital.

■ Capital Market and Money Market - Capital Market is the market for borrowing and lending long-term capital and Money Market is the market for borrowing and lending short-term funds.

■ Treasury Bill Market - The market where treasury bills are bought and sold.

■ Arbitrage - Arbitrage is the speculative activity that requires a great deal of specialized skill and practicality.

■ Savings Account - Savings bank accounts are where you can deposit money and withdraw it when needed. Each bank requires a certain amount as a minimum balance in such accounts. This varies in rural and urban areas. Interest starts from three percent depending on the daily balance in the account. The customer will also get a check book and debit card. Checks can be used to transfer money. Similarly, you can use a debit card to withdraw money from your own SB account. ATMs and internet banking can be used for this. Zero balance accounts are also now available to attract more customers to the bank.

■ Bank Loans - Banks provide loans to the needy against certain collateral received from the public. The interest rate charged on loans is higher than that paid on deposits. The interest rate on different types of loans also varies. The collateral accepted by banks for lending is physical assets (gold, property paper, etc.), fixed deposit certificates, and salary slips. .