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Bank accounts represent financial accounts in banks in which financial institutions hold money for account holders, resulting

in a debt balance or positive balance. Alternatively, banks loan money to customers, and this leads to a credit or negative balance. Bank accounts are used to deposit savings, unlike brokerage accounts which are used to sell and buy securities. Savings and checking accounts are two main types of bank accounts. Broadly speaking, a bank account refers to a monetary account, designed to process multiple transactions. Bank accounts make it possible to deposit money, thereby earning monetary returns. Some accounts come with debit and credit facilities and cannot fit neatly in a polarized definition. They have different names depending on the country where you open an account. For example, checking accounts in Canada and the United States correspond to current accounts in the United Kingdom. There are different types of bank accounts, and some may work better for you than others. If you choose a checking account, you can loan or give money, pay bills, and make purchases. Checks can be used for money transfers as well. You can transfer money from your account to a bank account held at a different bank. Typically, you will be allowed to make as many withdrawals and deposits as you need to. Many bank clients also choose to deposit and withdraw money through automatic teller machines. A savings account is another type of account that pays interest. Account holders cannot write checks or otherwise use the money directly. With this account, holders deposit some of their liquid assets and earn monetary returns in exchange for that. Money cannot be called in immediately, and you cannot free up cash without incurring a penalty fee. Banks typically limit the number of financial transactions (deposits and withdrawals) that can be made every month. At the same time, holders of savings accounts may be allowed to withdraw money and make deposits through ATMs. Passbooks are provided with savings accounts, helping account holders keep track of the transactions they make. Another type of bank account offered by some institutions is the no-frills bank account. It is a basic account that allows bank clients to cash checks and pay bills without having to pay high fees for these transactions. If you choose such an account, you may be allowed to make only a limited number of withdrawals and deposits. The number of checks to be processed will also be limited within a given month. No-frills bank accounts typically dont go with interest. A money market account is still another deposit account offered by banking institutions. They invest in various corporate and government securities, thus paying interest to depositors. Interest paid is determined by the current interest rates set on the money markets. Money market accounts differ from other bank accounts in that they offer a higher interest rate and thus, a higher minimum balance is required. In this way, bank clients avoid paying monthly fees and earn interest. Finally, certificates of deposit are yet another type of bank account in which bank clients deposit certain amount of money for a specified period of time. You cannot withdraw the money from the account before the maturity date. Some banking institutions allow this, but you will be charged a penalty fee. The interest banks pay on certificates of deposit is normally higher, compared to other types of accounts. However, the interest is based on the period of maturity, meaning that the longer it is, the more the account will earn.

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account statement
Banking Terms -> account statement

a statement of recent transactions and the resulting balance; "they send me an accounting every month"

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agent bank
Banking Terms -> agent bank

a bank that acts as an agent for a foreign bank a bank named by a multi-bank lending syndicate to protect their interests

wire transfer
Banking Terms -> wire transfer

Wire transfer, also known as credit transfer, refers to a method of transferring funds electronically from one institution or person to another. Wire transfers are made in two different ways. Cash can be transferred at a cash office or from one bank account to another. Compared to bulk payments, wire transfer systems are intended to offer individualized transactions. Examples of such systems are Check21 and ACH. ACH stands for Automated Clearing House, which functions as an electronic network for making transactions in the US. This system processes debit and credit transactions in batches and in large volumes. Credit transfers encompass vendor payments and direct deposits. Direct debit transfers include, on the other hand, mortgage loans, insurance premiums consumer payments, and other types of bills. Check21 is another name for Check Clearing for the 21st Century Act, which was enacted in 2004. Under this law, recipients are allowed to create digital versions of paper checks, which are known as substitute checks. In this way, further processing of the physical document is not necessary. The effects of this become visible to consumers when some checks no longer come with their monthly statements. At the same time, others are returned. In addition, under this law, mobile phones and computer scanners cannot be used to capture checks images with the purpose of depositing them electronically. This is called remote deposit. Basically, wire transfers are transfers of money done by a bank, and both recipients and senders do not touch the funds. It is not difficult to make a wire transfer, and the first step is to contact your financial institution online or by phone and provide the required information. This includes the name of the company or person to have the money wired to, the routing number of the bank, together with the phone number and address of the latter, the account number of the recipient, and the contact details of a person to whom questions can be presented, if needs be. The next step is to determine the sum of money to be wired and when the recipient needs to have it sent. The transaction is to be completed through your banking institution. Some banks allow clients to make transactions over the Internet, but other entities require that clients contact them by fax or phone. Finally, you have to confirm that the wire transfer took place. Request a transfer confirmation to be emailed or faxed or call the receiving bank and ask for confirmation. Wire transfers are a popular payment method, along with personal account management, balance transfers, and credit cards. With account management, clients can transfer money between savings and checking accounts. In fact, by swiping an ATM card, bank clients authorize a wire transfer from their bank accounts. At point of sale, transfers are free-ofcharge for customers, but a fee may be charged for other types of transfer. For example, it will be based on percentage of the amount to be transferred, or it can be a flat amount. This is oftentimes the case with credit card balance transfers.

Western Union and some other companies feature an anonymous type of wire transfer. Customers can go to Western Union, for example, and send certain amount of money to a branch of Western Union in Jamaica. Even if the office they visit is in Chicago, they will send cash and pay all applicable fees. The wire transfer will be made electronically. Wire transfers have advantages and disadvantages. They are handy in case you do not have a bank account. However, if you make a wire transfer to buy something from a private seller, they may provide wrong or false information. Payday Loan Canada

time draft
Banking Terms -> time draft

a draft payable at a specified future date

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thrift
Banking Terms -> thrift

extreme care in spending money; reluctance to spend money unnecessarily

stop payment
Banking Terms -> stop payment

A stop payment occurs when an accountholder asks their bank not to honor some payment. Stop payments can be made before the receiving party cashes a check and after the latter is delivered. Stop payment orders are mainly governed by banking regulations and state laws, and they can vary by bank and state. Banking institutions usually charge a fee to issue a stop payment. If the check is issued to pay back a legitimate debt, stopping payment may be regarded as an act of fraud. State fraud laws determine if this is considered a criminal act, and laws differ from one state to another. Bank clients can request a stop payment in different ways, depending on the bank. Clients of Wachovia Bank, for example, can instruct the bank to issue a stop payment online. They can simply login to online banking using their password and user ID. The next step is to click customer service on their my account page and click on stop payment. The bank will ask why the accountholder requests a stop payment order. In three or more steps, users can submit all the necessary information, and the stop payment request will be processed. The bank will typically request details on the pre-authorized payment or check, which has to be stopped, including the amount of payment and the payee. The bank will also need information on the bank account from which the amount has been sent. While banks differ with regard to requesting a stop payment order, they cannot stop the payment if the check has been paid already. If you have received money by mistake, the sender has to request them back. In general, financial institutions include a provision on stop payment forms, which states that a stop payment cannot be guaranteed before the bank

circulates the information around its offices and branches. Thanks to computer networks, banking institutions are able to quickly issue a stop payment order. However, if the clients bank already paid the check, and you cashed it, this money is in your bank account and not the senders. Usually, you have to call or visit your bank in order to request a stop payment. After you have made a request to stop a payment, it is a good idea to keep track of the time and date you made the request. Make note if you talked to a bank employee. If you requested a stop payment over the Internet, print the confirmation page. If you cannot get your check back, you may want to send a written request to your financial institution. Keep in mind that requests made by phone are valid up to 2 weeks. Written requests are followed for much longer (6 months). So, checks have to be void within this time frame. The bank will charge you a fee for each stop payment you make. You need to resubmit your request for a stop payment every 6 months until your check is finally returned. The fee you will pay to the bank to issue a stop payment depends on the bank and the state where you live. Customers of Bank of America are charged $20 while those of Washington Mutual are charged between $18 and $29, depending on where they reside. In Maryland, you will be charged around $30 while in Oklahoma you will pay about $25. Note that payments cannot be stopped on a certified cashiers check. If you have a standard check, you may include in the memo line: not valid after 6 months. This helps, but you wont be protected 100 percent. Payday Loan Canada

sight draft
Banking Terms -> sight draft

a draft payable on presentation

retail banking
Banking Terms -> retail banking

Retail banking is a type of banking with which financial transactions are executed with clients instead of other banks and corporations. Products and services provided include credit and debit cards, transactional and savings accounts, personal loans, mortgages, and many others. Retail banking is designed as a one-stop location for a number of financial products and services. Some retail banks even offer various investment services, including brokerage accounts, wealth management, retirement planning, and more. Some banks also have commercial and merchant branches that cater to businesses. The most basic products offered by retail banks include transactional and savings accounts. However, retail banks aim to offer a large array of products to attract customers and maintain customer loyalty. This diversification offers more opportunities for financial institutions to profit. In addition to basic services, banking establishments offer retirement accounts, certificates of deposit, car and home loans, safe deposit boxes, and others. Banks offer some or all of these services depending on the financial and banking regulations. However, they often partner with other banks and financial entities to offer more services. It can be safely said that retail banks aim to offer customers financial products and services for life, from college loans to retirement

accounts and trusts. It should be noted that retail banking is a very competitive field. With so many persons requiring retail banking products, many are shopping around to find the most lucrative offers, as well as the best rates, incentives, rewards plans, and deals. Retail banks compete by offering perks (e.g. credit monitoring, travel credit cards), low interest rates, and other services aiming to attract new customers. Many retail banks offer incentives such as balance transfer credit cards which allow clients to transfer balances to credit card accounts at their bank. Some banking establishments are, in fact, international corporations with many offices and branches. Other retail banks only have national presence. Some of them may be single-branch banks or they may operate regionally. Community banks, for example, may provide products and services intended to meet the needs and requirements of community members. These may include home or business loans, mortgages, and other financial products. In fact, community banks often offer better interest rates than the big banks. Community development banks are one type of banks in the United States that work to boost economic development and growth in moderate- and low-income communities and geographic areas. They aim to serve the members of these communities and are certified by the US Community Development Financial Fund. To become certified, community development banks should have as their main goal community development. These banks offer a variety of retail banking services to customers in economically underdeveloped areas. Postal savings banks are another type of retail banks run by postal savings systems. Their mission is to offer clients a convenient and save way to save money. In the USA, the Postal Savings System operated between 1911 and 1967, offering depositors annual interest of 2 percent. Private banks are another distinct type of retail bank, which are owned by general or individual partners. Only a few such banks operate in the United States, such as Brown Brothers Harriman & Co. Brown Brothers operates through 3 businesses commercial banking, wealth management, and investment banking. These businesses serve high net worth clients and corporate institutions. Savings banks also function as retail banks that accept savings deposits. They offer a variety of products and services, among which insurances and credit, savings products, and payments. These are available to medium-sized and small enterprises and individuals. In the US, for example, savings and loan associations accept deposits and offer different loans and mortgages.

reconciliation
Banking Terms -> reconciliation

getting two things to correspond; "the reconciliation of his checkbook and the bank statement"

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private banking
Banking Terms -> private banking

