Banking Term Part-2

Part-1st to continue. ...

8. What is KYC?
      The Reserve Bank of India (RBI) has advised banks to follow ‘KYC guidelines’, wherein certain personal information of the account-opening prospect or the customer is obtained. The objective of doing so is to enable the Bank to have positive identification of its customers.  This is also in the interest of customers to safeguard their hard earned money.
      The KYC guidelines of RBI mandate banks to collect three proofs from their customers. They are-
Photograph                   
Proof of identity            
Proof of address
9. What is Sub-prime crisis?
The current Subprime crisis is due to sub-prime lending. These are the loans given
to the people having low credit rating.

10. What is Base Rate?
        It is the minimum rate of interest that a bank is allowed to charge from its customers. Unless mandated by the government, RBI rule stipulates that no bank can offer loans at a rate lower than BR to any of its customers.
      It is effective from, July 1, 2010. However, all existing loans, including home loans and car loans, will continue to be at the current rate. Only the new loans taken on or after July 1 and old loans being renewed after this date will be linked to BR.

11. What is SWIFT?
SWIFT  :- Society for worldwide Interbank financial tele- communication.
India was 74th Nation to join SWIFT Network.
SWIFT Code is a standard format of bank Identifier code. This code is used particularly in International transfer of money between banks.
A majority of FOREX related message are sent to correspondent banks abroad through SWIFT.
SWIFT Code consist 8 or 11 character when code is 8 digit, It is referred to primary office 4 – bank code
2 – country code
2 – location code
3 – branch code (optional).

12. What  is Swabhimaan Yojana?
Swabhimaan is a financial inclusion plan of bank to take banking to the door steps of the remote village where banking facility are not available.
13. What is NOSTRO and VOSTRO account?
NOSTRO Account: A NOSTRO account is maintained by an Indian bank in the foreign countries.
VOSTRO Account: a vostro a/c is maintained by a foreign bank in India with their corresponding bank.

14. What is a DeMat Account?
DeMat is nothing but a dematerialized account. If one has to save money or make cheque payments, then he/she needs to open a bank account. Similarly, one needs to open a DeMat account if he/she wants to buy or sell stocks. Thus, DeMat account is similar to a bank account wherein the actual money is being replaced by shares. In order to open a DeMat account, one needs to approach the Depository Participants [DPs].
In India, a DeMat account is a type of banking account that dematerializes paper-based physical stock shares. The DeMat account is used to avoid holding of physical shares: the shares are bought as well as sold through a stock broker. In this case, the advantage is that one does not need any physical evidence for possessing these shares. All the things are taken care of by the DPs.
This account is very popular in India. Physically only 500 shares can be traded as per the provision given by SEBI. From April 2006, it has become mandatory for any person holding a DeMat account to possess a Permanent Account Number (PAN).

15. What is RuPay Card?
RuPay is the Indian domestic card payment network set up by National Payments Corporation of India (NPCI) at the behest of banks in India. The RuPay project had been conceived by Indian Banks Association (IBA) and had the approval of Reserve Bank of India (RBI).
RuPay LogoNational Payments Corporation of India (NPCI) has a plan to provide a full range of card payment services including the RuPay ATM, RuPay MicroATM, Debit, Prepaid and Credit Cards which will be accepted in India and abroad, across various channels like POS, Internet, IVR and mobile etc.
The initial focus of NPCI would be to approach those banks who have not been issuing any payment card at all more specifically – Regional Rural Banks (RRBs) .