30 Most Common Terms and Definitions for Bank PO exams

The post of PO, ie ,Probationary Officer on a bank is the entry point for a job in a bank especially for graduates who have just passed out and are without no prior experience. So some of the commonly asked terms which are asked in bank PO exams are given below for the aid of the candidates who are preparing for the bank PO exams.

30 Most Common Terms and Definitions

Here are the 30 most common terms along with their definitions which are frequently asked in Bank PO exams :

Acceptance Letter

Acceptance letter is letter that a borrower or applicant gives to a lender after reading the terms and policies of the loan. The letter signifies the borrower’s willingness to accept the loan within a particular period of time.

Account Balance

There are two types of account balance – Opening Account Balance or Beginning of the Day ( BOD
) balance and the other is Closing Account Balance or End of the Day ( EOD ) Balance. BOD is the balance in the account at the beginning of each day. It includes all deposits and withdrawals that were posted earlier. EOD is that account balance that is computed at the end of every business day.

Active Account

An active account is that Bank account where there are regular transactions. In other words, it is that bank account that is not dormant or inoperative or under an attachment order of the court or enforcement authorities.

Additional Cardholder

When another member is added to an existing card thereby extending its usage is called an additional cardholder. By adding an additional cardholder, the existing cardholder allows the person to make purchases and use the credit card. However, the additional cardholder does not have to pay the monthly outstanding balance. This responsibility rests with the principal cardholder only.

Advance EMI

Advance EMI is the number of monthly instalments, paid in advance at the time of disbursal of loan.

Affinity Card

Credit cards linked to special organizations like charity, health club, sports club and exclusive clubs are called affinity cards. This type of credit card can also help to raise funds when a part of income from every transaction goes towards the benefit of the relevant organization.

Annual Percentage Yield

Annual Percent Yield or APY is the percentage rate reflecting the total amount of interest paid on a deposit account like savings, CDs etc based on the interest rate and the effect of interest compounding for one year,

Asset

Asset can be defined as cash or anything that you possess that can be turned in to cash. It can include anything like property, goods, savings or investments. The opposite of an asset is a liability. For a bank, its assets are basically the loans it makes.

Automatic Payment

An arrangement that allows payments to be made automatically from a bank account to pay bills like insurance payments, loan payments etc. is called automatic payment. Such payments are usually scheduled to be made on a fixed date of a month.

Bank Draft

Bank Draft is an instrument issued by one branch of a bank to another branch of a bank containing an order to pay a certain sum on demand to the person on whose name he draft is made. It is used to transfer funds or to provide the customer funds payable at the bank at different location. Bank drafts are valid only for a certain period.

Base Rate

Base Rate is a new reference rate used by banks for loan pricing w.e.f July 2010. It captures cost of deposits, costs of capitals and unallowable overheads.

Billing Cycle

The number of days between the last statement date and the current statement date is called the billing cycle. Most of the service providers use a monthly billing cycle.

Business Credit Card

A credit card that comes with special features and rewards for the corporate users is a business credit card. These are very useful in separating business expenses from personal expenses.

Capital Adequacy Ratio

Capital Adequacy Ratio is defined as the capital to assets ratio which banks are required to maintain against risks. Due to this reason, it is also called Capital to Risks Assets Ratio.

Cash Back Credit Card

It is a special type of credit card that pays back in cash. Whenever a cash back credit card is used to make a purchase, a part of it is returned back.

Certified Cheque

Certified Cheque is a cheque for which the bank guarantees payment.

Compound Interest

Compound interest is that type of interest which is calculated not only on the initial principal value but also on the accumulated interests of the prior periods.

Delinquency

When loan payments are not made according to the terms of agreement is known as delinquency. Late fees are often levied as delinquent accounts.

Debit Card

Debit Card is a card issued by a bank for cash withdrawal from accounts through ATMs.

EMI

EMI or Equated Monthly Instalments is that amount which is to be paid to the Bank towards the loan taken by the borrowers on a monthly basis.

E – Payment

E – Payment refers to the online payment system that allows the customer to pay online from their account.

Fixed Deposit

Fixed deposit is the deposit of funds in a bank under an agreement that the funds must be kept deposited in the bank for a given time period under a predefined interest.

Installment loan

A loan that is promised to be paid back by paying the same amount of money on a regular basis for a specific period of time is called an installment loan.

Joint Account

Any bank account owned by two or more people is called a joint account. These types of accounts can be operated jointly or by any one or more survivor(s) or any other mode mandated by the account holders.

Ledger Folio

This is a term used to denote a set of 40 consecutive transactions in an account.

Linked Account

Any account linked to another account at the same financial institution so that the funds can be transferred electronically between the two accounts is called a linked account.

Maturity date

Maturity date in respect of a fixed deposit account is the date on which the funds will become liable for payment by the bank.

Mortgage

Mortgage is the written pledge of the property of a borrower which is kept as a security for the repayment of the loan.

Overdraft

The situation of overdraft occurs when a person does not have enough funds in his / her account to cover a cheque or some withdrawal and the bank pays the item and overdraws the account.

Passbook

It is issued by a bank or a financial institution to record deposits, withdrawals and the amount of interest earned in a savings account.

Leave a Reply

Your email address will not be published. Required fields are marked *