Private banking is a term that encompasses different financial, investment, and banking services offered to high net worth individuals. Banks provide personalized services to individuals with sizeable assets through bank advisors. With regard to wealth management, high net worth individuals have more wealth than regular bank customers and enjoy access to

a large array of alternative and conventional investment instruments. Private banking aims to offer such clients the best products and services, suited to their individual requirements. Bank advisors provide investment-related advice, customized financial solutions, credit and liquidity management, estate and tax planning, retirement planning, and much more. Banking teams operate on the domestic and international markets to provide investment and banking solutions to persons from diverse backgrounds. Structured products are featured with returns linked to currencies, basket of stocks, single stocks, equity indices, interest rates, etc. Investment protection is also designed to fit the requirements of individual clients from 0 percent to 100 percent. In addition, investment products may be offered with terms from 1 month to 10 years. Private banking also encompasses alternative investment products which are not associated with traditional asset classes such as bonds and equities. High net worth individuals enjoy access to private real estate and equity funds and hedge funds. Bank advisors also offer a large selection of financial planning services, including business and family protection, pension consolidation, saving for retirement, and income planning. Business and family protection services are designed to protect high net worth individuals and their families from financial hardship. Income planning aims at income generation through developing and implementing a personalized investment strategy. Pension consolidation is a service intended for persons with multiple pension plans. Bank advisors help high net worth individuals avoid lost opportunities and problems by consolidating pension plans into a single one. Finally, those who are saving for retirement are offered help in designing a plan to build up their wealth and enjoy it post retirement. A number of financial institutions in the US offer private banking to high net worth clients, among which Morgan Stanley, Bank of America, Wells Fargo, JP Morgan, and others. Other large private banks with a global reach are Deutsche Bank, Royal Bank of Canada, and Credit Suisse. Their customers pay based on the performance of an annual portfolio, on the number of transactions made, or a flat fee, which is an annual percentage of the amount of investment. Generally, private banking aims at wealth management, wealth protection, and managing the impacts of wealth, including tax advisory, property investment, philanthropy, and media. Influential, wealthy families enjoy wealth advisory services that help them build wealth structures and achieve their entrepreneurial dreams. Wealth advisory services encompass philanthropic and art advisory, trust services, sports advisory, and others. Trust services, for example, include investment management and fiduciary services, estate planning strategies, and investment platforms. Trust officers specialize in family and fiduciary wealth transfer structures, including charitable trusts, grantor trusts, private foundations, and dynasty trusts. Wealth advisory also encompasses aircraft advisory, with dedicated advisory teams offering personalized assistance and advice on purchasing a private aircraft. Advisors oversee the initial selection and assessment of aircraft and develop a financial strategy to fit clients financial circumstances. Art advisory aims to help high net worth clients build and maintain art collections. Advisors assist established and new collectors in managing collection administration and give advice on philanthropic and estate planning. Artwork is also accepted as collateral when applying for loans. Finally, sports advisory encompasses the sale and purchase of franchises and sports assets. Bank advisors offer interest-rate hedging and valuation services, as well as advice on renovated and new venues. Payday Loan Canada

overdraft
Banking Terms -> overdraft

Overdrafts occur when bank customers withdraw cash from their account, with the balance going below zero. An overdraft is basically a form of credit extended by a creditor when the account balance reaches zero. Overdrafts allow bank clients to withdraw money even when there are no funds in the account. In other words, banks allow their clients to borrow certain amount of money. With overdraft accounts, financial institutions cover checks to prevent them from bouncing. Given that overdrafts are a type of loan, bank clients pay interest on the overdrafts loan balance. On the other hand, the interest rate is often lower compared to credit cards. Overdrafts may occur for various reasons, among which not maintaining proper account register, merchant error, unexpected electronic withdrawals, and more. When the accountholder fails to maintain his account register well, overspending is due to negligence. Another reason for overdraft is, in fact, the possibility to overdraw money using an ATM. Some ATMs and banks allow withdrawals even when cash is insufficient in the account. ATMs are sometimes unable to communicate with the bank of the accountholder, with this resulting in automatic authorization of withdrawals. With temporary deposit holds, banks can put on hold a deposit that has been made to an account. Bank policies or Regulation CC may be responsible for that. Given that money is not immediately available, this will result in overdraft fees. Unexpected electronic withdrawals are yet another reason for overdrafts. This may occur when the trial period of some recurring service ends. Overdrafts may also occur due to direct deposit chargeback, recovering overpayment, or wage garnishment. Finally, overdraft may occur due to merchant error, with a merchant wrongly debiting a clients account. On the other hand, it can be said that an overdraft acts like a safety net on ones account. Clients are allowed to borrow up to a specified limit whenever they do not have money in the account. This is useful in covering short-term financial problems. Keep in mind that some bank accounts come with an overdraft facility, but this is not necessarily true for all accounts. If your account doesnt, you need to ask your banking institution for an overdraft facility. The banks decision will depend on the clients record, and he may be required to pay a fee for setting it up. You will not have to use it unless you need an overdraft. Moreover, you will not be required to pay additional charges in case of accidentally overdrawing. Naturally, clients have to pay the overdraft and interest charges. Rates depend on the bank and can be variable and fixed. In addition, a monthly charge and arrangement fee may apply. If you dont have the banks authorization to overdraw, the charges may be quite high. Your financial institution may not pay direct debits, bounce checks, and charge a fee for all refused transactions. Administration fees may be set in place as well. Overdraft protection is mainly offered by US financial institutions. Overdraft protection, also called courtesy pay program protection, covers the payment of items when money is not sufficient for given withdrawal. Overdraft protection may cover different withdrawals, including checks, electronic transfers, debit card payments, and ATM withdrawals. In simple words, overdraft protection allows for the payment of authorized items rather than being bounced or returned. Finally, there are overdraft lines of credit, which are extended in compliance with the Truth in Lending Act. Clients can apply for an overdraft credit line by completing and signing an application. Based on the clients credit rating, banks will deny or approve the application.

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offshore banking
Banking Terms -> offshore banking

Offshore banking is a type of banking conducted at an offshore bank, which is a bank located outside the depositors own country, usually in an area where the taxes are low, and there are other financial and legal benefits. These benefits include, but are not limited to greater privacy due to bank secrecy, easy access to deposits and protection against local economic, financial, or political risks. The term offshore banking is quite fitting because most offshore banks are located in islands, as was the very first one, from where the term originated. However, the term today has come to include banks in Switzerland, Luxembourg, and other landlocked countries in Europe and other places around the world. Accounts in offshore banks are subject to personal income tax on interest just like everywhere else. In most countries, the income tax does not differentiate between interest earned in local and offshore banks. For instance, clients subject to US income tax have to declare all offshore bank accounts that they have in other countries. Indeed, offshore banks are not bound by law to report income to tax authorities, but account holders are obligated to declare this income nonetheless. Offshore banks offer personal and corporate accounts and other financial products. These may include company incorporation, savings accounts, payment cards, and others. Some banks offer term deposits with interest rates that can be as high as 5 percent. Offshore banks also offer relationship management advice and wealth management advice, suitable for high net worth clients. Online banking is another service offered by offshore banks. Their customers can access both corporate and personal accounts and monitor activity, exchange currencies, and make deposits. In addition, clients can transfer funds around the globe and communicate with bank officials online. Benefits featured by offshore banks depend on the institution and its location. They may include zero tax on capital gains and dividend income, as well as no shareholder requirements. Proponents of offshore banking criticize attempts to control this branch with the argument that the institutions involved only want to access this money. What is more, offshore banks are seen as a threat to onshore bank systems, leading people to believe that these countries are trying to get ahead of the competition this way. One advantage of offshore banking is that it can grant access to financially and economically stable jurisdictions. People living in locations characterized by political turmoil can benefit from offshore banking as well and prevent their assets from being frozen, confiscated or seized. In all honesty, however, the banking systems in developed countries are pretty stable as well. Sometimes offshore banks offer higher interest compared to onshore ones due to the absence of government intervention. Proponents of offshore banking frequently describe government regulation as a type of tax on domestic banks, lowering interest rates on deposits. There are few industries that are open to remote nations in terms of being able to compete fairly, with tourism being the only other one. Some offshore banks also offer services and extras that traditional banks do not, such as lower rate loans and anonymous bank accounts. Offshore banking has some downsides too. These accounts are usually less financially secure and are often associated with the underground economy and organized crime. In addition, due to their location, offshore banks are many times costly to visit, and access to information may be more limited. Global communication technologies have resolved this problem to a great extent, with communication taking place online and by phone. Offshore banks also offer accounts that can be set up by mail, phone, and online. Payday Loan Canada

money market account

Banking Terms -> money market account

A money market account is a type of depository account featured by banks that invest in corporate and government securities. Interest is paid to depositors, which depends on the current interest rates set in the money markets. Money market accounts are a good option for persons who want to benefit from a higher rate of interest, but they also go with a higher minimum balance. Money market accounts are basically savings accounts intended for larger deposits. They are also known as money market demand accounts with a minimum balance of at least $500. However, some banks require that the balance be much higher. There are also restrictions on the number of transaction that can be made within one month. The money kept in money market accounts is used by banks to make money, and interest rates are higher. Accountholders can make up to 6 withdrawals a month, and exceeding this number of transactions results in penalty fees. Financial institutions are required to discourage their clients from going over these limits. They can either close bank accounts or impose high fees. Banks may or may not count ATM transactions toward the total of transactions. In addition, these accounts are not regular transactional accounts, and different rules apply compared to savings and checking accounts. For example, accountholders can write up to 3 checks every month. The money held in money market accounts is insured by FDIC; so, even if some financial institution goes out of business, depositors money is still safe. Credit unions and bank send accountholders a statement every month, either by email or by mail. This statement includes interest earned, transactions, and fees charged to the account. It is a good idea to check if you have written down all deposits and withdrawals in your register by comparing the entries with the statement. The process of matching them up is known as reconciling. If some entries are missing or incorrect, you have to find what they are and add or correct them. While bank errors are possible, they are not likely. Money market accounts represent premium accounts and are not the same as money market funds. The latter are investment mechanisms which feature higher returns than premium accounts. Basically, money market funds are open-ended mutual funds investing in debt securities, including commercial paper and treasury bills. Financial intermediaries benefit from them because these funds provide liquidity. In contrast, it is easy to open a money market account at most banks. Money deposited in the account is typically put into investment instruments such as treasury bills, certificates of deposit, and other investment vehicles, which are considered safe. Moreover, these are short-term low risk investments. Accountholders are rewarded for keeping their money at the bank and receive a premium interest which can be twice as higher compared to a regular account. It should be noted that there is a difference between CDs and money market accounts. CDs or certificates of deposit represent debt instruments that pay at certain rate of interest. Holders lend the financial institution money for a specified period of time so that they can be paid higher interest. In general, the interest rate increases with the maturity of CDs the longer the term, the higher the interest rate. Money market accounts feature most of the benefits that go with CDs, along with some features of checking accounts. An account can be opened at most banks and other financial establishments which will issue a checkbook to withdraw money from the account. Finally, depositing money is not different from depositing into a checking or savings account, and money becomes available for alternative investment instruments.

