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Tuesday, March 1, 2011

Some Important Banking Terms


RBI – The Reserve Bank of India is the apex bank of the country, which was constituted under the RBI Act, 1934 to regulate the other banks, issue of bank notes and maintenance of reserves with a view to securing the monetary stability in India.
Demand Deposit – A Demand deposit is the one which can be withdrawn at any time, without any notice or penalty; e.g. money deposited in a checking account or savings account in a bank.
Time Deposit – Time deposit is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn or it can be held for another term. 
Fixed Deposits – FDs are the deposits that are repayable on fixed maturity date along with the principal and agreed interest rate for the period. Banks pay higher interest rates on FDs than the savings bank account.
Recurring Deposits – These are also called cumulative deposits and in recurring deposit accounts, a certain amounts of savings are required to be compulsorily deposited at specific intervals for a specified period.
Savings Account – Savings account is an account generally maintained by retail customers that deposit money (i.e. their savings) and can withdraw them whenever they need. Funds in these accounts are subjected to low rates of interest.
Current Accounts – These accounts are maintained by the corporate clients that may be operated any number of times in a day. There is a maintenance charge for the current accounts for which the holders enjoy facilities of easy handling, overdraft facility etc.
FCNR Accounts – Foreign Currency Non-Resident accounts are the ones that are maintained by the NRIs in foreign currencies like USD, DM, and GBP etc. The account is a term deposit with interest rates linked to the international rates of interest of the respective currencies.
NRE Accounts – Non-Resident External accounts are the ones in which NRIs remit money in any permitted foreign currency and the remittance is converted to Indian rupees for credit to NRE accounts. The accounts can be in the form of current, saving, FDs, recurring deposits. The interest rates and other terms of these accounts are as per the RBI directives.
Cheque Book - A small, bound booklet of cheques. A cheque is a piece of paper produced by your bank with your account number, sort-code and cheque number printed on it. The account number distinguishes your account from other accounts; the sort-code is your bank's special code which distinguishes it from any other bank.
Cheque Clearing - This is the process of getting the money from the cheque-writer's account into the cheque receiver's account.
Clearing Bank - This is a bank that can clear funds between banks. For general purposes, this is any institution which we know of as a bank or as a provider of banking services.
Bounced Cheque - when the bank has not enough funds in the relevant account or the account holder requests that the cheque is bounced (under exceptional circumstances) then the bank will return the cheque to the account holder. The beneficiary of the cheque will have not been paid. This normally incurs a fee from the bank.
Credit Rating - This is the rating which an individual (or company) gets from the credit industry. This is obtained by the individual's credit history, the details of which are available from specialist organisations like CRISIL in India.
Credit-Worthiness - This is the judgement of an organization which is assessing whether or not to take a particular individual on as a customer. An individual might be considered credit-worthy by one organisation but not by another. Much depends on whether an organization is involved with high risk customers or not.
Interest - The amount paid or charged on money over time. If you borrow money interest will be charged on the loan. If you invest money, interest will be paid (where appropriate to the investment).
Overdraft - This is when a person has a minus figure in their account. It can be authorized (agreed to in advance or retrospect) or unauthorized (where the bank has not agreed to the overdraft either because the account holder represents too great a risk to lend to in this way or because the account holder has not asked for an overdraft facility).
Payee - The person who receives a payment. This often applies to cheques. If you receive a cheque you are the payee and the person or company who wrote the cheque is the payer.
Payer - The person who makes a payment. This often applies to cheques. If you write a cheque you are the payer and the recipient of the cheque is the payee.
Security for Loans - Where large loans are required the lending institution often needs to have a guarantee that the loan will be paid back. This takes the form of a large item of capital outlay (typically a house) which is owned or partly owned and the amount owned is at least equivalent to the loan required.
Internet Banking - Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by the bank.
Credit Card - A credit card is one of the systems of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services.
Debit Card – Debit card allows for direct withdrawal of funds from customers bank accounts. The spending limit is determined by the available balance in the account.
Loan - A loan is a type of debt.  In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. There are different kinds of loan such as the house loan, auto loan etc.
Bank Rate - This is the rate at which central bank (RBI) lends money to other banks or financial institutions.   If the bank rate goes up, long-term interest rates also tend to move up, and vice-versa.
CRR - CRR means Cash Reserve Ratio.  Banks in India are required to hold a certain proportion of their deposits in the form of cash with Reserve Bank of India (RBI). This minimum ratio is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio.  Thus, When a bank’s deposits increase by Rs100, and if the cash reserve ratio is 9%, the banks will have to hold additional Rs 9 with RBI and Bank will be able to use only Rs 91 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment.  This power of RBI to reduce the lendable amount by increasing the CRR makes it an instrument in the hands of a central bank through which it can control the amount that banks lend.  Thus, it is a tool used by RBI to control liquidity in the banking system.
SLR - SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities.  Thus, we can say that it is ratio of cash and some other approved to liabilities (deposits). It regulates the credit growth in India. 
ATM - An automated teller machine (ATM) is a computerised telecommunications device that provides the clients with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVV. Authentication is provided by the customer entering a personal identification number (PIN)

