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Banking Awareness for SBI PO and Clerk

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www.BankExamsToday.com

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Banking
Awareness
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For SBI, IBPS and other Govt exams

Ramandeep Singh
B.com (PU), MBA (PAU)

Ramandeep Singh

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Functions of Banks

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Primary Functions

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Accepting deposits

Most important function of a bank is to mobilize public funds. Bank provides safe
custody as well as interest to the depositors.
Saving deposit
Saving deposit account meant for those people who wants to save for future needs
and uncertainties. There is no restriction on number and amount of withdrawals.
Bank provides cheque book, ATM cum debit card and Internet banking facility.
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Banking Awareness for SBI PO and Clerk

Depositors need to maintain minimum balance which varies across different
banks.
Fixed deposit or Term deposit

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In fixed deposit account, money is deposited for a fixed tenure. Banks issues a
deposit certificate which contains name, address, deposit amount, withdrawal
date, depositor signatures and other important information.

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Depositor can't withdraw money during this period. In case depositor want to
withdraw before maturity, banks levy pre-mature withdrawal penalty.

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Current account

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Current accounts are normally opened by businesses. Banks provide overdraft

facility for these accounts by which account holder can withdraw more money
than available bank balance. This act as a short term loan to meet urgent needs.
Bank charges high rate on interest and charges for overdraft facility because bank
need to maintain a reserve for unknown demands for overdraft.
Recurring deposit

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In this type of account depositors deposits certain sum of money at regular period
of time. Benefit of recurring account is that it provides benefit of compounded
rate of interest and enables depositors to collect big sum of money.

Cash credit

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Granting Loans and advances

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It is a short term loan facility under which banks allows its customers to take loan
up to a certain limit, normally bank grants this loan against mortgage of certain
property.
Bank overdraft
Bank provides this facility to current account holders.Account holder can
withdraw money anytime up to the provided limit. He need to pay interest only on
borrowed amount for the period for which he took loan.

Ramandeep Singh
Loans
Banks providing loans for various kinds of short term as well as long term needs.
Borrower pay back the loan in installments.
Discounting bills

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In normal day to day business, sellers sends bills to buyer whenever they sell their
products and it is mentioned in bill to make payment in stipulated time. Lets take
it 30 days. In such conditions seller may discount the bill from bank for some
fees. In such situation bill discounting acts as short term loan. In case the buyer or
the drawer defaults, bank send the bill back to seller to drawer so that he may take
legal action against drawee or buyer.

Secondary functions
Agency functions

Banking Awareness for SBI PO and Clerk

Funds transfer

Cheques collection

Periodic payments/collection

Portfolio management

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Utility functions

Issue of draft, letter of credit etc :-Letter of credit acts as an assurance

that in case the borrower defaults in making the payment, bank will make
the payment up to the amount mentioned in letter of credit

Locker facility

Underwriting of shares

Dealing in foreign exchanges

Project reports

Social welfare programs

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Ramandeep Singh

What is an NRE account?

NRE Account stands for Non-Resident (External) Account.

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The NRE account can be opened by Non-Resident Indians (NRIs). The account
can be operated individually or jointly. Persons of Indian Origin are also eligible
for the account. In case of NRE accounts, nomination can be made for NRI or
PIO resident only.

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The NRE account gives an opportunity to non-resident Indians to deposit money

in Indian Banks.
There could be multiple type of accounts under NRE. These include: Saving
Fund, Current Account , Recurring Deposit, or Term Deposit. The funds under
NRE are maintained in Indian Rupees as the currency.

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The fund amount including the principal as well as the interest can be repatriated.
This facility may not be there in other accounts for NRIs. The repatriation could
be in foreign currencies.
The deposits under the NRE accounts are not taxable under Wealth Tax. Also, the
interest income is exempt from the income-tax.

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While the NRE accounts are accessible only to NRI and PIO there might be some
special cases. NRIs who return to India for permanent settlement may hold the
account till maturity of their deposits.

Banking Awareness for SBI PO and Clerk

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What are BASEL-III norms and why

are they important for India?

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"Basel III" is a name given to reform measures for the Banking sector. It was
developed by the Basel Committee, hence the name. The measures are to
strengthen the regulation, supervision and risk management of the banking sector.

Aims of BASEL-III norms:

create an ability to absorb financial and economic shocks

Improve risk management and governance

Strengthen banks' transparency and disclosures

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The reforms are targeted at the individual banks and banking institutions. It is also
aimed at reducing the system-wide risks.

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The norms have received a positive appreciation in India. The Reserve Bank of
India (RBI) Governor, D. Subbarao in an interview to a newspaper mentioned that
BASEL-III norms would strengthen Indian banks.

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The BASEL-III norms have provided important guidelines for Liquidity and
Capital. There are three important pillars defined for Capital.

Pillar I

Capital

Risk Coverage

Containing Leverage
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Ramandeep Singh

Pillar-II
Risk Management and Supervision

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Market Discipline

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Pillar-III

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In order to meet the BASEL-III requirements, Indian banks would have to raise a
lot of external capital. While the norms would strengthen the robustness of banks
against risks, it will also have some effect on the profitability in the short run. The
norms would increase the cost of capital for the banks and have an adverse effect
on the reqturn on equity in the short run.

Banking Awareness for SBI PO and Clerk

What are Special Economic Zones (SEZ)

in India?

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Special Economic Zone (SEZ) is an area where economic laws are more relaxed
than a country's typical or national laws. In India SEZs have been developed to
promote exports.

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The Special Economic Zones (SEZs) Policy was announced in April 2000.

The SEZ act came into effect in 2006.

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The Special Economic Zones Act, 2005, was passed by the Parliament in 2005.

The main objectives of the SEZ Act are:

(a) generation of additional economic activity

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(b) promotion of exports of goods and services

(c) promotion of investment from domestic and foreign sources

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(d) creation of employment opportunities

(e) development of infrastructure facilities

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The major incentives and facilities available to SEZ developers include:-

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Exemption from customs/excise duties for development of SEZs for authorized

operations approved by the BOA.
Income Tax exemption on income derived from the business of development of
the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income
Tax Act.
Exemption from minimum alternate tax under Section 115 JB of the Income Tax
Act.
Exemption from dividend distribution tax under Section 115O of the Income Tax
Act.
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Ramandeep Singh
Exemption from Central Sales Tax (CST).

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Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ
Act).