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letter of credit
Banking Terms -> letter of credit

A letter of credit represents a letter from a banking establishment which guarantees that a payment made by a buyer to seller will be received in the specified amount and on time. In case that the buyer cannot pay for the item purchased, the bank has to cover the purchases remaining amount. International transactions often involve letters of credit to make sure that payment has been made. The nature of international transactions makes letters of credit important due to factors like different laws, distance, and the impossibility to know all parties in person. Banks act on behalf of buyers as to guarantee that sellers will be paid only after the ordered items have been shipped. Letters of credit are issued by financial institutions most of the time, serving as payment for certain transactions. They are employed in transactions of considerable value in international trade, and the Uniform Customs and Practice for Documentary Credits is applicable. In addition, letters of credit are employed in land development as to make sure that public facilities, which have been approved, will be constructed. These include storm water ponds, sidewalks, streets, and others. In most cases, the letter of credit is irrevocable, meaning that it is not possible to cancel or amend it without the consent of the confirming bank, the issuing bank, and the beneficiary. The beneficiary has to show certain documents as to receive the payment, including bill of landing, commercial invoice, and documents which prove that the shipped item was insured against damage or loss. Banks issue letters of credit only after making sure the buyer will pay. Some clients have deposited or have to deposit money, which are sufficient to cover the payment. Other buyers make use of a line of credit to do that. Sellers, on the other hand, have to make sure that they deal with a legitimate bank. Then, sellers are paid only after they perform specific actions, to which both parties (seller and buyer) have agreed to. These may include the delivery of merchandise to a specific location, thus satisfying the letter of credits requirements. Once shipment is made, the seller is sent documentation which proves delivery. The item shipped must be paid even if something has happened to the merchandise. The seller should be paid even if the ship carrying the item sinks. The bank reviews the documentation proving that the seller has carried out the required actions. Then payment is made and the quality of goods is not taken into consideration. Letters of credit are important in international trade, but sellers should keep the following in mind. They have to read all requirements pertaining to the letter of credit before proceeding with the deal. Moreover, sellers have to make sure they understand what documentation is required. There are certain time limits, and sellers should check if they are reasonable. Finally, sellers should ask their service providers how long it will take to produce the required documentation for them. Documents that have to be presented include official documents such as origin certificate, embassy legalization, license, inspection certificate, etc. The type of documents to be presented is open to negotiation. Shipping documents may have to be provided as well, including insurance certificate, transport document, and other legal or commercial documents. In addition, financial documents, commercial documents (e.g. packing list, invoice), and insurance documents may have to be provided as well. Insurance documents include a certificate or insurance policy rather than a cover note. With these in mind, the payee has to present documentation which proves that the items were sent, rather than showing the actual items. Payday Loan Canada

investment banking

Banking Terms -> investment banking

Investment banking is a banking field that focuses on assisting companies to obtain funds. Apart from funds acquisition, investment banks provide advice on a variety of transactions that businesses make. Banks specialized in investment or commercial banking in the past. In

fact, it was illegal for banks to engage in both investment and commercial banking in the USA until 1999. This became possible with the Gramm-Leach-Bliley Act. Todays commercial banks offer various investment products in order to become one-stop shops for their clients. Investment banks have two possible venues to generate funds. One way is to offer stake in the company in exchange for private equity or venture capital. Alternatively, banks generate funds on the capital market by drawing on public funds and trading stock. Banks of this variety cater to a variety of stock holders, among which governments, businesses, individuals, and non-profit organizations, helping them raise money. Among their clients are municipalities, states, educational institutions, healthcare organizations, investors, and banks. Investment banks engage in various activities, including investing and lending assets, managing investment portfolios, and issuing, trading, buying, and selling bonds and stocks. Investment banks also offer advice on various financial transactions such as mergers and acquisitions and act as trading intermediaries for their customers. Finally, investment banks conduct research as to develop opinions on economies, markets, and securities. Investment banks may follow two lines of business. First, they may trade securities for other types of securities or for cash. Second, they may invest in and promote securities through research and underwriting. Investment banks are not involved in these activities only. Merchant banking is a type of banking through which banks gain share ownership in exchange for offering capital. Examples of merchant banks are One Equity Partners and Defoe Frontier & Cie. Investment management is another branch that specializes in the management of different securities, including bonds and shares, as well as other assets. The aim is to meet the investment objectives of a variety of investors. These can be corporations, pension funds, insurance companies, and other institutions, as well as private investors. Investments can be made through mutual funds and other investment schemes or through investment contracts. Investment schemes are more common nowadays. Investment banks investment management units often function as separate divisions, such as Private Client Services and Private Wealth Management groups. Another sub-division of investment banking is global transaction banking, specializing in securities brokerage, custody services, lending, and cash management. Investment banking firms also specialize in consulting and giving advice to companies. To be able to do this, they follow the market to see when it is a good time to manage the public assets of companies and to make public offerings. An investment bank will normally offer buyand-sell advice to the businesses is represents. In general, full-service investment banks offer financial and advisory services and research on a wide variety of financial products, such as commodities, rates, currency, credit, and equities. Big investment banks include Citigroup, Barclays Capital, Merrill Lynch, JP Morgan, and others. Some investment banks are affiliated with big financial entities while others are large-cap advisory firms and independent investment banks. Examples of the latter are Thomas Weisel Partners, Robert W. Baird & Company, and others. Most investment banks maintain markets for securities, which have been previously issued, and specialize in broker/ dealer operations. Investment banks have an important role to play in corporate structuring and private equity placement. In contrast to traditional banks, these financial institutions do not generally offer loans or accept deposits. However, some investment banks offer products much like traditional banks. J.P Morgan, for example, not only specializes in risk management and strategic advice, but lends money to its customers. Payday Loan Canada Banking Terms -> forex

forex

Forex, also called currency market, foreign exchange market, and FX, is a decentralized currency trading market, functioning on a global scale. Financial centers around the globe serve as the meeting point of various sellers and buyers, with forex determining the relative values of various currencies. The main purpose of the currency market is to facilitate investment and global trade as it allows companies to convert currencies. The foreign exchange market is a place where participants exchange, sell, buy, and speculate on different currencies. Generally, this market is comprised of central banks, banks, investment management firms, and commercial companies. Investors, retail forex brokers, as well as hedge funds participate on it. With such a variety of participants, the foreign exchange market is regarded as the biggest financial market around the globe. Currency markets are considered to be efficient because they are liquid and large. It should be noted, however, that forex is not a single exchange. The foreign exchange market connects participants from all over the world via a network of computers. With its help, convertible currencies are bought and sold, and conversion rates are determined. A huge volume is traded every day, and only fifteen percent of it is traded for services and goods. The way the foreign exchange market functions is simple to understand. It you buy a currency when it is low and then sell it when it is high, you will make money, profiting from your investment. The tricky part is to know what factors have impact on the currency market, what moves it, and what direction it is going to move next. The foreign exchange market is open 24/7 unlike other financial markets. So, investors are not concerned with when the market will open. With four trading sessions around the world, however, it is a good idea to monitor it only when the busiest sessions take place. These are the sessions in London and New York. It is recommended to buy and sell currencies when both sessions overlap because the foreign exchange market moves a lot then. At the same time, the foreign exchange market is a busy place even during one of the sessions. Trading takes place only on working days because weekends are officially market holidays. Many dealers on the currency market offer leveraged trading. Leverage is a type of lending, with dealers multiplying investments so that even small moves in rates can bring investors considerable profits. At the same time, beginner investors should be careful because this type of trading is a risky business compared to unleveraged trading. The currency market is unique because of its features. Due to the large volume of trade, the forex market is quite liquid. Its continuous operation and geographical dispersion contribute to the currency markets uniqueness. Moreover, a number of factors have impact on exchange rates. The currency market also offers low margins of profit unlike markets that offer fixed income. The trading of forex derivative products, such as options on currency futures and currency futures is allowed in most developed countries. These states have capital accounts, which are fully convertible. Trading forex derivative products is not permitted in some emerging countries as to ensure control over their capital accounts. Other states have controls over their capital accounts but have allowed currency futures exchanges to be established. Among them are South Africa, Korea, and India. It should be noted that up to 90 percent of transactions on the foreign exchange market are speculative. In other words, traders only speculate on the movement of currencies. Of all participants, hedge funds are notorious for currency speculation, due to their ability to borrow huge amounts of money, preventing central banks interventions in support of any currency. Payday Loan Canada

float
Banking Terms -> float

the number of shares outstanding and available for trading by the public the time interval between the deposit of a check in a bank and its payment allow (currencies) to fluctuate; "The government floated the ruble for a few months"

Federal Deposit Insurance Corporation


Banking Terms -> Federal Deposit Insurance Corporation

FDIC is a US state corporation established under the GlassSteagall Act in 1933. The FDIC guarantees the security of citizens deposits in banks. At the present, the amount of $250,000 per account per bank is guaranteed and given back to the holder if the institution goes bankrupt. This law is extended only to banks that are members of the corporation. The law, which was passed in 1933, was a measure to counteract and prevent further incidences like the consequences of the Great Depression, when all people who had savings in banks lost them irrevocably. At present the Federal Deposit Insurance Corporation insures deposits at almost 8,000 institutions across the United States. No depositor has lost any funds due to bank insolvency since 1934, a fact the United States as a developed country is very proud of. It is not difficult to check whether certain financial institution is a member. Banks post emblems in each branch to affirm their FDIC membership. The Board of Directors has five members, three of whom are appointed by the US President with the agreement of the Senate. Their term of office is six years per person. No more than 3 members can be elected from one political party. Under the Banking Act of 1933, signed by President Roosevelt, the Federal Deposit Insurance Corporation was set up as a temporary government corporation, given the right to offer deposit insurance to banks, to monitor and control non-member banks, to establish a dividing line between investment and commercial banking, to ban financial institutions from paying interest on clients checking accounts, and to permit them to open branches nationwide if separate state laws allow it. The first major challenge that faced the Federal Deposit Insurance Corporation occurred in the late 80s and early 90s. At this time, there was a loan crisis in the United States, which also affected savings and commercial banks. Among the preventive measures taken was the 1989 Financial Institutions Reform, Recovery and Enforcement Act and other acts. It cost taxpayers around $150 billion to combat this crisis successfully. The next big challenge was the recent global downturn. 25 banks went under in 2008 and were taken over by the FDIC. In mid2009, the corporation implemented what is known as a legacy loan program. The aim of this program is for banks to get rid of liabilities in order to increase lending and raise new capital. The most recent development is that 157 banks with around $92 billion in assets in the US have become insolvent. FDIC maintains a failed bank list which is regularly updated. The list includes a number of banks, among which the Mountain Heritage Bank, Atlantic Southern Bank, First Georgia Banking Company, United Western Bank, and many others. The Federal Deposit Insurance Corporation is funded by member banks, and they have to meet certain reserve and liquidity requirements. Examiners visit member banks on a regular basis to make sure that they follow the established guidelines. In case a bank is unable to

comply with the guidelines, the corporation issues a warning. However, if the problems cannot be resolved, the Federal Deposit Insurance Corporation can force the institution to take certain corrective actions, like changing the management. Although this has happened on just a few occasions, FDIC can take measures that result in a banks closure. The reason is that FDIC works to maintain confidence in the banking sector. This objective is mainly attained by offering insurance to depositors and taking various measures to minimize the risk of bank failure. Payday Loan Canada

dishonor
Banking Terms -> dishonor

refuse to accept; "dishonor checks and drafts"

