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Banking Term: Sarfaesi Act

Sarfaesi Act Stands for Securisation and reconstruction of financial assets and enforcement
of securities interest Act.
It was enacted to regulate securitization and reconstruction of financial assets and
enforcement of security interest created in respect of Financial Assets to enable realization
of such assets.
The SARFAESI Act provides for the manner for enforcement of security interests by a
secured creditor without the intervention of a court or tribunal.
In exercise of powers conferred by SARFAESI Act, 2002, Reserve Bank of India has issued
guidelines to registration, measures of asset reconstruction, prudential norms, acquisition of
financial assets etc.

Banking Term: Mortgage

A Mortgage is a method of using property as a security for the performance of an obligation,

usually the payment of a debt.
The term Mortgage refers to a legal device used for this purpose and it is also commonly
used to refer to a debt secure by the Mortgage.
It is a way to use one's real property, like land, a house, or a building, as a guarantee for a
loan to get money
The loan provides them the money to buy the house and the loan is guaranteed by the
house.

Banking Term: Free Trade Zone

It is a customs-defined area in which goods or services may be processed or transacted

without attracting taxes or duties or being subjected to certain regulation.
A special case is t free Port into which goods are imported free of custom tariffs or taxes.
The objective behind the scheme is to encourage bulk exporters.
Free trade zone (FTZ) is a specific class of special economic zone. They are a geographic area
where goods may be landed, handled, manufactured or reconfigured, and reexported
without the intervention of the customs authorities.

Banking Term: RTGS

Real time gross settlement is a fund transfer mechanism where transfer of money takes
place from one bank to another on a real time and on gross basis.
This is the fastest possible money transfer system through the banking channel.
The RTGS system is primary for large value transaction.
The minimum amount is Rs. 1 Lakh and there is no upper ceiling forRTGS transaction while
the minimum and maximum stipulation has been fixed for EFT and NEFT.

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Bank Clerk Study Material by www.questionpaperz.in

Banking Term: Entrepreneur

He is an economic agent who perceives market opportunities and assembles the factor of
production to exploit them in a firm. An individual who, rather than working as an employee,
runs a small business and assumes all the risk and reward of a given business venture, idea,
or good or service offered for sale.
Entrepreneurs play a key role in any economy.
These are the people who have the skills and initiative necessary to take good new ideas to
market and make the right decisions to make the idea profitable.
The reward for the risks taken is the potential economic profits the entrepreneur could earn.

Bankrupt

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:
Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having
the debtor declared bankrupt.
Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial
obligations and willingness to be declared bankrupt.

Banking Term: Convertible Bonds

A bond with an option, allowing the bondholder to exchange the bond for a specified
number of shares of common stock in the firm.
A conversion price is the specified value of the shares for which the bond may be exchanged.
The conversion premium is the excess of the bonds value over the conversion price.
It is a hybrid security with debt- and equity-like features.
Convertible bonds are most often issued by companies with a low credit rating and high
growth potential.

Banking Term: Bouncing of Cheque

Bouncing of Cheque means where an account does not have sufficient balance to honour
the cheque issued by the customer
The cheque is returned by the bank with the reason "funds insufficient" or "Exceeds
arrangement.
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Bank Clerk Study Material by www.questionpaperz.in

Bouncing of Cheque is written inadvertently by people who simply were unaware that their
bank balances were too low.
It is always a good idea to have a small overdraft line of credit to cover such situations, or
keep a close eye on your balance near bill-paying time.

Banking Term: Poverty Line

People living below the barest desirable nutritional standards of a daily calorie intake of
2400 calories per person in rural and 2100 calories per person in urban area said to be living
below the poverty line.
In 1980, the Planning Commission in its sixth Five year Plan document defined poverty line
on the basis of nutritional standards.
The daily per capita expenditure is pegged at 32 rupees for the rural poor and at 47 rupees
for the urban poor.
Poverty line based on the average monthly per capita expenditure is pegged at 972 rupees
for rural India and 1407 rupees for urban India.
The all-India poverty line in terms of consumption expenditure for a family of five is
estimated at 4760 rupees per month in rural areas and 7035 rupees per month in urban
areas in 2011-12.
CRR

CRR stands for Cash Reserve Ratio

CRR is the ratio of banks total deposits for which they are bound to keep with the RBI.
It could be between minimum 3% to maximum 15%
CRR is the most effective measure to check inflation
If CRR increases bank are bound to keep more money with the RBI & the liquidity in market
decreases & the value of money increases & inflation come down.

Banking Term: National Saving Certificate

A bond issued by government (Department for National Saving).

There have been some thirty one different issues of these certificates on which an interest,
an index-linked increase or a bonus are payable on maturity or earlier.
The certificate can be enchased at any time and interest is taxfree.
Scheme specially designed for Government employees, Businessmen and other salaried
classes who are Income Tax assesses.

Banking Term: Equity Multiplier

It measures financial leverage and represents both a profit and risk management.
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Bank Clerk Study Material by www.questionpaperz.in

It compares assets with equity and large values indicate a large amount of debt financing a
comparison to equity.
It has impact on return on assets.
A critical scrutiny of EM helps to evaluate whether capital support is proportionate to the
risks assumed in the balance sheet.
Investment Multiplier = (Total Assets )/(Total Equity)

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