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Banking Awareness for SBI PO and Clerk

Central Government Welfare

Schemes

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Aam Aadmi Bima Yojna

Started - 02-10-2007

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Objective - To provide life and accident insurance to people without land living
in rural areas

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Working - Both State government and National government contributes Rs 200

each towards insurance one family member of age 18-59.
Money paid to insurance beneficiary

In case of natural death - Rs 30,000

In case death due to accident or permanent disability - Rs 75,000

In case of permanent disability due to any accident - Rs 37,500

Doodh Ganga

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Goal - Provide interest free loan and capital subsidies to diary farmers

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Indira Awaaz Yojna

Started - 1985

Objective - Prociding financial assistance to rural and urban poor for construction
of houses
Working - Financial assistance of Rs 70,000 in plain areas and Rs 75,000 in
difficult areas is provided.

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Ramandeep Singh

Construction of sanitary latrine and smokeless chullah is mandatory

Hiring a contractor is banned

House is allotted in the name of woman or jointly in the name of both man
and woman.

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Prefernce is given to
Mentally challenge

Physical challenged

Woman headed houses

Transgenders

Widows and children of members of defence or police forces who died on

duty

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Janani Suraksha Yojana

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Started - 12 April 2005

Objective - JSY aims at reducing maternal deaths by promoting deliveries in
public and private health institutions
Working - Mother should be at least 19 year old and belong to BPL or SC/ST
category.

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Government provides

Rs 500 in case of home delivery

Rs 600 in case of mother from municipal/corporation area delivering baby

in private or public health care center

Rs 700 in case of mother from rural area delivering baby in private or

public health care center

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Banking Awareness for SBI PO and Clerk

Ladli Scheme

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Started - 20 August 2008

Aim- Objective of this scheme was to raise the status of girl child and change the
social mindset of people towards girls in Haryana. (Separate scheme for Delhi)
Working - Financial assistance of Rs 5000 per family per year is given by state
government on the birth of second girl child. This scheme is available for parents
who are domiciles of Haryana.

Ladli Laxmi Yojna

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Aim- Objective of this scheme was to raise the status of girl child and change the
social mindset of people towards girls in Madhya Pradesh.
Working - Government purchases National saving certificate worth Rs 6000 per
year for four years for every girl child born after 01-04-2008 and whose parents
are domicile of Madhya Pradesh.
Additional money paid on following events :At the time of admission in 4th standard - Rs 2000

At the time of admission in 9th standard - Rs 4000

At the time of admission 11th standard - Rs 7500

During higher secondary education - Rs 200 each month

On the completion of 21 years she could receive even Rs 1 lac

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Mahatma Gandhi National Rural Employment Guarantee Act

Started - 25 August 2005
Objective - To provide 100 days employment guarantee per year to unskilled
labourers
Working - Government provides 100 days employment guarantee per year to
unskilled labourer to do public works for which he is paid Rs 120 per day. In case
Government is unable to provide employment to labourers then it need pay
13

Ramandeep Singh
labourers for 100 days at their home.
Budget aloocated for MNREGA - Rs 45000 crores ( 2012-2013)

Midday Meal Scheme

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Started - Started on different dates in various states in India. It was first

introduced in Uttar Pradesh
Objectives - Providing free lunch on working days to primary and upper primary
students of government schools in India. This scheme aims at promoting
education and removal malnutrition in children.

National Pension Scheme India

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Started - 1 January 2004

Objectives - Provides social security to Government employees on retirement
Working - 10% of basic salary is deducted from basic salary and DA and
contributed to pension fund. Central government makes equal contribution to the
fund.

Pradhan Mantri Gram Sadak Yojana

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Started - 5 December 2000

Objective - To provide roads in villages with population of 1000+

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Rashtriya Krishi Vikas Yojana

Started - August 2007
Objective - This scheme aims at achieving 4% annual growth in agriculture
sector.
Working - Rs 5875 crores will be in agricultural sector in 11th five year plan to
improve agricultural productivity.

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Banking Awareness for SBI PO and Clerk

Rashtriya Swasthya Bima Yojana

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Started - April 1, 2008

Objective - Providing health insurance to poor people living below poverty line
and holding yellow card
Working - Anybody holding yellow card need to register for this scheme and get
a smart card. Family get insurance of Rs 30,000 per family. This is cashless
facility to get treatment in public as well as private hospitals.

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Sampoorna Grameen Rozgar Yojana

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Started - 25 September 2001

Aim - Started by cobining two ongoing schemes namely Jawahar Gram Smridhi
Yojana and employment Assurance Scheme. This scheme was started to provide
supplementary employment so that labourers in rural areas can earn extra and thus
providing food security to them.
Working - Budget of Rs 10,000 crores has been alloted which is to be provided in
ratio of ratio of 75:25 by Center and State and government.

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Sarva Shiksha Abhiyan

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Started - 2001
Aim - Provide useful and free education to children in the age group of 6 -14
years under RTE act 2009
Funds allocated - Rs 61,734 crores allocated in 2011-12

Swabhiman

Started - 10 February 2011

Aim - To provide banking facilitates in rural areas with banking services. Goal of
this scheme is to start banking services in 20,000 villages without banking

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Ramandeep Singh
services with a population of 2000 by March 2012

Swarnajayanti Gram Swarozgar Yojana

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Started - 1 April 1999

Objective - SGSY provide assistance to rural people living below poverty line to
take up self employment.

Swavalamban

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Started - 2010 (Will be closed on 2017-2017)

Goal - To encourage workers working in unorganized sector to save for their
retirement
Working - Workers must invest contribute minimum Rs.1000 to maximum
Rs.12000 per year into their NPS account. Government will contribute Rs 1000
per year to NPS account per year.

16

Banking Awareness for SBI PO and Clerk

Current RBI Policy & Reserve Rates:Repo Rate 8% (Unchanged)

Reverse Repo 7% (Unchanged)

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CRR 4% (Unchanged)

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SLR 23% (Unchanged)

MSF 9% (Unchanged)

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Bank Rate 9% (Unchanged)

Repo Rate

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Repo rate or repurchase rate is the rate at which banks borrow money from the
central bank (RBI for India) for a short period by selling their securities (financial
assets) to the central bank with an agreement to repurchase it at a future date at
predetermined price. It is similar to borrowing money from a money-lender by
selling him something, and later buying it back at a pre-fixed price.

Bank Rate

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People often get confused between Bank Rate and Repo Rate. Though they
appear similar there is a fundamental difference between them.

