150+ Banking Terms [Banking & Financial] – BT School

Discover a comprehensive guide to essential banking terms in BFSI industry. From credit risk to fintech innovations, enhance your financial literacy today.

Whether you’re a banking professional, a student aspiring to enter the field, or simply an individual seeking to enhance your financial literacy, understanding these terms is vital. From credit risk and capital adequacy to fintech innovations and regulatory compliance, each term plays a pivotal role in shaping the intricate workings of the banking sector. So, let’s delve into this expertly curated compilation of banking terms to expand your knowledge and empower you in the world of finance.

Account Types

  1. Checking Account [chek-ing uh-kount] – A type of bank account that allows individuals to deposit and withdraw funds for everyday transactions.
  2. Current Account [kur-uhnt uh-kount] – A bank account designed for businesses, offering various features to manage day-to-day transactions.
  3. Savings Account [sey-vings uh-kount] – An interest-bearing bank account that helps individuals save money while providing easy access to funds.

Banking Services

  1. ATM (Automated Teller Machine) [ey-tee-em] – A self-service machine that enables customers to perform basic banking transactions such as withdrawals and deposits.
  2. Credit Card [kred-it kahrd] – A payment card that allows individuals to borrow funds from a financial institution for purchases and repay them later.
  3. Debit Card [deb-it kahrd] – A card linked to a bank account, used to make purchases or withdraw funds directly from the account.

Banking Terms for Operations

  1. Clearing [kleer-ing] – The process of transferring funds from one bank to another, often involving checks or electronic transactions.
  2. Foreign Exchange [for-in ik-sehynj] – The conversion of one currency into another for various purposes, such as international trade or travel.
  3. Wire Transfer [wahyuhr trans-fur] – An electronic transfer of funds between banks or financial institutions, often used for large transactions or international transfers.

Financial Instruments

  1. Bonds [bawndz] – Debt securities issued by governments or corporations to raise capital, usually offering fixed interest payments and a maturity date.
  2. Derivatives [dih-ri-vuh-tivz] – Financial contracts or instruments whose value is derived from an underlying asset, such as options or futures.
  3. Stocks [stoks] – Shares or units representing ownership in a company, typically bought and sold on stock exchanges.

Loans and Mortgages

  1. Collateral [kuh-lat-er-uhl] – An asset or property pledged by a borrower to secure a loan, providing the lender with a form of security.
  2. Mortgage [mawr-gij] – A loan obtained from a bank or financial institution to purchase real estate, secured by the property itself.
  3. Personal Loan [pur-suh-nl lohn] – A type of loan provided by banks to individuals for personal use, typically unsecured and based on creditworthiness.

Regulatory Entities & Terms

  1. Reserve Bank of India (RBI) [ri-zurv bangk uhv in-dee-uh] – The central banking institution of India responsible for formulating and implementing monetary policies, regulating banks, and ensuring financial stability.
  2. Securities and Exchange Board of India (SEBI) [si-kyoo-ri-tiz and ik-sehynj bohrd uhv in-dee-uh] – The regulatory authority overseeing the securities market, ensuring investor protection, promoting fair practices, and regulating market intermediaries.
  3. FDIC (Federal Deposit Insurance Corporation) [ef-dik] – A U.S. government agency that provides deposit insurance to protect depositors in case of bank failures.
  4. SEC (Securities and Exchange Commission) [es-ee-see] – A regulatory body overseeing the securities industry, ensuring fair markets and investor protection.
  5. Central Bank [sen-truhl bangk] – A financial institution responsible for regulating a country’s money supply, interest rates, and overall banking system.
  6. Credit Information Bureau (India) Limited (CIBIL) [kred-it in-fer-mey-shuhn byoor-oh in-dee-uh lim-i-tid] – India’s leading credit information company that maintains credit records and provides credit scores to banks and financial institutions.
  7. Federal Reserve [fed-er-uhl ri-zurv] – The central banking system of the United States responsible for conducting monetary policy, supervising banks, and promoting financial stability.
  8. Interest Rate [in-ter-ist reyt] – The percentage charged by a lender on a loan or paid to a depositor on their savings, influencing borrowing costs and investment returns.
  9. Open Market Operations [oh-puhn mahr-kit op-uh-rey-shuhnz] – The buying and selling of government securities by a central bank to regulate the money supply and interest rates.

Banking Terms for Risk Management

  1. Credit Risk [kred-it risk] – The potential of a borrower failing to repay a loan or meet their credit obligations, posing a risk to the lender.
  2. Liquidity Risk [li-kwid-i-tee risk] – The risk that a bank may not have sufficient liquid assets to meet its financial obligations.
  3. Operational Risk [op-uh-rey-shuh-nl risk] – The risk of loss resulting from inadequate or failed internal processes, people, or systems within a bank.

