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1. Bank Rate:The interest rate at which at central bank lends money to commercialbanks. Often these loans are very short in duration. Managing the bank rate is apreferred 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, bylowering the cost of funds for borrowers. Conversely, higher bank rates help to reign

in the economy, when ination is higher than desired.

2. Repo: !epo is "!epurchase #greement$. #n agreement to sell a security for aspeci%ed price and to buy it back later at another speci%ed price. # repo is essentiallya secured loan.

3. Repo Rate: &henever the banks have any shortage of funds they can borrow itform !'(. !epo rate is the rate at which commercial banks borrows rupees from !'(.# reduction in the repo rate will help banks to get money at cheaper rate. &hen therepo rate increases borrowing form !'( becomes more expensive.

4. Reverse Repo Rate: !everse !epo rate is the rate at which !'( borrows moneyfrom commercial banks. 'anks are always happy to lend money to !'( since their

money is in the safe hands with a good interest. #n increase in reverse repo rate cancause the banks to transfer more funds to !'( due to this attractive interest rates.One factor which encourages an organisation to enter into reverse repo is that itearns some extra income on its otherwise idle cash.

5. CRR (Cash Reverse Ratio): C!! is the amount of funds that the banks have tokeep with !'(. (f !'( increases C!!, the available amount with the banks comesdown. !'( is using this method )increase of C!!*, to drain out the excessive moneyfrom the banks.

6. SLR (Statutory Liquiity Ratio): +L! is the amount a commercial banks needsto maintain in the form of cash, or gold, or govt. approved securities )'onds* beforeproviding credit to

its customers. +L! rate is determined and maintained by !'( in order to control theexpansion of the bank credit.!ee o" SLR: &ith the +L!, the !'( can ensure the solvency of a commercial banks.(t is also helpful to control the expansion of the 'ank credits. 'y changing +L! rates,!'( can increase or decrease bank credit expansion. #lso through +L!, !'( compelsthe commercial banks to invest in the government securities like govt. bonds. #ainuse o" SLR: +L! is used to control ination and propel growth. Through +L! rate themoney supply in the system can be controlled eectively.

$. #ar%ina& Stanin% 'ai&ity (#S'): M+- rate is the rate at which banks borrowfunds overnight from the !eserve 'ank of (ndia )RB* against approved governmentsecurities.

ii.This came into eect in may 2*11. nder the Marginal +tanding -acility )M+-*,currently banks avail funds from the !'( on overnight basis against their excessstatutory li/uidity ratio )SLR* holdings.iii. #dditionally, they can also avail funds on overnight basis below the stipulated +L!up to 0 per cent of their respective 1et 2emand and Time Liabilities )!+,L*outstanding at the end of second preceding fortnight. -hy (#S') is it require:'anks borrow money from !'( at M+- rate when there is an acute cash shortage oracute asset3liability mismatch. This does not carry any stigma. Sie o" #S'4Minimum amount of !s. One crore and in multiples of !s. One crore thereafter.

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/. Co00eria& aper: Commercial 5aper )C5* is an unsecured money marketinstrument issued in the form of a promissory note. Corporates, primary dealers )52s*and the #ll3(ndia -inancial (nstitutions )-(s* are eligible to issue C5. Maturity period4between a minimum of 6 days and a maximum of up to one year from the date ofissue. C5 can be issued in denominations of !s.7 lakh or multiples thereof. Only a

scheduled bank can act as an (5# )(ssuing and 5aying #gent) for issuance of C5.

. ,reasury Bi&&s4 Treasury bills )T3bills* oer short3term investment opportunities,generally up to one year. They are thus useful in managing short3term li/uidity. #tpresent, the 8overnment of (ndia issues three types of treasury bills throughauctions, namely, 903day, 0:;3day and 3day. There are no treasury bills issued by+tate 8overnments. Treasury bills are available for a minimum amount of !s.;7,???and in multiples of !s. ;7,???. Treasury bills are issued at a discount and areredeemed at par. Treasury bills are also issued under the Market +tabili@ation +cheme)M++*.

1*. Certiates o" +eposit (C+): Certi%cate of 2eposit )C2* is a negotiable moneymarket instrument and issued in dematerialised form or as a sance 5romissory 1oteagainst funds deposited at a bank or other eligible %nancial institution for a speci%edtime period.

