Banking Awareness : Short Note

1. Money Laundering: means acquiring, owning, possessing or transferring any proceeds of money of crime. Black Money in short!

2. Hybrid Debt-Capital instruments: Capital Market instruments that combine certain characteristics of equity and some of debt; any instrument which combines the qualities of 2 or more traditional instruments will be referred to as a ‘hybrid’.

3. Pillars of Basel III: 

1. Minimum Capital Standards
2. (Supervisory Review
3. Market Discipline (Imp to know from interview point of view  too.)

4. Financial Literacy: or financial education stands for being knowledgeable about and to be able to effectively make use of financial resources, such as banking/investing etc.

5. Narrow Banking: is a particular system of banking, in which a bank places its funds in risk free assets (ex.: govt. securities), with maturity period matching its liability’s (when the bank has to pay back to the customer) maturity timing – this helps to maintain proper liquidity at the time of demand payment and their funds have no chance of becoming an NPA. 

So, narrow banking is like narrow mindedness and to play it safe!

6. Venture Capital: capital as you know is source of fund, so, venture capital is the capital or source of fund which is used for financing new business ideas, which involves new technologies, high risk and potential high returns!

7. Index Linked Bonds: is the kind of bonds, the redemption value of which increases or decreases according to the movements in the rate of inflation. Wholesale Price Index is used as the inflation measure.

8. Z-Group shares: Shares of those companies which do not adhere (follow) the SEBI’s listing agreements.

9. Casino Banking: No Banks are not running casinos!

This term is used to refer to the practice of Banks, doing risky speculative financial activities like trading in the share market to earn profits and to show more profits in their balance sheet. This profit will be over and above the normal business profits that they earn from banking activities!

10. AIR: Annual Information Return. This return is to be filed by banks with the income tax department; this return helps the Tax authorities to look into transactions of tax payers.