These banking terms for interview pdf will help a lot to acquire basic banking knowledge. Here terms are given and their definitions are also updated soon.
Please know as much as word definitions. These definitions of general banking terms for interview are very helpful to one who is preparing for bank exams and to answer the basic banking interview questions. No One can survive in banking industry without banking general knowledge. A machine, activated by a magnetically encoded card or other medium, that can process a variety of banking transactions.
These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts. As of May 1, , up to two months of Federal benefits such as Social Security benefits, Supplemental Security Income benefits, Veteran's benefits, Railroad Retirement benefits, and benefits from the Office of Personnel Management that are direct deposited to an account may be protected from garnishment.
The amount automatically protected will depend upon the balance of the account on the day of review. See related questions about Garnishments. A checkless system for paying recurring bills with one authorization statement to a financial institution. Bank's policy as to when funds deposited into an account will be available for withdrawal.
See related questions about Funds Availability. The balance of an account less any hold, uncollected funds, and restrictions against the account. The difference between the credit limit assigned to a cardholder account and the present balance of the account. See related questions about Credit Cards. The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance.
Transfers are sometimes subjected to a Balance Transfer Fee. See related questions about Balance Transfers. A bank custodian is responsible for maintaining the safety of clients' assets held at one of the custodian's premises, a sub-custodian facility or an outside depository. See related questions about Bank Custodians. Examination of a bank's assets, income, and expenses-as well as operations by representatives of federal and state bank supervisory authority-to ensure that the bank is solvent and is operating in conformity with banking laws and sound banking principles.
Periodically the bank provides a statement of a customer's deposit account. It shows all deposits made, all checks paid, and other debits posted during the period usually one month , as well as the current balance. A business day during which an office of a bank is open to the public for substantially all of its banking functions. See related question about Funds Availability. A bankrupt person, firm, or corporation has insufficient assets to cover their debts.
The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee. The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. There are two types of bankruptcy:. A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract.
The month, date, and year when a periodic or monthly statement is generated. Calculations have been performed for appropriate finance charges, minimum payment due, and new balance.
A charge that appears on a periodic statement associated with an extension of credit e. A billing error can also be caused by a creditor's failure to credit a payment or other credit to an account as well as accounting and clerical errors. See related questions about Credit Card Disputes. Savings bonds are issued in face value denominations by the U. They are typically long-term, low-risk investment tools. See related questions about Savings Bonds.
Any day on which offices of a bank are open to the public for carrying on substantially all of the bank's business. A check that a bank has paid, charged to the account holder's account, and then endorsed.
Once canceled, a check is no longer negotiable. A check drawn on the funds of the bank, not against the funds in a depositor's account. However, the depositor paid for the cashier's check with funds from their account. The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available.
See related questions about Cashier's Checks. A negotiable instrument issued by a bank in exchange for funds, usually bearing interest, deposited with the bank. See related questions about Certificates of Deposit. A certificate signed by a lender indicating that a mortgage has been fully paid and all debts satisfied, also known as release of lien. See related question about Lien Release.
A personal check drawn by an individual that is certified guaranteed to be good. The face of the check bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the check. The signature signifies that. The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.
See related question about Charge Off. A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment. Check 21 is a Federal law that is designed to enable banks to handle more checks electronically, which is intended to make check processing faster and more efficient.
Check 21 is the short name for the Check Clearing for the 21st Century Act, which went into effect on October 28, See related question about Check The conversion of data on a check into an electronic image after a check enters the processing system.
Check truncation eliminates the need to return canceled checks to customers. The ChexSystems, Inc. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts.
ChexSystems only shares information with the member institutions; it does not decide on new account openings. Generally, information remains on ChexSystems for five years.
See related questions about ChexSystems. Generally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date.
Most real estate and automobile loans are closed-end agreements. Generally, any loan in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender.
The expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge. Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house. Collateral becomes subject to seizure on default.
