IBPS PO IV 2014 Interview Magazine ExamPundit

Interview
Magazine
for
IBPS PO IV
2014
Perfect for
Upcoming IBPS PO 2014 Interview
Publication Date 24th Dec, 2014

Edited by Team ExamPundit
Interview Preparation
An invitation for an interview shows that, on paper, you are the right person required by the
organisation for the vacant position. In fact, it is estimated that 80% of candidates are rejected at
the application stage so you are really more than three quarters of the way towards getting the job!
Larger organisations will have interviewers who are often personnel professionals, or who are
trained and experienced interviewers, so expect the interview to be very structured to obtain the
maximum from you. In smaller firms you are more likely to be interviewed by a partner who may not
be a trained interviewer. If you are confronted by a 'bad' interviewer you will have to work hard to
use the questions as a means of conveying the points you wish to make. It can be a good idea to try
to steer the conversation towards the topics you have particular strengths in, highlighting your good
points.
There are several different types of interview/questioning techniques:
The straightforward chronological interview, where you are asked questions around your CV
/ Application form
Criterion referenced interviews, where you will be asked to give examples of how you meet
their criteria e.g., examples of teamwork, negotiating, leadership
The off-the-wall questions where you might be asked some bizarre questions. This is to see if
you can think on the spot and how creative/logical you are.
The pressurised interview where your views will be challenged (or even ridiculed) and you
might feel like you are being goaded into an argument. If this happens to you do not lose
your cool, it is to test how you react under extreme pressure and to see if you can hold your
own without starting a fight or being reduced to tears.
Preparation is essential if you want to do well. Have a look at the checklist:
Stage 1 - Preparation
Re-read your resume.

Prepare questions to ask and to be asked
Work out clothes to wear
Rehearse interview
Anticipate the obvious questions during the interview
Work out a strategy for dealing with stress
Read vacancy details, employer's literature - what they are and what they want
Know where the interview will take place
Stage 2 - First Impressions Count
Arrive in good time

Make a good entrance
Body language - handshake, posture, eye contact
Smile
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Stage 3 - The Interview
Be yourself
Be honest
Be prepared to talk - but not too much
Don't be afraid to ask for clarification
Illustrate your answers with examples
Be ready to sell yourself
Be interesting
Stage 4 - The Final Stage
Know when the interview is over - read employer's body language

Thank him/her for his/her time
Learn from the experience - ask for feedback if necessary
Questions You May Wish To Ask
The Organisation
Major current projects

Future developments
Work
What you would be doing

How long for
Typical projects/timescales
Variety of work
Training
Training offered/possible
Help with professional qualifications
Colleagues
Who would you work with?
Location
Where would you be based?

How much travel/mobility
Questions You Can Prepare For
Tell us about yourself

Why did you choose your degree and what have you gained from it?
What has been your most important achievement in life so far? Why?
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What are your strengths and weaknesses?

Why have you applied for this job?
What do you have to offer us?
What are the current issues in this sector of work?
What experience do you have of working in a team and what role did you play in that team?
Describe a project you have successfully completed.
How would your friends describe you?
Describe a situation you have found difficult. How did you overcome it?
What questions would you like to ask us?
Dressing for an interview

Men and Women
Conservative two-piece business suit (solid dark blue or grey is best)

Conservative long-sleeved shirt/blouse (white is best, pastel is next best)
Clean, polished conservative shoes
Well-groomed hairstyle
Clean, trimmed fingernails
Minimal cologne or perfume
Empty pockets--no bulges or tinkling coins
No gum, candy or cigarettes
Light briefcase or portfolio case
No visible body piercing (nose rings, eyebrow rings, etc.)
Men
Necktie should be silk with a conservative pattern

Dark shoes (black lace-ups are best)
Dark socks (black is best)
Get a haircut; short hair always fares best in interviews
No beards (unless you are interviewing for a job as a lumberjack!)
Mustaches are a possible negative, but if you must, make sure it is neat & trimmed
No rings other than wedding ring or college ring
No earrings (if you normally wear one, take it out)
Women
Always wear a suit with a jacket; no dresses

Shoes with conservative heels
Conservative hosiery at or near skin color (and no runs!)
No purses, small or large; carry a briefcase instead
If you wear nail polish (not required), use clear or a conservative color
Minimal use of makeup (it should not be too noticeable)
No more than one ring on each hand
One set of earrings only
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Basic Questions
Introduce yourself.
This is over and over again the first question in an interview. It's the most complicated one if you're
not all set. Keep in mind, the interviewer does not want to hear about your hobbies. Its time for oneminute gist of your years of experience and skills in the context to the job you are looking forward to
get. Sell your professional self.
Why should we hire you?

Most people answer generally, so you need something substantial to stand out. Give genuine
examples that demonstrate you as the best-suited for the position. Highlight your achievements and
undertakings that are relevant to get the job.
Why do you want this job?

Use this occasion to demonstrate how much you know about the company and, most prominently,
how you fit best. Concentrate on challenges in the job and organization to show your comprehensive
knowledge. Spot out things you have done in past job to take care of the similar issues.
What are your weaknesses?

Answer this question to your benefit. "I would turn my weaknesses into strengths," For example, if
my weakness is lack of tolerance I would counter it by saying; I have learned particular measures to
make sure I remain composed and considerate." Don't pretend that you do not have a weakness.
Why did you quit your previous job?

Never evaluate your previous company, the boss, or colleagues. You should have a fine perceptive of
the job you're applying to twist this question. You may say that, you really enjoyed various aspects of
your previous job and spotlight on how this new job will give you the chance to contribute
meticulously on areas that are essential for the current position.
Where would you be five years from today?

Don't get swayed away by your five-year plan. You are expected to speak about goals related to the
job. This will reveal that you know the industry, the organization and you are looking forward to
grow here.
Remember the interviewer is trying to find if you can play a positive role in the organization!
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Banking Interview Questions

