Definitions of Some Important Banking Terms

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• GAAR (General anti avoidance rules): These are the provisions by which govt. Can restrict tax avoidance (some MNC’s deliberately avoid tax by doing transactions in tax heavens such as Mauritius, Luxembourg (Where Sahantha biotech fraud happened), Cayman Islands (where Vodafone fraud happened). Govt. India wants to plan these rules from 2016.

• GDP: GDP stands for Gross Domestic Product. It is a method of measuring the size of economy of a country. We can define as the total market value of all the goods and services produced in a given period of time in a country.

• GNP: The total value in money of all finished goods and services produced in an economy in one full year, and all net property income from abroad. The GNP growth rate is an important economic indicator for country’s economic development.

• Inflation: Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is more demand and less supply of the goods.

• Interest : The amount paid or charged on money over time. If you borrow money interest will be charged on the loan. If you invest money, interest will be paid (where appropriate to the investment).

• Internet Banking : Online banking (or internet banking ) allows customers to conduct financial transactions on a secure website operated by the bank. Banks are using internet as a channel to deliver their service to their customers is referred to internet banking.

• Kissan Credit Card : Kissan Credit card is issued by the bank to farmers to meet their cultivation needs and inputs, for a period of three years.

• Letter of Credit : The buyer of goods request his bank to give guarantee that the payment for the goods will be paid to the seller. IN such case the bank issues LC.

• Loan : A loan is a type of debt. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. There are different kinds of loans such as the house loan, auto loan etc.

• Mergers in Banking : Mergers refers to combination of two or more banking companies into a single one. Further, it shall continue on a single name.

• Mobile Banking : Operating banking services on his / her mobile screens like checking his bank account balances / fund transfers etc.., is referred mobile banking.

• Monetary Policy : The RBI issues monetary policy annually to control money supply in the economy and flow of credit by banks to control inflation. CRR, SLR, BANK Rate are the tools of monetary policy (recent monetary policy statement was released on 30th September 2014). Next will be on 2nd December 2014.

• Monetary policy: It is the process by which the central bank or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest.

• Monetized debt: The govt. can restore the original situation before economic crisis period by offering subsidies and royalties and different incentives to increase the total quality production of the country in stipulated time, US govt. did it in 2010-11.

• Moratorium : When the repayment of a loan starts after certain period of its disbursement, that period is called moratorium.