50 Important Banking Financial Terms, Download Free PDF

We have come up with a list of banking/financial terms which will help you in your preparation for banking awareness section. Your knowledge of these terms can be assessed in interviews as well. Scroll down the list and see how many of these you didn’t know.

Important Banking Financial Terms

CRR
Cash Reserve Ratio is the minimum fraction of total deposits of a bank’s customers that banks have to hold as reserves with the central bank.

SLR
Statutory Liquidity Ratio is the ratio of liquid assets to the net demand and time liabilities.

LAF
Liquid Adjustment Facility is a tool to allow banks to borrow money through repurchase agreements. It consists of repo and reverse repo operations.

MSF
Marginal Standing Facility allows scheduled banks to borrow funds overnight from RBI against approved government securities.

MSS
Market Stabilization Scheme is a monetary policy intervention by RBI to withdraw excess liquidity by selling government securities in the economy.

OMO
Open Market Operations refers to the buying and selling of government securities in the open market so as to expand or contract the amount of money in the banking system.

Repo
Repo stands for Repurchase agreement where a seller of a security agrees to buy it back from a buyer at a higher price on a specified date.

CD
A Certificate of Deposit is a promissory note issued by a bank with a maturity date, fixed interest rate and can be issued in any denomination. It restricts holders from withdrawing funds on demand.

NAV
Net Asset Value is the value per share of a mutual/exchange-traded fund. It is computed once per day based on the closing market price of securities involved.

ETF
Exchange-Traded Fund is a marketable security tracking an index, a commodity, bonds, or a basket of assets.

DeMat
Dematerialization is the movement from physical certificates of stock to their electronic counterparts.

RD
Recurring Deposit is a special term deposit allowing people with regular income to deposit a fixed income every month and earn interest rates applicable to fixed deposits.

FDI
Foreign Direct Investment is the investment made by a firm/individual of one country into businesses located in another country.

FII
A Foreign Institutional Investor is an investor/investment fund registered in a country and investing in another one.

GAAR
General Anti-Avoidance Rule allows tax officials to deny tax benefits in case a deal is found without any commercial purpose other than tax avoidance.

P-Notes
Participatory Notes is a financial instrument required by investors who are not registered with SEBI to invest in India securities.

NPCI
National Payments Corporation of India is an umbrella organization for operating retail payments and settlement systems in India.

SWIFT
The Society for Worldwide Interfinancial Telecommunication provides a network that facilitates financial institutions anywhere in the world to send/receive information about financial transactions in a secure, standardized and reliable environment.

CCIL
The Clearing Corporation of India is set up to provide guaranteed clearing and settlement functions for transactions in money, G-Secs, foreign exchange and derivatives market.

ECS
Electronic Clearing Service is an electronic mode of transferring funds from one bank account to another.

EFT
Electronic Funds Transfer is a system of transferring money from one bank account to another without any physical money coming in the picture.

NEFT
National Electronic Funds Transfer is a system to transfer money via electronic mode from one bank account to another.

RTGS
Real Time Gross Settlement is an electronic form of funds transfer with the fund transfer happening on a real time basis.

IBRD
The International Bank for Reconstruction and Development is an international financial institution offering loans to middle-income developing countries.

IMF
The International Monetary Fund is an international organization striving to ensure that the international monetary system remains stable.

BIS
The Bank for International Settlements is an international financial institution owned by central banks which promotes global monetary and financial stability through international cooperation.

ADB
The Asian Development Bank’s function is to accelerate economic and social development in asia and pacific region.

NABARD
National Bank for Agricultural and Rural Development is set up as an apex development bank with a mandate for facilitating credit flow for promotion and development of agriculture, cottage and village industries.

IDBI
Industrial Development Bank was one of the development banks in the country specialised in industrial finance which got converted to a commercial bank in the name of IDBI Bank.

IBPS
The main function of Institute of Banking Personnel Selection is to conduct competitive exams for clerical and officers’ posts in the banking sector.

IBA
Indian Banks’ Association is an association of Indian banks and financial institutions based in Mumbai to develop, coordinate and strengthen Indian banking.

SEBI
The Securities and Exchange Board of India is the regulator for Indian securities market.

NHB
National Housing Bank is RBI’s wholly owned subsidiary focussing on promoting housing finance institutions. It is an apex financial institution for housing finance.

SIDBI
Small Industries Development Bank of India’s purpose is to provide refinance facilities and short term lending to industries, and serves as the principal financial institution in the MSME sector.

ARM
An Adjustable Rate Mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.

ATM
An Automated Teller Machine is an electronic telecommunications device that enables customers of financial institutions to get their miscellaneous work done (for eg. withdrawing cash, transferring funds etc.) without contacting bank staff.

CAMELS
Camels rating is a supervisory rating system to classify a bank’s overall condition. The different letters stand for different terms given below:

C: Capital Adequacy

A: Assets

M: Management Capability

E: Earnings

L: Liquidity

S: Sensitivity

CBS
Core Banking System is a banking service provided by a group of networked bank branches where customers can access their account and perform transactions from any of the branches.

EPS
Earnings Per Share is the monetary value of earnings per outstanding share of common stock for a company.

XD
Ex-Dividend comes into the picture when a declared dividend is owned by the seller rather than the buyer.

IPO
An Initial Public Offer is the very first sale of stock issued by a company to public.

SENSEX
It’s the stock market index of BSE. The full form is Sensitive Index.

HUF A/C
A Hindu Undivided Family is defined under the Hindu Law as a family consisting of all persons linearly descended from a common ancestor. The business of the family is carried out by Karta who is the head of the family.

NPA
A Non-Performing Asset is a credit facility where the interest and/or installment of principal has remained past due for a specified period of time.

PIN
A Personal Identification Number is a number allocated to a customer to validate electronic transactions.

PLR
A Prime Lending Rate is the average rate of interest charged on loans by five major banks.

RSI
The Relative Strength Index is a technical indicator used to analyse financial markets.

NIFTY
National Stock Exchange Fifty is the broad index of NSE comprising of 51 stocks.

NIRP
Negative Interest Rate Policy is a negative central bank target interest rate. That means instead of receiving money on deposits, depositors must pay regularly to keep their money with the bank.

IFC
International Finance Corporation is a sister organization of World Bank and member of the World Bank Group and is the largest global development institution focused exclusively on the private sector in developing countries.

We sincerely hope that this list will make you ready for your upcoming exams. Here is the link to the next article in this series.