Banking Terminology

An introduction to commonly
used words in Banks and their meaning.
Bank
 A bank is a financial institution
 licensed to
 receive deposits and make loans.
 Banks may also provide
 financial services, such as
 wealth management, currency exchange and safe deposit boxes. 
Debit Card
 It is a card
 issued by the bank
 so the customers can withdraw their money
 or make payments
 from their account
 electronically
Credit Card
 It is a card
 issued by the bank
 so the customers can
 make payments
 electronically
 as a short term loan from bank
 And pay that amount back to bank
 Within a fixed span of time
Core Banking Solutions (CBS)
 When all the branches of the bank
 Are connected to each other
 Electronically
 On a network.

 This allows the customer

 The facility to access his account
 Through any branch of the bank
 Rather than the one he holds account in.
Demat Account
 The way in which a bank,
 keeps money
 in a deposit account,
 in the same way,
 the Depository* company,
 converts share certificates into electronic form,
 and keep them in a Demat account.

*Depositary : Any org. that deals with trading of securities.

Liquidity
 It is the ability
 of converting an investment
 Quickly
 into cash
 with no loss in value.
Overdraft
 When more amount
 Than the existing balance in the account
 Is withdrawn
 The exceeding amount is known as Overdraft
 Ex : Opening Balance : 100
Withdrawn : 120
Balance : 0
Overdraft : 20
Overdraft Balance : As per norms with bank
 As of now, OD is a facility for current account holders.
 The Branch Manager holds the power to provide OD.
Inflation
 It is a condition when
 There is a rapid increase
 In the price of goods and services
 Which brings down the purchasing power of the money, meaning
 Consumer will have the same amount of Money, but will be able to purchase less from it.
 The Central bank(RBI for India), uses different economic tools to tackle inflation.
RBI and Inflation
 The RBI controls the different economic tools like CRR and Repo Rate in India
 CRR means the percentage of funds banks have to keep the RBI
CRR 4%

CRR 8%
In itial f un ds : 10 0

K ep t w ith RBI : 4
Initial funds : 100

Kept with RBI : 8

Available fo r Len d in g

96

Available for Lending

92

 When people have less money to borrow, or spend

 Demand decreases
 Which gradually leads to price fall, thus ending Inflation
Deflation
 It is the condition when
 there is a rapid decrease
 In the prices of Good and Services
 Consumers are not willing
 To purchase any goods or services
 Other than the bare necessities because
 Deflation is a result of long term inflation
 Which leads to cost cutting and lay-offs by producers
 Leading to Joblessness and a cycle of recession.
Home Assignment!!!
 Read about how RBI and the finance ministry deals with Inflation and Deflation.

 Prepare a brief report.

 Form a group of 5-7 students and each group will submit report by tomorrow.
Overdraft, Growth Rate of India, Inflation, Deflation, Demand
Draft, Cheque, Monetary Policy, National Income. GST, Parts