1. What do you know by stale cheque?- When the cheque becomes out of date and cannot be
encashed, it is termed as stale cheque. For example, the validity period of any cheque is three
months and when a cheque dated: 10.01.2012 is presented for payment on 10.01.2013, it is
considered as a stale cheque, since the cheque is more than three months old.
2. What do you mean by post dated cheque?- When the date of the cheque is beyond the date on
which the cheque is presented for payment, the cheque is considered to be post dated. For
example, when a cheque dated: 10.02.2013 is presented for payment on 10.01.2013, it is
considered to be a post dated cheque.
3. What do you know by current chest? - Currency chests are operated by RBI so that they can
provide good quality currency notes to the public. However, RBI has appointed commercial banks
to open and monitor currency chests on behalf of RBI. The cash kept in currency chests is
considered to be kept in RBI and
4. What is meant by minimum balance to be maintained in the accounts? In the case of
savings bank and current account deposits, the banks stipulates a minimum balance to be
maintained. The minimum balance varies from bank to bank and when the balance in the account
falls below the minimum balance then banks debit the account with some penal charges. Some
banks insist quarterly average minimum balance to be maintained instead of regular minimum
balance to be maintained.
5. What do you mean by tax deduction at source? TDS means tax deducted at source. Banks must
deduct tax from the interest paid on the fixed deposit when the interest paid on fixed deposits
to a customer exceeds Rs. 10000/- during the accounting year. TDS is applicable to fixed deposits
only and is applicable to savings bank deposits.
6. What do you mean by weaker sections? - The following categories are termed as weaker
sections namely - small business enterprises; marginal farmers; artisans/village and cottage
industries for whom loans are granted upto Rs. 50000.00; SGSY beneficiaries; SC/ST
beneficiaries; DIR beneficiaries; SJSRY beneficiaries; SLRS; self help groups and people belonging to
minority community.
7. What do you know by MICR? - MICR means magnetic ink character recognition. Nowadays,
the cheques are issued in MICR formats in metropolitan centres namely; Mumbai, Chennai,
Kolkata, Bangalore etc. The MICR code is readable by a reader sorter computer which helps in
quick sorting of the cheques towards immediate adjustment of the amount to be received and paid
by the banks in the clearing house. MICR code consists of the following namely; the cheque
number, name of the city, name of the bank, name of the branch, account category etc. and banks
simply type the amount of the cheque in the MICR portion using scanners so that the sorter
reader is able to read the entire information in regard to the cheque instantaneously.
8. What do you mean by cheque truncation? - Under cheque truncation, the physical cheque is
replaced by the digital image of the cheque after scanning. Once the cheque is truncated the
physical cheque is cancelled and from the moment of truncation only the digital image has life.
The digital image of the cheque which contains the digital signature of a bank officer as to its
authenticity is processed by all banks and payment is effected. Cheque truncation helps in quick
processing of the cheques drawn even on far away places since there is no necessity to physically
move the cheque from one place to another place.
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9. What do you mean by ECS?- ECS means electronic clearing service and this facility is used
where a large number of small value payments or receipts are to be made or received. ECS can
be used for either debit transactions or credit transactions. When a company wants to pay
dividends to large number of shareholders, they use ECS credit facility and by debiting the
company's account, the shareholders accounts are credited with the dividend amount
instantaneously. Similarly when an accountholder can use ECS debit facility towards effecting
payment to telephone charges each month.
10. What do you mean by bank assurance? Hither to banks were dealing with acceptance of
deposits and lending loans to the customers apart from undertaking certain ancillary services.
Nowadays banks started selling insurance policies of prominent insurance companies by having
tie up arrangements with such companies and banks earn commission for such transactions.
11. What do you mean by Universal banking? - Universal banking is the concept under which
banks can provide various types of services namely; deposits, loans, safe deposit lockers, safe
custody services, dealing with mutual fund schemes, selling insurance policies, selling gold coins,
dealing with issue of shares and debentures etc. Thus at present banks are becoming like a
supermarket for all kinds of financial products and such concept is called as universal banking.
12. What do you mean by Regional Rural Banks? - The Regional Rural Banks are relatively new
banking institutions which were added to the Indian banking scene since October, 1975. The
distinctive feature of a rural bank is that though it is a separate body corporate with perpetual
succession and common seal, it is very closely linked with the commercial bank which has
sponsored the proposal to establish it.
13. What do you mean by National Housing Bank?- National Housing Bank was established under
the National Housing Bank act, 1987 as an apex body and the key function of National Housing Bank
is the development of the housing sector and it is a wholly owned subsidiary of Reserve Bank of
India. National Housing Bank undertakes the following activities namely; promotion and
development of housing finance companies; regulation and supervision of housing finance
companies and providing both direct finance and indirect finance to housing sector.
14. What do you mean by NABARD? - National Bank for agriculture and rural development was
set up in 1982 as an apex development bank in the field of agricultural finance and rural
development. NABARD is set up by the Government for the purpose of facilitating credit flow
for promotion and development agriculture and integrated rural development. It covers
supporting all other allied economic activities in rural areas, promoting sustainable rural
development and ushering in prosperity in the rural areas.
15. What do you mean by EXIM Bank? - Export and Import Bank of India was set up during the
year, 1982 for the purpose of financing, promoting and facilitating foreign trade in the country. It
is wholly owned by the Government of India. The bank apart from enhancing exports from the
country, integrates the country's foreign trade and investment with the overall economic growth.
16. What do you mean by SIDBI? - SIDBI was established for the purpose of assisting and
promoting small scale industry. It was established on 2.4.1990. It is the principal financial
institution established for the promotion, financing and development of industry in the small scale
sector and to coordinate the functions of the institutions engaged in the promotion and financing
or developing industry in the small scale sector.
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17. What do you mean by NBFCs? - Non Banking Finance Companies provide finance for small
ventures but at the same time they are more customer oriented and operate at low volumes
compared to the banks. They also collect deposits from customers and offer slightly higher
interest rates on deposits compared to the banks.
18. What do you mean NEFT and RTGS - The two options namely - national electronic funds
transfer and RTGS - real time gross settlement offered by Reserve Bank of India allow electronic
transfer of funds from the remitter who has an account in one bank to the beneficiary who has
account in any other bank/branch. The transfer can be carried out using the internet banking
facility. The minimum amount that can be transferred by RTGS is Rs. 2.00 lakh and there is no such
limit for transfer through NEFT. It is settled in batches at times defined by the Reserve Bank of India.
RTGS transactions are settled continuously as and when they are put through. The transfer of funds
through NEFT and RTGS can also be carried out by submitting the remittance form at the remitter's
bank branch.
19. What do you mean IFSC code? - IFSC means Indian financial system code. It is a eleven digit
code to identify the bank branch. IFSC code is used while transferring the funds using RTGS and
NEFT payments.
20. What do you mean by financial inclusion? In spite of vast growth in the banking system, a large
number of poor people are still not served by any bank. They are living outside the purview of
any bank. Financial inclusion is delivery of financial services at an affordable cost to the vast
population of disadvantaged/low incomes sections of the society
21. What do you mean No frill accounts? No frill accounts are accounts with very low or nil
minimum balance as well as charges to be opened by the banks as targeted by Reserve Bank of
India. KYC norms are relaxed for opening no frill accounts so that people living in rural and semi
urban areas can open the accounts conveniently. Overdrafts upto Rs. 25000.00 are allowed in the no
frill accounts
22. What do you mean by narrow banking? - It is the system of banking under which the bank
accepts deposits from the public and places the funds accepted in 100 percent risk free assets
with maturity matching for its liabilities. The bank takes no risk of lending at all.
23. Who are business facilitators and business correspondents? - RBI has permitted the banks to
use the services of business facilitators and correspondents with effect from 2006. The services of
non-governmental officers, microfinance institutions and civil society organizations can be
utilized by the banks. They help the banks in identifying the borrowers processing their
applications etc. without involving in business transactions. No approval of RBI is necessary.
Correspondents will do all the above and will also participate in business transactions in a small way.
24. What do you mean by non performing assets? - Non performing assets means bad loans.
When the principal and interest in the account becomes overdue for more than 90 days, it is
treated as non performing assets. Non performance assets are classified into sub standard assets,
doubtful assets and loss assets. Banks are willing to keep the level of non performance accounts at
the lowest.
25. What do you mean by priority sector advance? - In order to boost development of agriculture
and industries, Government of India has stipulated certain norms under which banks are in a
position to allocate 40 percent of their advances exclusively to certain categories of borrowers
called as priority sector advances. The following are classified into priority sector advances namely
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- retail traders, small business, professional and self employed; agriculture; small scale
industries, self help groups, differential rate of interest and SC/ST beneficiaries
26. What do you mean by merchant banking? - Merchant banking stands for provision of
various services to corporate clients by helping them to access capital market. Merchant
banks help the corporate customers to approach the capital market with initial public offers
for the purpose of collection of capital by way of shares.
27. What do you mean by demat accounts? Demat means dematerialization. During the early days,
shares and debentures certificates were issued in physical form in the form of certificates. At
present, they are issued in electronic form. It is the process by which paper securities are
converted to electronic form so that they can be stored, sold and transferred easily.
28. What is a depository? - A depository holds the securities of the investors in electronic form.
In our country there are two depositories namely; NSDL - National Securities Depositories
Limited promoted by National Stock Exchange and CDSL - Central Depository Services Limited
promoted by Bombay Stock Exchange.
29. What do you know by consortium financing? When a corporate is in need of huge finance - say
Rs. 200 crores and above, banks join together and extend the loan facilities by sharing the loan
amount between themselves. This reduces the risk for each bank. The banks jointly process the
application of the borrower and sanction the advance and this is called consortium lending.
30. What do you mean by repo rate? - It is the rate at which RBI lends short term funds to the
commercial banks against securities. In order to temporarily expand the money supply, the
central bank decreases repo rates enabling the banks to swap the government securities for cash.
Repo is the abbreviation of Repurchase and to contract the money supply RBI increases the repo
rates.
31. What do you mean reverse repo ? - The reverse repo rate is the interest rate that banks
receive if they deposit money with the central bank. This reverse repo rate is always lower than the
repo rate. Increases or decreases in the repo and reverse repo rate have an effect on the interest
rate on banking products such as loans, mortgages and savings.
32. What do you mean by CRR? - CRR means Cash Reserve Ratio and as per the stipulations by
Reserve Bank of India, all banks are in a position to maintain a certain percentage of their
deposits (technically called as net demand and time liabilities) in their account with the RBI. CRR
ranges from 5 percent to 15 percent. By increasing CRR by merely 0.25 percent, an amount of Rs.
15000 crores of liquid funds can be transferred from the commercial banks to the coffers of RBI.
When CRR is reduced, the liquid funds are transferred from RBI to commercial banks.
33. What do you mean by SLR? - Statutory Liquidity Ratio refers to the stipulation by RBI that
approximately 25 percent of the banks deposits is to be kept in the form of government securities,
gold and cash. Primarily SLR refers to the amount invested by the banks in Government of India
securities. RBI has the right to change the statutory liquidity ratio from time to time. On reduction
of SLR, the availability of funds for the banks moves up and banks tend to more loans to the
common public. In the case of increase in SLR, banks reduce bank lending.
34. What do you mean by PLR? - Prime lending rate is the rate at which commercial banks are
willing to lend to their triple A rated No 1 borrowers. The lending rates by the bank for other
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borrowers whose credit worthiness is low will be more than prime lending rate. RBI has
deregulated the lending rates that are to be charged by the banks for advance above Rs. 2 lakhs.
35. What do you mean by BPLR? - It is the rate at which commercial banks must charge to all
their advances less than Rs. 2 lakhs.
36. Who is a non resident Indian? - Non resident Indian is the person who is the Indian citizen
who is residing in abroad for more than 182 days and has gone for abroad for the purposes
namely; business, studies and employment.
37. What are the different types of accounts that can be opened by Non Resident Indians? - Nonresident ordinary account, Non-resident External account, FCNR account and RFC account.
38. What are the different currencies in which FCNR accounts can be opened? - FCNR accounts
can be opened in the following currencies namely; US dollar, pound sterling, Euro, Australian
dollar, Japanese Yen and Canadian dollar. FCNR accounts can be opened for a minimum period of
one year and maximum period of three years
39. What are the traditional functions of RBI? - The traditional functions of RBI are - issue of
currency, forex management, export assistance, clearing house functions, change of currency,
transfer of currency, publication of statistics and other information and training in banking.
40. What are the developmental functions of RBI? - The developmental functions of RBI are agriculture development, promotion of industrial finance, promotion of export through
refinance, development of bill market, development and regulation of banking system.
41. What are the regulatory functions of RBI? - The regulatory functions of RBI are qualitative
credit control, bank rate, differential rate of interest, open market operations, Maintenance of
CRR and SLR, direct action, credit authorization scheme and moral persuasion
42. What are the different types of financial institutions in our country? - The various financial
institutions in our country are - RBI - Reserve Bank of India; SEBI - Securities and Exchange Board
of India and IRDA - Insurance Regulatory and Development Authority of India. RBI monitors the
various banks in the country; SEBI monitors and regulates capital markets and IRDA monitors the
functions of insurance companies.
43. What are the different types of banks in our country? - In our country the following banks are
available - savings banks; commercial banks; industrial banks; development banks; land
development banks; indigenous banks; central bank; cooperative banks; exchange banks and
consumer banks
44. What are the different types of secondary functions of any bank? - They are agency or
representative functions; general utility services and social development functions.
45. What do you mean by agency or representative functions of any bank? - They are collection
and payment of various items; purchase and sale of securities; trustee and executor; remitting
money; purchase and sale of financial exchange; letter of references and other agency functions.
46. What are the general utility services offered by the banks? - They are locker facilities;
business information; help in transportation of goods; acting as a referee; issuing of letters of
credit; acting as underwriters; issue of traveler cheques; issue of gift cheques and dealing in
merchant banking activities
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47. What are the social development functions of a bank ? - They are capital formation;
inducement to innovations; impact on the rate of interest; role on the development of rural
sector; helping in pushing up the demand
48. Can you name some items which are covered under negotiable instruments act? - They are
promissory notes, bills of exchanges; cheques, exchequer bills; circular notes; dividend warrants;
share warrants; bearer debentures; bank notes and bank drafts
49. What is a Payment Bank? - Payment Bank is a entity which will allow you to open Savings and
Current Account like the other Banks. However, the difference is that a Payment Bank can be your
mobile operator or supermarket chain(eg. Big Bazar) or even a NBFC.
50. What Makes Payment Banks Different From Normal Banks? - Payment Banks helps the
customer to handle cash a lot easier by providing privileages like transferring money from your
Mobile Phones to any bank account or another mobile phone customer and also you can recieve the
money similar way. The added advantages are paying bills, paying at the Shopping Retailers and
recharges etc.
51. Why Payment Banks? - India has a vast growing Mobile Users Database with over 91 Crore
customers. So basically providing the service will increase the Financial Inclusion Programme.
Basically it will help the citizen a lot on the other hand it will boost up the financial inclusion.
Facts On Payment Banks
Payment Banks will give an interest to the customer's account each year similar like Banks.
The only thing Payment Banks will note provide is Giving Out LOANS.
The RBI has stipulated that every payments bank must have an equity capital of 100 crore to
start off and maintain a capital adequacy of 15 per cent. Apart from these, it will need to
meet cash reserve requirements and needs to invest in specific securities to meet the
statutory liquidity ratio. All these amounts are to be invested in government securities or
treasury bills. Promoters holding must be at least 40 per cent for the first five years, and
eventually reduced to 26 per cent over 12 years.
NACHIKET MORE COMMITTEE is the officially appointed Committee which recommended
Payment Banks to increase the Financial Inclusion Programme.
Nachiket More Committee is also known as Committee on Comprehensive Financial
Services for Small Businesses and Low-Income Households.
Speculations as of 13th August, 2014 are that Western Union, Bharti Airtel, Vodafone are
interested in Payment Banks. It is said that Bharti Airtel is teaming up with State Bank of
India to set up Payment Banks.
History of ATMs and White Label ATMs(WL-ATM/WLA)
The first bank who produced ATM was HSBC in the year 1987 in Mumbai. After that ATM has
been installed in many places. But the problem occurred when RBI noticed that the
installation of ATMs have not been initiated in the Rural areas of India. Although SBI or State
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Bank of India has the largest ATM network, yet the rural areas are neglected. Mainly the
Urban and Developed areas had the most ATMs. You will notice more ATMs in Shopping
Malls, Movie Theatres, Sports Arena, Entertainment Parks but less in Rural areas, villages.
This has affected the Financial Inclusion program.
To increase the Financial Inclusion, RBI issued guidelines for Non-Banking Financial
Companies to set up White Label ATMs or WL-ATM.
Usually we have seen ATMs with Bank's Logo in it, making it sure that the bank has installed
the ATM in that location. But White Label ATMs does not have any Bank logo in it. It is
installed by any Non-Banking Entity.
52. How does White Label ATM work? - It is like the outsourcing of bank's payment service. Earlier
bank's had to install ATMs using their Logos and security and other maintenance staffs. But with the
White Label ATMs banks now only need to fill the White Label ATMs with cash. Suppose a NBFC
named XYZ Ltd. opens a White Label ATM with the name "ABC". Now they will have a bank as
sponsor. Suppose MNO Bank is the sponsor. So now, XYZ will install and set up their White Label
ATMs and keep the maintenance staff and securities while MNO Bank will make sure the White
Label ATMs are having sufficient cash. The outcome of this system is that banks now will not need to
worry about maintenance and other things.
53. Do White Label ATMs charge the customer? - No, as per RBI guidelines they cannot charge the
customers directly. However, they charge from banks and the banks charge it from Customer's
account.
54. Summary of White Label ATM - Basically the main motive is to increase the financial inclusion.
As the NBFCs has to install White Label ATMs in a ratio of 1 Urban White Label ATM is to 2 Rural
White Label ATMs. So when they try to install 1000 White Label ATMs in a Urban Location they will
have to install 2000 White Label ATMs in the Rural Areas. It will increase the Rural participation in
Financial Inclusion.
Facts
IndiCash of Tata Communications Payment Solution Limited(TCPSL) was the first White Label
ATM in India.
More than 15 companies including Tata, Muthoot, Prizm Payments, Srei Infra., Vakgrangee
Software, AGS have been given permission of White Label ATMs by Reserve Bank of India.
Any NBFC or any non-bank entity with a minimum net worth of Rs.100 crore can apply for
White Label ATMs. However it is completely on RBI whether they will give permission or not.
The 5 transactions are free on a monthly basis but after that the White Label ATMs will
charge 15 rs per transaction and 5 rs per balance inquiry. These charges will later reflect on
the customer's bank account statement.
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BANKING & FINANCIAL TERMS

