Banking Terms — Set 1

Correct Answer: D. Indian Financial System Code

IFSC stands for Indian Financial System Code. It is an 11-digit alphanumeric code used to identify specific bank branches. This code is essential for facilitating electronic funds transfers like NEFT and RTGS.

Correct Answer: D. National Electronic Funds Transfer

NEFT stands for National Electronic Funds Transfer. It is a nation-wide system that allows individuals to electronically transfer funds between banks. Unlike RTGS, NEFT transactions are processed in batches rather than in real-time.

Correct Answer: B. Real Time Gross Settlement

RTGS stands for Real Time Gross Settlement. It refers to a system where the transfer of money takes place from one bank to another on a 'real-time' and 'gross' basis. This is typically used for high-value transactions that require immediate clearing.

Correct Answer: D. Automated Teller Machine

ATM stands for Automated Teller Machine. It is an electronic telecommunications device that enables customers to perform financial transactions without a human clerk. The first ATM was installed by Barclays Bank in London in 1967.

Correct Answer: C. Equated Monthly Installment

EMI stands for Equated Monthly Installment. It is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. EMIs consist of both principal and interest components.

Correct Answer: C. Know Your Customer

KYC stands for Know Your Customer. It is a mandatory process used by financial institutions to verify the identity and address of their clients. This practice is crucial for preventing identity theft, money laundering, and financial fraud.

Correct Answer: C. Non-Resident External

NRE stands for Non-Resident External account. It is a rupee-denominated account opened by Non-Resident Indians to park their foreign earnings in India. The interest earned on such accounts is generally tax-exempt in India.

Correct Answer: D. Foreign Direct Investment

FDI stands for Foreign Direct Investment. It occurs when an individual or entity from one country makes a lasting investment into a business in another country. FDI is a major source of non-debt financial resources for economic development.

Correct Answer: D. Permanent Account Number

PAN stands for Permanent Account Number. It is a unique 10-character alphanumeric identifier issued by the Income Tax Department. PAN serves as vital evidence of identification for various financial transactions.

Correct Answer: D. Gross Domestic Product

GDP stands for Gross Domestic Product. It represents the total monetary value of all finished goods and services produced within a country's borders in a specific time period. GDP is often used as a primary indicator of a nation's economic health.