Cash deposits or checks that have been presented for payment and for which payment has been received. A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls. Items—such as drafts, notes, and acceptances—received for collection and credited to a depositor's account after payment has been received. Collection items are usually subject to special instructions and may involve additional fees.
Most banks impose a special fee, called a collection charge, for handling collection items. A Collective Investment Fund CIF is a trust created and administered by a bank or trust company that commingles assets from multiple clients. The federal securities laws generally require entities that pool securities to register those pooled vehicles such as mutual funds with the SEC. However, Congress created exemptions from these registration requirements for CIFs so long as the entity offering these funds is a bank or other authorized entity and so long as participation in the fund is restricted to only those customers covered by the exemption.
See related question about Collective Investment Funds. A person who signs a note to guarantee a loan made to another person and is jointly liable with the maker for repayment of the loan. See related questions about Joint Account Liability. The Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.
It was enacted by the Congress in A service which specializes in working with consumers who are overextended with debts and need to make arrangements with creditors. A fixed-rate mortgage offers you a set interest rate and payments that do not change throughout the life, or "term," of the loan. A conventional fixed-rate loan is fully paid off over a given number of years-usually 15, 20, or A portion of each monthly payment goes towards paying back the money borrowed, the "principal"; the rest is "interest.
An individual who signs the note of another person as support for the credit of the primary signer and who becomes responsible for the obligation. A form to be completed by an applicant for a credit account, giving sufficient details residence, employment, income, and existing debt to allow the seller to establish the applicant's creditworthiness.
Sometimes, an application fee is charged to cover the cost of loan processing. A type of insurance, also known as accident and health insurance, that makes payments on the loan if you become ill or injured and cannot work.
See related question about Credit Disability Insurance. A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. This is optional coverage. See related questions about Credit Life Insurance. A person or organization that sells, provides, performs, or assists in improving a consumer's credit record, credit history or credit rating or says that they will do so in exchange for a fee or other payment.
It also includes a person or organization that provides advice or assistance about how to improve a consumer's credit record, credit history or credit rating.
There are some important exceptions to this definition, including many non-profit organizations and the creditor that is owed the debt. A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
See related questions about Credit Reports. An agency that collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans.
Typical clients include banks, mortgage lenders, credit card companies, and other financing companies. Also commonly referred to as a consumer reporting agency or credit bureaus. See related questions about Credit Reporting Agencies. A number, roughly between and , that measures an individual's credit worthiness. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report.
Banks use a credit score to help determine whether you qualify for a particular credit card, loan, or service. See related questions about Credit Scores. A time of day established by a bank for receipt of deposits. After the cut-off time, deposits are considered received on the next banking day. See related question about Deposit Cut-Off Time. A debit may be an account entry representing money you owe a lender or money that has been taken from your deposit account.
A debit card allows the account owner to access their funds electronically. Debit cards may be used to obtain cash from automated teller machines or purchase goods or services using point-of-sale systems. The use of a debit card involves immediate debiting and crediting of consumers' accounts. See related questions about Debit Cards. Any person who regularly collects debts owed to others.
See related questions about Debt Collection. A debt elimination scheme is a plan that is advertised as a way for an individual to eliminate various types of debt simply by paying someone a small fee compared to the amount of debt to be eliminated. These schemes are fraudulent. As a result of using a fraudulent scheme, individuals will lose money, could lose property, will damage their credit rating, and possibly incur additional debt.
In addition, a creditor may take legal action against an individual to resolve a fraudulent attempt to eliminate debt. It is also possible for the victim to have identify theft occur by participating in such a fraudulent scheme. See related questions about Debt Elimination and Fraudulent Schemes. The percentage of a consumer's monthly gross income that goes toward paying debts.
Generally, the higher the ratio, the higher the perceived risk. Loans with higher risk are generally priced at a higher interest rate. See related question about Debt-to-Income Ratio. An itemized memorandum of the cash and other funds that a customer presents to the bank for credit to his or her account.
Data received by a creditor indicating that a credit applicant has not paid his or her accounts with other creditors according to the required terms. See related questions in Credit Reports. A payment that is electronically deposited into an individual's account at a depository institution.