Repo Rate
Repo rate is the rate of interest which is levied on Short-Term loans taken by commercial banks from
RBI. Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction in the
repo rate will help banks to get money at a cheaper rate. When the repo rate increases, borrowing from
RBI becomes more expensive.
Reverse Repo Rate
This is exact opposite of Repo rate. Reverse repo rate is the rate at which commercial banks CHARGE
on their surplus funds with RBI. RBI uses this tool when it feels there is too much money floating in the
banking system. Banks are always happy to keep money with RBI since their money is in the safe hands
with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI
due to these attractive interest rates.
CRR Rate
Cash reserve Ratio (CRR) is the amount of cash funds that the banks have to maintain with RBI. If RBI
decides to increase the percent of this, the available amount with the banks comes down. RBI is using
this method (increase of CRR rate), to drain out the excessive money from the banks.
SLR Rate
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or
gold or government approved securities (Bonds) before providing credit to its customers.
SLR is determined and maintained by the RBI in order to control the expansion of bank credit. SLR is
determined as the percentage of total demand and time liabilities. Time Liabilities are the liabilities a
commercial bank is liable to pay to the customers after a specific time period. SLR is used to control
inflation and proper growth. Through SLR tuning, the money supply in the system can be controlled
efficiently.
Bank Rate
Bank rate is the rate of interest which is levied on Longt-Term loans and Avances taken by commercial
banks from RBI. Changes in the bank rate are often used by central banks to control the money supply.
MSF Rate:-MSF(Marginal Standing Facility Rate) is the rate at which banks can borrow overnight from
RBI.This was introduced in the monetary policy of RBI for the year 2011-2012. Banks can borrow funds through MSF
when there is a considerable shortfall of liquidity. This measure has been introduced by RBI to regulate short-
term asset liability mismatches more effectively
Base Rate:-The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except for
DRI advances, loans to bank's own employees and loan to banks' depositors against their own deposits.
(i.e. cases allowed by RBI) .
Term Deposit Rate:-A deposit held at a financial institution that has a fixed term. These are generally
short-term with maturities ranging anywhere from a month to a few years. When a term deposit is
purchased, the lender (the customer) understands that the money can only be withdrawn after the term
has ended or by giving a predetermined number of days notice.
Inflation
Inflation is as an increase in the price of goods and services that projects the Indian economy. An
increase in inflation figures occurs when there is an increase in the average level of prices in goods and
services. Inflation happens when there are fewer goods and more buyers;or we can say when demand is
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more than supply.This will result in increase in the price of goods, since there is more demand and less
supply of the goods.
Deflation
Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation
rate becomes negative (below zero) and stays there for a longer period.
FII
FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An
institution established outside India, which proposes to invest in Indian market, in other words buying
Indian stocks. FIIs generally buy in large volumes which has an impact on the stock markets. Institutional
Investors includes pension funds, mutual funds, Insurance Companies, Banks etc.
FDI:-FDI (Foreign Direct Investment) occurs with the purchase of the physical assets or a significant
amount of ownership (stock) of a company in another country in order to gain a measure of management
control (or) A foreign company having a stake in an Indian company.
SEZ:-SEZ means Special Economic Zone is a special geographic part of country which possess special
economic regulations that are different from other areas in the same country. Moreover, these regulations
tend to contain measures that are favourable to foreign direct investment. Conducting business in a SEZ
usually means that a company will receive tax incentives and the opportunity to pay lower tariffs.
The basic motto behind this is to increase foreign investment, development of infrastructure, job
opportunities and increase the income level of the people.
Balance of Payment:-A record of all transactions made between one particular country and all other
countries during a specified period of time.
Balance of payment of a country is a systematic record of all economic transactions completed between
its residents and the residents remaining world during a year. In other words, the balance of payment
shows the relationship between the one countrys total payment to all other countries and its total receipts
from them.
Balance of Trade:-Balance of trade refers to the total value of a countrys export commodities and total
value of imports commodities. Thus balance of trade includes only visible trade i.e. movement of goods
(exports and imports of goods). Balance of trade is a part of balance of payment settlement.
Balance sheet:-Balance sheet is a statement showing the assets and liabilities of a business at a certain
date. Balance sheet helps in estimating the real financial situation of a firm.
Direct and Indirect Taxes:-Direct taxes are levied on the income of individuals and corporates. For
example, income tax, corporate tax etc. Indirect taxes are paid by consumer when they buy goods and
services. These include excise duty, custom duty, VAT, service tax etc.
Bridge Loan:-A loan made by a bank for a short period to make up for a temporary shortage of cash. On
the part of borrower, mostly the companies for example, a business organization wants to install a new
company with new equipments etc. while his present installed company/equipments etc. are not yet
disposed off. Bridge loan covers this period between the buying the new and disposing of the old one.
Page 13 of 33