Payday Loan Canada

demand deposit
Banking Terms -> demand deposit

Demand deposit is a term which refers to an account in which money has been deposited and can be withdrawn without notifying the depository entity and at any time. With this type of account, persons can withdraw their money whenever required. This is the opposite to a term deposit which is not to be freely accessed over a specified period of time. Most savings and checking accounts represent demand deposit, with funds being accessible by account holders. Checking accounts are among the most common accounts that work on the demand deposit principle. Money can be withdrawn immediately after it has been posted to the checking account. Bank money in the form of demand deposits is held in commercial banks. It is the larger part of the money supply in states, with account balances of demand deposits being money. Money supply includes demand deposits and currency. Deposited money can be used to various purposes, such as payment for services and products, settling debts, etc. During periods of financial crisis, depositors withdraw their money which results in a reduced money supply. The opposite is true for periods of stability and growth. In general, depositors can withdraw their money without making a special arrangement with their credit union or bank. Withdrawals can take place if the balance is sufficient and the procedures of the bank are followed. Depending on the regulations of the financial institution, some exceptions may exist, as is the case with demand deposits including financial instruments that have not cleared before the money is released. Restrictions may also apply to checks by foreign financial institutions. Electronic funds transfer is a kind of demand deposit which is available for withdrawal within minutes. Electronic funds transfers are bank-to-bank transfers, which are pre-qualified by the sending institution. In many cases, receiving banks immediately post the funds. Electronic transfers of this type allow recipients to withdraw the full amount just minutes after the money has been posted. In general, withdrawals can be made in several ways. One way to do that is to present a check that is written, with money deposited in the bank account. The financial institution then checks

the available balance and if money is sufficient, the check is being cashed for the client. Using a debit card is another way to withdraw money from a demand deposit. Some restrictions may apply, for example, there may be a limit on the amount that can be withdrawn within a 24hour period. A third way to withdraw money is by transferring it from one account to another. Sometimes demand deposits are made into checking accounts. Clients may decide to transfer some or all of the money into a savings account. This can be done online, by phone, or at the local branch of ones bank. Basically, any account from which funds can be withdrawn on demand is a demand deposit. Money market accounts fall into this category. In contrast, certificates of deposit do not allow accountholders to withdraw their money until maturity. If money is withdrawn before that, the holder risks incurring fees and interest penalties. Money market accounts and savings accounts are both demand deposits, despite of some differences. They both pay interest on the money you have deposited. Money market funds and banks impose restrictions on withdrawals, and a minimum balance should be maintained. A charge of $5 usually applies if you fall below this minimum. Accountholders can make certain number of withdrawals free-ofcharge and once they reach the limit, a fee applies. In general, demand deposits are quite useful. With the help of online tools, accountholders can monitor transactions, transfer money and schedule payments as a way of managing their money. Payday Loan Canada

custodial account
Banking Terms -> custodial account

a brokerage firm account that parents have created for a minor

Payday Loan Canada

credit union
Banking Terms -> credit union

A credit union is a profit-sharing financial institution, which is democratically run and controlled by its members. Credit unions provide financial services and offer credit to their members. They operate to contribute to international and community development, with some credit unions being volunteer operations. Credit unions around the world vary widely in terms of size, from entities with several members to large unions with thousands of union members and billions of assets. In general, credit unions are smaller than banking establishments, especially in terms of assets. Three main functions of credit unions can be differentiated. First, they offer union members support and assistance in managing their financial situation, when necessary. Second, they provide low interest loans; and third, they encourage union members to save on a regular basis. In addition to low cost loans, union members enjoy other benefits, including insurance at no direct cost, personalized service, protection through NCUA insurance, and many others. Credit union membership is a convenient and easy way to borrow and save and an excellent source of financial information. On top of low interest rates on loans, some credit unions offer higher interest savings accounts than banks do. Savings are insured against theft and fraud. Truly, credit unions have also faced a rise in delinquencies during the financial crisis. At the same time, they have been less affected. A strong sense of responsibility for the community

makes members pay off their loans on time. Union members realize that they will affect other members by not paying off their loans. In should be noted that unions must be able to function on their own in a competitive market economy. Thus, most credit unions do not accept donations. Another distinctive feature of credit unions is that normally, only members of the union can borrow and deposit money with it. Credit unions market themselves as entities that are committed to their members financial wellbeing. To this purpose, they aim to offer excellent member service. They work to provide a broad range of savings and loan products, including share draft accounts, share accounts, online banking, share term certificates, and more. Union members make savings on a regular basis, as much or as little as they want. These savings are pooled together and given out as loans to other union members. Union members, who have made savings over some period of time can apply for a loan. They may be charged just 1 percent a month on the outstanding balance. The income of credit unions is in the form of interest that is charged on loans. The majority of credit unions offer products and services to individual clients only. Unlike them, corporate credit unions offer various services to credit unions, including service and product delivery, funds clearing tasks, operational support, and others. The largest US credit union of this variety is the U.S. Central Credit Union. Credit unions that focus on moderate- and low-income communities and people join the National Federation of Community Development Credit Unions, based in New York. It is a national trade association which provides technical assistance, training, education, and investments to community development credit unions across the country. Credit unions are supported by a variety of groups and institutions. These include community groups, churches, national consumer councils, and others. How to join a credit union? First, you will have to fill out an application form, which can be collected from a collection point. You will need to show some ID. Collection points are located in accessible places and some even work on Saturdays. Some credit unions organize sign up events as well. Payday Loan Canada7

compensating balance
Banking Terms -> compensating balance

a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line of credit at a bank; "the compensating balance increases the effective interest rate to the ban

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checking account
Banking Terms -> checking account

A checking account is a type of deposit account in a bank or another financial establishment, which allows for deposits and withdrawals. Money in checking accounts is liquid, meaning that the account holder can withdraw it using automated teller machines, checks, electronic debits, etc. Checking accounts are different from other types of bank accounts because they allow unlimited deposits and repeated withdrawals. In contrast, savings accounts may limit both. There are various types of checking accounts, including student accounts, business accounts, and joint accounts, all of which offer some special and similar features. Due to the high

liquidity that goes with checking accounts, the interest rate offered with them is not high. Checking accounts are also known as transactional accounts and demand accounts. Most banking establishments offer such accounts for no fee or minimal fee. Electronic banking services today allow bank customers to set up automatic payments with their checking accounts so that their monthly expenses are taken care of. Due to the low fees of checking accounts, big commercial banks consider them loss leaders. Naturally, the aim of most financial institutions is to attract clients to use their other, more profitable products. Examples of these are certificates of deposit, mortgages, and various loans. These transactional accounts are not to be used for the purpose of savings or earning interest. They are opened for the convenience of individual clients and businesses. Financial transactions appear in itemized lists at the clients passbook or bank statement. Checking accounts typically allow customers to receive and make payments by cash (bank notes and coins), pre-authorized or direct debit money orders and checks. Payments can also be made by giro or direct deposit (funds transfer), a debit or ATM card, standing order, or SWIFT, which is an international account-to-account transfer. The Banking Acts of 1933 and 1935 and Regulation Q prohibited the payment of interest on checking accounts by members of the Federal Reserve until recently. Banks have circumvented the restriction by creating different account types such as the Negotiable Order of Withdrawal. Banks that are not members of the Federal Reserve also offer interest-paying checking accounts. The Consumer Protection Act and the Dodd-Frank Wall Street Reform repealed statutes which prohibited interest-bearing checking accounts. In this way, Regulation Q was effectively repealed. As of July, 2011, financial establishments will be allowed but not obliged to offer interest-beating checking accounts. A checking account can be opened at almost any banking institution or credit union. You can check with your local bank or read reviews of checking accounts. If you want a checking account that earns interest, you can check the offers of HSBC or ING Direct (the online checking account at HSBC and ING Direct Electric Orange Checking Account, respectively). Keep in mind that some interest-bearing checking accounts are offered with restrictions. Check what they are before you decide to open an account. Among the pitfalls you should look for are bounced check fees, minimum balance requirements, and a limited number of monthly transfers. Reward checking accounts are another type, which goes with more restrictions. While they pay higher interest, it is more difficult to qualify for them. Once you have chosen and opened a checking account, you may want to fund it. The easiest way to do that is with direct deposit, which is a good option if you want to move funds electronically. Checks can also be deposited to a checking account so that you can cover future payments. Sometimes, you may not have enough money in your checking account. To avoid possible problems, you can use overdraft protection, which will serve as a safety net. Payday Loan Canada

certified check
Banking Terms -> certified check

A certified check is a type of check, which banks certify, verifying that funds are sufficient in the account. This money will be set aside and held in an internal account of the bank until the check is returned by the payee or cashed. Certified checks do not bounce and are like cash in terms of liquidity. With this type of check, banks guarantee the recipient that the holders account has sufficient funds deposited to be transferred. Banks also guarantee that the signature of the accountholder is not forged. Certified checks come handy when a recipient is

not sure about the account holders creditworthiness and wants to prevent the check from bouncing. In general, certified checks are used if the payee wants to make sure the check is good as well as for making down payments on homes and cars. Certified checks were widely used in many countries before the advent of electronic transfers, debit cards, and gift cards. Certified checks are a liability of the issuing bank, and it will set aside the sum of money, which is listed on the check. Certified checks have their downsides as well. First, depositors are typically not allowed to place a stop payment order on such checks. Second, most banking establishments charge a fee as to certify checks. If the payee is a client of the issuing bank, there is a good chance that it will reduce the charge. With some account types, the check will be issued free-of-charge. You will be charged an issuance fee if you are not a client of the bank. Keep in mind that in some cases, you can obtain a certified check only if you have a checking account at the bank. After you write the check, the teller has to stamp it certified. Your banking institution will put a hold on this sum in your checking account, thus guaranteeing funds availability. If you want to get a certified check, the first thing to do is check whether you have enough money in the account. It has to cover the amount of the check and the fee of your bank. Certified checks are not issued through the drive through; so, you have to actually speak to the teller and explain what you need. Make sure you bring your account information with you, including some form of identification such as an ID card or your drivers license. After verifying your account balance, the teller will ask you to write the check in front of them. It is a good idea to record the checks amount and number in your check register. Then, you can present the check to the person or entity that requested it. In case you lose the check, proceed as with an ordinary check. Ask your bank to issue a stop payment for it. A certified check is not drawn on a regular checking account. It is issued directly by a banking establishment. Anyone can request such a check payable to a specific recipient. Certified checks are among the oldest checking services that banks offer. They can be used to forward a documented financial instrument to a specific payee. This is very simple to do. You just supply your financial institution with the payees name and the sum to be paid. With most banks, you can also request additional data to be included, such as a field to record the reason for payment or an invoice number. Additional details include the date of issue and your name as a payer. Payday Loan Canada

certificate of deposit
Banking Terms -> certificate of deposit

The term certificate of deposit refers to a promissory note, which is issued by a banking establishment. With time deposits like this, withdrawals are possible but often result in a penalty. This means that withdrawing funds is restricted. Certificates of deposit entitle bearers to receive interest at a set interest rate. They have a term or maturity and can be issued in various denominations. The term of CDs spans from 1 month to 5 years, and they are typically issued by commercial banks. In some cases, certificates of deposits are indexed to the bond market or stock market, and other indices may be introduced as well. Investors are paid interest in exchange for loaning funds to an institution for a specified period. The interest increases in proportion to the period over which funds are loaned out. Certificates of deposit come with one major advantage. Investors can calculate the amount of expected earnings when they make the investment. Given that CDs are FDIC-insured, they are