!ote4 C2s can be issued by )i* scheduled commercial banks Aexcluding !egional!ural 'anks and Local #rea 'anksB and )ii* select #ll3(ndia -inancial (nstitutions )-(s*that have been permitted by !'( Minimum amount of a C2 should be !s.0 lakh, andin multiples of !s. 0 lakh thereafter. The maturity period of C2s issued by banksshould not be less than 6 days and not more than one year, from the date of issue.

11. 'isa& +eit: # de%cit in the government budget of a country and representsthe excess of expenditure over income. +o this is the amount of borrowed fundsre/uire by the government to meet its expenditures completely.

12. +iret ,a: # direct tax is that which is paid directly by someone to taxingauthority. (ncome tax and property tax are an examples of direct tax. They are notshifted to somebody else.

13. niret ,a:This type of tax is not paid by someone to the authorities and it isactually passed on to the other in the form of

increased cost. They are levied on goods and services produced or purchased. DxciseTax, +ales Tax, Eat, Dntertainment tax are indirect taxes.

14. !S,R ount: # 1ostro account is maintained by an (ndian 'ank in theforeign countries.

15. 7S,R ount: # Eostro account is maintained by a foreign bank in (ndia

with their corresponding bank.

16. S+R (Speia& +ra8in% Ri%hts): +2! are new form of (nternational reserveassets, created by the (nternational Monetary -und in 09=6. The value of +2! isbased on the portfolio of widely used countries and they are maintained asaccounting entries and not as hard currency or physical assets like 8old.

1$. Cheque: Che/ue is a negotiable )which can be transferred to another person inexchange of money* instrument drawn on a speci%ed banker ordering the banker to

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pay a certain sum of money to the drawer of che/ue or another person. Che/ue isalways payable on demand.

,ypes o" Cheque: i. nte +ate Cheque: # che/ue bearing a date prior to actualdate of signing the che/ue or opening of an account is called an ante dated che/uewhich is valid and can be paid till it become stale. ii. Sta&e Cheque: (f the validity of

the che/ue has already expired it is called stale che/ue which cannot be paid. Thenormal maximum validity of che/ue is < months earlier it was = months. iii. ost+ate Cheque:The che/ue which bears a date subse/uent to the date on which itis drawn. -or ex. # che/ue drawn on 0?thFanuary, ;?0< bears the date of 0;thFanuary,;?0

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26. ,er0 #oney:Term Money refers to borrowingNlending of funds for periodexceeding 0> days

2$. CRR(Capita& to Risk -ei%hte ssets Ratio): Capital to risk weightedassets ratio is arrived at by dividing the capital of the bank with aggregated risk

weighted assets for credit risk, market risk and operational risk.

2/. !on er"or0in% ssets (!): #n asset, including a leased asset, becomesnon performing when it ceases to generate income for the bank.

2. !'L,!: ination is a rise in the general level of prices of goods and servicesin an economy over a period of time. &hen the general price level rises, each unit ofcurrency buys fewer goods and services. Conse/uently, ination reects a reductionin the purchasing power per unit of money G a loss of real value in the medium ofexchange and unit of account within the economy.

3*. +='L,!4 deation is a decrease in the general price level of goods andservices. 2eation occurs when the ination rate falls below ? )a negative inationrate*. This should not be confused with disination, a slow3down in the ination rate)i.e., when ination declines to lower levels*.

31. R='L,!4 &hen government wants to control the e?ation condition, thesuggests !'( to decrease the key rates. (f deation in not controlled, govt. makes a%scal policy. )taxes decreased, subsidy on loan increased*.

32. +S'L,!4 &hen government wants to control the in?ation condition, thesuggests !'( to increase the key rates. (f ination in not controlled, govt. makes a%scal policy. )taxes increased, subsidy on loan decreased*

33. +out"u& sset: #n asset would be classi%ed as doubtful if it has remained inthe substandard category for a period of 0;

months.34. CS +eposit: 2eposit in bank in current and +avings account.

35. Liqui ssets: Li/uid assets consists of cash, balances with !'(, balances incurrent accounts with banks, money at call and short notice, inter3bank placementsdue within

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institutions, allow them to invest in (ndian markets through registered -oreign(nstitutional (nvestors )-((s*, while saving on time and costs associated with directregistrations.

3. +eva&uation4 means oHcial lowering of the value of a countryQs currency withina %xed exchange rate system, by which the monetary authority formally sets a new

%xed rate with respect to a foreign reference currency.

4*. +epreiation: is used to describe a decrease in a currencyQs value )relative toother maKor currency benchmarks* due to market forces, not government or centralbank policy actions.