Call Money:-Call money is in the form of loans and advances which are payable on demand or within the
number of days specified for the purpose.
Clearing Bank:-Clearing bank is one, which settles the debits and credits of the commercial banks. Even
of the cash balances are lesser, clearing bank facilitates banking operation of the commercial bank.
Clearing House:-Clearing house is an institutions which helps to settle the mutual indebtedness that
occurs among the members of its organization.
Greshams Law:-Bad money (if not limited in quantity) drives good money out of circulation This
statement was given by Sir Thomas Gresham, the economic adviser of Queen Elizabeth. This law states
that people always want to hoard good money and spend bad money when two forms of money are in
circulation at the same time.
HDI:-A tool developed by the United Nations to measure and rank countries levels of social and
economic development based on four criteria: Life expectancy at birth, mean years of schooling,
expected years of schooling and gross national income per capita. The HDI makes it possible to track
changes in development levels over time and to compare development levels in different countries.
Monetary Policy:-Monetary policy is the process by which monetary authority of a country, generally a
central bank controls the supply of money in the economy by exercising its control over interest rates in
order to maintain price stability and achieve high economic growth. In India, the central monetary
authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the
economy. Other objectives of the monetary policy of India, as stated by RBI, are:Regressive Tax
It is the tax in which rate of taxation falls with an increase in income. In regressive taxation incidence falls
more on people having lower incomes than that of those having higher incomes.
Credit Authorization Scheme:-Credit Authorization Scheme was introduced in November, 1965 when P
C Bhattacharya was the chairman of RBI. Under this instrument of credit regulation RBI as per the
guideline authorizes the banks to advance loans to desired sectors
Open Market Operations:-An open market operation is an instrument of monetary policy which involves
buying or selling of government securities from or to the public and banks.
Moral Suasion:-Moral Suasion is just as a request by the RBI to the commercial banks to take so and so
action and measures in so and so trend of the economy. RBI may request commercial banks not to give
loans for unproductive purpose which does not add to economic growth but increases inflation.
Shadow Price
It is an imputed value for a good based on the opportunity costs of the resources used to produce it such
values are of particular significance in resolving problems of resource allocating with respect to the effect
on welfare.
Special Drawing Rights (SDRs):-It is a reserve asset (known as Paper Gold) created within the
framework of the International Monetary Fund in an attempt to increase international liquidity, and now
forming a part of countries official forex reserves along with gold, reserve positions in the IMF and
convertible foreign currencies.
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Stagflation:-It is a state of the economy in which economic activity is slowing down, but wages and prices
continue to rise. The term is blend of the words stagnation and inflation.
Transfer payment:-It is a payment made by public authority other than one made in exchange for goods
or services produced. Transfer payments are not the part of National Income. Examples includes
unemployment benefit and child benefits.
[1]
In other words, the transfer is made without any exchange of goods or services. Examples of certain
transfer payments include welfare (financial aid), social security, and government making subsidies for
certain businesses
Devaluation:- The loss of value of currency of a country relative to other foreign currency is
known as devaluation. Devaluation is a process in which the government deliberately cheapens
the exchange value of its own currency in terms of other currency by giving it a lower exchange
value. Devaluation is used for improving, the balance of payment situation in the country.
Fiscal Policy:-Fiscal policy is the use of government revenue collection (taxation) and expenditure
(spending) to influence the economy
Fiscal policy is that part of government policy which deals with taxation, expenditure, borrowing and the
management of public debt in the economy. fiscal policy primarily concerns itself with the flow of funds in
the economy. it exerts a very powerful influence of the working of economy as a whole.
Scheduled Banks:-They are banks which are included in the second schedule of the Reserve Bank of
India Act, 1934. These banks enjoy certain privileges such as free concessional remittance facilities and
financial accommodation from the RBI. they also have certain obligations like minimum cash reserve ratio
(CRR) to be kept with RBI.
ATM :ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer
Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense
cash, receive cash, accept cheques, give balances in the accounts and also give mini-statements to the
customers.
Bouncing of a cheque : Where an account does not have sufficient balance to honour the cheque
issued by the customer , the cheque is returned by the bank with the reason "funds insufficient" or
"Exceeds arrangement".This is known as 'Bouncing of a cheque' .
Collecting Banker : Also called receiving banker, who collects on instruments like a cheque, draft or bill
of exchange, lodged with himself for the credit of his customer's account.
Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their
accounts. When you purchase things on the basis of Debit Card the amount due is debited immediately to
the account . Many banks issue Debit-Cum-ATM Cards.
Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and
current account deposits.
Demat Account : The term "demat", in India, refers to a dematerialised account for individual Indian
citizens to trade in listed stocks or debentures in electronic form rather than paper, as required
for investors by the Securities and Exchange Board of India (SEBI). In a demat account, shares and
Page 15 of 33

securities are held electronically instead of the investor taking physical possession of certificates. A
demat account is opened by the investor while registering with an investment broker
Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce where the exchange of
business takes place by Electronic means.
Endorsement : When a Negotiable Instrument contains, on the back of the instrument an endorsement,
signed by the holder or payee of an order instrument, transferring the title to the other person, it is called
endorsement.
Merchant Banking : When a bank provides to a customer various types of financial services like
accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice,
information or assistance on starting new business, acquisitions, mergers and foreign exchange.
Minor Accounts : A minor is a person who has not attained legal age of 18 years. As per Contract Act a
minor cannot enter into a contract but as per Negotiable Instrument Act, a minor can draw,negotiate,
endorse, receive payment on a Negotiable Instrument so as to bind all the persons, except himself. In
order to boost their deposits many banks open minor accounts with some restrictions.
Mobile Banking : With the help of M-Banking or mobile banking customer can check his bank balance,
order a demand draft, stop payment of a cheque, request for a cheque book and have information about
latest interest rates.
Money Laundering : When a customer uses banking channels to cover up his suspicious and unlawful
financial activities, it is called money laundering.
Mortgage : Transfer of an interest in specific immovable property for the purpose of offering a security for
taking a loan or advance from another. It may be existing or future debt or performance of an agreement
which may create monetary obligation for the transferor (mortgagor).
NABARD : National Bank for Agriculture & Rural Development was setup in 1982 under the Act of 1981.
NABARD finances and regulates rural financing and also is responsible for development agriculture and
rural industries.
Negotiation : In the context of banking, negotiation means an act of transferring or assigning a money
instrument from one person to another person in the course of business.
NPA Account : If interest and instalments and other bank dues are not paid in any loan account within a
specified time limit, it is being treated as non-performing assets of a bank.
Plastic Money : Credit Cards, Debit Cards, ATM Cards and International Cards are considered plastic
money as like money they can enable us to get goods and services
Prime Lending Rate (PLR) : The rate at which banks lend to their best (prime) customers.It is usually
less than normal interest rate.
Promissory Note : Promissory Note is a promise / undertaking given by one person in writing to another
person, to pay to that person , a certain sum of money on demand or on a future day.
Public Sector Bank : A bank fully or partly owned by the Government.
Page 16 of 33

Virtual Banking : Virtual banking is also called internet banking, through which financial and banking
services are accessed via internet's world wide web. It is called virtual banking because an internet bank
has no boundaries of brick and mortar and it exists only on the internet.
Wholesale Banking : Wholesale banking is different from Retail Banking as its focus is on providing for
financial needs of industry and institutional clients.
National Electronic Funds Transfer System (NEFT) RBI introduced an electronic funds transfer
system to facilitate an efficient, secure,econo-mical, reliable and expeditious system of funds transfer and
clearing in the banking sector throughout India, and to relieve the stress on the existing paper-based
funds transfer and clearing system called National Electronic Funds Transfer System (NEFT
System).
National
Electronic Clearing Services (NECS) The objective of National Electronic Clearing
Services (NECS) is to facilitate centralised processing for
repetitive and bulk payment instructions.
Sponsor banks shall submit NECS data at a single centre viz. at Mumbai. While NECS (Credit) shall
facilitate multiplecredits to beneficiary accounts at destination branch against a single debit of the
account of a User with the sponsor bank, the NECS (Debit) shall facilitate multiple debits to destination
account holders against single credit to user account.
Universal Banking:- Universal Banking refers to those services offered by banks beyond traditional
banking service such as saving accounts and loans and includes Pension Funds Manage-ment,
undertaking equipment leas-ing, hire purchase business and factoring services, Primary Dealer-ship
(PD) business, insurance busi-ness and mutual fund business.
Financial System:-The economic development of a nation is reflected by the progress of the various
economic units, broadly classified into corporate sector, government and household sector. While
performing their activities these units will be placed in a surplus/deficit/balanced budgetary situations.
There are areas or people with surplus funds and there are those with a deficit. A financial system or
financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus to
the areas of deficit. A Financial System is a composition of various institutions, markets, regulations and
laws, practices, money manager, analysts, transactins and claims and liabilities.
Financial Markets:-A Financial Market can be defined as the market in which financial assets are
created or transferred. As against a real transaction that involves exchange of money for real goods or
services, a financial transaction involves creation or transfer of a financial asset. Financial Assets or
Financial Instruments represents a claim to the payment of a sum of money sometime in the future and
/or periodic payment in the form of interest or dividend.
Money Market - The money market is a wholesale debt market for low-risk, highly-liquid, short-term
instrument. Funds are available in this market for periods ranging from a single day up to a year. This
market is dominated mostly by government, banks and financial institutions.
Capital Market - The capital market is designed to finance the long-term investments. The transactions
taking place in this market will be for periods over a year.
Forex Market - The Forex market deals with the multicurrency requirements, which are met by the
exchange of currencies. Depending on the exchange rate that is applicable, the transfer of funds takes
place in this market. This is one of the most developed and integrated market across the globe.
Page 17 of 33