a good option for elderly people who want to maintain some capital over the course of their life. On the other hand, when investors choose a higher interest rate and longer maturity, they forgo other, sometimes more profitable uses of their capital. In general, CDs are mid-term to long-term investment instruments offered by banking and savings and loan institutions. Banks offer higher interest rates in order to use investors money for a longer period of time. Why cannot banks let customers use this money anytime they need them? Banks also make various commitments with the funds. They lend them to other clients and trade investment securities. If you decide to withdraw your money on demand, the bank may be forced to pay a penalty some other place. Banking establishments charge a penalty that is usually in the amount of interest you could have earned by holding the certificate to maturity. There is no threshold for the amount of the penalty, so it is important to read the terms and conditions. If you hold a relatively short-term certificate of deposit and withdraw your money before maturity, you will pay between 1 and 3 months of interest. This applies to CDs with a term of one year or less. For certificates of deposit with longer terms, you may pay over 3 months of interest. If you hold a 5-year certificate of deposit, you may lose 6 months of interest. In general, the longer the term, the higher the penalty will be. While losing some of the interest may not sound that bad, it may happen that you havent earned it yet. In this situation, the bank may take a portion of the principal, and you will be left with less than the amount of your original investment. Unless you have another investment in mind, that will bring you a substantially higher return, it is not a good idea to withdraw the money before maturity. You may withdraw your money at maturity, along with the accrued interest. It should be noted that a bigger principal generally receives a higher interest, but this is not always the case. In addition, certificates of deposits with longer terms also go with a higher interest rate, but not before recession (when inverted yield curve is observed). If you want to find a better rate, check with smaller institutions first. They are likely to give you a better rate than larger ones. In addition, business CD accounts generally receive lower interest rate compared to personal CD accounts. Finally credit unions and banks, which are not insured by NCUA or FDIC, often offer a higher interest rate. Payday Loan Canada

Bank Ombudsman : Bank Ombudsman is the authority to look into complaints against Banks in the main areas of collection of cheque / bills, issue of demand drafts, non-adherence to prescribed hours of working, failure to honour guarantee / letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances where banks flout directions / instructions of RBI. This Scheme was announced in 1995 and is functioning with new guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks. Bancassurance : Bancassurance refers to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies like home insurance - car insurance, medi-policies and others, by banks as corporate agents through their branches located in different parts of the country by charging a fee. Banker's Lien : Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary. Banking : Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on demand or otherwise and withdrawable by cheques, drafts, order, etc. Basel-II : The Committee on Banking Regulations and Supervisory Practices, popularity known as Basel Committee, submitted its revised version of norms in June, 2004. Under the revised accord the capital requirement is to be calculated for credit, market and operational risks. The minimum requirement continues to be 8% of capital fund (Tier

I & II Capital) Tier II shall continue to be not more than 100% of Tier I Capital. Brick & Mortar Banking : Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking,tele banking etc. Business of Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Traveller's Cheques, doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central Government may notify in the official Gazette. 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' .
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Certificate of Deposit :. Certificate of Deposits are negotiable receipts in bearer form which can be freely traded among investors. This is also a money market instrument,issued for a period ranging from 7 days to f one year .The minimum deposit amount is Rs. 1 lakh and they are transferable by endorsement and delivery. Cheque : Cheque is a Bill of Exchange drawn on a specified banker ordering the banker to pay a certain sum of money to the drawer of cheque or another person. Money is generally withdrawn by clients by cheques. Cheque is always payable on demand. Cheque Truncation : Cheque truncation, truncates or stops the flow of cheques through the banking system. Generally truncation takes place at the collecting branch, which sends the electronic image of the cheques to the paying branch through the clearing house and stores the paper cheques with it. 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. Consumer Protection Act : It is implemented from 1987 to enforce consumer rights through a simple legal procedure. Banks also are covered under the Act. A consumer can file complaint for deficiency of service with Consumer District Forum for amounts upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to Rs.1 Crore in State Commission and for amounts above Rs.1 Crore in National Commission. Co-operative Bank : An association of persons who collectively own and operate a bank for the benefit of consumers / customers, like Saraswat Co-operative Bank or Abhyudaya Co-operative Bank and other such banks. Co-operative Society : When an association of persons collectively own and operate a unit for the benefit of those using its services like Apna Bazar Co-operative Society or Sahakar Bhandar or a Co-operative Housing Society. Core Banking Solutions (CBS) : Core Banking Solutions is a buzz word in Indian banking at present, where branches of the bank are connected to a central host and the customers of connected branches can do banking at any breach with core banking facility. Creditworthiness : It is the capacity of a borrower to repay the loan / advance in time alongwith interest as per agreed terms. Crossing of Cheques : Crossing refers to drawing two parallel lines across the face of the cheque.A crossed cheque cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing.A general crossing means that cheque can be paid through any bank and a special crossing, where the name of a bank is indicated on the cheque, can be paid only through the named bank.

Current Account : Current account with a bank can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. No interest is paid in this type of account. Customer : A person who maintains any type of account with a bank is a bank customer. Consumer Protection Act has a wider definition for consumer as the one who purchases any service for a fee like purchasing a demand draft or a pay order. The term customer is defined differently by Laws, softwares and countries.

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. Debtor : A person who takes some money on loan from another person. Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account deposits. Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account. Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment. 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. Debtor : A person who takes some money on loan from another person. Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account deposits. Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account. Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment.

E-Banking : E-Banking or electronic banking is a form of banking where funds are transferred through exchange of electronic signals between banks and financial institution and customers ATMs, Credit Cards, Debit Cards, International Cards, Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this category. EFT - (Electronic Fund Transfer) : EFT is a device to facilitate automatic transmission and processing of messages as well as funds from one bank branch to another bank branch and even from one branch of a bank to a branch of another bank. EFT allows transfer of funds electronically with debit and credit to relative accounts. Either or Survivor : Refers to operation of the account opened in two names with a bank. It means that any one of the account holders have powers to withdraw money from the account, issue cheques, give stop payment instructions

etc. In the event of death of one of the account holder, the surviving account holder gets all the powers of operation. 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. Endorsement in Blank : Where the name of the endorsee or transferee is not mentioned on the instrument. Endorsement in Full : Where the name of the endorsee or transferee appears on the instrument while making endorsement. Execution of Documents : Execution of documents is done by putting signature of the person, or affixing his thumb impression or putting signature with stamp or affixing common seal of the company on the documents with or without signatures of directors as per articles of association of the company.

Garnishee Order : When a Court directs a bank to attach the funds to the credit of customer's account under provisions of Section 60 of the Code of Civil Procedure, 1908. General Lien : A right of the creditors to retain possession of all goods given in security to him by the debtor for any outstanding debt. Guarantee : A contract between guarantor and beneficiary to ensure performance of a promise or discharge the liability of a third person. If promise is broken or not performed, the guarantor pays contracted amount to the beneficiary.

Holder : Holder means any person entitled in his own name to the possession of the cheque, bill of exchange or promissory note and who is entitled to receive or recover the amount due on it from the parties. For example, if I give a cheque to my friend to withdraw money from my bank,he becomes holder of that cheque. Even if he loses the cheque, he continues to be holder. Finder cannot become the holder. Holder in due course : A person who receives a Negotiable Instrument for value, before it was due and in good faith, without notice of any defect in it, he is called holder in due course as per Negotiable Instrument Act. In the earlier example if my friend lends some money to me on the basis of the cheque, which I have given to him for encashment, he becomes holder-in-due course. Hypothecation : Charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. In pledge, possession of property is passed on to the lender but in hypothecation, the property remains with the borrower in trust for the lender. Identification : When a person provides a document to a bank or is being identified by a person, who is known to the bank, it is called identification. Banks ask for identification before paying an order cheque or a demand draft across the counter. Indemnifier : When a person indemnifies or guarantees to make good any loss caused to the lender from his actions or others' actions. Indemnity : Indemnity is a bond where the indemnifier undertakes to reimburse the beneficiary from any loss arising due to his actions or third party actions. Insolvent : Insolvent is a person who is unable to pay his debts as they mature, as his liabilities are more than the assets . Civil Courts declare such persons insolvent. Banks do not open accounts of insolvent persons as they cannot enter into contract as per law.

Interest Warrant : When cheque is given by a company or an organization in payment of interest on deposit , it is called interest warrant. Interest warrant has all the characteristics of a cheque. International Banking : involves more than two nations or countries. If an Indian Bank has branches in different countries like State Bank of India, it is said to do International Banking. Introduction : Banks are careful in opening any account for a customer as the prospective customer has to be introduced by an existing account holder or a staff member or by any other person known to the bank for opening of account. If bank does not take introduction, it will amount to negligence and will not get protection under law. JHF Account : Joint Hindu Family Account is account of a firm whose business is carried out by Karta of the Joint family, acting for all the family members.. The family members have common ancestor and generally maintain a common residence and are subject to common social, economic and religious regulations. Joint Account : When two or more individuals jointly open an account with a bank Karta : Manager of a Hindu Undivided Family (HUF) who handles the family business. He is usually the eldest male member of the undivided family. Kiosk Banking : Doing banking from a cubicle from which food, newspapers, tickets etc. are also sold. KYC Norms : Know your customer norms are imposed by R.B.I. on banks and other financial institutions to ensure that they know their customers and to ensure that customers deal only in legitimate banking operations and not in money laundering or frauds. Law of Limitation : Limitation Act of 1963 fixes the limitation period of debts and obligations including banks loans and advances. If the period fixed for particular debt or loan expires, one can not file a suit for is recovery, but the fact of the debt or loan is not denied. It is said that law of limitation bars the remedy but does not extinguish the right. Lease Financing : Financing for the business of renting houses or lands for a specified period of time and also hiring out of an asset for the duration of its economic life. Leasing of a car or heavy machinery for a specific period at specific price is an example. Letter of Credit : A document issued by importers bank to its branch or agent abroad authorizing the payment of a specified sum to a person named in Letter of Credit (usually exporter from abroad). Letters of Credit are covered by rules framed under Uniform Customs and Practices of Documentary Credits framed by International Chamber of Commerce in Paris. Limited Companies Accounts : Accounts of companies incorporated under the Companies Act, 1956 . A company may be private or public. Liability of the shareholders of a company is generally limited to the face value of shares held by them. Mandate : Written authority issued by a customer to another person to act on his behalf, to sign cheques or to operate a bank account. Material Alteration : Alteration in an instrument so as to alter the character of an instrument for example when date, amount, name of the payee are altered or making a cheque payable to bearer from an order one or opening the crossing on a cheque. 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. Micro Finance: Micro Finance aims at alleviation of poverty and empowerment of weaker sections in India. In micro finance, very small amounts are given as credit to poor in rural, semi-urban and urban areas to enable them to raise

their income levels and improve living standards. 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. Money Market : Money market is not an organized market like Bombay Stock Exchange but is an informal network of banks, financial institutions who deal in money market instruments of short term like CP, CD and Treasury bills of Government. Moratorium : R.B.I. imposes moratorium on operations of a bank; if the affairs of the bank are not conducted as per banking norms. After moratorium R.B.I. and Government explore the options of safeguarding the interests of depositors by way of change in management, amalgamation or take over or by other means. 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. Non-Fund Based Limits : Non-Fund Based Limits are those type of limits where banker does not part with the funds but may have to part with funds in case of default by the borrowers, like guarantees, letter of credit and acceptance facility. Non-Resident : A person who is not a resident of India is a non-resident. Non-Resident Accounts : Accounts of non-resident Indian citizens opened and maintained as per R.B.I. Rules. Notary Public : A Lawyer who is authorized by Government to certify copies of documents . 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. Off Balance Sheet Items : Those items which affect the financial position of a business concern, but do not appear in the Balance Sheet E,g guarantees, letters of credit . The mention "off Balance Sheet items" is often found in Auditors Reports or Directors Reports. Online Banking : Banking through internet site of the bank which is made interactive. Pass Book : A record of all debit and credit entries in a customer's account. Generally all banks issue pass books to Savings Bank/Current Account Holders. Personal Identification Number (PIN) : Personal Identification Number is a number which an ATM card holder has to key in before he is authorized to do any banking transaction in a ATM .

