Banking is full of concepts and terms that can be quite complex to comprehend. Even the most common terms have certain features which not seem obvious to the common man. But, if you wish to work for a bank, there are a lot of terms that you must be aware of.
This is because finance and banking have become a rather important part of our lives and therefore it is necessary you take some time out to learn new phrases or put in an effort to understand the old ones. It could yield profitable results for you.
Listed below are a few banking terms that would make it easier for you to find a job for yourself in the bank.
1. Base Rate
This is the minimum rate that a bank can charge to its most credit worthy customer.
According to the norms of the RBI, a bank can never lend loans to an individual below their base rate. However, there is an exception to the bank employees, Loans to the depositors of the banks made against their own deposits along with the subvention to the central bank.
2. MICR (Magnetic Ink Character Recognition)
The MICR code is pronounced as my-ker and is a 9 digit number that is printed on a demand draft or cheques. This code is printed with the help of a special kind of ink which is made of a magnetic material. Out of these 9 digits, the first 3 denotes the city.
The 4th to 6th digit indicates the bank while the last 3 denote the bank’s branch number. This code is interpreted with the help of a machine that reduces the chances of error in the cheque’s clearance and therefore helps in making the transfer of funds easier.
3. No-frills Account
The synonym of the zero balance account is No-frills account. It is a unique kind of savings account that is offered by the banks. In such accounts, you aren’t bound to maintain a certain minimum balance to keep your account functioning. However, this won't restrict you from making use of the free cheque book issuance or the facility of net banking.
4. Routing Number
This is the nine-digit number which helps in identifying the bank. Each bank would have a unique routing number. The larger banks might also have several routing numbers that would be based on the geographic location as to where the account was opened.
5. Processing Fee
The processing fee is the amount that the bank levies when they are processing the borrower’s loan application. The fee is a rather small percentage of the sanctioned loan. You might have often heard of the banks reducing their processing fee so as to attract more customers.
6. IFSC Code
The IFSC code is an 11 digit alphanumeric code that helps in identification of the branches of a bank. The first 4 numbers denote the code of the bank while the 5th number is the control character. The last 6 digits represent the bank’s branch. When you are transferring money through NEFT or RTGS, you would need this IFSC code.
7. Traveler’s Cheque
The traveler’s cheque is the fixed-amount, pre-printed cheque that is issued by the bank. This allows the individual signing it to pay someone else. In simpler words, it functions as the alternative of the cash when you are traveling. In the case of this cheque being lost or stolen, it can be replaced by the financial institution that issued you the traveler’s cheque.
NEFT stands for National Electronic Funds Transfer and is basically the process of transferring funds through electronic means. This could be through a telephone, ATM or an electronic terminal. With NEFT, you can transfer the funds within the same bank or inter-bank. NEFT is much slower than RTGS as in here, the settlement takes place in batches rather than happening individually.
9. Linked Accounts
Any of the two or more accounts within the same bank that are linked with each other, here in funds can be transferred electronically between the accounts. There are also several other specified services that these accounts can share.
Of course, these were just a handful of terms but, understanding these would help you to get yourself a respectable position in a reputed bank.
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