1. Tell us what is investment banking?
Investment banking manages portfolios of financial assets, commodity and currency, fixed income, corporate finance, corporate advisory services for mergers and acquisitions, debt and equity writing etc.
Consumer bank is a new addition in the banking sector, such bank exist only in countries like U.S.A and Germany. This bank provides loans to their customer to buy T.V, Car, furniture etc. and give the option of easy payment through instalment.
A crossed cheque indicates the amount should be deposited into the payees account and cannot be cashed by the bank over the counter. Here cross-lines on the left side corner of the cheque that indicates crossed cheque.
4. What is 'Fixed' APR and 'Variable' APR?
'APR' (Annual Percentage Rate) can be 'Fixed' or 'Variable' type. In 'Fixed APR', the interest rate remains same throughout the term of the loan or mortgage, while in 'Variable APR' the interest rate will change without notice, based on the other factors like 'prime rate'.
The 'balloon payment' is the final lump sum payment that is due. When the entire loan payment is not amortized over the life of the loan, the remaining balance is due as the final repayment to the lender. Balloon payment can occur within an adjustable rate or fixed rate mortgage.
A credit check or a credit report is done by the bank on a basis of an individual's financial credit. It is done in order to make sure that an individual is capable enough of meeting the financial obligation for its business or any other monetary transaction. The credit check is done keeping few aspects in concern like your liabilities, assets, income etc.
A cashier cheque issued by the bank on behalf of the customer and takes the guarantee for the payment. The payment is done from the bank's own funds and signed by the cashier. The cashier cheque is issued when rapid settlement is necessary.
Payroll cards are types of smart cards issued by banks to facilitate salary payments between employer and employees. Through payroll card, employer can load salary payments onto an employee's smart card, and employee can withdraw the salary even though he/she doesn't have an account in the bank.
Charge off is a declaration by a lender to a borrower for non-payment of the remaining amount, when borrower badly falls into debt. The unpaid amount is settled as a bad debt.
10. What do you mean by 'cheque endorsing'?
'Endorsing cheque' ensures that the cheque get deposited into your account only. It minimizes the risk of theft. Normally, in endorsing cheque, the cashier will ask you to sign at the back of the cheque. The signature should match the payee.
11. What is bank? What are the types of banks?
A bank is a financial institution licensed as a receiver of cash deposits. There are two types of banks, commercial banks and investment banks. In most of the countries, banks are regulated by the national government or central bank.
12. What is overdraft protection?
Overdraft protection is a service that is provided by a bank to their customer. For instance, if you are holding two accounts, saving and credit account, in the same bank. Now if one of your accounts does not have enough cash to process the cheques, or to cover the purchases. The bank will transfer money from one account to another account, which does not have cash so to prevent check return or to clear your shopping or electricity bills.
13. What is the 'cost of debt'?
When any company borrows funds, from a financial institution (bank) or other resources the interest paid on that amount is known as 'cost of debt'.
14. What is adjustment credit?
Adjustment credit is a short-term loan made by the Federal Reserve Bank (U.S) to the commercial bank to maintain reserve requirements and support short term lending, when they are short of cash.
Home equity loan, also known as the second mortgage, enables you to borrow money against the value of equity in your home. For example, if the value of the home is $1, 50,000 and you have paid $50,000. The balance owed on your mortgage is $1, 00,000. The amount $50,000 is an equity, which is the difference of the actual value of the home and what you owe to the bank. Based on equity the lender will give you a loan. Usually, the applicant will get 85% of the loan on its equity, considering your income and credit score. In this case, you will get 85% of $50,000, which is $42,500.
16. What is Convertibility Clause?
For certain loan, there is a provision for the borrower to change the interest rate from fixed to variable and vice versa is referred as Convertibility Clause.
'Bill Discount' is a settlement of the bill, where your electricity bill or gas bill is sold to a bank for early payment at less than the face value and the bank will recover the full amount of the bill from you before bill due date. For example, electricity bill for XYZ is $1000; the electricity bill company will sell the bill to the bank for 10% to 20% discount to the face value. Here, the bank will buy the electricity bill for $900 whose face value is $1000, now the bank will recover, full amount of bill from the customer i.e $1000. If the customer fails to pay the bill, the bank will put interest on the outstanding bill and ask the customer for the payment.