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. Pledge : A bailment of goods as security for payment of a debt or performance of a promise, e.g pledge of stock by a borrower to a banker for a credit limit. Pledge can be made in movable goods only. Post-Dated Cheque : A Cheque which bears the date which is subsequent to the date when it is drawn. For example, a cheque drawn on 8th of February, 2007 bears the date of 12th February, 2007. Power of Attorney : It is a document executed by one person - Donor or Principal, in favour of another person , Donee or Agent - to act on behalf of the former, strictly as per authority given in the document. Premature Withdrawals : Term deposits like Fixed Deposits, Call Deposits, Short Deposits and Recurring Deposits have to mature on a particular day. When these deposits are sought to be withdrawn before maturity , it is premature withdrawal. Prime Lending Rate (PLR) : The rate at which banks lend to their best (prime) customers. Priority Sector Advances : consist of loans and advances to Agriculture, Small Scale Industry, Small Road and Water Transport Operators, Retail Trade, Small Business with limits on investment in equipments, professional and self employed persons, state sponsored organisations for lending to SC/ST, Educational Loans, Housing Finance up to certain limits, self-help groups and consumption loans. 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. Provisioning : Provisioning is made for the likely loss in the profit and loss account while finalizing accounts of banks. All banks are supposed to make assets classification . and make appropriate provisions for likely losses in their balance sheets. Rescheduling of Payment : Rearranging the repayment of a debt over a longer period than originally agreed upon due to financial difficulties of the borrower. Safe Custody : When articles of value like jewellery, boxes, shares, debentures, Government bonds, Wills or other documents or articles are given to a bank for safe keeping in its safe vault,it is called safe custody.. Bank charges a fee from its clients for such safe custody. Savings Bank Account : All banks in India are having the facility of opening savings bank account with a nominal balance. This account is used for personal purposes and not for business purpose and there are certain restrictions on withdrawals from this type of account. Account holder gets nominal interest in this account. Restrictive Endorsement : Where endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as "Pay to Ashok only". Now Ashok cannot negotiate the instrument further. Right of Appropriation : As per Section 59 of the Indian Contract Act, 1972 while making the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. If the debtor does not do so, the banker can appropriate the payment to any debt of his customer. Right of Set-Off : When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off. For example, debit balance of Rs.50,000/- in overdraft account can be set off against credit balance of Rs.75,000/- in the Savings Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the savings account.

Teller : Teller is a staff member of a bank who accepts deposits, cashes cheques and performs other banking services for the public. Underwriting : is an agreement by the underwriter to buy on a fixed date and at a fixed rate, the unsubscribed portion of shares or debentures or other issues. Underwriter gets commission for this agreement. Universal Banking : When Banks and Financial Institutions are allowed to undertake all types of activities related to banking like acceptance of deposits, granting of advances, investment, issue of credit cards, project finance, venture capital finance, foreign exchange business, insurance etc. it is called Universal Banking. 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.

Banking Definitions
M&S Bank has compiled this list of common banking terms used to help you understand the common banking terminology that is used today. If you have any questions you may contact your local branch Personal Banker or email the online teller at teller@msbank.com. ACH Processing (ACH - Automated Clearing House) - Processing that occurs between a nationwide network of financial institutions that send electronic messages, via telecommunications lines instead of paper (checks), to transfer money between two parties. The most common ACH transactions are direct deposit, preauthorized debits, cash concentration, and corporate to corporate payments. Automated Teller Machine (ATM) - A machine that allows the customer to perform some of the more common teller transactions, such as cash withdrawals, deposits, and transfers. ATMs are generally accessible 24 hours a day, 7 days a week. Cashier's Check - A check drawn by a bank on itself, signed by the Cashier or other authorized bank officer and payable to a third party named by the customer. Cashier's Checks are universally accepted. Certificate of Deposit (CD) - A type of deposit account with a fixed term (months until maturity) and a minimum initial deposit. Interest is earned at the current rate in effect for the term. Interest payments may be added back to the CD or payable by check or deposit to another M&S checking or savings account. Most CD's are automatically renewable at the end of a term for the current rate in effect at the time of renewal. Check Safekeeping - The process of microfilming customer's paid checks. The microfilm is the official record of the transaction and is retained by the financial institution. Canceled checks are stored rather than being returned to the customer. Check Card (Debit Card) - A plastic card with the Visa or MasterCard logo, designed to give a customer access to funds in his/her checking account to obtain cash, purchase goods and services, or transfer funds from one account to another. The cards are accepted around the world wherever you see the Visa or

MasterCard logo. Compound Interest - Interest that accrues when earnings for a specific period are added to principal; thus interest for the following period is computed on the principal plus accumulated interest. Credit Cards - A plastic card that can be used by the holder to make purchases or obtain cash advances using a line of credit made available by the card-issuing financial institution. Daily Compounding - A frequency of calculating interest whereby interest is added to the principal each day. Interest is then earned on the new balance. Direct Deposit - A pre-authorized system in which customer's government benefits or other payments are automatically deposited to their checking or savings accounts. Some types of Direct Deposits are Social Security, SSI, VA benefits, annuities, pension benefits, payroll checks and dividend checks. Education IRA - An investment tool created for the purpose of paying for the future cost of a child's postsecondary education. Contributions and their earnings are tax-free when withdrawn to pay for qualifying education expenses. EFTPS - Electronic Federal Tax Payment System is a new way for taxpayers to pay federal taxes electronically from the convenience of office or home. EFTPS interfaces with the TT&L program and is designed to replace the Federal Tax Deposit coupons with the electronic system. EFTPS offers two primary payment methods through the ACH network, and the taxpayer is in full control of initiating all tax payments. Grace Period - A time period within which a depositor can withdraw funds from a certificate without penalty. Individual Retirement Accounts - Two types to choose from for eligible individuals, the Traditional IRA and the Roth IRA. IOTA Accounts - Interest on Trust Accounts are NOW accounts established by attorneys or law firms for their clients, where the interest is forwarded to the Florida Bar Foundation. Money Market Deposit Account - A deposit account offered by financial institutions that is designed to be directly equivalent to, and competitive with, money market mutual funds. These accounts, unlike mutual funds, are FDIC insured. NOW Account - A deposit account, similar to a checking account, from which the account holder can withdraw funds by writing a negotiable order of withdrawal (NOW) payable to a third party and which can earn interest. Online Banking & Bill Pay - Personal and business account information accessible through a personal computer, the Internet or Screen Phone. The Bill Pay service, available via these same devices or a touch-tone phone, utilize the ATM network to electronically pay any bill (excluding the federal government and IRS). Paper checks are issued when ACH payments are not available. Overdraft Protection - A service that allows the customer to write checks for an amount over and above the amount in their checking account. Funds are transferred from their line of credit or other designated account to their checking account as needed. Personal Identification Number (PIN) or Personal Access Number (PAN) - A secret number or code used by the account holder to authorize a transaction or obtain information regarding his or her account. Often used

in conjunction with a plastic card or with a telephone voice response system. Qualified Retirement Plan - An employee benefit plan that qualifies for special tax treatment under Internal Revenue Code Section 401(a). Regular Savings Account - A form of deposit account with no legal limits or requirements as to amount, duration, or times of additions or withdrawals. Rollover IRA - A type of IRA that allows employees who receive a lump-sum distribution upon leaving an employer, or upon termination of an employer's qualified retirement plan, to deposit all or any portion of the funds in a self-directed IRA. The portion of eligible distribution that is put into such an account enjoys the same tax-deferral status as a regular IRA. Roth IRA - Contributions are not deductible but distributions can generally be withdrawn tax-free. Signature Card - A contractual form, executed by an account holder, establishing account ownership and setting forth some of the basic terms of the account and provisions of the deposit contract. Simple IRA - Savings Incentive Match Plan for Employees of small employers. This retirement plan is simple to administer and offers contribution options that are both flexible and substantial; generally available to both for-profit and not-for-profit employers having no more than 100 employees. Simplified Employee Pension Plan - A plan by an employer to make contributions toward an employee's retirement income. The employer makes contributions, up to the annual contribution limits, directly to an IRA set up by an employee with a qualified financial institution. Tax Identification Number (TIN) - The number used to identify an individual or entity for federal income tax purposes. Tiered Interest Rate - An interest rate structure in which the entire account balance earns a higher rate once it reaches the designated level, or interest is earned at various rates within tiers. The method used must be disclosed. Traditional IRA - Contributions may be partially or fully deductible, but distributions are generally taxable. Trustee Transfer - The moving of IRA funds from one IRA trustee directly to another IRA trustee, with no check being made payable to the IRA participant. This type of transfer is not subject to any time or frequency restrictions. Uncollected Funds - Funds that have been deposited in an account or cashed against an account by a check that has not yet been cleared through the check collection process and paid by the drawee bank. Financial Institutions typically place a temporary hold on their customers' uncollected funds, making those funds unavailable for withdrawal until the time period of the hold expires. Uniform Transfer to Minors Act - An act that sets forth provisions for giving a minor an intangible gift (i.e.- bank accounts, stocks or bonds) that results in income shifting with an adult serving as custodian. The custodian has direct control over the gift and can sell and reinvest proceeds from the gift for the minor recognizing any gain and/or annual income that results. Wire Transfer - An electronic transfer of funds from one financial institution to another.

Common Banking terms asked in a bank interview.


Author: Andy | Posted at: 6:44 PM | Filed Under: Interview questions |
Important Hi definitions helpful in bank interview preparation:friends,

Here I am posting for you some important banking terminology that will helpful in your bank interview preparation. I hope it will clear all your doubts regarding different bank rates.

REPO RATE: - Under repo transaction the borrower places with the lender certain acceptable securities against funds received and agree to reverse this transaction on a predetermined future date at agreed interest cost. Repo rate is also called (repurchase agreement or repurchase option).

REVERSE REPO RATE: - is the interest rate earned by the bank for lending money to the RBI in exchange of govt. securities or "lender buys securities with agreement to sell them back at a predetermined rate".

CASH RESERVE RATIO: - specifies the percentage of their total deposits the commercial bank must keep with central bank or RBI. Higher the CRR lower will be the capacity of bank to create credit.

SLR: - known as Statutorily Liquidity Ratio. Each bank is required statutorily maintain a prescribed minimum proportion of its OR "Every bank has to maintain a percentage of its demand and time liabilities by way of cash, gold etc". demand and time liabilities in the form of designated liquid asset.