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Unlike Repo Rate, there is no sale of security in Bank Rate. Bank rate is the rate
at which banks borrow money from the central bank without any sale of
securities. It is generally for a longer period of time. This is similar to borrowing
money from someone and paying interest on that amount.

Both these rates are determined by the central bank of the country based on the
demand and supply of money in the economy.

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Ramandeep Singh

Reverse Repo Rate

Reverse Repo rate is the rate of interest at which the central bank (RBI) borrows
funds from other banks for a short duration. The banks deposit their short term
excess funds with the central bank and earn interest on it.

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Reverse Repo Rate is used by the central bank to absorb liquidity from the
economy. When it feels that there is too much money floating in the market, it
increases the reverse repo rate, which means that banks earn higher rate of interest
when they deposit money with the central bank.

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Reverse Report rate was an independent rate till 03/05/2011. However, in the
monetary policy announced on 03/05/2011, RBI decided to link it to Repo rate.
So, Reverse Repo Rate is now always 100 bps below the Repo rate (till RBI
decides to delink the same).

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CRR (Cash Reserve Ratio)

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Have you ever wondered what happens to the amount that you deposit in bank? It
is used by banks to earn money by investing or lending it to others (house loans,
personal loans etc.). But as per the regulations, banks cannot use the entire
amount deposited with them for this purpose. They are required to maintain a
percentage of their deposits as cash. So, if you deposit Rs. 100/- in your bank,
then bank cant use the entire Rs. 100/- for lending or investment purpose. They
have to maintain a portion of the deposit as cash and can use only the remaining
amount for lending/investment. This minimum percentage, which is determined
by the central bank, is known as Cash Reserve Ratio.

So if CRR is 6% then it means for every Rs. 100/- deposited in the bank, it has to
maintain a minimum of Rs. 6/- as cash. However, banks do not keep this cash
with them, but are required to deposit it with the central bank, so that it can help
them with cash at the time of need.
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Banking Awareness for SBI PO and Clerk

SLR (Statutory Liquidity Ratio)

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Apart from keeping a portion of deposits with the RBI as cash, banks are also
required to maintain a minimum percentage of deposits with them at the end of
every business day, in the form of gold, cash, government bonds or other
approved securities. This minimum percentage is called Statutory Liquidity Ratio.

Example

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If you deposit Rs. 100/- in a bank, and assuming CRR to be 6% and SLR to be
8%, the bank can use 100-6-8= Rs. 86/- for giving loan or for investment purpose.

19

Ramandeep Singh

Interim Budget 2014-15 Highlights

The government's term ends in May and the measure wasnecessary to cover expe
nditure until a national election iscompleted and a new administration installed.

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Chidambaram said India's economy, the 11th largest in theworld, had stabilised an
d was showing signs of turnaround. Hisspeech was marred by protests over the pr
oposed division of asouthern state.

GROWTH

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* GDP expansion in third and fourth quarters of 2013/14estimated at 5.2 percent.

Growth for the whole year expected at4.9 percent.

FISCAL DEFICIT

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* Fiscal deficit seen at 4.6 percent of GDP in 2013/14, belowtarget of 4.8 percent.
* Fiscal deficit projected at 4.1 percent of GDP in 2014/15

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* Says need to bring down the deficit to 3 percent of GDP by 2016/17

CURRENT ACCOUNT DEFICIT

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* Current account deficit for 2013/14 estimated at $45 billion from last fiscal year'
s $88billion.

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* Forex reserves to rise by $15 billion by end of 2013/14

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BORROWING/DEBT SERVICING
* Gross market borrowing for 2014/15 seen at 5.97 trillion rupees, net market borr
owing at4.57 trillion rupees.
* Government plans to buy back/switch bonds of 500 billion rupees in 2014/15.
* Ways and Means advances for 2014/15 estimated at 100 billion rupees
* Debt repayment in 2014/15 seen at 1.397 trillion rupees

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Banking Awareness for SBI PO and Clerk

* Interest payments seen rising to 4.27 trillion rupees in 2014/15 from a revised es
timate of3.8 trillion rupees for the current fiscal year.

PRIVATISATION

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* Target for 2014/15 increased to 569.25 billion rupees

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* Target from stake sale in state run firms for 2013/14 revised to 258.41 billion ru
pees

SPENDING

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* Plan expenditure for 2014/15 seen at 5.55 trillion rupees, the same level as the p
reviousfiscal year
* Non plan spending estimated at about 12.08 trillion rupees in 2014/15

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SUBSIDIES

* Total spending on food, fertilisers and fuel at 2.5 trillion rupees in 2014/15

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* Food subsidy estimated at 1.15 trillion rupees, fertiliser subsidy at 679.71 billio
n rupees.Petroleum subsidy seen at 634.27 billion rupees versus revised figure of
854.8 billion rupeesfor 2013/14.

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DEFENCE

* Spending raised to 2.24 trillion rupees in 2014/15, up 10 percent year on year.

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EXPORTS

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* Merchandise exports seen at $326 billion in 2013/14, up 6.3 percent year on yea
r.
* Agriculture exports expected to touch $45 billion in 2013/14, up from $41 billio
n in2012/13

TAX PROPOSALS
* No major change in tax rates

21

Ramandeep Singh
* Factory gate tax to be reduced to 10 percent from 12 percent on some capital go
ods,consumer durables
* Cut excise duty on small cars, two wheelers, commercial vehicles to 8 percent fr
om 12percent

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* Recommends excise duty reductions on larger vehicles

* Restructure of factory gate tax for mobile handsets

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BANKS RESTRUCTURING

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* Govt to provide 112 billion rupees capital infusion in state run banks in 2014/15
* Propose to set up public debt management office to start5 work from 2014/15

FINANCE MINISTER COMMENTS

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Resurgence in exports, global economic revival and moderation in inflation point

to betteroutlook for Indian economy in 2014/15.

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"I can confidently assert that the economy is more stable today than what it was t
wo yearsago. The fiscal deficit is declining, the current account deficit has been c
onstrained, inflationhas moderated, the quarterly growth rate is on the rise, the exc
hange rate is stable, exportshave increased and hundreds of projects have been un
blocked."

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India's economy now the 11th largest in the world, he said.

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Banking Awareness for SBI PO and Clerk

India ranking in different Indexes :

1. Global Hunger Index (GHI) - Indias score is 23.7, with a rank of 66th out of
88 countries.

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2. Global Peace Index Indias ranked 141th.

3. Human Development Report UNDP - India at 134 out of 182 countries.

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5. Global Corruption Index - India at 94th .

