FREE NOTES ON BANKING TERMS FOR YOUR BANK PROMOTION EXAMS IN 2024 | PART-1

FREE NOTES ON BANKING TERMS FOR YOUR BANK PROMOTION EXAMS IN 2024 | PART-1

There are some terms which as a banker, you should be aware of. Here in this article, some of the important terms have been explained which will help you in scoring for your bank promotion exams of 2024.

You can also find the PDF file of these terms at the end of this article so that you can read them later on for 2024 BANK PROMOTION EXAMS preparation.

RBI – RBI was constituted as an apex Bank of the country under Reserve Bank of India Act, 1934. The main purpose of setting up this bank was to regulate other banks, to issue Bank notes and to maintain reserves so that monetary stability can be secured in India.

Demand Deposit – A deposit which can be withdrawn at any time without giving any prior notice or without any penalty, is known as demand deposit. Example: Money is deposited in a savings account or checking account in a bank.

Time Deposit – Deposit made with a bank which cannot be withdrawn for a certain period of time or term, is known as time deposit. When a certain period of time is over, the amount can be withdrawn or it can be renewed for another term.

Fixed Deposits – The deposit which is repayable on fixed maturity date along with the amount of principal at an agreed interest rate, is known as fixed deposit. Higher rate of interest is paid on fixed deposits than the interest rate which is paid on savings accounts.

Recurring Deposits – When a certain sum of money is deposited as savings at specific intervals for a specific period of time, it is known as recurring deposit. It is also sometimes called a cumulative deposit.

Savings Account – This kind of account is generally maintained by the retail customers who deposit money which is basically their savings. The savings can be withdrawn by them whenever they need funds. A lower rate of interest is paid on such accounts.

Current Accounts – These kinds of accounts are maintained by the corporates from which we can withdraw or deposit money any number of times in a day. Banks charge on maintenance fees operating these accounts for the facility of easy handling and overdraft facility etc.

FCNR Accounts – FCNR stands for foreign currency non-resident accounts which are maintained by NRIs in foreign currencies such as USD, JPY, AUD etc. It is a type of term deposit whose interest rates are dependent on the international interest rates of the respective currencies.

NRE Accounts – NRE stands for non-resident external account maintained by NRIs so that they can remit money in any foreign currency which has been permitted and that will get converted into Indian rupees to be credited to these accounts. 

These types of accounts can either be savings, current, recurring, or fixed. The terms and conditions and interest rates which are applicable on these accounts are directed by the Reserve Bank of India.

Hot Money – It is a money which is held in one currency which will get switched to another currency in a flash so that better Returns can be made or considering the upcoming adverse circumstances. This kind of flight of money can cause a plunge in the exchange rate of currency.

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Reserve Money (M0) = Currency in circulation + ‘Other’ deposits with the RBI + Bankers’ deposits with the RBI or

(M0) = Net RBI credit to the Government + RBI’s net foreign assets + Government’s currency liabilities to the public + RBI credit to the commercial sector + RBI’s claims on banks – RBI’s net non-monetary liabilities. 

Narrow Money (M1) = Demand deposits with the banking system + Currency with the public + ‘Other’ deposits with the RBI. 

M2 = M1 + Savings deposits with Post offices. 

Broad Money (M3) = M1+ Time deposits with the banking system 

(M3) = Net bank credit to the Government + Government’s currency liabilities to the public + Bank credit to the commercial sector + Net foreign exchange assets of the banking sector – Net non monetary liabilities of the banking sector. 

M4 = M3 + Deposits with post office (excluding National Saving Certificates).

Inflation – It refers to the continuous rise in the general prices of the goods and services and inflation is commonly expressed as a percentage (annual rate) of change on an index number.

HyperInflation – A growth in the rate of inflation which has been expressed wherein, value of money is lost to the extent where other mediums of exchange such as Bator foreign currencies are vague to express.

Cheque Book – It refers to a booklet of cheques. A cheque is basically a piece of paper which is produced by a bank with the customer’s account number the customer’s account number, Sort-code & number of the check printed on it. Cheques that distinguish from other accounts by way of account numbers mentioned on them, while sort-code is the bank special Code which differentiates it from other banks.

Cheque Clearing – It refers to the process of getting money from the account of the person who has written the check in into the account of the person in whose favour it’s been written.

Clearing Bank – It is the bank which clears funds between two banks. This can be an institution which can be a bank or an institution who provides banking services.

Bounced Cheque – In case a Bank doesn’t have enough funds in their account holders or the account holder has requested the bank that the cheque should be bounced under some exceptional circumstances, then the bank returns the cheque to the account holder.

Consumer Price Index (CPI) – It is a kind of inflationary indicator which measures the fluctuations in the cost of a fixed basket of goods and services. It includes housing, electricity, food, & transportation. 

Consumer price index is published on a monthly basis and they are also sometimes called the cost of living index.

Stagflation – It is a condition which refers to the condition when two economic problems are on the rise. i.e inflation is increasing and the economic growth has slowed down.

Deflation – It refers to any condition when the general price level of goods and services is falling accompanied with decrease in the production and employment level.

Recession – It refers to that sad phase of economic activity where there is a rise in unemployment. It can be defined as 2 successive quarters of negative growth in GDP. It is also considered to have a cyclic character.

Stagnation – It refers to the period in which the economy is growing at a very slow pace or is not growing at all. It results in an increase in unemployment and decreases in the spending of consumers.

PDF file of Terms of Banks (Part-1) for Bank Promotion Exams 2024 : PDF File 2024