BANK RATE: - is the rate of interest which is charged by RBI on its advances to commercial banks. When reserve bank desires to restrict expansion of credit it raises the bank rate there by making the credit costlier to commercial bank.

OVERDRAFT:- It is the loan facility on customer current account at a bank permitting him to overdraw up to a certain agreed limit for a agreed period ,interest is payable only on the amount of loan taken up.

PRIME LENDING RATE: It is the rate at which commercial banks give loan to its prime customers.

There are some Standard questions that should be prepared well by the candidate as they play a crucial role in letting the interviewers know that the candidate is suitable for the job or not. Here we have compiled some of these commonly asked Questions with suggestions on how to answer them.

Question :- Tell us Something about Yourself. How to Answer :- This is usually the first question asked in Interviews. You should not read all the data in your resume and also do not go too deep about telling about your parents, village and grand parents etc. For example, avoid answers like- "My village name is XYZ which come under XYZ District. My school name was XYZ school which was the biggest in district with 10000 students......" Be natural and calm. Speak Slowly and Tell them about your strengths, achievements and passions etc. This question should not take more than 3 Minutes to be answered. Keep in mind that they know that you are capable as you have already cleared the written test, now you have to show them your suitability and genuine desire for this job. So mention your strengths and interests that are related to that job. Doing a brief research about that Bank/Company before the interview is advised. Remember that at the end of the day you have to make the interviewer feel that you are the right person for this job.

Question :- Why should we Hire you in our Organization? How to Answer :- The Interviewer wants to know your suitability for the job so in this question you should tell about your Strengths and achievements so far. You should mention your strengths so that they would come to know your fitness for the job. Do not say something which is not true about you. Remember that the Interviewers are very Experienced and they will realize if you are saying truth or just trying to Outsmart them. Avoid using phrases like "This is the Best Company" or "I want to work in this field." Instead, try to mention good things about you that are related to that job and this will surely prove your usefulness.

Question :- What are your Strengths and Weaknesses ? How to Answer :- This is again a very commonly asked question. The Interviewer here wants to analyze how much you know of yourself.

Strengths:- You should mention your strengths that are beneficial for them. For example, It should not be like "I am a very good cricket Player", Rather you should focus on strengths that are related to that job. For example, "I have good communication skills" Or "I Like Interacting with people" Or "I am good at a analyzing Problems and working in a team to find out appropriate solutions". Weaknesses :- You should not say that you do not have any Weakness. It shows that either you are Overconfident or have not assessed yourself and don't want to talk about it. Similarly do not say phrases like "I am short tempered" Or "I get angry very soon and can do anything in anger". Rather you should genuinely mention the areas that are related to your professional life and you are trying to get better at them.

Question :- Where do you see yourself after five years from now? How to Answer :- Here The interviewer wants to know your knowledge about career path in the job and what is your level of commitment to the job they are offering. It should be answered realistically. Example of a horrible answer is "I will be in your seat after five years". Rather you should answer in such a way that ensures them that you are interested in making a long-term commitment towards the job and will have a long term and mutually beneficial association with them. For example "I am definitely interested in making a long-term commitment to my next position. This is exactly what Im looking for and what I am very well qualified to do. I will do my job to the best of my ability and i am prepared to learn new things and contribute to the overall success of the organization in a number of ways. I am confident that here i will have opportunities to advance my skills and provide best of my services to the organization. "

Question :- Why did you choose to work in a bank? Or Why you want job in a government bank when you can get better salary in private jobs? Or Why you want a Clerk Job in Bank after doing B.tech.(Engineering)? How to Answer :- These are very common questions and are asked to almost 90% of the candidates. Here The interviewer wants to know your level of willingness of working a in a bank.

Never straight away say that "I did not get a job in Private sector" or "There is lot of stress in Private jobs and government jobs are less intense and more flexible." Rather you should answer realistically to show your genuine desire of working in a bank. If B.tech graduates are asked about opting for a bank job after engineering, they can say " Uncertainity of future and growth in IT Companies due to recent turbulence and high recent growth in banking sector." You should manipulate your answer to prove that your engineering degree would be beneficial for you in interacting with people and creating more business relationships for them.

Question :- Answering the Puzzles type Questions! How to Answer :- Although these are not so common, but may be asked to anyone in an Interview. Herethe interviewer doesn't really want to hear exact answer from you rather they want to see if you are able to analyze the correct problem or are you just trying to hurry up without taking the time to analyze and putting some effort. They just want to see your practical approach that will be useful during you job period. So If asked any puzzle type question, you should not Hurry up in telling the answer even if you know it. Even if you do not know the answer (and even can not find the answer), do not hurry up in saying NO. Rather you should draw the picture of problem on a paper(even if you know the answer) and take some time to analyze it (ask them if you do not understand it correctly). It will make them feel that you believe in analyzing the client requirement before reaching to any conclusion, which is a must. So you should answer these questions by taking time, drawing it and asking them for clarifications. This will surely fill the interviewer's purpose.

Question :- Answering the Technical questions and questions related to some current scenario? How to Answer :- Although asked rarely, but one should also prepare some topics related to banking terminologies such as Repo Rate, Reverse Repo Rate, Cash Reserve Ratio, SLR (Statutorily Liquidity Ratio), Bank Rate, OverDraft, Prime Lending Rate, 3G Spectrum, RBI, ATM(Automated teller machine), Capital Adequacy Ratio - CAR, Questions on IPL Winners, and Many More..(Click here to download Word Document containing common banking terms). Also, chairman of some main banks in India such as RBI, SEBI etc. should also be known.

Remember that although you know these terms and current affairs related to banking and common issues, yet these questions do not play a big role in determining your selection or rejection. Even if you do not know an answer, genuinely say "NO Idea Sir!" rather than wasting time and trying to fool them with random answers, It's just not worth it! Although you should not memorize any of above sample texts and should say it in your words to convey the idea which is to prove your usefulness!!.This will surely make them believe that you are a fit for this job!! Although we've presented comprehensive list of commonly asked questions but still the list is endless and you may be asked anything other than these. To succeed, you should keep in mind that you have to sell you professional side, show them that you are useful and you will surely be Hired!!

Question Asked In State Bank Of India (SBI) Interview


Posted by CFOTEAM on August 4, 2011 // Leave Your Comment

Why do you want to enter banking? Have you applied to any other areas apart from banking? Here off course your answer will hold some other finance or sales and marketing careers insurance or accountancy, altogether these careers should have skills related to banking. How do you feel about committing yourself to another three years of exams? The professional examinations that you will almost certainly be required to take as part of your training are not always difficult in themselves, but do require determination and focus- especially as much of your study will be done in the evenings after a hard days work. You should also be aware of the range of qualifications open to you many of the large clearing banks offer the opportunity to gain qualifications in marketing, personnel or accountancy not just banking.

Tell me about an experience in which you had to use tact? Tact and diplomacy are important qualities in retail banking the customer is (almost!) always right. You may have to tell an account holder diplomatically why they cant have a loan for example, without provoking them into moving their account elsewhere. To answer this type of question, think through everything you have done in the last five years school, university, sports, clubs, societies, travel, vacation jobs etc. and try to think of situations where you had to demonstrate this and other qualities do this before your interview. If you have completed a number of employer application forms, then you should already have done this as this type of question is now common on application forms. Who are our major competitors and what differences do you notice in our products?

The company will be expecting that you have done your research on the industry generally. You should be familiar with the banks products and services literature on these can be picked up at any branch. Read the banks brochures and annual reports these may be in the careers information room. Be aware of current trends in the market and try to find out what each bank is doing in these areas. What is SLR? Every bank is required to maintain at the close of business every day, a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). Present SLR is 24%. (reduced w.e.f. 8/11/208, from earlier 25%) RBI is empowered to increase this ratio up to 40%. An increase in SLR also restrict the banks leverage position to pump more money into the economy. What is SLR ? (For Non Bankers)

SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved to liabilities (deposits) It regulates the credit growth in India. What are Repo rate and Reverse Repo rate?

Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate What is the difference between Bank Rate and Repo Rate? Bank Rate vs Repo Rate Bank Rate is the rate at which RBI allows finance to commercial banks in India. There are difference types of refinance that can be availed by banks and these are linked to Bank Rate. Thus, banks can borrow at this rate only to the extent of their eligibility for refinance.

On the other hand, Repo is a money market instrument, which enables collateralised short term borrowing and lending through sale/purchase operations in debt instruments. Under a repo transaction, a holder of securities sells them to an investor with an agreement to repurchase at a predetermined date and rate. In the case of a repo, the forward clean price of the bonds is set in advance at a level which is different from the spot clean price by adjusting the difference between repo interest and coupon earned on the security. In the money market, this transaction is nothing but collateralised lending as the terms of the transaction are structured to compensate for the funds lent and the cost of the transaction is the repo rate. Thus, a bank can borrow under repo provided he has the extra securities which it can lend temporarily to RBI for borrowing short term funds. What is relation between Inflation and Bank interest Rates?

Now a days, you might have heard lot of these terms and usage on inflation and the bank interest rates. Bank interest rate depends on many other factors, out of that the major one is inflation. Whenever you see an increase on inflation, there will be an increase of interest rate also What is a bank?

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money What is the activity of Banks?

Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and other forms of money lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to. What is Banking Business?

Banking Business means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act.

IMS-DAVV Hardcore PaGaL

Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:25 PM

NIA interview questions Interview. What is CAR? Reinsurance? when is niacl established.? When is niacl nationalized.? What is CRR? Define SLR? how can we control the liquidity in system with CRR.? how much % Govt owns in Niacl.? How much %govt should own to make the company govt owned? Tell me about recent un summit(copenhagen)? What is the profit of NIACL? Income of NIACL? what is a liability ? what is insurance liability? (person got confused and confused me), Public liability? Why will you stay with niacl? suppose you got selected in Federal bank united bank of india and NIACL which one you choose and please be honest.? (I told them that my interviews were completed for fd and ubi Quote

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the_rkp
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Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:26 PM

NIA Qus (all collected from other threads or from orkut)

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Interview...4 ppl one sardarji and 3 others....I entered the hall...maan what was that door...pata hi nahi chal raha tha khulta kaise hai...aur band kaise hota hai.... the guy sitting in the middle spoke.... hmmn so u hv done electronics and Communication....word communication spelled doom....heheh so wat actually is comm.....answered something....sender receiver medium something types.... then sardarji spoke....u hv heard of smthin were there is no medium for communication?......heheheh ...said satellite comm....and lookd at him...no expressions?? Is body launguage also a part of comm....said yes...have u studied it in electronics....yaar mujhe toh nahi lagta engg me kahin bhi yeh padaya jaata hai...its taught in managmnt under organisational behaviour....I said no sir was nt in our curriculum.... next question.....5 powerful women of india....answered

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next question.....5 religious places in India....started with amritsar...to create an impression on him...heheh and last one I said Rameshwaram....yaar border par hai India Sri lanka ke...bt hai toh India me hi....he gave me a weird look....as if he met with sharman joshi of 3 idiots.... acha now the other guy...fired with rapid questions....RBi deputy governs,SEBi chairman,IRDA chairman,NIA profits,FDI in banks....answer some..... then the last guy who was listening very patiently gv a glance as if....aa ja bacche.... first question....who is AGI of india...was looking blank...then he said auditor general of inida....nahi aata who is deputy CM of kerela....I said I kno the CM bt I dont kno the DCM... last pyaara sa question.....where is THAR desert....said rajasthan.... that l'll be all was their reply and I left the room..... so my suggestion is....plz read ur GK and current affairs,NIA,insurance,and ur subjects if u can..... All the best guys who are still waiting for their turns in NIA.....thanx Quote