Credit Market - Credit market is a place where banks, FIs and NBFCs give short, medium and long-term
loans to corporate and individuals.
Money Market Instruments:-Money Market Instruments The money market can be defined as a market
for short-term money and financial assets that are near substitutes for money. The term short-term
means generally a period upto one year and near substitutes to money is used to denote any financial
asset which can be quickly converted into money with minimum transaction cost.
Some of the important money market instruments are briefly discussed below;
1. Call/Notice Money
2. Treasury Bills
3. Term Money
4. Certificate of Deposit
5. Commercial Papers
1. Call /Notice-Money Market:-1.Call/Notice money is the money borrowed or lent on demand for a very
short period. When money is borrowed or lent for a day, it is known as Call (Overnight) Money.
Intervening holidays and/or Sunday are excluded for this purpose. Thus money, borrowed on a day and
repaid on the next working day, (irrespective of the number of intervening holidays) is "Call Money".
Notice Money:-When money is borrowed or lent for more than a day and up to 14 days, it is "Notice
Money".No collateral security is required to cover these transactions.
2. Inter-Bank Term Money:-Inter-bank market for deposits of maturity beyond 14 days is referred to as
the term money market. The entry restrictions are the same as those for Call/Notice Money except that,
as per existing regulations, the specified entities are not allowed to lend beyond 14 days.
3. Treasury Bills.:-Treasury Bills are short term (up to one year) borrowing instruments of the union
government. It is a promise by the Government to pay a stated sum after expiry of the stated period from
the date of issue (14/91/182/364 days i.e. less than one year). They are issued at a discount to the face
value, and on maturity the face value is paid to the holder. The rate of discount and the corresponding
issue price are determined at each auction.
4. Certificate of Deposits:-Certificates of Deposit (CDs) is a negotiable money market instrument and
issued in dematerialised form or as a Usance Promissory Note, for funds deposited at a bank or other
eligible financial institution for a specified time period. Guidelines for issue of CDs are presently governed
by various directives issued by the Reserve Bank of India, as amended from time to time. CDs can be
issued by (i) scheduled commercial banks excluding Regional Rural Banks (RRBs) and Local Area Banks
(LABs); and (ii) select all-India Financial Institutions that have been permitted by RBI to raise short-term
resources within the umbrella limit fixed by RBI. Banks have the freedom to issue CDs depending on their
requirements. An FI may issue CDs within the overall umbrella limit fixed by RBI, i.e., issue of CD
together with other instruments viz., term money, term deposits, commercial papers and intercorporate
deposits should not exceed 100 per cent of its net owned funds, as per the latest audited balance sheet.
5. Commercial Paper:-Commercial paper is an unsecured promissory note with a fixed maturity of 1 to

364 days. Commercial paper is a money-market security issued (sold) by large corporations to
get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing
bank or corporation's promise to pay the face amount on the maturity date specified on the note.
Page 18 of 33

Bounced Cheque:-A cheque that a bank has refused to cash or pay because the account holder does not
have sufficient funds to cover it in this account.
Cashiers Cheque:-A cheque issued by a bank drawn on its own funds rather than on the funds its
depositors.
Clear:-A cheque is cleared when its account is debited or deducted from the payers account and
credited or added to the payees account.
Compound Interest:-Interest calculated on the original principal and on the interest already accrued.
Overdraft:-A cheque written for more money than is currently in the account. The cheque is said to have
bounced if the bank refuse to cash the cheque.
Stop Payment:-A request made to a bank to not pay a specific cheque. If requested soon enough, the
cheque will not be debited from the payers account.
Bank Draft:-A cheque drawn by one bank against funds deposited into its account at another bank,
authorizing individual named in the draft.
Inactive Account:-Transactions house not occurred on a bank account for an extended period of time..
Personal Identification Number (PIN):-An account holder has a secret number or code to authorize a
transaction or obtain information regarding his or her account often used in conjunction with a plastic card
(ATM or Debit Card), online account access or with a telephone voice response system.
Bank Statements:-This is a statement from the bank giving details of transaction in the relevant account.
It can be requested at any intervals required, usually monthly.
Cheque Clearing:-This is the process of getting the money from the cheque-writers account into the
cheque receivers account.
Standing Order:-A regular payment made out of a current account which is of a set account and is
originated by the account holder.
Fringe Benefit:-A benefit in addition to salary offered to employees such as use of companys car,
house, lunch coupons, heath care subscriptions etc.
Foreign Exchange Reserves:-Foreign-exchange reserves (also called forex reserves or FX

reserves) in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and
monetary authorities. However, the term in popular usage commonly includes foreign exchange
and gold, special drawing rights (SDRs), and International Monetary Fund (IMF) reserve positions.
Crowding Out:-The possible tendency for government spending on goods and services to put upward
pressure on interest rates, thereby discouraging private investment spending.
Central Bank:-Major Financial institution responsible for issuing currency, managing foreign reserves,
implementing monetary policy, and providing banking services to the government and commercial banks
RBI is the central bank of India.
Page 19 of 33

Account payee:-Also account payee only. Words written on the face of a cheque between two parallel
lines. The purpose is to ensure that the cheque may only be paid into an account in the name of the
payee-the person to whom the cheque is made payable. This means that the payee cannot sign it in
names of another person.
Multi Option Deposit scheme:-Multi Option Deposit scheme is a term deposit which is not fixed at all
and comes with a unique break-up facility which provides full liquidity as well as benefit of higher rate of
interest, through the savings bank account. One can also keep that deposit intact by availing on overdraft
facility, to meet occasional temporary funds requirements.
Cards:-Banks provide free ATM cum Debit card to its customers who have deposit account with them.
This card provides online access to savings or current account. They can have the access to the widest
network of ATMs across the country to withdraw cash, enquire about the account balance etc. Banks are
also having bilateral sharing arrangement with other banks under this scheme.
Demat Services:_Banks have come forward to offer Demat Services to its customer. Demat account, the
abbreviation for dematerialized account is used to avoid holding physical shares: The shares are bought
and sold through a stock broker.
Online Banking:-Transaction at the convenience of customers, saving times and cost through computers
is popularly known as Online Banking. It is also known as E-Banking or Net Banking or Internet Banking.
It is done through a computer with internet facilities. Customers can monitor and control their through
Internet Banking. They can check account balance view their account, get summary statement, make bill
payments and utility payments, request for cheque book, drafts, Bankers cheques, stop cheque
payments, transfer funds, request for third party transfers, invest and renew deposits, issue standing
instruction, register mobile number for SMS alerts and many more attractive features user-id and
password are given by the banks to the customer for operation of account after they successfully register
with the bank.
NRI Banking :-Banks allow NRIs to open an NRI account when they complete the account opening
formalities. A customer for this purchase a form has to be filled up in which the information soughtly the
bank is provided. They can have a NRI Saving Bank Account, Current Account, Fixed Deposits in Indian
Rupees, Fixed Deposits in foreign currency, NRO account (Rupee account for crediting income in India)
Saving Account;-A saving bank account is the most common operating account for individuals and
others for non-commercial transaction. A savings account helps people to put through day-to-day
banking transaction besides earning some return on the savings made. Banks generally put some ceiling
on the total number of withdrawals permitted during specific time periods. Banks also stipulate certain
minimum balance to be maintained in saving accounts Normally, a higher minimum balance is stipulated
in cheque operated accounts as compared to non-cheque operated accounts. Banks as a rule do not give
overdraft facility in a saving account but allow occasional over drawings to meet contingencies.
Current Accounts:-Current accounts are cheque operated accounts maintained for mainly business
purpose. Unlike savings bank accounts no limits are fixed by banks on the number of transaction
permitted in the account Banks generally insist on a higher minimum balance to be maintained in current
account. Considering the large number of transactions in the account and volatile nature of balances
maintained overnight banks generally levy certain service charges for operating a current account. In
Page 20 of 33

terms of RBI directive banks are not allowed to pay any interest on the balances maintained in current
accounts.
Fixed or Time Deposits:-Time deposits are deposits accepted by banks for a specified period of time. In
terms of RBI directives the minimum period for which term deposits can be accepted is 15 days. The
banks generally do not accept deposit for period longer than 10 years. Banks pay interest on term
deposits based on the periods of deposits and normally pay higher interest for longer term deposits
changes made in interest rates from time to time do not alter the interest paid on the existing deposits.
Banks are allowed to levy a penalty for premature encashment of deposits at their discretion. Bank allow
loans against the fixed deposits on demand margin retained over the deposit outstanding and interest
rate charged there on are decided by to bank and may vary from bank to bank.
Capital Adequacy Ratio:-Capital adequacy ratio measures the amount of a banks capital expressed as
a percentage of its credit exposure. Globally, the capital adequacy ratio has been developed to ensure
banks can absorb a reasonable level of losses before becoming insolvent. Indian banks are expected to
maintain a minimum capital adequacy ratio of 9 per cent (Rs 9 as capital for every Rs 100 in loan or
asset) Applying minimum capital adequancy ratios serves to protect depositors and promote the stability
and efficiency of the financial system by reducing the likelihood of banks be coming insolvent.
Collateral Loan Market
Collateral loan market forms, by and large, the largest and the best developed section of the money
market. In this market, loans are given against the security of government bonds, shares of first class
companies, agriculture and manufactured commodities and bullion and jewellery.
Mutual Funds:-Mutual Funds collect the savings from small investors to invest them in government and
other corporate securities and cash income through interest and dividends desides capital gains. It works
on the principle of small drops of water make a big ocean to get funds from investors, the fund adopts a
simple technique. Each fund is divided into a small fraction Called units of equal value. Each investor is
allotted units in proportion to the size of his investment.
Regular Savings Account:-A Form of deposit account with no legal limits or requirements as to amount
duration or times of addition or withdrawals.
Wire Transfer:-An electronic transfer of funds from one financial institution to another.
Economic Miracle:-The terms "economic miracle", "economic boom", "tiger economy" or simply "miracle"
have come to refer to great periods of change, particularly periods of dramatic economic growth, in the
recent histories of a number of countries.
Asset Liability Mismatch:-In finance, an assetliability mismatch occurs when the financial
terms of an institution's assets and liabilities do not correspond

Fixed income : It refers to any type of investment under which the borrower/issuer is obliged to make
payments of a fixed amount on a fixed schedule: for example, if the borrower has to pay interest at a fixed
rate once a year, and to repay the principal amount on maturity.
Page 21 of 33