18. What is Internet banking system?
Internet banking allows the customers and financial institution to conduct final transaction using banks or financial institute website.
19. Explain what is Line of Credit?
Lines of credit are another type of business loan provided by commercial banks. It is more like a security for your business; the bank allows the customer to withdraw the amount from readily available funds in an adverse time. Customer or Company can pay back over time and withdraw money again without going into the loan process.
20. What are the different types of 'Fixed Deposits'?
There are two different types of 'Fixed Deposits'
Special Term Deposits: In this type of 'Fixed Deposits', the earned interest on the deposit is added to the principal amount and compounded quarterly. This amount is accumulated and repaid with the principal amount on maturity of the deposit.
Ordinary Term Deposits: In this type of 'Fixed Deposits', the earned credit is credited to the investor's account, once in a quarter. In some cases, interest may be credited on a monthly basis.
The earned interest on fixed deposits is non-taxable. You can also take a loan against your fixed deposit.
Commercial bank is owned by the group of individuals or by a member of Federal Reserve System. The commercial bank offer services to individuals, they are primarily concerned with receiving deposits and lending to business. Such bank earns money by imposing interest on the loan borrowed by the borrower. The money that is deposited by the customer will be used by the bank to give business loan, auto loan, mortgages and home repair loans.
22. What are the types of accounts in banks?
a) Checking Account:
You can access the account as the saving account but, unlike saving account, you cannot earn interest on this account. The benefit of this account is that there is no limit for withdrawal.
b) Saving Account:
You can save your money in such account and also earn interest on it. The number of withdrawal is limited and need to maintain the minimum amount of balance in the account to remain active.
c) Money Market Account:
This account gives benefits of both saving and checking accounts. You can withdraw the amount and yet you can earn higher interest on it. This account can be opened with a minimum balance.
d) CD (Certificate of Deposits) Account:
In such account you have to deposit your money for the fixed period of time (5-7 years), and you will earn the interest on it. The rate of interest is decided by the bank, and you cannot withdraw the funds until the fixed period expires.
23. What are the types of Commercial Banks?
a) Retail or consumer banking:
It is a small to mid-sized branch that directly deals with consumer's transaction rather than corporate or other banks
b) Corporate or business banking:
Corporate banking deals with cash management, underwriting, financing and issuing of stocks and bonds
c) Securities and Investment banking:
Investment banking manages portfolios of financial assets, commodity and currency, fixed income, corporate finance, corporate advisory services for mergers and acquisitions, debt and equity writing etc.
d) Non-traditional options:
There are many non-bank entities that offer financial services like that of the bank. The entities include credit card companies, credit card report agencies and credit card issuers
24. What are the different ways you can operate your accounts?
You can operate your bank accounts in different ways like
a) Internet banking
b) Telephone or Mobile banking
c) Branch or Over the counter service
d) ATM ( Automated Teller Machine)
25. What are the different types of banking software applications are available in the Industry?
There are many types of banking software applications and few are listed below
a) Internet banking system:
Internet banking allows the customers and financial institution to conduct final transaction using banks or financial institute website.
b) ATM banking (Automated Teller Machine):
It is an electronic banking outlet, which allows customers to complete basic transaction.
c) Core banking system:
Core banking is a service provided by a networked bank branches. With this, customer can withdraw money from any branch.
d) Loan management system:
The database collects all the information and keeps the track about the customers who borrows the money.
e) Credit management system:
Credit management system is a system for handling credit accounts, assessing risks and determining how much credit to offer to the customer.
f) Investment management system:
It is a process of managing money, including investments, banking, budgeting and taxes.
g) Stock market management system:
The stock market management is a system that manages financial portfolio like securities and bonds.
h) Financial management system:
Financial management system is used to govern and keep a record of its income, expense and assets and to keep the accountability of its profit.