Union Budget 2011-12 Highlights

1.      Allocation For Social Sector Increased By 17% To Rs. 1,60,887 Crore.
2.      Allocation for Bharat Nirman Programme Increased By  Rs. 10,000 Crore.
3.      Plan Allocation For Education Hiked By 24% And Health By 20%.
4.      Eligibility For Old Age Pension Scheme Reduced From 65years To 60.
5.      Allocation For Infrastructure Increased By 23.3% To Rs. 2,14,000 Crore.
6.      Credit To Farmers To Be Increased To Rs. 4,75,000 Crore.
7.      Fiscal Deficit Pegged At 4.6% Of GDP.
8.      Government To Borrow Rs. 3.43 Lakh Crore From The Market.
9.      Extension Of Nutrient Based Subsidy To Cover Urea Under Active Consideration.
10.  Exemption Limit For Income Tax Raised By Rs. 20,000 to Rs. 1,80,000
11.  Minimum Alternate Tax Increased From 18 To 18.5%.
12.  One Percent Central Excise Duty Imposed On 130 Items.
13.  Lower Rate Of Excise Duty Raised From 4 To 5%.
14.  Service Tax Hiked On Domestic and International Air Travel.
15.  Direct Taxes Code To Be Effective From April 2012 And Implementation Of GST is on Course.
16.  Critical institutional reforms set pace for double-digit growth
17.  Scaled up flow of resources infuses dynamism in rural economy
18.  GDP estimated to have grown at 8.6% in 2010-11
19.  Exports grown by 9.6%, imports by 17.6% in April-January 2010-11 over corresponding period last year
20.  Indian economy expected to grow at 9% in 2011-12.
21.  Five-fold strategy to deal with black money. Group of Ministers to suggest ways for tackling corruption
22.  Public Debt Management Agency of India Bill to come up next financial year
23.  Direct Tax Code (DTC) to be effective from April 01, 2012
24.  Phased move towards direct transfer cash subsidy to BPL people for better delivery of kerosene, LPG and fertilizer mooted
25.  Rs.40,000 crore to be raised through disinvestment in 2011-12
26.  FDI policy to be liberalized further
27.  SEBI registered mutual funds permitted to accept subscription from foreign investors who meet KYC requirement
28.  FII limit for investment in corporate bonds in infrastructure sector raised
29.  Additional banking license to private sector players proposed
30.  Rs.6000 crore to be provided in 2011-12 for maintaining minimum Tier I Capital to Risk Weighted Asset Ratio (CRAR) of 8% in public sector banks
31.  Rs.500 crore to be provided to regional rural banks to maintain 9% CRAR
32.  India Microfinance Equity Fund of Rs.100 crore to be created by SIDBI
33.  Rs. 500 crore Women SHG Development Fund to be created
34.  Micro Small and Medium Enterprises MSME gets boost as Rs. 5000 crore provided to SIDBI and Rs.3000 crore to NABARD
35.  Existing housing loan limit enhanced to Rs.25 lakh for dwelling units
36.  Provision under Rural housing Fund enhanced to Rs.3000 crore
37.  Allocation under Rashtirya Krishi Vikas yojna (RKVY) increased to Rs.7860 crore
38.  Allocation of Rs.300 crore to promote 60000 pulses villages in rainfed areas
39.  Rs. 300 crore vegetable initiative to achieve competitive prices
40.  Rs.300 crore to promote higher production of nutri-cereals
41.  Rs.300 crore to promote animal based protein
42.  Rs.300 crore Accelerated Fodder Development Programme to benefit farmers in 25000 villages
43.  Credit flow to farmers raised from Rs.3,75,000 crore to Rs.4,75,000 crore
44.  Rs.10,000 crore for NABARD's Short Term Rural Credit Fund for 2011-12
45.  15 more mega food parks during 2011-12
46.  National food security bill to be introduced this year
47.  Capital investment in storage capacity to be eligible for viability gap funding
48.  23.3% increase in allocation for infrastructure
49.  Tax-free bonds of Rs.30,000 crore proposed by government undertakings
50.  Environmental concerns relating to infrastructure projects to be considered by Group of Ministers
51.  National Mission for Hybrid and Electric Vehicles to be launched
52.  7 Mega clusters for leather products to be set up
53.  Allocation for social sector increased by 17% amounting to 36.4% of total plan allocation
54.  Bharat Nirman allocation increased by Rs.10,000 crore
55.  Rural broadband connectivity to all 2.5 lakh panchayats in three years.
56.  Bill to amend Indian Stamp Act to introduce. Rs.300 crore scheme for modernization stamp and registration administration
57.  Significant increase in remuneration of Angawadi workers and helpers
58.  Allocation for education increased by24%. Rs.21,000 crore allocated for Sarv Shikshya Abhiyan registering an increase of 40%
59.  1500 institute of higher learning to be connected by March 2012 with Knowledge Knowledge Network.
60.  National Innovation Council set up. Additional Rs.500 crore for National Skill Development Fund
61.  Plan allocation for health stepped up by20%
62.  Indira Gandhi National Old Age Pension Scheme liberalized further
63.  Rs.200 crore for Green India Mission
64.  Rs.200 crore for cleaning of rivers
65.  Rs.8000 crore provided for development needs of J&K
66.  10 lakhs Aadhaar(UID) numbers to be generated everyday from 1st October
67.  Fiscal deficit kept at 4.6% of GDP for 2011-12
68.  Income Tax exemption limit for general category in individual tax payers enhanced from Rs.1,60,000 to Rs.1,80,000
69.  Qualifying age for senior citizens lowered to 60; senior citizen above 80 year to get Rs.5,00,000 IT exemption
70.  Surcharge on corporate lowered to 5%