Premium Financing :-Premium Financing involves the lending of funds to a person or company to cover
the cost of an insurance premium. Premium finance loans are often provided by third party finance entity
known as a "Premium Financing Company"; however insurance companies and brokerages occasionally
provide premium financing services
[1]
Net present value:- In finance, the net present value (NPV) or net present worth (NPW) of a time
series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the
individual cash flows of the same entity.
Share Capital:-Funds raised by issuing shares in return for cash or other considerations. The amount of
share capital a company has can change over time because each time a business sells new shares to the
public in exchange for cash, the amount of share capital will increase. Share capital can be composed of
both common and preferred shares.
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First bank established in India: Bank of Hindustan in 1770

First India bank started solely with Indian capital investment is PNB (Punjab National Bank)
Founder of Punjab National Bank is Lala Lajpat Rai
Reserve Bank of India RBI) was established in 1935 and Nationalized in 1949.
First governor of RBI: Mr.Osborne Smith
First Indian Governor of RBI: Mr. C D Deshmukh
First bank to introduce savings account in India: Presidency Bank in 1833
First bank to introduce cheque system in India: Bengal Bank in 1833
First bank to introduce internet banking: ICICI bank
First bank to introduce mutual fund: State Bank of India
First bank to introduce credit card in India: Central Bank of India
Open market operations are carried out by RBI
Capital market regulator is SEBI
Largest Commercial bank in India State Bank of India
The International Bank for Reconstruction and Development (IBRD) is known as World Bank
CRR, SLR, Repo Rate, Reverse Repo rate are decide by RBI
Savings banks interest rates, fixed deposit interest rates, Loan Rates etc. are decided by individual banks
The bank which has launched Mobile Bank Accounts in association with Vodafones m paisa HDFC Bank
Largest Public sector bank in India SBI
Largest Private sector bank in India ICICI Bank
Largest Foreign bank in India Standard Chartered Bank
First Indian bank to open branch outside India i.e. London in 1946: Bank of India
First RRB named Prathama Grameen Bank was started by: Syndicate Bank
First Bank to introduce ATM in India: HSBC in1987, Mumbai
Bank of Baroda has the maximum number of overseas branches
FDI limit for new banks 49%
FDI limit for private banks: 74%
Bank of India is the first Indian Bank to open overseas branch. It established a branch in London in 1946.
ICICI Bank was the first Bank to provide Mobile ATM.
SBI State Bank of India has the total number of maximum branches and holds 2nd position in the world.
India's first "talking" Automated Teller Machine ATM) launched by Union Bank of India UBI) for visually
impaired was launched in Ahmedabad Gujarat).
Page 22 of 33
Important Terms Used in Reserve Bank of

India
(Taken from Glossary)
relevant assets and the subsequent

deterioration in values under difficult market
conditions or in a forced sale.
Capital Funds
Equity contribution of owners. The
basic approach of capital adequacy
framework is that a bank should have
sufficient capital to provide a stable resource
to absorb any losses arising from the risks in
its business. Capital is divided into different
tiers according to the characteristics /
qualities of each qualifying instrument. For
supervisory purposes capital is split into two
categories: Tier I and Tier II.
Tier I Capital
A term used to refer to one of the
components of regulatory capital. It consists
mainly of share capital and disclosed reserves
(minus goodwill, if any). Tier I items are
deemed to be of the highest quality because
they are fully available to cover losses Hence
it is also termed as core capital.
Tier II Capital
Ratio of assets to capital.

Capital reserves
That portion of a company's profits
not paid out as dividends to shareholders.
They are also known as undistributable
reserves and are ploughed back into the
business.
Deferred Tax Assets
Unabsorbed depreciation and carry
forward of losses which can be set-off against
future taxable income which is considered as
timing differences result in deferred tax
assets. The deferred Tax Assets are accounted
as per the Accounting Standard 22.
Deferred Tax Liabilities
Refers to one of the components of

regulatory capital. Also known as
supplementary capital, it consists of certain
reserves and certain types of subordinated
debt. Tier II items qualify as regulatory capital
to the extent that they can be used to absorb
losses arising from a bank's activities. Tier II's
capital loss absorption capacity is lower than
that of Tier I capital.
Revaluation reserves
Revaluation reserves are a part of
Tier-II capital. These reserves arise from
revaluation of assets that are undervalued on
the bank's books, typically bank premises and
marketable securities. The extent to which the
revaluation reserves can be relied upon as a
cushion for unexpected losses depends mainly
upon the level of certainty that can be placed
on estimates of the market values of the
Page 23 of 33
Leverage
Deferred tax liabilities have an effect

of increasing future year's income tax
payments, which indicates that they are
accrued income taxes and meet definition of
liabilities.
Subordinated debt
Refers to the status of the debt. In the
event of the bankruptcy or liquidation of the
debtor, subordinated debt only has a
secondary claim on repayments, after other
debt has been repaid.
Hybrid debt capital instruments

In this category, fall a number of
capital instruments, which combine certain
characteristics of equity and certain
characteristics of debt. Each has a particular

India
feature, which can be considered to affect its

quality as capital. Where these instruments
have close similarities to equity, in particular
when they are able to support losses on an
ongoing basis without triggering liquidation,
they may be included in Tier II capital.
The notional amount of the asset is

multiplied by the risk weight assigned to the
asset to arrive at the risk weighted asset
number. Risk weight for different assets vary
e.g. 0% on a Government Dated Security and
20% on a AAA rated foreign bank etc.
CRAR(Capital to Risk Weighted Assets Ratio)
BASEL Committee on Banking

Supervision
The BASEL Committee is a committee
of bank supervisors consisting of members
from each of the G10 countries. The
Committee is a forum for discussion on the
handling of specific supervisory problems. It
coordinates the sharing of supervisory
responsibilities among national authorities in
respect of banks' foreign establishments with
the aim of ensuring effective supervision of
banks' activities worldwide.
BASEL Capital accord
The BASEL Capital Accord is an
Agreement concluded among country
representatives in 1988 to develop
standardised risk-based capital requirements
for banks across countries. The Accord was
replaced with a new capital adequacy
framework (BASEL II), published in June 2004.
BASEL II is based on three mutually reinforcing
pillars hat allow banks and supervisors to
evaluate properly the various risks that banks
face. These three pillars are:
Minimum capital requirements, which seek
to refine the present measurement
framework supervisory review of an
institution's capital adequacy and internal
assessment process; market discipline
through effective disclosure to encourage safe
and sound banking practices
Risk Weighted Asset
Page 24 of 33
Capital to risk weighted assets ratio is

arrived at by dividing the capital of the bank
with aggregated risk weighted assets for
credit risk, market risk and operational risk.
The higher the CRAR of a bank the better
capitalized it is.
Credit Risk
The risk that a party to a contractual
agreement or transaction will be unable to
meet its obligations or will default on
commitments. Credit risk can be associated
with almost any financial transaction. BASEL-II
provides two options for measurement of
capital charge for credit risk
1. Standardised approach (SA) - Under the SA,
the banks use a risk-weighting schedule for
measuring the credit risk of its assets by
assigning risk weights based on the rating
assigned by the external credit rating
agencies.
2. Internal rating based approach (IRB) - The
IRB approach, on the other hand, allows banks
to use their own internal ratings of
counterparties and exposures, which permit a
finer differentiation of risk for various
exposures and hence delivers capital
requirements that are better aligned to the
degree of risks. The IRB approaches are of two
types:
a) Foundation IRB (FIRB): The bank estimates
the Probability of Default (PD) associated with
each borrower, and the supervisor supplies
other inputs such as Loss Given Default (LGD)
and Exposure At Default (EAD).

India
b) Advanced IRB (AIRB): In addition to

Probability of Default (PD), the bank estimates
other inputs such as EAD and LGD. The
requirements for this approach are more
exacting. The adoption of advanced
approaches would require the banks to meet
minimum requirements relating to internal
ratings at the outset and on an ongoing basis
such as those relating to the design of the
rating system, operations, controls, corporate
governance, and estimation and validation of
credit risk components, viz., PD for both FIRB
and AIRB and LGD and EAD for AIRB. The
banks should have, at the minimum, PD data
for five years and LGD and EAD data for seven
years. In India, banks have been advised to
compute capital requirements for credit risk
adopting the SA.
Market risk
Market risk is defined as the risk of
loss arising from movements in market prices
or rates away from the rates or prices set out
in a transaction or agreement. The capital
charge for market risk was introduced by the
BASEL Committee on Banking Supervision
through the Market Risk Amendment of
January 1996 to the capital accord of 1988
(BASEL I Framework). There are two
methodologies available to estimate the
capital requirement to cover market risks:
1) The Standardised Measurement Method:
This method, currently implemented by the
Reserve Bank, adopts a building block
approach for interest-rate related and equity
instruments which differentiate capital
requirements for specific risk from those of
general market risk. The specific risk charge
is designed to protect against an adverse
movement in the price of an individual
security due to factors related to the
individual issuer. The general market risk
charge is designed to protect against the
interest rate risk in the portfolio.
Page 25 of 33
2) The Internal Models Approach (IMA): This

method enables banks to use their
proprietary in-house method which must
meet the qualitative and quantitative criteria
set out by the BCBS and is subject to the
explicit approval of the supervisory authority.
Operational Risk
The revised BASEL II framework offers
the following three approaches for estimating
capital charges for operational risk:
1) The Basic Indicator Approach (BIA): This
approach sets a charge for operational risk as
a fixed percentage ("alpha factor") of a single
indicator, which serves as a proxy for the
banks risk exposure.
2) The Standardised Approach (SA): This
approach requires that the institution
separate its operations into eight standard
business lines, and the capital charge for each
business line is calculated by multiplying gross
income of that business line by a factor
(denoted beta) assigned to that business line.
3) Advanced Measurement Approach (AMA):
Under this approach, the regulatory capital
requirement will equal the risk measure
generated by the banks internal operational
risk measurement system. In India, the banks
have been advised to adopt the BIA to
estimate the capital charge for operational
risk and 15% of average gross income of last
three years is taken for calculating capital
charge for operational risk.
Internal Capital Adequacy Assessment

