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Important Banking Terms And Definitions pdf

Important Banking terms for Banking awareness.Banking terms are a lot in number. They are used in the context of Banking and finance business in India and if you want to enter the world of banking, you should be aware of such terms which are in use. Candidates are advised to go through the list given here which contains some of the important banking terms which are often asked in each and every examination. They are very common terms and it is also asked in some of the non banking examinations like in Railways and Defence etc. candidates should know them and understand their essence as it is also important for them for the point of view of the interview. In interviews such questions are often asked which relates to the banking and financial business. Some of the terms like base rate, bank rate, repo rate, reverse repo rate, CRR and SLR etc are very common in banking and they are often asked. If you want to score more marks in the Banking examinations like IBPs you must be well aware with these terms.

Important Banking and financial terms for IBPS PO and clerk:

Bank rate:

It is the rate at which the central bank lends commercial banks for the long terms without their securities. In India it is the rate at which RBI lends money to the commercial banks in simple terms.

Base Rate:

earlier this was the prime lending rate. It is the minimum rate at which the commercial bank lends to its prime customers. This is decided by the individual banks now.


It stands for follow on public offering. When any financial institution or business sells its share in the public that has already sold its share, It is called follow on public offering.


It stands for Initial public offering. It is the selling of the assets/ shares of the business by a company for the first time to general public.

Repo Rate: 

Repo rate means a purchase and sale of agreement. It is a contract to buy securities and then sell them back at an agreed future date and price. It is thus revenue for short term investment of surplus funds. From RBI point of view it is called a short term lending and from banks point of view it is called short term borrowing.

Reverse Repo rate : 

Reverse Repo Rate is an instrument of borrowing funds for a short period and involves selling a security and simultaneously agreeing to repurchase it at a stated future date for slightly higher price. From RBI point of view it is called a short term borrowing and from banks point of view it is called a short term lending.

Group Company :

As per RBI for the purpose of FDI, two or more enterprise which , directly or indirectly , are in position to exercise 26% or more of voting rights in other enterprise or appoint more than 50% of the members of the board of directors in the other enterprises.

Branch Vs Subsidiary: 

A subsidiary is a separate legal entity from the parent company, although owned by parent company, has a same legal identity as its parent company , from liability , on the other hand branch is not a separate legal entity of the parent company and liability wise there is no limit to the parents company’s liability , RBI has permitted to Foreign Banks to change from Branch Mode to the Wholly Owned Subsidiaries.

NFS (National Financial Switch):

It facilitates interconnectivity between banks’ switches and interbank payment Gateway for authentication & routing the payment details of various E-commerce & E-Govt. activities (Retail Banking).

SLR (Statutory Liquidity Ratio): 

This is a minimum Reserve which every bank has to maintain with itself in the most liquid form to meet any demand of the depositors.

Zero Liability Protection:

It is a bank guarantee. If your card

is lost or stolen you may not be responsible for unauthorized purchases made with your card if you report the theft promptly. The Zero liability protection facility is free & automatically available on all bank consumer Credit Cards.

Vostro Account: When a foreign Bank is opened in the India with Indian Currency is known as Vostro account e.g. Standard Chartered Bank in India.

General Awareness For Bank Exams

List Of RBI Governors Of India


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