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Re: Bank PO/Clerk Interview Questions and Experience - 05-042010, 03:27 PM

NIA Qus (all collected from other threads or from orkut)

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Interview: I was asked the following questions by the 4 member panel.I was the first to give interview that day. I am an MBA(Finance) from IBS,Mumbai.: 1. What does ICFAI stands for ? 2. Tell me something about ICFAI ? 3. What is the CFA course of ICFAI ? 4. My family background. 5. What considerations should be taken while making a portfolio ? 6. Where does an insurance company invests its funds ? 7. What are treasury bills ? 8. What is Yield ? 9. How is yield related to market price ? 10. What is HTM & AFS ? 11. What is mark to market ? 11. How is it important for insuarnce sector ? 12. What are dated securities ? 13. Founder of NIACL ? 14. Paid up capital of NIACL ? 15. What do you know about NIACL ? 16. What are sources of income for NIACL? 17. what are the disbursements for NIACL? 18. How will you handle the situation if an experienced and old employee misbehaves with you in office ? 19. How much makrs i will give myself out of 10 for this interview ? Quote

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Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:29 PM

SBI clerk Qus (all collected from other threads or from orkut) 1-why r u interested in banking sector..?? 2-Do u support privatisation of banks? why..?? 3-Being in a public sector bank how can u compete with private sector banks...?? 4-what steps 2b taken 2 control global warming.? Questions posted by Akanshita 1.wat is NPA? 2.why do u want to join sbi. 3.Tell something abt yourself? 4.how many time u have cleared sbi exam? 5.who is the current chairman of sbi? 6.what is CRR? 7.what is RR(Repo rate)? 7.why did u choosed sbi for the job while pvt sector bank is paying heavy salary to his employee? 8.which banned outfit is responsible for recent blast in different city of india? 9.who is the governor of RBI? 10.u have completed your graduation(if u have)in this year(----).what u were doing till now? 11.who is the finance secretary? Questions posted by Aditya Gupta # What is RR(Reporate) # Whats is CRR # Whats is reverse RR # Whats is SLR # Whats r d tools with RBI to control liquidity in market # Who is d chairperson of RBI # Which bank recently got submerged in SBI # Who is the owner of SBI at present n with what % of shares # What was d name of first bank established in India ? # When was State Bank of India established in India # Who is the Chairman of SBI # Financial crisis in America # Why joining SBI or Banking Sector # Questions on Hobby # Historical or geographical Importance of d place u live important definitions helpful in bank interview preparation:Hi friends, Here I am posting for you some important banking terminology that will helpful in your bank interview preparation. I hope it will clear all your doubts regarding different bank rates.

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REPO RATE: - Under repo transaction the borrower places with the lender certain acceptable securities against funds received and agree to reverse this transaction on a predetermined future date at agreed interest cost. Repo rate is also called (repurchase agreement or repurchase option). REVERSE REPO RATE: - is the interest rate earned by the bank for lending money to the RBI in exchange of govt. securities or "lender buys securities with agreement to sell them back at a predetermined rate". CASH RESERVE RATIO: - specifies the percentage of their total deposits the commercial bank must keep with central bank or RBI. Higher the CRR lower will be the capacity of bank to create credit. SLR: - known as Statutorily Liquidity Ratio. Each bank is required statutorily maintain a prescribed minimum proportion of its demand and time liabilities in the form of designated liquid asset. OR "Every bank has to maintain a percentage of its demand and time liabilities by way of cash, gold etc". BANK RATE: - is the rate of interest which is charged by RBI on its advances to commercial banks. When reserve bank desires to restrict expansion of credit it raises the bank rate there by making the credit costlier to commercial bank. OVERDRAFT:- It is the loan facility on customer current account at a bank permitting him to overdraw up to a certain agreed limit for a agreed period ,interest is payable only on the amount of loan taken up. PRIME LENDING RATE: It is the rate at which commercial banks give loan to its prime customers. As HR is undoubtedly the most grueling and significant part of an interview for any post concerned or applied. So, some of the questions that you may come through are: Tell us something about yourself o This is the most common and the first in the list of interview questions for clerk. No matter what post or position you may be applying for, this is kind of a universal question that will be asked, just to measure you up. This way the interviewer normally wants to have a slight notion of what do you feel about yourself, about your qualities and how snappish and intellectually aptly can you identify yourself. So, your reply should be very diminutive and at the same time giving fine information concerning you. For example: you can say, I am sensible, realistic but at the same time imaginative, conscientious and can manage people well. So, you are at this point interested about the clerk position we have offered. What variety of experience do you boast of? Accurate RESPONSE: Ive just completed school, and I am searching for a full-time arrangement that will aid me to expand and gather more experience. Honestly, I do not have much job practice, but I was brought up in a family circle where my father, mother and other family members taught us a superior work ethic. I can make out that hopefully, I would be capable to fill this spot, since I am a very rapid apprentice. INCORRECT response: I cant be acquainted with what you are saying I just sought after an afternoon employment, so I can snooze in during the sunup hours, and still comprise a assortment of time to go bashes and celebration or parties in the nights or evenings. In addition, my mother goes past here each day on her means to her work, so she may well drop

me off. There might be times when I would require you at this juncture prior to your standard hours commence. Will I have any dilemma trying to get a hold of you if I want you to come up to work earlier? CORRECT: Well, I will be taking several daybreak college classes, however I dont have school on Mondays. So, I would be pleased to do that on Mondays, and Ill strive to remain efficient with my class agenda once I get my courses in concert. Tell us something about your past experiences. The next subject which usually comes up and about interview questions for clerk is concerning the earlier experiences as this assists the interviewer to acquire an thought about how your precedent experiences are going to sway the company. Thus, it is very imperative for you to come to a decision that which ingredient of your individualism and job familiarity you would like to be in the illumination but make it in no doubt that you do not end up with tales of your intrepidness and adventures. Here you should center more on your daily life at work that will focus more on your dilemma solving skills: like the means by which you demeanor yourself at your job, scrutinize tricky situations and manage people. Accounts at banks and/or other financial institutions. 1Deposit account a:Checking accounts or current account b: Savings accounts c:Money market deposit account: d:Time deposit 2Personal account 3Sweep account 4Transactional account or demand accounts or demand deposit accounts. Quote

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the_rkp
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Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:30 PM

SBI clerk Qus (all collected from other threads or from orkut) questions asked to me: since i am a comp. sci. student they asked what r d languages i hv learnt i replied c,c++ and now i learning vb... they asked the diff. bet. c and vb

Posts: 453 Join Date: Jul 2006 Location: Indore Age: 27

then hw computers r used in banks? earlier days v used maintain separate record for each n every person who hv account but after being

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computersied as v type the acc.no. it display all the details.. then dd forms were computerised,earlier it was written by hand ... then core banking... next i am a throwball player.... so they asked what's d diff.bet throw ball and volley ball as i hv won state level certificate in elocution i was asked to speak abt. INDIA for 2 min. then they asked me wat i like n dislike in INDIA... since i'm 4m vandalur next to chennai , it comes under kanchipuram dist. they questioned me "wat's imp. regarding kanchipuram", i replied temples,dist.Head Quarter then kanchipuram silk... then they also asked me abtwat's imp. in vandalur next wat do u know abt SBI wat r the private banks ans. i replied ICICI and HDFC full form of ICICI ? Industrial Credit and Investment Corporation of India... Wat r the nationalised banks? since i am doing college ug final year they asked y do come for job when u r studying.....I replied that the main aim of studies is to know wat's going around us and the next is to get the job .. when the oppurtunity knocks at me y shdn't i use it... then wat is u.s crisis Quote

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the_rkp
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Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:41 PM

SBI clerk Qus (all collected from other threads or from orkut) we had 3 men n a lady to interview us.....one person asked me abt my hobbies [painting- colours n how do i select my theme to paint] and abt my plc and since i've written Tally as my spcl course ..they asked me to tell abt that too..

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2nd person asked me chairman of SBI n finance min of my state.. 3rd person asked me abt my native plc n abt deposits n loans provided by the bank.. 4th person asked me abt the speciality of a famous personality Sir M. Vishveshvaraiyya as he's the pioneer of the KRS Dam built in Mysorea famous tourist attraction ...and abt debt waivers of farm loans..... Simple........and within 15 mins my interview was over !!!!!!!!! Keep Smiling throughout....if u dont know tell it frankly...no probs...they'll correct u if u r wrong..... POSTED BY Ramanjaneyulu hi guy's today i given interview at hyd sbi learning centre. my interview was so cool. they just asked about my details and some computer questions i.e. what is dos? what is ram? and what is floating and what is gravitational force,it is same for all materials or not and regarding about "gate way of india" where it is and y it has made? where is the india gate and y it has build? that sal...... all the best for other guy's
Quote

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the_rkp
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Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:42 PM

Hello friends,

Posts: 453 Join Date: Jul 2006 Location: Indore Age: 27 Thanks: 54 Thanked 866 Times in 286 Posts Groans: 13 Groaned at 17 Times in 13 Posts

This s swetha frm Mangalore.i gave my interview today(15-1008 .Questions asked were related to my subjects,my previous job nd abt my qualification.Panel consisted of 3 members initially they wil verify ur certificates, dont forget to attest ur photocopies frm a gazatted officer.Other questions asked were like who's the finance minister,chairman of sbi,dgm's (there r 2 dgm's itseems which i din answer),which bank faced financial crisis recently (ICICI),What u know abt sbi,nd regarding ur hobbies (VIMP) think nd write properly bcoz most of d questions wil be frm ur subjects nd hobbies. I wanna thank u all for sharing useful information in this forum it helped me a lot i gained so much knowledge frm dis site only nd gud luck for the rest who r gonna give interviews in d coming days... Quote

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the_rkp
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Re: Bank PO/Clerk Interview Questions and Experience - 05-04-2010, 03:45 PM

Posts: 453 Join Date: Jul 2006 Location: Indore Age: 27 Thanks: 54 Thanked 866 Times in 286 Posts Groans: 13 Groaned at 17 Times in 13 Posts

Yesterday(15/10/08. I finished my Interview. frnds don't worry about interview questions. First you go through two or three times through you bio data, and prepare details regarding what you are written in the bio data, like ->Importance of your birth place, ->Importance of your district, ->College/University which you studied, ->importance of the different places you staying, ->great personalities born in your district etc. ->details regarding your extracurricular activities and your achievements. get prepare Positive answers for compulsory questions like ->Tell me about yourself, ->Tel me about your family, ->tell me about your previous job provder, ->your strong/weak points, ->why do you want joined SBI, ->why not using your higher qualifications, ->if you are undergoing graduate they definitely ask ->if we take you what you do your studies ->If you completed degree in more then 2years they will ask what you doing till now. ->If you working why you want leave present job? (frnds please give positive answer for this)

and also prepare daily importance /common knowledge of your subject studies in degree or 10+2, like what is chemistry, who is the founder of biochemistry etc.