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4. GREENDEX , a world wide ranking based on consumer choice and

environment - India Ranked 1st with a Score of 59.5 among 17 countries.

6. WEF The Global Gender Gap Report - India ranked 114 lisetd very poorly on
the economic,
education and health sub- indexes.

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7. WEF Global Information Technology Report - India at 54th.

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8. the business executives in the Political and

Economic Risk Consultancy (PERC) survey rated India as having the regions
most inefficient bureaucracy. India scored 9.41 Singapore scored 2.53.
9. Global Competitiveness Index - India at 59th .

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10. India ranked at 105 in the Education for All Development Index.

23

Ramandeep Singh

Bank Slogans
Multinational Bank Slogans
Punch line

CITI Bank

Let's get it done

Standard Chartered Bank

Your Right Partner

HSBC Bank

The World's Local Bank

Royal Bank of Scotland

Make it happen

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Name of the Bank

BNP Paribas

The bank for a changing world

JPMorgan Chase Bank

The right relationship is everything

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Deutsche Bank

American Express Bank

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Barclays Bank

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Scotia Bank

Youre richer than you think

Do more
Fluent in finance
Living, Breathing Asia

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DBS Bank

A passion to perform

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Indian Bank Slogans

Bank Name

Bank Slogan

Allahabad Bank

A tradition of trust

Andhra Bank

Much more to do. With YOU in focus

Bank of Baroda

India's International Bank

24

Banking Awareness for SBI PO and Clerk

Relationships beyond Banking

Bank of Maharashtra

One Family One Bank

Bank of Rajasthan

Together we Prosper

Canara Bank

It's easy to change for those who you love, Together we Can

Central Bank of India

Build A Better Life Around Us, Central to you since 1911

Corporation Bank

Prosperity for all

Dena Bank

Trusted Family Bank

Federal Bank

Your Perfect Banking Partner

HDFC Bank

We Understand Your World

HSBC

Worlds Local Bank

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"Hum Hai na..."

IDBI Bank

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ICICI Bank

Banking for all; "Aao Sochein Bada"

Indian Bank

Taking Banking Technology to Common Man, Your Tech-fr

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Indian Overseas Bank

J & K Bank

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Bank of India

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Karur Vysya Bank

Good people to grow with

Serving to Empower
Smart way to Bank

Lakshmi Vilas Bank

The Changing Face of Prosperity

Oriental Bank of Commerce

Where every individual is committed

Punjab and Sindh Bank

Where series is a way of life

Punjab National Bank

The Name you can Bank Upon

25

Ramandeep Singh
The Nation banks on us; Pure Banking Nothing Else; With you

State Bank of Hyderabad

You can always bank on us

State Bank of Mysore

Working for a better tomorrow

State Bank of Patiala

Blending Modernity with Tradition

State Bank of Travancore

A Long Tradition of Trust

South Indian Bank

Experience Next Generation Banking

Syndicate Bank

Your Faithful And Friendly Financial Partner

The Economic Times

Knowledge is Power

UCO Bank

Honors Your Trust

Union Bank of India

Good people to bank with

United Bank of India

The Bank that begins with U

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State Bank of India

Vijaya Bank

A Friend You can Bank Upon

Experience our expertise

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Yes Bank

26

Banking Awareness for SBI PO and Clerk

List of PSU Banks and Their Heads

State Bank of India and Its Associates
Name of the Head

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Bank name
State Bank of India
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Travancore
State Bank of Patiala

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Smt. Arundhati Bhattacharya

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Bank name
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Bharatiya Mahila Bank
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank Ltd
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sindh Bank
Punjab National Bank
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank

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Other PSU banks

27

Name of the Head

Rakesh Sethi
C. V. R. Rajendran
S. S. Mundra
V. R. Iyer
Sushil Muhnot
Usha Anantha Subramaniyan
R. K. Dubey
Rajeev Rishi
Sadhu Ram Bansal
Ashwini Kumar
M. S. Raghavan
T. M. Bhasin
M. Narendra
S. L. Bansal
Jatinder Bir Singh
K. R. Kamath
Sudhir Kumar Jain
Arun Kaul
Arun Tiwari
Vacant
V. Kannan

Ramandeep Singh

New Appointments in India 2014

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Mr. Narendra Modi : Chairman, Planning Commission.

Mrs. Sumitra Mahajan : Speaker, Lok Sabha.
Mohammad Hamid Ansari : Chairman, Rajya Sabha.
Mr. P. J. Kurien : Deputy Chairman, Rajya Sabha.
Mr. Arun Jaitley : Leader of House (Rajya Sabha).
Mr. Ghulam Nabi Azad : Leader of Opposition (Rajya Sabha).
Dr. Montek Singh Ahluwalia : Deputy Chairman, Planning Commission.
Mr. V. S. Sampath : Chief Election Commissioner
Mr. Harishankar Brahma : Election Commissioner.
Syed Nasim Zaidi : Election Commissioner.
Mr. Shashi Kant Sharma : Comptroller and Auditor-General of India.
Mr. Justice K. G. Balakrishnan : Chairperson, National Human Right
Commission (NHRC)
Mr. Ajit Kumar Seth : Cabinet Secretary.
Mr. Nripendra Misra : Principal Secretary to Prime Minister.
Justice V. Eshwaraiah : Chairman, National Commission for Backward Classes.
Ms. Shanta Sinha : Chairperson, National Commission for Protection of Child
Rights (NCPCR)
Dr. P. L. Punia : Chairman, National Commission for Scheduled Castes
Dr.Rameshwar Oraon : Chairman, National Commission for Scheduled Tribes
(NCST).
Prof. D. P. Agrawal : Chairman, Union Public Service Commission (UPSC).
Dr. M. S. Swaminathan : Chairman, National Commission on Farmers (NCF).
Mr. Ajit Kumar Doval : National Security Adviser and Special Adviser to PM
(Internal Security).
Mr. Sharad Kumar : Director-General, National Investigation Agency (NIA)
Mr. Arunendra Kumar : Chairman, Railway Board.
Mr. Shumsher K. Sheriff : Secretary-General, Rajya Sabha
Mr. T. K. Viswanathan : Secretary-General, Lok Sabha.
Mr. Syed Asif Ibrahim : Director, Intelligence Bureau (IB).
Mr. Ranjit Sinha : Director, Central Bureau of Investigation (CBI).
Mr. Alok Joshi : Director, Research and Analysis Wing (RAW).
Mr. Jayanto Narayan Choudhury : Director-General, National Security Guard
28

Banking Awareness for SBI PO and Clerk

ww

w.

