1.

SDR (Special Drawing Rights):

SDR are new form of International reserve assets, created by the
International Monetary Fund in 1967. The value of SDR is based on the
portfolio of widely used countries and they are maintained as
accounting entries and not as hard currency or physical assets like
Gold.
2. NEFT (National Electronic Fund Transfer): NEFT enables funds
transfer from one bank to another but works a bit differently than
RTGS. NEFT is slower than RTGS. The transfer is not direct and RBI acts
as the service provider to transfer the money from one account to
another. You can transfer any amount through NEFT, even a rupee.
Minimum limit: No Minimum limit, Maximum Limit: No maximum limit.
3. RTGS (Real time gross settlement):
RTGS system is funds transfer systems where transfer of money or
securities takes place from one bank to another on a "real time" and on
"gross" basis. Settlement in "real time" means payment transaction is
not subjected to any waiting period. The transactions are settled as
soon as they are processed. Minimum & Maximum Limit of RTGS: 2
lakh and no upper limit.
4. CRAR (Capital to Risk Weighted Assets Ratio) or CAR (Capital
Adequacy Ratio):
Capital to risk weighted assets ratio is arrived at by dividing the capital
of the bank with aggregated risk weighted assets for credit risk, market
risk and operational risk.
5. Non Performing Assets (NPA):
An asset, including a leased asset, becomes non performing when it
ceases to generate income for the bank. The Duration of NPA
declaration is of 90 days.
6. Participatory Notes:
Are derivative instruments, used by Foreign Institutional Investors (FIIs)
who are NOT registered with SEBI. These are mostly used by overseas
HNIs (High Net worth Individuals), hedge funds and other foreign
institutions, allow them to invest in Indian markets through registered
Foreign Institutional Investors (FIIs), while saving on time and costs
associated with direct registrations. Foreign institutions, allow them to
invest in Indian markets through registered Foreign Institutional

Investors (FIIs), while saving on time and costs associated with direct
registrations.
7. IFSC: IFSC code means Indian Financial System Code.
RTGS and NEFT payment system of Reserve Bank of India (RBI) use
these codes. IFSC code consists of 11 Characters identified as under
(Lets take an example of SBI, Madhapur Hyderabad):- First 4 digits
show the Identity of the bank. i.e. SBIN 5th digits in default as ZERO
(for future use) i.e. 0 Last 6 Characters display the Branch Identity. i.e.
004187 So IFSC Code is SBIN004187
8. MICR:
MICR code means Magnetic Ink Character Recognition code which
contains 9 digits, like 380002006 appearing at the bottom of the
cheque, following the cheque number. Each Bank Branch has a unique
MICR code. First 3 digits:-City PIN Code + Next 3 digits :Bank Code
+Last 3 Digits-Branch Code
9. CTS
(CHEQUE TRUNCATION SYSTEM) is basically an online image-based
cheque clearing system where cheque images and Magnetic Ink
Character Recognition (MICR) data are captured at the collecting bank
branch and transmitted electronically. Truncation means, stopping the
flow of the physical cheques issued by a drawer to the drawee branch.
10. Core Banking Solution (CBS) :Core Banking Solution (CBS) is networking of branches, which enables
Customers to operate their accounts, and avail banking services from
any branch of the Bank on CBS network, regardless of where he
maintains his account.
11. Commercial Paper:
Commercial Paper (CP) is an unsecured money market instrument
issued in the form of a promissory note. Corporate, primary dealers
(PDs) and the All India Financial Institutions (FIs) are eligible to issue
CP. Maturity period: between a minimum of 7 days and a maximum of
up to one year from the date of issue. CP can be issued in
denominations of Rs.5 lakh or multiples thereof. Only a scheduled bank
can act as an IPA (Issuing and Paying Agent) for issuance of CP.
12. Treasury Bills:

Treasury bills (T bills) offer short term investment opportunities. They

are thus useful in managing short term liquidity. At present, the
Government of India issues three types of treasury bills through
auctions, namely, 91 day, 182 day and 364 day. There are no treasury
bills issued by State Governments. Treasury bills are available for a
minimum amount of Rs.25,000 and in multiples of Rs. 25,000. Treasury
bills are issued at a discount and are redeemed at par.
13. Certificates of Deposit (CD):
Certificate of Deposit (CD) is a negotiable money market instrument
and issued in dematerialised form or as a Usance Promissory Note
against funds deposited at a bank or other eligible financial institution
for a specified time period.
Note: CDs can be issued by (i) scheduled commercial banks{excluding
Regional Rural Banks and Local Area Banks}; and (ii) select All ]India
Financial Institutions (FIs) that have been permitted by RBI Minimum
amount of a CD should be Rs.1 lakh, and in multiples of Rs. 1 lakh
thereafter. The maturity period of CDs issued by banks should not be
less than 7 days and not more than one year, from the date of issue.
14. Bank Rate:
The interest rate at which at central bank lends money to commercial
banks. Often these loans are very short in duration. Managing the bank
rate is a preferred method by which central banks can regulate the
level of economic activity. Lower bank rates can help to expand the
economy, when unemployment is high, by lowering the cost of funds
for borrowers. Conversely, higher bank rates help to reign in the
economy, when inflation is higher than desired.
15. Repo Rate:
Whenever the banks have any shortage of funds they can borrow it
form RBI. Repo rate is the rate at which commercial banks borrows
rupees from RBI. A reduction in the repo rate will help banks to get
money at cheaper rate. When the repo rate increases borrowing form
RBI becomes more expensive.
16. Reverse Repo Rate:
Reverse Repo rate is the rate at which RBI borrows money from
commercial banks. Banks are always happy to lend money to RBI since
their money is in the safe hands with a good interest. An increase in
reverse repo rate can cause the banks to transfer more funds to RBI

due to this attractive interest rates. One factor which encourages an

organization to enter into reverse repo is that it earns some extra
income on its otherwise idle cash.
17. CRR (Cash Reverse Ratio):
CRR is the amount of funds that the banks have to keep with RBI. If RBI
increases CRR, the available amount with the banks comes down. RBI
is using this method (increase of CRR), to drain out the excessive
money from the banks.
18. SLR (Statutory Liquidity Ratio):
SLR is the amount a commercial banks needs to maintain in the form
of cash, or gold, or govt. approved securities (Bonds) before providing
credit to its customers. SLR rate is determined and maintained by RBI
in order to control the expansion of the bank credit.
19. Marginal Standing Facility (MSF):
MSF rate is the rate at which banks borrow funds overnight from the
Reserve Bank of India against approved government securities.