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BANKING
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Author:Naveenkumar_DV
Date: 9/7/2010
Keywords: Basics of Banking
Target readers: ALL
Project: BMCBFS2D
Declaration: I/We hereby declare that this document is based on
my/our personal experiences and/or experiences of my/our
project members. To the best of my/our knowledge, this
document does not contain any material that infringes the
copyrights of any other individual or organization including the
customers of Infosys.
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DEFINITION
What is Banking?
The Bank is systematically accepts the Deposits/Lends the money
from/to the Public as it pays the interests to Deposits and Collects the
interest for lending money
(Or) Primary function of Banking is Lending the money to the
public/Corporate with an intension of getting the interest and Deposit
money from public/Corporate by providing some interest
The bank will lend the money to the public with high interest and depositthe money and provide the less interest as per the Bank regulations to
get the profits
All the Banking regulations are under RBI
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TECHNICAL TERMS WE USED IN BANKING
Repo rate: if RBI lends the money to a bank then RBI will collect some
Interest from the Bank then its called as Repo rate
Reverse Repo rate: if a bank deposits the money in RBI then it will pay
some interest to the Bank then its called as Reverse repo rate
Base Points: If there is any change in the Interest/Deposit rate then we will
say it as Base points.
Ex: if a bank wants to increase the lending interest rates by 50 paise, thenthey will announces it as we are hiking the lending rates for loans as 50
base points
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TYPES OF BANKING
Retail Banking
Retail banking refers to the mobilization of deposits from individuals and
providing loans to individuals and small businesses. Retail banking is
characterized by large volume of small value transactions.
For example, the deposit accounts, personal loans to individuals, credit
cards, home mortgage loans, etc come under retail banking.
Wholesale Banking
Wholesale banking is also known as business to business banking. Itrefers to the transactions between banks and large customer like
corporate and government involving large sums of money. It also
includes the transactions between banks.
It includes general lending to businesses as well specialized services
like mergers and acquisitions advisory services, leasing, investmentmanagement services, etc.
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Universal Banking
Universal banking is the combination of retail and wholesale banking. It
includes activities like general deposit taking and lending, trading in
financial assets, brokerage services, investment management,
insurance, foreign exchange transactions, etc.
Online Banking
Online Banking refers to do the all the Transactions from one bank to
another as well as internally using the e-banking technology. Using thisbanking we no need to go to the bank for deposits
Now a days this technology playing a key role in all the banking.
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The Process involved in the e-banking while doing the transaction
internally, then the money will directed through the same bank only.
When we are doing the transaction from one bank to another then the
money will goes to RBI then from there the money will be credited to thedestination account holder.
The Retail banking provides loans to the customers and also offers the
Deposits from customers.
Note: the person should have account in the bank in which he is going totake the loan as well as for deposits also.
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TYPES OF DEPOSITS
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DESCRIPTION
Savings Account:
The savings account is normally offered to the public /individuals those
who wants to open an account.
In this type of account the Bank will pay some interest to the account
holder.There will be some limit for the transactions in this account on both
withdraws and amount
Current Account:
The Current account is normally offered to the Corporates those who
are needs to do large transactions.In this type of account the bank will not going to pay the interest for the
money
There will be no limit for transactions, since they need to do large
amount transactions
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SOME KNOWLEDGE THINGS
When u called a country is in Recession?
A country is in recession when it posts its GDP as Negative
continuously for 3 times .
What are the different stages in Economy after coming from Recession?1. Recession
2. DIP
3. Neutral
4. Recovery
5. Growth/Developed