banking terms and basics

7/30/2019 Banking Terms and Basics

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BANKING


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Author:Naveenkumar_DV

Date: 9/7/2010

Keywords: Basics of Banking

Target readers: ALL

Project: BMCBFS2D

Declaration: I/We hereby declare that this document is based on

my/our personal experiences and/or experiences of my/our

project members. To the best of my/our knowledge, this

document does not contain any material that infringes the

copyrights of any other individual or organization including the

customers of Infosys.


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DEFINITION

What is Banking?

The Bank is systematically accepts the Deposits/Lends the money

from/to the Public as it pays the interests to Deposits and Collects the

interest for lending money

(Or) Primary function of Banking is Lending the money to the

public/Corporate with an intension of getting the interest and Deposit

money from public/Corporate by providing some interest

The bank will lend the money to the public with high interest and depositthe money and provide the less interest as per the Bank regulations to

get the profits

All the Banking regulations are under RBI


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TECHNICAL TERMS WE USED IN BANKING

Repo rate: if RBI lends the money to a bank then RBI will collect some

Interest from the Bank then its called as Repo rate

Reverse Repo rate: if a bank deposits the money in RBI then it will pay

some interest to the Bank then its called as Reverse repo rate

Base Points: If there is any change in the Interest/Deposit rate then we will

say it as Base points.

Ex: if a bank wants to increase the lending interest rates by 50 paise, thenthey will announces it as we are hiking the lending rates for loans as 50

base points


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TYPES OF BANKING

Retail Banking

Retail banking refers to the mobilization of deposits from individuals and

providing loans to individuals and small businesses. Retail banking is

characterized by large volume of small value transactions.

For example, the deposit accounts, personal loans to individuals, credit

cards, home mortgage loans, etc come under retail banking.

Wholesale Banking

Wholesale banking is also known as business to business banking. Itrefers to the transactions between banks and large customer like

corporate and government involving large sums of money. It also

includes the transactions between banks.

It includes general lending to businesses as well specialized services

like mergers and acquisitions advisory services, leasing, investmentmanagement services, etc.


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Universal Banking

Universal banking is the combination of retail and wholesale banking. It

includes activities like general deposit taking and lending, trading in

financial assets, brokerage services, investment management,

insurance, foreign exchange transactions, etc.

Online Banking

Online Banking refers to do the all the Transactions from one bank to

another as well as internally using the e-banking technology. Using thisbanking we no need to go to the bank for deposits

Now a days this technology playing a key role in all the banking.


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The Process involved in the e-banking while doing the transaction

internally, then the money will directed through the same bank only.

When we are doing the transaction from one bank to another then the

money will goes to RBI then from there the money will be credited to thedestination account holder.

The Retail banking provides loans to the customers and also offers the

Deposits from customers.

Note: the person should have account in the bank in which he is going totake the loan as well as for deposits also.


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TYPES OF DEPOSITS


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DESCRIPTION

Savings Account:

The savings account is normally offered to the public /individuals those

who wants to open an account.

In this type of account the Bank will pay some interest to the account

holder.There will be some limit for the transactions in this account on both

withdraws and amount

Current Account:

The Current account is normally offered to the Corporates those who

are needs to do large transactions.In this type of account the bank will not going to pay the interest for the

money

There will be no limit for transactions, since they need to do large

amount transactions


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SOME KNOWLEDGE THINGS

When u called a country is in Recession?

A country is in recession when it posts its GDP as Negative

continuously for 3 times .

What are the different stages in Economy after coming from Recession?1. Recession

2. DIP

3. Neutral

4. Recovery

5. Growth/Developed

banking terms and basics

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