Bank Taglines

Most banks in India have always had odd punch lines. Some are functional, many emotional
1.      Karur Vysya Bank -- Smart way to Bank
2.      South Indian Bank -- Experience Next Generation Banking
3.      SBI Bank -- Nations banks on us; Pure Banking Nothing Else; With you all the way
4.      UCO Bank -- Honours Your Trust
5.      ICICI Bank – it was "Hum Hai na..." now it is "khayal aapka”
6.      Andhra Bank -- Much more to do. With YOU in focus
7.      Lakshmi Vilas Bank -- The Changing Face of Prosperity
8.      IDBI Bank -- Banking for all; Not just for Big boys; "Aao Sochein Bada"
9.      Central Bank of India -- Build A Better Life Around Us.
10.  Vijaya Bank -- A Friend You can Bank Upon
11.  Punjab National Bank -- A Name you can Bank Upon
12.  Dena Bank -- Trusted Family Bank
13.  Canara Bank -- it's easy to change for those who you love; Together we can do
14.  Oriental Bank of Commerce -- where every individual is committed
15.  Indian Bank -- Taking Banking Technology to Common Man
16.  Yes Bank -- Experience our expertise
17.  Allahabad Bank -- A tradition of trust
18.  Bank of India -- Relationships beyond Banking.
19.  Federal Bank -- Your Perfect Banking Partner
20.  HDFC -- We Understand Your World
21.  Bank Of Baroda -- India's International Bank
22.  Syndicate Bank -- Your Faithful And Friendly Financial Partner
23.  United Bank of India -- The Bank that begins with u
24.  Indian Overseas Bank -- Good people to grow with us