Ba

nk
Ex

am

sTo
da

y.c

om

(NSG).
Mr. Dilip Trivedi : Director-General, CRPF.
Mr. Devendra Kumar Pathak : Director-General, Border Security Force (BSF).
Mr. Arvind Ranjan : Director-General, Central Industrial Security Force (CISF).
Mr. P. K. Mehta : Director-General, Railway Protection Force. (RPF)
Mr. Subhas Goswami : Director-General, Indo-Tibetan Border Police (ITBP).
Mr. Arun Chaudhary : Director-General, Sashastra Seema Bal.
Vice-Admiral Anurag G. Thapliyal : Director-General, Indian Coast Guard.
Lt. Gen. Avtar Singh : Director-General, Defence Intelligence Agency.
Prof. Ved Prakash : Chairman, UGC.
Dr. Avinash Chander : Scientific Adviser to Defence Minister and Secretary,
Defence Research and Development Organisation. (DRDO)
Dr. R. Chidambaram : Principal Scientific Adviser to the Government.
Mr. K. Radhakrishnan : Chairman, Space Commission and ISRO.
Mr. Ratan Kumar Sinha : Chairman, Atomic Energy Commission and
Secretary, Dept. of Atomic Energy.
Mr. Naseem Ahmad : Chairperson, National Commission for Minorities.
Mr. Rajiv Mathur : Chief Information Commissioner.
Mr. Amitava Bhattacharya : Chairman, Staff Selection Commission (SSC).
Dr. Vishwa Mohan Katoch : Director-General, Indian Council of Medical
Research.
Mr. C. Chandramouli : Registrar-General of India and Census Commissioner.
Justice D. K. Jain : Chairman, Law Commission.
Dr. Baldev Raj : President, Indian National Academy of Engineering (INAE).
Mr. Justice (Retd.) B. N. Kirpal : Chairman, National Forest Commission.
Mr. T. Nanda Kumar : Chairperson, National Dairy Development Board
(NDDB).
Lt. General AT Parnaik : Director-General, Border Roads Organisation.
Dr. Raghuram Rajan : Governor, RBI.
Justice Mr. Markandey Katju : Chairman, Press Council of India.
Mr. Ravindra Pisharody : Chairman, Audit Bureau of Circulations (ABC).
Mr. R. K. Tewari : Chairman, Central Board of Direct Taxes (CBDT).
Mrs. J.M. Shanti Sundharam : Chairman, Central Board of Excise and
Customs.
Mr. Ashok Chawla : Competition Commission of India
Justice Syed Rafat Alam : Chairman, Central Administrative Tribunal
Mr. G. Sai Prasad : CMD, National Hydroelectric Power Corporation (NHPC).
29

Ramandeep Singh

ww

w.

Ba

nk
Ex

am

sTo
da

y.c

om

Mr. R. S. Sharma : CMD, Oil and Natural Gas Corporation (ONGC).

Mr. B. C. Tripathi : CMD, GAIL.
Mr. S. Behuria : Chairman, IOC.
Mr. Sunil Kumar Srivastava : CMD, Oil India Ltd.
Mr. Vineet Joshi : Chairman, Central Board of Secondary Education (CBSE).
Mr. U. K. Sinha : Chairman, Securities and Exchange Board of India (SEBI).
Dr. Harsh Kumar Bhanwala : Chairman, National Bank for Agriculture and
Rural Development (NABARD).
Smt. Arundhati Bhattacharya : Chairman, SBI.
Mr. M. S. Raghavan : Chairman, IDBI.
Justice Dilip Raosaheb Deshmukh : Chairman, Company Law Board.
Mr. Hardeep Singh Puri : India's Permanent Representative to UN.
Mr. S. K. Roy : Chairman, Life Insurance Corporation of India (LIC)
Mr. Ashwin Pandya : Chairman, Central Water Commission.
Ms. Mamta Sharma : Chairperson, National Commission for Women.
Dr. Y. V. Reddy: Chairman, 14th Finance Commission.
Dr. Pronob Sen : Chairman, National Statistical Commission.
Smt. Leela Samson : Chairperson, Central Board of Film Certification.
Dr. Rakesh Tewari : Director-General, Archaeological Survey of India (ASI).
Mr. Sidharth Birla : President, Federation of Indian Chambers of Commerce
and Industry (FICCI)
Dr. Rahul Khullar : Chairman, Telecom Regulatory Authority of India (TRAI).
Dr. Rajan Katoch : Director, Enforcement Directorate.
Mr. R. V. Verma : Chairman, Pension Fund Regulatory and Development
Authority (PFRDA).
Mr. Pradeep Kumar : Commissioner, Central Vigilance Commissioner (CVC).
Dr. Sekhar Basu : Director, Bhabha Atomic Research Centre.
Mr. N. Ramachandran : President, Indian Olympic Association.
Prof. P. Sinclair : Director, National Council of Educational Research and
Training (NCERT).
Mr. S. Gopalakrishnan : President, Confederation of Indian Industry (CII).
Mr. Sam Pitroda : Chairman, National Knowledge Commission.
Mr. Ratan Tata : Chairman, Investment Commission.
Mr. Shivlal Yadav : Interim President, Board of Control for Cricket in India
(BCCI).
Mr. R. Chandrasekaran : Chairman, NASSCOM.
Mr. Ramesh Sippy : Chairman, National Film Development Corporation
30

Banking Awareness for SBI PO and Clerk

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w.

Ba

nk
Ex

am

sTo
da

y.c

om

(NFDC).
Mr. Ravindra Kumar: Chairman, United News of India.
Mr. K. N. Shanth Kumar : Chairman, PTI.
Mr. Ravindra Kumar : President, Indian Newspaper Society (INS).
Mr. Rana Kapoor : President, The Associated Chambers of Commerce and
Industry of India (ASSOCHAM).

31

Ramandeep Singh

Basic Financial Terms A-Z

A

y.c

om

AGM - Annual General Meeting, it is the year meeting held by every registered
company. Agenda is to explain the performance during the year, presentation of
annual financial statements, voting on important financial decisions. Any
shareholder can participate in AGM.

sTo
da

Asset turnover ratio - This ratio can be explained as Net assets / Total turnover
or sales. This ratio measures the operational efficiency of business assets. In
simple terms this measures how many time total assets turned in a year and how
efficiently the assets are used in a business.

nk
Ex

am

Acid test ratio - This is one of the important ratio to measure business liquidity.
Business liquidity is defined as ability of a business to pay it;s short term debts.
Acid test ratio = Highly liquid assets / current liabilities

w.

