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Banking Concepts / Law at a Glance – Part A

July 6, 2016

Let’s see some acronyms and other details pertaining to Banking concepts / law

  • BSBDA – Basic Savings Bank Deposit Accounts
  • KYC – Know your Customer
  • Scheduled Bank – Bank which is listed in the 2nd Schedule of RBI Act, 1934
  • Savings Account – Useful for investment/savings
  • Current Account – Useful for Business (Overdraft facility – Subject to the bank’s approval)
  • Fixed Deposits – Term deposits which attract more interest rates than a Savings Account (Usually for a term. e.g. 6 months, 1 year and so on)
  • Recurring Deposits – Accumulate money over a period of time and get better rate of interest
  • NIA – Negotiable Instruments Act, 1881
    • Inchoate instrument – Unrecorded Instrument
    • Indorsement – Simple method of signing the instrument in favour of a third person and delivering the instrument
    • Drawer – Maker of the instrument
    • BOE – Bill of Exchange
    • Cheque – A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand
    • Promissory Note – An instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument
  • NBFC – Non-Banking Financial Company
  • Securitization Act, 2002
    • SPV – Special Purpose Vehicle
  • CRR – Credit Reserve Ratio – Certain proportion of the deposits in form of cash
  • SLR – Statutory Liquidity Ratio – Reserve a commercial bank has to maintain before providing credit
  • Repo Rate – Rate at which RBI lends to Commercial banks (Short-term)
  • Reverse Repo Rate – Rate at which RBI gives Interest to the Commercial banks on their deposits
  • Lien – A legal claim against an asset which is used to secure a loan
  • NEFT – National Electronics Funds Transfer
  • RTGS – Real-time gross settlement systems
  • IMPS – Immediate Payment Service
  • NPCI – National Payments Corporation of India
  • NACH – National Automated Clearing House
  • Clearing House – A banker’s established where the bills and cheques from member banks are exchanged
  • RuPay – A new card system launched by NPCI
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