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Banks: A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses.
Banking: Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on demand or otherwise and withdraw able by cheques, drafts, order, etc.
Balance of Payment Account: A country's balance of international payment is a systematic statement of all economic transactions between the country and the rest of the world The statistical statement for a period mainly show (1) transactions in goods, services and income between the economy and the rest of the world, (2) changes of ownership and other changes in that economy's monetary gold, Special Drawing Rights (SDRs) and claims and liabilities to the rest of the world. Like other accounts, the balance of payments records each transaction either a plus or a minus. If a transaction earns foreign currency for the nation it is called a credit and if a transaction involves spending foreign currency it is debit. The two major components of balance of payments are balance on current account and balance on capital account. Balance on current account summarises the difference between nation's total exports and imports of goods and services and capital account balance depicts changes in loans or investments that private citizens or government make or receive from foreign private citizen or governments. Since each country's capital and current accounts have to sum to zero the counterpart of the surplus or deficit would be capital flows and change in reserves.
Balance of Trade: International trade is made up of purchase and sale of goods between countries and are collectively called imports and exports. Exports and imports are visible trade. The difference between exports and imports is called balance of trade. The balance of trade is favourable when the value of exports exceeds imports (trade surplus) and unfavourable or adverse when value of imports exceed exports (trade deficit). Transactions in services relate to payment and receipt for services such as shipping, insurance, travel and tourism, transfer of interest, migrant remittances, interest and dividend payments, etc. These services are called invisibles. Trade in goods and services constitute the current account. In addition, there are capital transactions in the form of payments and receipts due to transfer of funds for acquiring assets, extension of credits and loans, investments etc. These three groups of economic transactions constitute the balance of payments of a country.
Bank Credit to Commerical Sector: This denotes credit extended by RBI to commercial sector by investing in shares/bonds of financial institutions, ordinary debentures of cooperative institutions and loans to financial institutions and bills discounted by commercial banks with RBI and other banks. Other bank's credit to commercial sector is in the form of loans, cash credit, overdrafts, bills discounted and investment in approved securities and other investment.
Bank Credit to Government: Reserve Bank Credit to Government is the sum of the claims of the bank on the Central Government in the form of holdings of dated securities, ways and means advances, Treasury Bills and rupee coins. These assets less the Centre's cash balances with the RBI give Net RBI Credit to Central Government. Net RBI Credit to State Governments comprises loans and advances to state Governments, less their deposit balance with banks. Other banks' credit to Government represents their investments in long term and short- term Government securities. Bank credit to Government is one of the factors explaining the variations in money supply. Other factors giving rise to change are RBI credit to commercial sector, other banks' credit to commercial sector, government's currency liabilities, net foreign exchange asset of RBI and other banks, and net non-monetary liabilities of RBI and banks.
Bank Rate: An instrument of general credit control and represents the standard rate at which the RBI is prepared to buy or rediscount bills of exchange or other commercial paper eligible for purchase under the provisions of the Act. The Bank Rate influences the cost of financial accommodation extended by RBI. The impact of a change in the Bank Rate depends upon such factors as the extend of commercial banks' dependence on the Reserve Bank for funds, the availability of funds to banks from other sources, the extent to which other interest rates are directly influenced by changes in the Bank Rate, and the degree of importance attached to a change in the Bank Rate as an indicator of the stance of monetary policy.
Banking Codes and Standad Board of India (BCSBI): This Board was set in pursuance of a recommendation of the Committee on Procedures and Performance Audit on public services to benchmark the existing level of public services in the banking sector. This is an autonomous body established by the RBI and the banks to evaluate and oversee the observance of voluntary code of conduct by the banks. The purpose is to ensure that comprehensive code of conduct for fair treatment of customers is evolved and adhered to. As a part of the collaborative arrangement, the Reserve bank would build up corpus of BCSBI to make it a self-sustaining organisation.
Banking Ombudsman Scheme: The Banking Ombudsman Scheme was introduced in 1995 under the provision of Banking Regulation Act 1949 covering scheduled commercial banks and scheduled primary cooperative banks and Regional Rural Banks having business in India. The scheme is intended to establish a system of Banking Ombudsman for expeditious and inexpensive resolution of customer complaints. Any person whose grievance against a bank is not resolved to his satisfaction with in a period of two months after the bank received the complaint can approach the Banking Ombudsman if the complaint of the deficiency of service is pertaining to any of the matters specified in the scheme. Presently 15 Banking Ombudsman Offices administer the scheme in the country. Apart from enabling resolution of complaints relating to provision of banking services by mediating between the bank and the aggrieved party or by passing an award in accordance with the scheme, Banking Ombudsman endeavours to resolve disputes by way of arbitration between one bank and its constituents, as well as between one bank and another bank as may be agreed upon by the contesting parties in accordance with the provisions of the B.O scheme and Arbitration and Conciliation Act.
Bank for International Settlements (BIS): The Bank for International Settlements was set up in 1930 and is situated in Basle. Under article 3 of the Bank's statute, the basic object is to promote cooperation among central banks and as such is designated as "Central Banks' Bank". It carries out a wide range of banking operations arising from the task of assisting the Central Banks in managing and investing their monetary reserves. It promotes international monetary cooperation facilitating exchange of views about international banking and monetary system among the central bankers and central bank experts. BIS is also a research centre particularly in the monetary sphere. BIS acts as trustee or agent for a number of international bodies or arrangements, in the execution of international payment agreements. The BIS currently has 55 member central banks.