A dispute submitted directly to the furnisher about the accuracy of information in your consumer report that relates to an account or other relationship you have with the furnisher. See related questions about Credit Disputes.
Certain information that Federal and State laws require creditors to give to borrowers relative to the terms of the credit extended. A signed, written order by which one party the drawer instructs another party the drawee to pay a specified sum to a third party the payee , at sight or at a specific date. Typical bank drafts are negotiable instruments and are similar in many ways to checks. A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's Website on the Internet.
This is also known as Internet or online banking. Electronic check conversion is a process in which your check is used as a source of information-for the check number, your account number, and the number that identifies your financial institution. The information is then used to make a one-time electronic payment from your account-an electronic fund transfer.
The check itself is not the method of payment. The transfer of money between accounts by consumer electronic systems-such as automated teller machines ATMs and electronic payment of bills-rather than by check or cash. Wire transfers, checks, drafts, and paper instruments do not fall into this category.
Embezzlement typically occurs in the employment and corporate settings. The process used to imprint or inscribe MICR characters on checks, deposits, and other financial instruments. Each check in encoded at the bottom with the dollar amount of the check. If that information is entered incorrectly, there is an encoding error.
Prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program. The required process for resolving errors involving electronic transfers to and from deposit accounts.
Reversion of real or personal property to the state when 1 a person dies without leaving a will and has no heirs, or 2 when the property such as a bank account has been inactive for a certain period of time. See related questions about Inactive Accounts. A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions-or until obligations have been fulfilled.
Securities, funds, and other assets can be held in escrow. The periodic examination of escrow accounts by a mortgage company to verify that monthly deposits are sufficient to pay taxes, insurance, and other escrow-related items on when due. Funds held in reserve by a mortgage company to pay taxes, insurance, and other mortgage-related items when due. An account held in the name of a decedent that is administered by an executor or administrator of the estate.
A period of time that allows the banks to exceed the maximum hold periods defined in the Expedited Funds Availability Act. The purpose of this Act is to help consumers protect their credit identities and recover from identity theft. One of the key provisions of this Act is that consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies Equifax, Experian, and TransUnion.
A federal law, established in and revised in , that gives consumers the right to see their credit records and correct any mistakes. The FCRA regulates consumer credit reporting and related industries to ensure that consumer information is reported in an accurate, timely, and complete manner. The Act was amended to address the sharing of consumer information with affiliates. Its purpose is to ensure ethical practices in the collection of consumer debts and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy.
It is often used in conjunction with the Fair Credit Reporting Act. A government corporation that insures the deposits of all national and State banks that are members of the Federal Reserve System.
Federal agency responsible for the emergency evaluation and response to all disasters, natural and man-made. FEMA oversees the administration of flood insurance programs and the designation of certain areas as flood prone. See related questions about Flood Insurance. The central bank of the United States.
The Fed, as it is commonly called, regulates the U. See Who Regulates My Bank? Undertaking to act as executor, administrator, guardian, conservator, or trustee for a family trust, authorized trust, or testamentary trust, or receiver or trustee in bankruptcy.
See related questions about Trusts. The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. An organization authorized by statute for ensuring the safe and sound operation of financial institutions chartered to conduct business under that agency's jurisdiction.
A real estate loan which is in a first lien position, taking priority over all other liens. In case of a foreclosure, the first mortgage will be repaid before any other mortgages. The interest rate and the payment remain the same over the life of the loan. The consumer makes equal monthly payments of principal and interest until the debt is paid in full. A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
Flood insurance protects against water from an overflowing river or a hurricane's tidal surge and also covers damage from water that builds up during storms. A strip of relatively flat and normally dry land alongside a stream, river, or lake that is covered by water during a flood. A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. See related questions about Foreclosure.
A check on which the drawer's signature has been forged. See related questions about Forgery. The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. See related question about Forgery. A key provision of the Fair and Accurate Credit Transactions Act of is the consumer's ability to place a fraud alert on their credit record.