Process (ICAAP)
In terms of the guidelines on BASEL II,
the banks are required to have a boardapproved policy on internal capital adequacy
assessment process (ICAAP) to assess the
capital requirement as per ICAAP at the solo
as well as consolidated level. The ICAAP is

India
required to form an integral part of the

management and decision-making culture of a
bank. ICAAP document is required to clearly
demarcate the quantifiable and qualitatively
assessed risks. The ICAAP is also required to
include stress tests and scenario analyses, to
be conducted periodically, particularly in
respect of the banks material risk exposures,
in order to evaluate the potential vulnerability
of the bank to some unlikely but plausible
events or movements in the market
conditions that could have an adverse impact
on the banks capital.
Supervisory Review Process (SRP)
Supervisory review process envisages
the establishment of suitable risk
management systems in banks and their
review by the supervisory authority. The
objective of the SRP is to ensure that the
banks have adequate capital to support all the
risks in their business as also to encourage
them to develop and use better risk
management techniques for monitoring and
managing their risks.
Market Discipline
Market Discipline seeks to achieve
increased transparency through expanded
disclosure requirements for banks.
Credit risk mitigation
Techniques used to mitigate the
credit risks through exposure being
collateralised in whole or in part with cash or
securities or guaranteed by a third party.
Mortgage Back Security
A bond-type security in which the
collateral is provided by a pool of mortgages.
Income from the underlying mortgages is
used to meet interest and principal
repayments.
Derivative
Page 26 of 33
A derivative instrument derives its

value from an underlying product. There are
basically three derivatives
a)
Forward Contract- A forward contract
is an agreement between two parties to buy
or sell an agreed amount of a commodity or
financial instrument at an agreed price, for
delivery on an agreed future date. Future
Contract- Is a standardized exchange tradable
forward contract executed at an exchange. In
contrast to a futures contract, a forward
contract is not transferable or exchange
tradable, its terms are not standardized and
no margin is exchanged. The buyer of the
forward contract is said to be long on the
contract and the seller is said to be short on
the contract.
b)
Options- An option is a contract which
grants the buyer the right, but not the
obligation, to buy (call option) or sell (put
option) an asset, commodity, currency or
financial instrument at an agreed rate
(exercise price) on or before an agreed date
(expiry or settlement date). The buyer pays
the seller an amount called the premium in
exchange for this right. This premium is the
price of the option.
c)
Swaps- Is an agreement to exchange
future cash flow at pre-specified Intervals.
Typically one cash flow is based on a variable
price and other on affixed one.
Duration
Duration (Macaulay duration)
measures the price volatility of fixed income
securities. It is often used in the comparison
of interest rate risk between securities with
different coupons and different maturities. It
is defined as the weighted average time to
cash flows of a bond where the weights are
nothing but the present value of the cash
flows themselves. It is expressed in years. The
duration of a fixed income security is always

India
shorter than its term to maturity, except in

the case of zero coupon securities where they
are the same.
is a mechanism to nurture an otherwise viable

unit, which has been adversely impacted, back
to health.
Modified Duration
Substandard Assets
Modified Duration = Macaulay

Duration/ (1+y/m), where y is the yield (%),
m is the number of times compounding
occurs in a year. For example if interest is paid
twice a year m=2. Modified Duration is a
measure of the percentage change in price of
a bond for a 1% change in yield.
A substandard asset would be one,

which has remained NPA for a period less
than or equal to 12 months. Such an asset will
have well defined credit weaknesses that
jeopardize the liquidation of the debt and are
characterised by the distinct possibility that
the banks will sustain some loss, if
deficiencies are not corrected.
Non Performing Assets (NPA)

An asset, including a leased asset,
becomes non performing when it ceases to
generate income for the bank.
Net NPA
Gross NPA (Balance in Interest
Suspense account + DICGC/ECGC claims
received and held pending adjustment + Part
payment received and kept in suspense
account + Total provisions held).
Coverage Ratio
Doubtful Asset
An asset would be classified as
doubtful if it has remained in the substandard
category for a period of 12 months. A loan
classified as doubtful has all the weaknesses
inherent in assets that were classified as
substandard, with the added characteristic
that the weaknesses make collection or
liquidation in full, - on the basis of currently
known facts, conditions and values - highly
questionable and improbable.
Equity minus net NPA divided by total

assets minus intangible assets.
Slippage Ratio
Loss Asset
(Fresh accretion of NPAs during the

year/Total standard assets at the beginning of
the year)*100
A loss asset is one where loss has

been identified by the bank or internal or
external auditors or the RBI inspection but the
amount has not been written off wholly. In
other words, such an asset is considered
uncollectible and of such little value that its
continuance as a bankable asset is not
warranted although there may be some
salvage or recovery value.
Restructuring
A restructured account is one where
the bank, grants to the borrower concessions
that the bank would not otherwise consider.
Restructuring would normally involve
modification of terms of the
advances/securities, which would generally
include, among others, alteration of
repayment period/ repayable amount/ the
amount of installments and rate of interest. It
Page 27 of 33
Off Balance Sheet Exposure

Off-Balance Sheet exposures refer to
the business activities of a bank that generally
do not involve booking assets (loans) and
taking deposits. Off-balance sheet activities

India
normally generate fees, but produce liabilities

or assets that are deferred or contingent and
thus, do not appear on the institution's
balance sheet until and unless they become
actual assets or liabilities.
Current Exposure Method
The credit equivalent amount of a

market related off-balance sheet transaction
is calculated using the current exposure
method by adding the current credit exposure
to the potential future credit exposure of
these contracts. Current credit exposure is
defined as the sum of the positive mark to
market value of a contract. The Current
Exposure Method requires periodical
calculation of the current credit exposure by
marking the contracts to market, thus
capturing the current credit exposure.
Potential future credit exposure is determined
by multiplying the notional principal amount
of each of these contracts irrespective of
whether the contract has a zero, positive or
negative mark-to-market value by the
relevant add-on factor prescribed by RBI,
according to the nature and residual maturity
of the instrument.
Net of total income and total

operating expenses.
Net operating profit
Operating profit before provision

minus provision for loan losses, depreciation
in investments, write off and other provisions.
Profit before tax (PBT)

(Net operating profit +/- realized
gains/losses on sale of assets)
Profit after tax (PAT)
Profit before tax provision for tax.
Retained earnings
Profit after tax dividend
paid/proposed.
Average Yield
(Interest and discount
earned/average interest earning assets)*100
Average cost
(Interest expended on deposits and
borrowings/Average interest bearing
liabilities)*100
Return on Asset (ROA)- After Tax
Earnings
Total income
Sum of interest/discount earned,
commission, exchange, brokerage and other
operating income.
Total operating expenses
Sum of interest expended, staff
expenses and other overheads.
Operating profit before provisions
Page 28 of 33
Return on Assets (ROA) is a

profitability ratio which indicates the net
profit (net income) generated on total assets.
It is computed by dividing net income by
average total assets. Formula- (Profit after
tax/Av. Total assets)*100
Return on equity (ROE)- After Tax
Return on Equity (ROE) is a ratio
relating net profit (net income) to
shareholders equity. Here the equity refers to
share capital reserves and surplus of the bank.
Formula- Profit after tax/(Total equity + Total
equity at the end of previous year)/2}*100

India
Accretion to equity
(Retained earnings/Total equity at the

end of previous year)*100
days and securities under held for trading

and available for sale categories excluding
securities that do not have ready market.
Funding Volatility Ratio
Net Non-Interest Income

The differential (surplus or deficit)
between non-interest income and noninterest expenses as a percentage to average
total assets.
Net Interest Income ( NII)
The NII is the difference between the
interest income and the interest expenses.
Net Interest Margin
Net interest margin is the net interest
income divided by average interest earning
assets.
Cost income ratio (Efficiency ratio)
The cost income ratio reflects the
extent to which non-interest expenses of a
bank make a charge on the net total income
(total income interest expense). The lower
the ratio, the more efficient is the bank.
Formula: Non interest expenditure / Net Total
Income * 100.
CASA Deposit
Deposit in bank in current and Savings
account.
High Cost Deposit
Liquid assets [as above] to current

and savings deposits - (Higher the ratio, the
better)
Market Liability Ratio
Inter-bank and money market deposit
liabilities to Average Total Assets
ALM
Asset Liability Management (ALM) is
concerned with strategic balance sheet
management involving all market risks. It also
deals with liquidity management, funds
management, trading and capital planning.
ALCO
Asset-Liability Management
Committee (ALCO) is a strategic decision
making body, formulating and overseeing the
function of asset liability management (ALM)
of a bank.
Banking Book
The banking book comprises assests
and liabilities, which are contracted basically
on account of relationship or for steady
income and statutory obligations and are
generally held till maturity.
Deposits accepted above card rate

(for the deposits) of the bank.
Venture Capital Fund
Liquid Assets
Held Till Maturity(HTM)
Liquid assets consists of: cash,

balances with RBI, balances in current
accounts with banks, money at call and short
notice, inter-bank placements due within 30
The securities acquired by the banks

with the intention to hold them up to
maturity.
Page 29 of 33
A fund set up for the purpose of

investing in startup businesses that is
perceived to have excellent growth prospects
but does not have access to capital markets.