Financial Terms

  1. Annual Percentage Rate (APR) [an-yool per-sen-tij reyt] – The annualized interest rate charged on loans or credit cards, inclusive of fees and other costs.
  2. Compound Interest [kom-pound in-ter-ist] – Interest calculated on both the initial principal and any accumulated interest from previous periods.
  3. Net Income [net in-kuhm] – The total revenue a bank earns after deducting expenses, taxes, and interest payments.

Banking Technology

  1. Blockchain [blok-cheyn] – A decentralized digital ledger that records transactions across multiple computers, providing transparency and security.
  2. Fintech [fin-tek] – A term combining finance and technology, referring to innovative companies that leverage technology to provide financial services.
  3. Mobile Banking [moh-buhl bang-king] – The use of mobile devices to access banking services, such as checking account balances or transferring funds.

International Banking Terms

Focuses on banking activities that span across different countries, such as correspondent banking, letters of credit, and offshore banking, facilitating global transactions and financial services.

  1. Correspondent Bank [kor-uh-spon-duhnt bangk] – A bank that provides services on behalf of another bank in a different geographic location.
  2. Offshore Banking [awf-shawr bang-king] – The practice of holding bank accounts or conducting financial transactions in a jurisdiction outside one’s home country.
  3. SWIFT (Society for Worldwide Interbank Financial Telecommunication) [swift] – A global network used by banks to securely communicate and perform financial transactions.

Financial Institutions

  1. Commercial Bank [kuh-mur-shuhl bangk] – A bank that offers services to individuals, businesses, and corporations, such as accepting deposits and providing loans.
  2. Investment Bank [in-vest-muhnt bangk] – A bank that assists companies and governments in raising capital by underwriting or issuing securities.
  3. Retail Bank [ree-teyl bangk] – A bank that focuses on providing financial services to individuals and small businesses rather than larger corporations.

Risk Assessment

Involves evaluating and managing various risks faced by banks, including credit, market, and operational risks, to ensure financial stability and minimize potential losses.

  1. Basel III [bey-zuhl three] – A set of international banking regulations designed to strengthen the banking sector’s resilience and risk management.
  2. Stress Test [stres test] – A simulation to evaluate a bank’s financial stability and resilience by subjecting it to hypothetical adverse scenarios.
  3. Value at Risk (VaR) [val-yoo at risk] – A statistical measure used to assess the potential loss in value of an investment or portfolio under specific conditions.
  4. Credit Risk [kred-it risk] – The risk of loss arising from a borrower’s failure to repay a loan or meet their credit obligations.
  5. Market Risk [mahr-kit risk] – The risk of financial loss resulting from adverse changes in market prices, such as interest rates, exchange rates, or stock prices.
  6. Operational Risk [op-uh-rey-shuh-nl risk] – The risk of loss resulting from inadequate or failed internal processes, systems, or human errors.

Banking Terms for Payment Systems

Refers to the mechanisms and networks utilized for transferring funds, such as ACH, EFT, and Swift transfers, enabling secure and efficient movement of money between accounts and across borders.

  1. Real-Time Gross Settlement (RTGS) [ree-uhl-tahym grohs set-l-muhnt] – An electronic funds transfer system in India that facilitates instant and secure interbank transactions, settling them individually on a real-time basis.
  2. Unified Payments Interface (UPI) [yoo-nuh-fahyd pey-muhnts in-ter-feys] – A real-time payment system in India that enables instant money transfers between banks using mobile devices, promoting cashless transactions and financial inclusion.
  3. ACH (Automated Clearing House) [ey-see-eych] – A network used for electronic funds transfers in the United States, allowing direct deposits and bill payments.
  4. EFT (Electronic Funds Transfer) [ee-ef-tee] – The electronic transfer of money from one bank account to another, often initiated by the account holder.
  5. SWIFT Code [swift kohd] – A unique identification code used to identify a specific bank in international wire transfers.
  6. 134. Automated Clearing House (ACH) [aw-tuh-mey-tid kleer-ing hous] – An electronic payment network used for processing large volumes of transactions, including direct deposits, bill payments, and fund transfers.
  7. Electronic Funds Transfer (EFT) [ih-lek-tron-ik funds trans-fer] – The electronic transfer of funds from one bank account to another, often used for online purchases or bill payments.
  8. Swift Transfer [swift trans-fer] – A secure and efficient messaging system used by banks to send international wire transfers quickly and accurately.