A consumer would use this option if they believe they were a victim of identity theft. The alert requires any creditor that is asked to extend credit to contact the consumer by phone and verify that the credit application was not made by an identity thief.
A Federal law that mandates that all the records created and kept by Federal agencies in the executive branch of government must be open for public inspection and copying. The only exceptions are those records that fall into one of nine exempted categories listed in the statute. An account on which funds may not be withdrawn until a lien is satisfied and a court order or other legal process makes the account available for withdrawal e.
An account may also be frozen when there is a dispute regarding the true ownership of an account. The bank will freeze the account to preserve the existing funds until legal action can determine the lawful owner. An entity that provides information about a consumer to a consumer reporting agency for inclusion in a consumer report. A legal process that allows a creditor to remove funds from your bank account to satisfy a debt that you have not paid.
If you owe money to a person or company, they can obtain a court order directing your bank to take money out of your account to pay off your debt. An extension of credit from a financial institution that is guaranteed by a Federal or State government entity to assist with tuition and other educational expenses. The government entity is responsible for paying the interest on the loan and paying the lender to manage it.
The government entity also is responsible for the loan if the student defaults. A party who agrees to be responsible for the payment of another party's debts should that party default. Used to indicate that a certain amount of a customer's balance may not be withdrawn until an item has been collected, or until a specific check or debit is posted.
A line of credit secured by the equity in a consumer's home. It can be used for home improvements, debt consolidation, and other major purchases. Interest paid on the loan is generally tax deductible consult a tax advisor to be sure. The funds may be accessed by writing checks against the line of credit or by getting a cash advance. A home equity loan allows you to tap into your home's built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe.
Homeowners often use a home-equity loan for home improvements, to pay for a new car, or to finance their child's college education. The interest paid is usually tax-deductible.
Because the loan is secured by your home's equity, if you default, the bank may foreclose on your house and take ownership of it. This type of loan is sometimes referred to as a second mortgage or borrowing against your home. An account that has little or no activity; neither deposits nor withdrawals having been posted to the account for a significant period of time. An index-linked CD is a deposit obligation of the issuing bank and is often sold through bank branches and affiliated and unaffiliated brokers.
Index-linked CDs provide the investor the ability to participate in the appreciation, if any, of a particular index, during the term of the CD. Index-linked CDs may have complicated payout structures and may not be suitable or appropriate for all investors. Investors should carefully review the investment risk considerations detailed in the relevant offering documents and disclosure statements.
Index-linked CDs are not securities and are not registered under securities laws. See related questions about Index-linked Certificates of Deposit. The more frequently Gr interest is compounded, the higher the effective rate. In India interest on loans and advances is compounded on monthly basis as per RBI order. Loan payments and balances into a single account with one creditor.
This can be done in several ways. For example, you can transfer several high interest credit card balances onto one card with a lower rate. If you own a home, you can consolidate your debt with ww a low-interest home equity loan. Or, you can get a loan specifically designed for this purpose.
CPV is an important parameter in banks and a negative verification can lead to decline of the banking facilities sought. This helps establish the risks involved in the proposal and debt servicing capacity of the borrower. A wide range of iti criteria viz. Credit History of the person is an important criteria for sanction of mb credit.
Your credit available is your outstanding balance subtracted from your total credit line. For example, if your credit line is Rs 50, and you have an outstanding balance of Rs 40,, your credit available is 8A Rs 10,, which means that you have Rs 10, of credit left that you can use to make purchases with your credit card.
Many banks and credit issuers Gr Information regularly update the credit bureaus about your payment habits and Company how much money you owe. Potential creditors may check your credit report when you apply for a loan or a credit card. Reporting to at least one Credit Bureau is mandatory in India. They may include the following: income, amount of personal debt carried, number of accounts from other credit sources and credit history. Borrowing or drawing limit fixed by a bank for a customer depending on his co credit history, repaying capacity and relationship with bank.
