Important Banking Terms or Terminology for IBPS PO/Clerk SBI PO/CLerk

Important Banking/Bank Terms/Abbrevitaion or Banking/BANK Terminology/Abbrevitaion for IBPS PO/Clerk or SBI PO/CLerk in Question / Answer form

Q1. What is a Repo Rate?

Ans: Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI.

Q2. What is Reverse Repo Rate?

Ans: This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels there is too much money floating in the banking system.

Q3. What is CRR Cash Reserve Ratio Rate?

Ans: CRR is the amount of funds that the banks have to keep with RBI.

Q4. What is SLR (Statutory Liquidity Ratio) Rate?

Ans: SLR approved secis the amount a commercial bank needs to maintain in the form of cash, or gold or govt. urities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI. SLR is used to control inflation and propel growth.

Q5. What is Bank Rate?

Ans: Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks.

Q6. What is Inflation?

Ans Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is an increase in the average level of prices in Goods and services. Inflation happens when there are fewer Goods and more buyers; this will result in increase in the price of Goods.

Q7. What is Deflation?

Ans: Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation rate becomes negative (below zero) and stays there for a longer period.

Q8. What is PLR (Prime Lending Rate )?

Ans: The PLR is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks.

Q9. What is Deposit Rate?

Ans. Interest Rates paid by a depository institution on the cash on deposit.

Q10. What is FII (Foreign Institutional Investor)?

Ans FII used to denote an investor, mostly in the form of an institution. An institution established outside India.

Q11. What is FDI (Foreign Direct Investment)?

Ans FDI occurs with the purchase of the “physical assets or a significant amount of ownership (stock) of a company in another country in order to gain a measure of management control” (Or) A foreign company having a stake in a Indian Company.

Q12. What is IPO - Initial Public Offering?

Ans This is the first offering of shares to the general public from a company wishes to list on the stock exchanges.

Q13. What is Disinvestment?

Ans: The Selling of the government stake in public sector undertakings.

Q14. What is Fiscal Deficit?

Ans: It is the difference between the government’s total receipts (excluding borrowings) and total expenditure.

Q15. What is Revenue deficit?

Ans: It defines that, where the net amount received (by taxes & other forms) fails to meet the predicted net amount to be received by the government.

Q16. What is GDP - Gross Domestic Product ?

Ans: The or GDP is a measure of all of the services and goods produced in a country over a specific period; classically a year.

Q17. What is GNP - Gross National Product ?

Ans: GNP is measured as GDP plus income of residents from investments made abroad minus income earned by foreigners in domestic market.

Q18. What is National Income?

Ans: National Income is the money value of all goods and services produced in a country during the year.

Q19. What is Per Capita Income?

Ans: The national income of a country, or region, divided by its population. Per capita income is often used to measure a country's standard of living.

Q20. What is Vote on Account?

Ans: A vote-on account is basically a statement ,where the government presents an estimate of a sum required to meet the expenditure that it incurs during the first three to four months of an election financial year until a new govt is in place, to keep the machinery running.

Q21. Difference between Vote on Account and Interim Budget?

Ans: Vote-on-account deals only with the expenditure side of the government's budget, an interim Budget is a complete set of accounts, including both expenditure and receipts.

Q22. What is SDR (Special Drawing Rights) ?

Ans: The SDR is an artificial currency created by the IMF in 1969. SDRs are allocated to member countries and can be fully converted into international currencies so they serve as a supplement to the official foreign reserves of member countries.

Q23. What is SEZ - Special Economic Zone ?

Ans: SEZ means is the one of the part of government’s policies in India. A special Economic zone is a geographical region that economic laws which are more liberal than the usual economic laws in the country.

Q24. What is Open Market operations(OMO)?

Ans: The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system by RBI.

Q25. What is Micro Credit?

Ans: It is a term used to extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families.

Q26. What is Liquidity Adjustment Facility(LAF)?

Ans: A tool used in monetary policy that allows banks to borrow money through repurchase agreements.

Q27. What is RTGS System - Real Time Gross Settlement?

Ans: RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. Settlement in 'real time' means payment transaction is not subjected to any waiting period.

Q28. What is Bancassurance?

Ans: It is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products.

Q29. What is Wholesale Price Index(WPI)?

Ans: The WPI is the index used to measure the changes in the average price level of goods traded in wholesale market. A total of 435 commodity prices make up the index. It is available on a weekly basis.

Q30. What is Consumer price Index(CPI)?

Ans: It is a measure estimating the average price of consumer goods and services purchased by households.

Q31. What is a Debenture?

Ans: A debenture is basically an unsecured loan to a corporation. A type of debt instrument that is not secured by physical asset. Debentures are backed only by the general creditworthiness and reputation of the issuer.

Q32. What is a hedge fund?

Ans: ‘Hedge’ means to reduce financial risk. A hedge fund is an investment fund open to a limited range of investors and requires a very large initial minimum investment.

Q33. What is FCCB?

Ans: A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than the issuer’s domestic currency.

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