India
Held for Trading(HFT)
Securities where the intention is to

trade by taking advantage of short-term price
/ interest rate movements.
Available for Sale(AFS)
The securities available for sale are
those securities where the intention of the
bank is neither to trade nor to hold till
maturity. These securities are valued at the
fair value which is determined by reference to
the best available source of current market
quotations or other data relative to current
value.
Yield to maturity (YTM) or Yield
The Yield to maturity (YTM) is the
yield promised to the bondholder on the
assumption that the bond will be held to
maturity and coupon payments will be
reinvested at the YTM. It is a measure of the
return of the bond.
Cash reserve ratio is the cash parked

by the banks in their specified current account
maintained with RBI.
SLR
Statutory liquidity ratio is in the form
of cash (book value), gold (current market
value) and balances in unencumbered
approved securities.
Stress testing
Stress testing is used to evaluate a
banks potential vulnerability to certain
unlikely but plausible events or movements in
financial variables. The vulnerability is usually
measured with reference to the banks
profitability and /or capital adequacy.
Scenario Analysis
A method in which the earnings or
value impact is computed for different
interest rate scenario.
LIBOR
Convexity
This represents the rate of change of
duration. It is the difference between actual
price of a bond and the price estimated by
modified duration.
Foreign Currency Convertible Bond
A bond issued in foreign currency
abroad giving the investor the option to
convert the bond into equity at a fixed
conversion price or as per a pre-determined
pricing formula.
London Inter Bank Offered Rate. The

interest rate at which banks offer to lend
funds in the interbank market.
Basis Point
Is one hundredth of one percent. 1
basis point means 0.01%. Used for measuring
change in interest rate/yield.
Trading Book
Fraud
Investments in trading book are held

for generating profits on the short term
differences in prices/yields. Held for trading
(HFT) and Available for sale (AFS) category
constitute trading book.
Frauds have been classified as under,

based mainly on the provisions of the Indian
Penal Code
(a) Misappropriation and criminal breach of
trust.
CRR
Page 30 of 33

India
(b) Fraudulent encashment through forged

instruments, manipulation of books of
account or through fictitious accounts and
conversion of property.
(c) Unauthorised credit facilities extended for

reward or for illegal gratification.
(d) Negligence and cash shortages.
(e) Cheating and forgery.
(f) Irregularities in foreign exchange
transactions.
(g) Any other type of fraud not coming under
the specific heads as above.
Securitization
A process by which a single asset or a
pool of assets are transferred from the
balance sheet of the originator (bank) to a
bankruptcy remote SPV (trust) in return for an
immediate cash payment.
Special Purpose Vehicle (SPV)
An entity which may be a trust,
company or other entity constituted or
established by a Deed or Agreement for a
specific purpose.
Bankruptcy remote
The legal position with reference to
the creation of the SPV should be such that
the SPV and its assets would not be touched
in case the originator of the securitization
goes bankrupt and its assets are liquidated.
Credit enhancement
These are the facilities offered to an
SPV to cover the probable losses from the
pool of securitized assets. It is a credit risk
cover given by the originator or a third party
and meant for the investors in any
securitization process.
Page 31 of 33
Custodian
An entity, usually a bank that actually

holds the receivables as agent and bailee of
the trustee.
First loss facility
First level of credit enhancement
offered to an SPV as part of the process in
bringing the securities issued by SPV to
investment grade.
Second loss facility

Credit enhancement providing the
second or subsequent tier of protection to an
SPV against potential losses.
Value at Risk (VAR)
VAR is a single number (currency
amount) which estimates the maximum
expected loss of a portfolio over a given time
horizon (the holding period) and at a given
confidence level. VaR is defined as an
estimate of potential loss in a position or
asset/liability or portfolio of assets/liabilities
over a given holding period at a given level of
certainty. The following are the three main
methodologies used to calculate VaR:
Parametric Estimates Estimates VaR using
parameters such as volatility and correlation.
Accurate for traditional assets and linear
derivatives, but less accurate for non linear
derivatives. Monte Carlo simulationEstimates VaR by simulating random scenarios
and revaluing positions in the portfolio.
Appropriate for all types of instruments, linear
and nonlinear. Historical simulationEstimates VaR by reliving history; takes actual
historical rates and revalues positions for each
change in the market
Commercial real estate
commercial real estate is defined as
fund based and non-fund based exposures

India
secured by mortgages on commercial real

estates (office buildings, retail space, multipurpose commercial premises, multi-family
residential buildings, multi-tenanted
commercial premises, industrial or warehouse
space, hotels, land acquisition, development
and construction etc.)
Banking Ombudsman Scheme 2006
The Banking Ombudsman Scheme

enables an expeditious and
inexpensive forum to bank customers
for resolution of complaints relating
to certain services rendered by banks.
The Banking Ombudsman is a senior
official appointed by the Reserve Bank
of India to redress customer
complaints against deficiency in
certain banking services.
All Scheduled Commercial Banks,
Regional Rural Banks and Scheduled
Primary Co-operative Banks are
covered under the Scheme.
The Banking Ombudsman does not
charge any fee for filing and resolving
customers complaints.
The amount, if any, to be paid by the
bank to the complainant by way of
compensation for any loss suffered by
the complainant is limited to the
amount arising directly out of the act
or omission of the bank or Rs 10
lakhs, whichever is lower.
The Banking Ombudsman may award
compensation not exceeding Rs 1 lakh
to the complainant only in the case of
complaints relating to credit card
operations for mental agony and
harassment.
If a complaint is not settled by an
agreement within a period of one
month, the Banking Ombudsman
proceeds further to pass an award.
Page 32 of 33
Before passing an award, the Banking

Ombudsman provides reasonable
opportunity to the complainant and
the bank, to present their case.
If one is not satisfied with the decision
passed by the Banking Ombudsman,
one can approach the appellate
authority against the Banking
Ombudsmens decision. Appellate
Authority is vested with a Deputy
Governor of the RBI.
If one is aggrieved by the decision,
one may, within 30 days of the date of
receipt of the award, appeal against
the award before the appellate
authority.
IFSC (Indian Financial System Code):
Indian Financial System Code is an

alpha-numeric code that uniquely
identifies a bank-branch participating
in the NEFT system.
IFSC is used by the NEFT system to
identify the originating / destination
banks / branches and also to route
the messages appropriately to the
concerned banks / branches.
This is an 11 digit code with the first 4
alpha characters representing the
bank, The 5th character is 0 (zero).and
the last 6 characters representing the
bank branch.
For eg. SBIN0001652, SBIN is State
Bank of India's Code, 0 is a control
number and 001652 is the branch
code.
RBI Rates as of November 28, 2014

REPO Rate: 8% remained Unchanged
Reverse Repo Rate: 7% remained Unchanged
SLR: 22% Unchanged
CRR: 4% remained Unchanged
MSF: 9% remained Unchanged
Bank Rate: 9% remained Unchanged
ASIAN INFRASTRUCTURE INVESTMENT BANK

India along with 20 other countries on 23 October 2014 signed an agreement to become the
founding member of the China-backed Asian Infrastructure Investment Bank (AIIB).
The AIIB bank aims to aid the infrastructure development in the Asian region and reduce the
dependence on Western-dominated World Bank and IMF.
The agreement was signed by the Usha Titus, Joint Secretary, Economic Affairs division of the Union
Ministry of Finance on behalf of India at a special ceremony in Beijing at the Great Hall of the People.
On the Chinese counterpart, the agreement was signed by the Chinas Vice Finance Minister Jin Liqun.
He was also the former Vice-President of the Asian Development Bank and he has been appointed as
the Secretary General of AIIB.
The AIIB is in addition to the BRICS (Brazil, Russia, India, China and South Africa) Development Bank
formed in 2014.
The bank will be based in Shanghai. It is set to commence its operations with an Indian as its
President.
About Asian Infrastructure Investment Bank
The Bank will be headquartered in Beijing.

The bank is expected to be operational by 2015.
The authorised capital of AIIB is 100 billion US Dollar and the initial subscribed capital is
expected to be around 50 billion US Dollar. The paid-in ratio will be 20 per cent.
Voting rights are to be decided after consultations among the members over fixing the bench
marks which were expected to be combination of GDP and Purchasing Power Parity (PPP).
Based on this formula, India will be second largest share holder of the bank after China.
The bank will help to bridge the infrastructure deficit by playing a complementary role along
with other financial institutions like ADP and IMF and work for good governance.
Besides India and China, other AIIB members are Vietnam, Uzbekistan, Thailand, Sri Lanka,
Singapore, Qatar, Oman, the Philippines, Pakistan, Nepal, Bangladesh, Brunei, Cambodia,
Kazakhstan, Kuwait, Lao PDR, Malaysia, Mongolia and Myanmar.
Page 33 of 33
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Interview

Upcoming IBPS PO 2014 Interview

Publication Date 24th Dec, 2014

There are several different types of interview/questioning techniques:

Preparation is essential if you want to do well. Have a look at the checklist:

Re-read your resume.

Stage 2 - First Impressions Count

Arrive in good time

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Stage 3 - The Interview

Stage 4 - The Final Stage

Know when the interview is over - read employer's body language

Questions You May Wish To Ask

Major current projects

What you would be doing

Who would you work with?

Where would you be based?

Questions You Can Prepare For

Tell us about yourself

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What are your strengths and weaknesses?

Dressing for an interview

Conservative two-piece business suit (solid dark blue or grey is best)

Necktie should be silk with a conservative pattern

Always wear a suit with a jacket; no dresses

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Why should we hire you?

Why do you want this job?

What are your weaknesses?

Why did you quit your previous job?

Where would you be five years from today?

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Banking Interview Questions

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Facts On Payment Banks

History of ATMs and White Label ATMs(WL-ATM/WLA)

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BANKING & FINANCIAL TERMS

Reverse Repo Rate

term asset liability mismatches more effectively

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BANKING & FINANCIAL TERMS

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BANKING & FINANCIAL TERMS

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BANKING & FINANCIAL TERMS

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BANKING & FINANCIAL TERMS

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BANKING & FINANCIAL TERMS

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BANKING & FINANCIAL TERMS

5. Commercial Paper:-Commercial paper is an unsecured promissory note with a fixed maturity of 1 to

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BANKING & FINANCIAL TERMS

Foreign Exchange Reserves:-Foreign-exchange reserves (also called forex reserves or FX

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BANKING & FINANCIAL TERMS

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