A good credit management will ensure optimum utilization of borrowed funds and meet repyment obligations on Z. It is the official record of how you pay the money you owe to your creditors.
The information on your report can either qualify or disqualify you from obtaining credit cards, mortgages, loans etc. An individual can obtain credit 84 Credit-worthy iti report on himself from the credit bureau on payment of a fee. You are judged to be qualified to have credit. It attracts no rate of interest and is generally charged by the bank with maintenance charges. There is no limit to the number of transactions in this type of account.
The factor is computed by dividing the yearly rate by Gr days. Debit Card denotes immediate debit to the customer's account. More specifically, it is the amount of money that you have borrowed. It is the ww Burden percentage of your income that goes to paying your debts every month. Debt ratio usually gives a clear picture of your overall financial well-being.
To calculate your debt ratio, first add up all your monthly income including take-home pay after taxes. Then add up all your monthly payments for interest bearing loans and accounts, such as mortgages, student loans, credit cards and car loans. Finally, divide your monthly payments by your m income. Multiply the result by and that number is your debt ratio percentage. This means that you should look carefully at your monthly payments Z.
You should immediately stop accumulating debt and start looking for ways to decrease your debt or increase your income. Interest will usually still accumulate during deferment. Late fees are often levied on delinquent accounts.
A facility normally extended for payment of earnest money deposits in tenders. Gr 96 Depreciation Depreciation means a decline in the value of capital asset. It represents a cost of ownership and the consumption of an asset over time. For credit card accounts, this information may be found in the Card member Agreement. It is also called the loan papers. In operative account Down Payment The amount, which has to be paid by the borrower upfront while on taking a loan.
It is also called the margin amount or margin money. In a Letter of Credit it is the Beneficiary. The person who makes or draws a bill of exchange or cheque is called drawer. Charge Early repayment charge is also called prepayment penalty. Gr Prepayment charge Electronic Electronic Clearing Facility: An inter bank arrangement where by Clearing Service a customer can give instructions to his bank where he holds a ECS current or savings account to pay the monthly installments of w.
These mandates have to be endorsed by the bank branch maintaining the account. Gr Fixed Rate Also called the fixed interest rate, it is a fixed amount of interest, which is chargeable for a specified duration or for the entire tenure of the loan. It varies according to the market conditions.
This rate is linked to an external, market determined benchmark e. The lending is expressed with ww a spread above or below the benchmark rate. Repricing takes place after a predetermined period say, 6 months when the lending rate will be revised with reference to the benchmark rate as on that day.
Generally such transactions Credit Card are unauthorized by credit card holders and involve a lost, stolen, fabricated, counterfeit and fraudulent processing of a credit card. If you purchase a car under hire-purchase agreement with a finance company, then you become the hirer. Gr Hypothecation Hypothecation is a charge that is created on movable asset as security for a debt.
However, the ownership as well as possession of the asset is retained with the borrower. Eg: EMI loan. Interest is calculated at a specified percentage of the principal amount.
Semi Fixed Z. Fixed The interest rates of the loans sanctioned under fixed interest rate category remain fixed throughout the tenure of the loan. The intro rate is usually lower than the regular 8A APR. After the introductory period is over the rate switches to the regular APR. Gr Joint account Any account owned by two or more people. Change in the mode of operation requires the mandate of all accountholders w. If you miss the due date, the account is considered past due and you may be charged a late fee.
Late payments may be ww reflected on your credit report. If you have paid late numerous times, it may be difficult to get additional credit. The late payment charges m are fixed at the time of signing the finance contract. It involves screening all the documents etc related to the property.
This is done to ensure that the property in Z. When applying for credit, a borrower agrees to be liable for any charges to his or her account, including interest, fees and finance charges. Like assets, liabilities may also be of long term nature or short term nature. The loan agreement details the various aspects and terms and condition of the loan.
The borrower must read the loan agreement carefully as once he enters Gr into a legal contract with the bank by signing the loan agreement, the terms become binding. Post sanction of Disbursement the loan, the Bank conducts necessary verification and validation w.
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