Banking Terms
Economics · बैंकिंग शब्दावली
📋Quick Overview
Banking terminology is one of the most frequently tested areas in competitive exams. Key concepts include CRR, SLR, Repo Rate, Reverse Repo, MSF, Bank Rate, LAF, OMO, Base Rate, MCLR, and PLR. Understanding the differences between these terms and knowing current rates is essential. Additionally, payment systems like RTGS, NEFT, IMPS, and UPI are regularly asked.
📖Key Banking Terms
| Term | Full Form | Definition | Current (Approx) |
|---|---|---|---|
| CRR | Cash Reserve Ratio | % of NDTL kept as CASH with RBI. No interest earned. | 4% |
| SLR | Statutory Liquidity Ratio | % of NDTL maintained in liquid assets (gold, govt securities) by bank itself | 18% |
| Repo Rate | Repurchase Rate | Rate at which RBI lends SHORT-TERM to banks against govt securities | 6.25% |
| Reverse Repo | Reverse Repurchase Rate | Rate at which banks park excess funds with RBI | 3.35% |
| MSF | Marginal Standing Facility | Emergency overnight borrowing from RBI at Repo + 0.25%. Can dip into SLR up to 2% | 6.50% |
| Bank Rate | Bank Rate | Long-term lending rate by RBI (without collateral). Penal rate. Equal to MSF. | 6.50% |
| LAF | Liquidity Adjustment Facility | Framework for Repo and Reverse Repo operations by RBI to manage daily liquidity | — |
| OMO | Open Market Operations | RBI buys/sells govt securities in open market to control money supply | — |
| Base Rate | Base Rate | Minimum lending rate below which banks cannot lend (replaced PLR in 2010) | — |
| MCLR | Marginal Cost of Funds Based Lending Rate | Replaced Base Rate from April 2016. More transparent, linked to marginal cost of funds | ~8.5% |
| PLR | Prime Lending Rate | Old benchmark rate (before 2010). Rate for most creditworthy borrowers | Replaced |
📖Repo Rate vs Bank Rate
📖RTGS vs NEFT vs IMPS
| Feature | RTGS | NEFT | IMPS |
|---|---|---|---|
| Full Form | Real Time Gross Settlement | National Electronic Funds Transfer | Immediate Payment Service |
| Settlement | Real-time (instant), one-by-one | Batch-wise (every 30 min), 24x7 since Dec 2019 | Real-time (instant), 24x7x365 |
| Minimum Amount | Rs 2 lakh | Rs 1 (no minimum) | Rs 1 (no minimum) |
| Maximum Amount | No upper limit | Rs 10 lakh (per transaction, can vary) | Rs 5 lakh |
| Availability | 24x7 (since Dec 2020) | 24x7 (since Dec 2019) | 24x7x365 |
| Operated by | RBI | RBI | NPCI |
| Charges | Free (since July 2019) | Free (since Jan 2020) | Nominal charges apply |