Common Banking Terms

Bank Ombudsman : Bank
Ombudsman is the
authority to look into
complaints against Banks in
the main areas of collection
of cheque / bills, issue of
demand drafts, non-
adherence to prescribed
hours of working, failure to
honour guarantee / letter of
credit commitments,
operations in deposit
accounts and also in the
areas of loans and advances
where banks flout
directions / instructions of
RBI. This Scheme was
announced in 1995 and is
functioning with new
guidelines from 2007. This
scheme covers all scheduled
banks, the RRBs and co-
operative banks.

Bancassurance :
Bancassurance refers to the
distribution of insurance
products and the insurance
policies of insurance
companies which may be
life policies or non-life
policies like home insurance
- car insurance, medi-
policies and others, by
banks as corporate agents
through their branches
located in different parts of
the country by charging a
fee.

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.

Banking : Accepting for the
purpose of lending or
investment of deposits of
money from Public,
Repayable on demand or
otherwise and withdrawable
by cheques, drafts, order,
etc.

Basel-II : The Committee
on Banking Regulations and
Supervisory Practices,
popularity known as Basel
Committee, submitted its
revised version of norms in
June, 2004. Under the
revised accord the capital
requirement is to be
calculated for credit, market
and operational risks. The
minimum requirement
continues to be 8% of
capital fund (Tier I & II
Capital) Tier II shall
continue to be not more
than 100% of Tier I Capital.

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, Traveller's 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' .