Ba

American Depository Receipts - This is the way non-US companies raises

money from US investors. These shares can be traded in US stock exchanges and
denominated in US $.

ww

Amortization - It is an accounting technique by which intangible assets are

written off over a period of time. For example provision for doubtful debts or
preliminary expenses are written off over a certain period of time.

Annuity - It is an investment scheme under which investor makes recurring

investments and lump sum payment is made to him at the end. Common example
is Recurring deposit account at a post office where people makes small monthly

32

Banking Awareness for SBI PO and Clerk

deposits and gets their money back at the end of period. Benefit of Annuity is
investor gets compound interest over a period of time.

om

Asset Management Company - AMC is a company that pools and invests

investor money in pre-determined goals. Pool of funds is known as Mutual fund.

sTo
da

y.c

Audit - Financial statement and physical stock is checked annually by

professional auditor ( Chartered Accountant affiliated by ICAI in India )

am

Book-keeping - Recording of financial transactions in books of account.

nk
Ex

Bear market - A market situation in which most of the investors thinks that
markets will fall.

w.

Ba

Balance of Payment - BOP is the difference between a country's exports and

imports.

ww

Capital - Wealth invested by an entrepreneur on his business. Capital = Assets Liabilities

Capital gain - Gain by selling a capital asset in which a person is not doing
business. Income by selling a house by a bank employee is a capital gain whereas
when a builder do the same thing it is Income from business and professional.

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Ramandeep Singh
Current asset - An asset that can be converted into cash with 12 months. For
example - debtors, stock etc.

y.c

om

Credit rating - A ranking applied to an individual, business or a nation based

upon its credit history and current financial position. There are various credit
rating companies in India such as Crisil.

sTo
da

CPI - Consumer price index is measure to find price of a bundle of commodities.

CPI is used to measure the inflation in a country.

am

Debt consolidation - Debt consolidation is a process by which various loans and

converted into a single loan to reduce interest rate and instalment value.

Ba

nk
Ex

Depreciation - Depreciation is reduction in value of an asset due wear and tear

over a period of time. For example a company purchased a machine in 2005 and
planned to charge 20% depreciation. In 2010 the machine will be written off from
the books of account.

ww

w.

Dividend - Dividend is the amount per share paid by a company to its

shareholders. Dividend value is based upon company's profitability.

Dividend payout ratio - It is the ratio of dividend paid per share and EPS (
Earning per share )
Double entry bookkeeping - It is a method of bookkeeping in which every
transaction is recorded two accounts. Once in debit side and once in credit side.

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Banking Awareness for SBI PO and Clerk

E
Earning per share - Earnings made by a company in a financial year divided by
number of issued shares.

y.c

om

Equity - Value of a business. Equity = Total assets - Total liabilities

sTo
da

Ex-divided - Ex-dividend means without dividend. When a seller makes a exdividend sales contract then he is entitled to get dividend or interest payment.

nk
Ex

EBT - Earning before tax

am

EBIT - Earning before interest and taxes

Ba

EAT - Earning after tax

ww

w.

Face value - The amount mentioned on face of a bond certificate.

Fixed assets - Assets which can be seen such as machinery

Financial year - A period of 12 months from 1st April to 31st march

35

Ramandeep Singh
Fundamental analysis - Analysis of a company based upon financial and
operational performance.

om

Fiscal policy - Income and expenses management by Government.

sTo
da

y.c

Flat rate - Rate of interest in a contract which remains same irrespective of

market rate in future.

Floating rate - Rate of interest which changes with change in market rate.

am

Fund manager - A person who manages a mutual fund and tries to maximize
fund's returns while sticking to fund's objectives.

nk
Ex

Ba

Gearing - It is the ratio of debt to equity

w.

Goodwill - Intangible assets that defines firm's reputation in monetary terms.

ww

Gross profit = Net sales - Net purchases - Direct expenses

GDP - Gross domestic product is the aggregate value of goods and services
produced by every person of a nation.

GST - Goods and services tax is the same tax system for everything. It is
proposed that GST will replace the multi tax system in India by 2015.
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Banking Awareness for SBI PO and Clerk

sTo
da

y.c

Hedge funds - Mutual funds which invests in derivatives

om

Hedging - Hedging is a technique used by investors to protect themselves from

adverse price movements. Derivatives are used for hedging in which hedgers
takes the risk of price fluctuations.

am

Index - It is statistical measure used to find price variations in market. In stock

markets most dominating stocks are grouped to make an index. For example Sensex.

nk
Ex

Income statement

Ba

A statement that represents both income and expenditure of a business during a

specific period of time.

w.

IPO - Initial public offer is issue of stocks for the first time in the market.

ww

Intangible assets Assets which cant be seen but have value for business. For
example Goodwill.

Indemnity A legal contract under which one party promises to pay another for
any loses incurred to them by their acts.

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Ramandeep Singh
Interest rate risk Risk that value of financial assets will deteriorate because of
fall in interest rate. For example value of bonds decreases with decrease in interest
rate.

om

Irredeemable stocks Stocks which cant be exchanged for cash in future.

sTo
da

y.c

Indirect Costs - Indirect cost is a cost incurred on product that is not directly
related to its production.

nk
Ex

am

Junk fund A fund which invests investors money in junk investments means
high risk investments which high returns.

ww

w.

Ba

KYC Know Your Customer policy is mandatory in India and every investor
irrespective of his investment volume needs to furnish his identity and residence
details.

Libor London

38

Banking Awareness for SBI PO and Clerk

Liquidity Ability of a business to pay off its short term debts with current
assets. Currently NISL is facing liquidity crunch.

om

Liquid assets Assets which can be readily converted into cash

y.c

Liquid ratio Liquid assets/Current liabilities

sTo
da

Limited liability Liability of an individual or a business up to the value of

investment made in a business

am

nk
Ex

Monopoly - A situation in market where there are many buyers but a single seller
exist.

w.

Ba

Money market - Market dealing in short term lending and borrowing of funds.
Also know as Cash market.

ww

Monetary policy - Set of actions by Central bank of a country ( RBI in case of

India) to control the supply of money. These actions included increase in interest
rate, open market purchases, changing commercial bank's reserve funds ratio
(SLR) etc.