Bancassurance: Bancassurance is an important channel of distribution of insurance policies, wherein banks own and sell the insurance products and bear the risk- in India however, through this channel, policies are sold by bank staff at the bank counters, but are not owned by the banks. This channel is jointly used by banks and the insurance companies.
Base Rate: From July 1 2010, banks will move to a new, more transparent regime of loan pricing. They will jettison the Benchmark Prime Lending Rate (BPLR) and price loans off a 'base rate'. Unlike the BPLR that was set somewhat arbitrarily by banks, the base rate will follow an explicit formula that factors in a bank's cost of deposits, operating costs (expenses of running its branches, for instance), the cost of statutory drafts on bank funds imposed by the Reserve Bank of India (the Cash Reserve Ratio and Statutory Liquidity Ratio) and the profit margin. The base rate will help borrowers to compare interest rates offered by various banks and make the process of how banks arrive at interest rates for loans more transparent. RBI has stipulated that banks cannot charge below the base rate for most loans. (There are a couple of exceptions like agricultural loans and export credit.) While the new model will ensure greater transparency, it need not mean lower lending rates for borrowers. In fact, banks' blue-chip corporate borrowers could see some increase in their cost of borrowing. The reason is somewhat simple. RBI allowed banks to lend below their prime lending rates and the majority of banks did the bulk of their corporate lending at 'sub-PLR rates'.
Basel Committee on Banking Supervision (BCBS): The Basel Committee is a committee of bank supervisors drawn from 13 member countries (Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, The Netherlands, Spain, Sweden, Switzerland, United Kingdom and United State of America). It was founded in 1974 to ensure international cooperation among a number of supervisory authorities. It usually meets at the Bank for International settlements in Basel, Switzerland, its permanent Secretariat. The Committee framed two Capital Accords, Basel I (1988) and Basel II (1999).
Banker's Lien: Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary.
Brick & Mortar Banking: Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking, tele banking etc.
Business of Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Travelers’ Cheques, doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central Government may notify in the official Gazette.
Bouncing of a cheque: 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”. This is known as 'Bouncing of a cheque’.
Basis Point: One hundredth of 1%. A measure normally used in the statement of interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis points. Bear Markets: Unfavorable markets associated with falling prices and investor pessimism.
Bid-ask Spread: The difference between a dealers’s bid and ask price.
Bid Price: The highest price offered by a dealer to purchase a given security.
Bill: It is a document which gives evidence of in-debtedness of one party to another. A bill may simply be written order for goods which can be used as security for a loan to the supplier from a bank, or it may be a security such as a Treasury Bill or Bill of Exchange.
Blue Chip: It is a first-class Equity share, the purchase of which (the hope is) entails little risk even in economic recessions (Depression). The term is, of course, applied as a matter of subjective judgement.
Board for Financial Supervision: This was constituted in November 1994, under the Central Board of Directors of RBI with a view to give undivided attention to supervision of banks, all India financial institutions and NBFCs . It functions within the framework of RBI (BFS) Regulation 1994 exclusively framed for the purpose in consultation with Government of India. The Governor of RBI is the Chairman of the Board and four non-official directors of the Central Board are the members. The Deputy Governors of RBI are the Ex-officio members.
Bond: It is a form of fixed-interest Security issued by central or local governments, companies, banks or other institutions, e.g. National Savings Income Bonds. Bonds are usually carry fixed interest and may be irredeemable and may be secured or unsecured. Economists frequently make use of the term bond in theoretical analysis, for example of choices between holding cash and other financial assets, in which a bond is a proxy for a whole range of securities.
Bull: He is Stock Exchange speculator who purchases Stocks and Shares in the belief that prices will rise and that he will be able to sell them again later at a profit. Bull is the opposite of Bear. The market is said to be bullish when it is generally anticipated that prices will rise.
Bullion: It means gold, silver, or other precious metal in bulk, i.e. in the form of ingots or bars rather than in coin. Gold billion is used in international monetary transactions between Central Banks and forms partial backing for many currencies. A bullion market is a Gold Market.
Bear: A Bear is an investor who reasons out the southward movement of share prices thereby limits oneself to trade of short-term nature. A stock market operator who expects share prices to fall and keeps selling (to pick up the shares later a lower price for actual delivery), causing selling pressure and lowering the prices further. Term derived from the attacking posture of the bear, pushing downwards.
Budget Deficit: The excess of government expenditure over government income, which must be financed either by borrowing or by printing money. Budget deficit is measured by calculating the total expenditure over and above the total receipts.
  • Budget Deficit = total Receipts (Revenue + Capital) – Total Expenditure (Revenue + Capital) .
  • Revenue receipts : Receipts from tax, interest from loans provided by the Government, dividends, profits from Public Sector Undertakings (PSUs) and grants.
  • Capital receipts : Receipts from repayment of loans by the State Governments, PSUs, sale of Government assets.
  • Revenue expenditure : Salaries, interest payment, subsidies, pension.
  • Capital expenditure : Loan and advances to State Governments and PSUs and capital outlay.
Book Value: The amount of stockholders’ equity in a firm equals the amount of the firm’s assets minus the firm’s liabilities and preferred stock.
Broker: Individuals licensed by stock exchanges to enable investors to buy and sell securities.
Brokerage Fee: The commission charged by a broker.
Bull Markets: Favorable markets associated with rising prices and investor optimism.

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