Risk Mitigation

  1. Diversification [dih-vur-suh-fi-key-shuhn] – Spreading investments across different assets or sectors to reduce the overall risk exposure.
  2. Hedging [hej-ing] – A strategy used to minimize potential losses by taking offsetting positions in related financial instruments.
  3. Insurance [in-shoor-uhns] – A contract between an individual or business and an insurance company to provide financial protection against specific risks.
  4. Non-Performing Assets (NPA) [non-per-for-ming as-ets] – Loans or advances that have stopped generating income for banks due to non-payment or default by borrowers.

Financial Reporting

  1. Balance Sheet [bal-uhns sheet] – A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time.
  2. Income Statement [in-kuhm steyt-muhnt] – A financial statement that reports a company’s revenues, expenses, and net income over a specific period.
  3. Statement of Cash Flows [steyt-muhnt uhv kash flohz] – A financial statement that shows the inflows and outflows of cash during a specific period, categorizing them as operating, investing, or financing activities.

Credit Terms

  1. Credit Bureau [kred-it byoor-oh] – An organization that collects and maintains credit information on individuals and businesses for lenders to assess creditworthiness.
  2. Credit Rating [kred-it rey-ting] – An assessment of the creditworthiness of individuals or entities, determining their ability to repay debts.
  3. Default [di-fawlt] – Failure to repay a loan or meet the terms of a credit agreement, resulting in negative consequences for the borrower.

Investment Terms

  1. Asset Allocation [as-et al-uh-key-shuhn] – The distribution of investments across different asset classes, aiming to optimize risk and return.
  2. Dividend [dih-vi-dend] – A distribution of a company’s profits to its shareholders, usually in the form of cash or additional shares.
  3. Portfolio [pawrt-foh-lee-oh] – A collection of financial investments held by an individual or institution.
  4. Exchange-Traded Fund (ETF) [eks-change trey-did fuhnd] – An investment fund traded on stock exchanges, representing a basket of securities and providing diversification.
  5. Hedge Fund [hej fuhnd] – An investment fund that pools capital from accredited investors and employs various strategies to generate high returns, often with higher risk.
  6. Mutual Fund [myoo-chuhl fuhnd] – An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.

Financial and Banking Regulations

Pertains to the framework of laws and regulations governing the banking industry, including acts like Dodd-Frank, and requirements like KYC/AML, to ensure compliance and safeguard financial systems.

  1. Dodd-Frank Act [dod-frangk akt] – A U.S. legislation enacted to regulate the financial industry and provide consumer protection after the 2008 financial crisis.
  2. SAR (Suspicious Activity Report) [ess-ey-ar] – A report filed by financial institutions to FinCEN (Financial Crimes Enforcement Network) to alert authorities of potentially illicit transactions.
  3. KYC/AML [kus-tuh-mer noh yoor kus-tuh-mer/anti-money laundering] – Acronym for Know Your Customer and Anti-Money Laundering, referring to regulatory requirements and processes aimed at preventing financial crimes.

Financial Analysis

  1. Financial Ratios [fi-nan-shuhl rey-shee-ohs] – Calculations used to assess a company’s financial performance, such as liquidity ratios or profitability ratios.
  2. NPV (Net Present Value) [net preh-zuhnt val-yoo] – A method to evaluate the profitability of an investment by comparing the present value of expected cash flows to the initial investment.
  3. ROI (Return on Investment) [ar-oh-ey] – A measure of profitability, calculating the return generated by an investment relative to its cost.

Banking Ethics

  1. Anti-Money Laundering (AML) [an-tee-muhn-ee lawn-der-ing] – Policies and procedures aimed at detecting and preventing money laundering activities within the banking system.
  2. Conflict of Interest [kon-flikt uhv in-ter-ist] – A situation where an individual or institution’s personal interests interfere with their professional obligations, potentially compromising the integrity of their actions.
  3. Insider Trading [in-sahy-der trey-ding] – The illegal practice of trading stocks or other securities based on non-public, material information.

Financial Compliance

  1. Compliance Officer [kuhm-plahy-uhns aw-fer] – An individual responsible for ensuring a bank’s adherence to relevant laws, regulations, and internal policies.
  2. Risk Assessment [risk uh-ses-muhnt] – The process of identifying, analyzing, and evaluating potential risks that may affect a bank’s operations or financial stability.
  3. SARBOX (Sarbanes-Oxley Act) [sahr-beynz okz-lee akt] – U.S. legislation enacted to enhance corporate governance, financial reporting, and accountability after accounting scandals.