Marginal cost - Additional cost to produce an extra unit of product.

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Ramandeep Singh

Margin - Amount of profit added to cost price of each unit of a product

sTo
da

y.c

om

Margin call - Margin call term is used in two situations. First - Whenever a
lender gives a secured loan and loan value is a fixed percentage of loan then
whenever the value of security decrease below the decided ratio then lender given
a margin call to borrower to bring loan to security ratio to decided
level. Secondly in stock exchanges traders trades in various securities by paying
20-30% of the value of securities. Whenever the value of security goes below that
margin, broker gives margin call to trader to bring the margin to desired level.

nk
Ex

am

Mark-to-market - As explained above while defining margin call, value of

assets in case of securities is measured on daily basis. If the trader's asset value
increased, increased value is transferred to his account. In case the value of assets
decreased margin call is made to adjust the margin.

w.

Ba

NPV - Net Present Value is aggregate of future cash flows from a project minus
total costs. NPV is a capital budgeting technique used to check feasibility of
projects.

ww

Net profit - Net profit is Gross profit minus indirect cost. See indirect costs

Net worth - Net assets - Total liabilities

Nationalization - When Government takes control of a business, this is known as

nationalization.

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Banking Awareness for SBI PO and Clerk

NAV - Net Assets Value is mutual fund's per unit exchange traded price

om

Opportunity cost - Additional cost in production of an addition unit of product.

y.c

Options - Option is right to buy at pre-determined price at a future date. Option is

used for hedging. Options safeguards option-holder from future price fluctuations.

sTo
da

Overdraft - Facility given by a bank which allows its customers to withdraw

more money than account balance. Overdraft generally have high rate of interest
as borrower can demand and return the loan anytime.

am

nk
Ex

Preference shares - A type of shares having no voting rights and have higher rate
of dividend.

ww

w.

Ba

Ponzi schemes - It is a kind of fraud scheme which use Network marketing as a

tool. Investors are paid out of new investments. These schemes end when new
investments stop coming and large number of investors wants to withdraw their
money. Latest Ponzi scheme in India was "Speak Asia".

PLR - Prime lending rate is the minimum rate of interest that is to be charged by
a bank. Each bank decides its own PLR.

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Ramandeep Singh
R
ROI - Rate on investment is return divided by value of investment

y.c

Recession - An economic situation of negative growth

om

Redemption - Maturity date of a security or a bond

sTo
da

Repo rate - Rate at which Central bank (RBI in case of India) lends money to
commercial banks

am

Reverse repo rate - Rate at which commercial banks lends to central bank

nk
Ex

Right issue - Issue of shares in which existing shareholders gets right to buy
shares in proportion of their existing holding

ww

w.

Ba

Risk free return - Rate of return, normally it is 90 days bills issued by a national
government

Stagnation - An economic situation of slow economic growth, high rate

unemployment and inflation.

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Banking Awareness for SBI PO and Clerk

Shorting - Selling securities which an investors don't have in expectation of price
drop

om

y.c

Underwriters - In case of an IPO, new companies makes contracts with

underwriter where underwriters promises to purchase unsubscribe shares.

sTo
da

am

Working capital - Money required by a business to run its day to day business.
Working capital = Current assets / Current liabilities

nk
Ex

Warrants - A document which gives right to holder to get shares at stated price

ww

w.

Ba

Yield - Yield is the return on investment which may in form dividend or interest

43

Ramandeep Singh

List of Basic Accounting Terms

A

om

Accounting - process of recording, analysis and reporting monetary transactions

Accounting Concepts - Basic principles upon which accounting is based

y.c

Accounts payable - Amount payable by business entity to various parties from

whom good or services have been purchased.

sTo
da

Account receivable - Amount due to business entity to whom goods or services

have been sol

am

Accrual basis - An accounting system which explains that expenses and incomes
should be recognized at the time when they are actually realized.

nk
Ex

Amortization - It is the splitting off a loan or intangible assets over a future

period
Annual report - Report issued by a company at the end of year containing all
important financial statements and preview of management's goals.

ww

w.

Ba

Authorized share capital - Maximum share capital a company is authorized to

issue

Bad debts - Noncollectable receivables

Balance sheet - Statement that summarizes assets and liabilities of a business
entity
Bankruptcy - A state in which an individual or legal entity is unable to pay off
his debts so he surrenders his assets to the court.
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Banking Awareness for SBI PO and Clerk

Bill of exchange - A promise to certain amount of money to holder at a specified

date

om

Bill of lading : A document which represents ownership of goods in transit i.e.

goods during shipping from one place to another.

y.c

Bills Payable : A bill which shows that a firm has to pay money to the person or
firm whose name is mentioned in the bill.

sTo
da

Bills receivable : A bill which shows that money is to be paid to firm from those
whose names are mentioned in the bill.
Bonus shares : Shares which are issued to the existing shareholder w

am

Bookkeeping : This process includes analyzing, classifying and recording from

various sets of books in a very systematic way.

nk
Ex

Book value : Historical cost less accumulated depreciation. Generally, it is

accounting value.
Brought down : Written as b/d. It represents the opening balance of an account.

ww

w.

Ba

Brought forward : Written as b/f. This term is generally used to open an account
for the current year by posting the closing balance of previous year.

Capital expenditure : Cost incurred to acquire fixed assets which spreads

benefits in future.
Capital work-in-progress : Cost incurred in those assets which are not ready yet
for use.
Carried down : Written as c/d. This term a synonym for the term carried forward
45

Ramandeep Singh
and used to balance an account.
Carried forward : Written as c/f. Term used to transfer the balance from one
period to the another.

om

Carriage inwards : These are the expenses incurred for transporting the goods
purchased by the firm.

y.c

Carriage outwards : Expenses incurred for transporting goods sold by the firm.

sTo
da

Cash : It broadly covers currency and generally accepted equivalents of cash, like
cheques, drafts and demand deposits in bank.
Cash at bank : Deposit with bank.

am

Cash Book : A book of all transactions or entries for cash payments and receipts.
Cash on hand : Cash available and undeposited.

nk
Ex

Closing stock/ Closing inventory : Goods remaining at the end of an accounting

period.

ww

w.

Ba

Conservatism principle : Accounting concept that states that all expected losses
should be recorded but not expected gains.

Depreciation : Decrease in value of assets or the cost of an asset is allocated to

that period during which asset is used.
Discount : A deduction from cost of something , offered by seller.
Dividend: A share of profit which is to be distributed to the shareholders.

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Banking Awareness for SBI PO and Clerk

Dividend Yield: Ratio of current dividend to the current market price of a share.
Double-entry: Transaction entered in both sides debit as well as credit i.e. every
transaction has to entered twice.

om

Doubtful debts : A collection of that debt which is doubtful.

y.c

Drawings : Withdrawing cash or goods from business for personal use.

sTo
da

Dual Aspect Principle : Also known as Duality Principle. This fundamental

principle of accounting
states that every transaction has a dual effect and should be recorded at two
places.

am

Du-Pont System : The System merges the income statement and balance sheet
into two measures of profitability: Return on Assets (ROA) and Return on Equity
(ROE).

nk
Ex

EBIT : Earnings before interest and tax.

Entity Principle : The business firm is treated as a separate entity for the purpose
of accounting.

Ba

Equity : A stock or any other security representing an ownership interest.

w.

Exchange Rate : The rate at which one currency can be converted into another.

ww

Expenses : the cost i.e. material or services used in an operation during a

specified period.

F
Face Value : Commonly referred to the amount paid to a bondholder at the
maturity date, given that the issuer doesn't default.

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Ramandeep Singh
Financial Asset : An intangible asset that derives value. Stocks, bonds, bank
deposits etc are all examples of financial asset.

om

Financial Ratio : Ratio based on firm's financial statement which reflects firm's
financial condition and performance.

y.c

Financial Statement : A formal record of the financial activities of a business,

person or other entity.
Financial data is presented in a structured manner.

sTo
da

Fixed Assets : It includes premises, plant and machinery, furniture, land and
buildings etc.
Fixed Charge : A required payment under a contract.

am

Freehold Premises : Premises which are not subject to any charge.

nk
Ex

Funds Flow Statement : A statement which shows inflow and outflow of funds.

ww

w.

Ba

Gross Profit Margin : Ratio of Gross profit to net sales i.e. gross profit as a
percentage of net sales.

Holding Company : A parent company which holds enough stock in another

company to hold its board of directors.
Human Resource Accounting (HRA) : Measuring the cost and value of
employees and managers in the organisation. It includes the measurement of the
cost incurred to recruit, hire, train and develop employees and managers.
HRA Report : After measuring the cost and value of its people, the organisation
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Banking Awareness for SBI PO and Clerk

prepares a report which is known as HRA Report.

om

Imprest : Maintained cash to meet the sundry expenses.

y.c

Income Due but not received : Receivable income but not yet received.

sTo
da

Income Received but not due : Income received during current accounting
period which is supposed to be received at some future date.
Income statement : Profit and loss statement that measures the firm's operations.

am

Insolvency : Inability of debtors to meet their debt obligations i.e. lack of

liquidity.

nk
Ex

Intangible assets : Assets like patents, copyrights, goodwill etc which are
valuable but are not physical in nature.
Interest earned ratio : Ratio which measures firm's ability to meet its interest
payments out of its annual earnings i.e. EBIT / Interest expense.

w.

Ba

Interest rate risk : Uncertainty in expected returns of securities due to changes in

interest rates.

ww

Inventory : Stock of goods or articles.

Journal : A daily record of transactions in which each transaction is based on

double entry bookkeeping i.e. for all transactions both debits and credits are to be
entered.

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Ramandeep Singh
L
Ledger : A record of all individual accounts of a business or firm.

om

Liability : A financial obligation which arises due to some past events or

transactions in business.

y.c

sTo
da

Marketable securities : Securities which can easily be converted into cash.

Market value : Mutually accepted price of an asset between buyers and sellers. It
is price at which an asset would trade in market.

am

Matching Principle : States that expenses should be recorded during that period
when it is incurred, regardless the period of transfer of cash.

nk
Ex

Miscellaneous expenditure : Lower monetary value costs are misc expenditure

like various meals, ticket prices etc.

w.

Ba

Mortgage : A temporary pledge of property to the creditor as a security for an

obligation or the debt repayment.

ww

Net block : Net block is what asset are worth to the company. Generally, it is
gross block less accumulated depreciation.
Net current assets : Current assets less current liabilities.
Net income : Total earnings of company. It represents firm's total profit or loss,
calculated by taking all revenues and deducting all the costs of the business.
Net profit margin : Net profit or income as a percent of sales i.e. net Income/

50

Banking Awareness for SBI PO and Clerk

Sales.

om

Operating profit margin : Operating income / Revenue.

y.c

Outstanding expenses : Unpaid expenses.

sTo
da

Overdraft : When money is withdrawn from bank account and account balance is
below zero.

am

Paid up capital : The amount of company's capital which has been funded by
shareholders.

nk
Ex

Patent : The sole right to make and sell the product for set period of time.
Petty cash book : Record of entries for small amount payments.

Ba

Prepaid expenses : Expenses which have been paid but benefits of which is yet to
be received.

ww

w.

Profit and loss account : A statement which shows all revenues and expenses of
firm for a given time period. Subtracting expenses from revenues gives net
income of the firm for that time period, that's why known as profit and loss
account.
Proposed dividend : Company's board of directors declare an amount of dividend
every year and this amount is noted as a liability in balance sheet. The rate of
proposed dividend can be changed by shareholders in annual general meeting.
Provision for doubtful debts : Keeping aside an amount out of the firm's profit
to meet the losses due to doubtful debts.
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Ramandeep Singh

Provision for tax : Keeping aside an amount to meet future tax liability.

om

R
Realization principle : It states that recognize the revenue only when it is earned.

y.c

Redeemable Preference Shares : Preference shares which are redeemed by

issuing company at an agreed price on a specified date.

sTo
da

Reserves and surplus : Accumulated profits of the firm.

Retained earnings : A portion of net income of company which is not distributed

in shareholders and reinvested in core business.

nk
Ex

am

Return on equity : Equity earnings / Net worth.

Sales book : A complete record of sales which are made on credit.

w.

Ba

Sales Returns Book : A record of entries of those goods which are returned by
customers and earlier sold on credit.

ww

Secured loans : Loan backed by an asset belongs to the borrower, just to reduce
the risk for the lender.
Sinking fund : Fund created by keeping aside some money annually for gradual
repayment of debt.
Sundry expenses : Miscellaneous expenses.

52

Banking Awareness for SBI PO and Clerk

T

ww

w.

Ba

nk
Ex

am

sTo
da

y.c

om

Total asset turnover ratio : Net sales/ Total assets.

53