Money Management

  1. Budgeting [buhj-it-ing] – The process of creating and managing a plan to allocate income and expenses, aiming to achieve financial goals.
  2. Compound Interest [kom-pound in-ter-ist] – Interest calculated on both the initial principal and any accumulated interest from previous periods.
  3. Emergency Fund [ih-mur-juhn-see fuhnd] – A reserve of savings set aside to cover unexpected expenses or financial emergencies.

Asset Management

  1. Asset Management [as-et man-ij-muhnt] – The professional management of investments, including stocks, bonds, real estate, or other assets, on behalf of clients.
  2. Mutual Fund [myoo-chuhl fuhnd] – An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.
  3. Wealth Management [welth man-ij-muhnt] – A comprehensive approach to financial planning and investment management, typically catering to high-net-worth individuals.

Financial Planning

  1. Estate Planning [ih-steyt plan-ing] – The process of arranging the distribution of assets and wealth after an individual’s death to minimize taxes and ensure the fulfillment of their wishes.
  2. Retirement Planning [ri-tahyuh-muhnt plan-ing] – The process of setting financial goals and creating a strategy to accumulate savings for retirement.
  3. Tax Planning [taks plan-ing] – Strategies implemented to minimize tax liabilities legally, optimizing deductions, credits, and other tax-saving opportunities.

Investment Banking Terms

  1. IPO (Initial Public Offering) [ahy-pee-oh] – The first sale of a company’s shares to the public, enabling it to raise capital and become publicly traded.
  2. Mergers and Acquisitions (M&A) [mur-jers and ak-wuh-zish-uhnz] – Transactions involving the consolidation of companies through mergers or the acquisition of one company by another.
  3. Underwriting [uhn-der-rahy-ting] – The process of assessing risk and providing financial backing for insurance policies or securities issuances.

Financial Security

  1. Encryption [en-krip-shuhn] – The process of converting information into a code or cipher to prevent unauthorized access or data breaches.
  2. Fraud Detection [frawd dih-tek-shuhn] – The use of technology and analysis to identify and prevent fraudulent activities within a bank or financial institution.
  3. Risk Management [risk man-ij-muhnt] – The identification, assessment, and mitigation of potential risks that may impact a bank’s financial stability or operations.

Cash Management

  1. Cash Flow [kash floh] – The movement of money into and out of a business or individual’s bank accounts, indicating the inflows and outflows of cash.
  2. Liquidity [li-kwid-i-tee] – The ability of a bank or individual to access sufficient funds to meet financial obligations promptly.
  3. Treasury Management [trezh-uh-ree man-ij-muhnt] – The oversight and control of a company’s cash, investments, and financial risks to optimize liquidity and ensure efficient operations.

Banking Infrastructure & Networks

  1. Core Banking System [kor bang-king sis-tuhm] – The central information system used by banks to manage customer accounts, transactions, and other banking operations.
  2. Data Security [dey-tuh si-kyoor-i-tee] – Measures and protocols implemented to protect sensitive customer information and prevent unauthorized access or data breaches.
  3. SWIFT Code [swift kohd] – A unique identification code used to identify a specific bank in international wire transfers.
  4. Interbank [in-ter-bangk] – Transactions or relationships between banks, involving the exchange of funds, information, or services.
  5. SWIFT Network [swift net-wurk] – A secure messaging network used by financial institutions worldwide to transmit information and instructions for financial transactions.
  6. VISA [vee-suh] – A global payment network that facilitates electronic funds transfers and card-based transactions.

Online Security

  1. Cybersecurity [sahy-ber si-kyoor-i-tee] – Practices and measures implemented to protect computer systems, networks, and data from cyber threats or attacks.
  2. Phishing [fish-ing] – A fraudulent practice where individuals are tricked into revealing sensitive information, such as passwords or credit card details, by impersonating a trustworthy entity.
  3. SSL (Secure Sockets Layer) [es-es-el] – A security protocol that ensures secure communication and data encryption between a website and its users.

Financial Education

  1. Financial Literacy [fi-nan-shuhl li-tuh-ruh-see] – The knowledge and understanding of personal finance, including budgeting, saving, investing, and managing debt.
  2. Investment Strategy [in-vest-muhnt stra-te-jee] – A plan or approach to selecting and managing investments based on an individual’s financial goals, risk tolerance, and time horizon.
  3. Risk Appetite [risk ap-i-tahyt] – The level of risk an individual or institution is willing to accept in pursuit of potential returns.

Customer Service

  1. Call Center [kawl sen-ter] – A centralized customer service department that handles incoming and outgoing calls from customers, providing assistance and resolving issues.
  2. Relationship Manager [ri-ley-shuhn-ship man-ij-er] – A bank representative assigned to manage and strengthen the relationship with high-value customers, providing personalized financial advice and support.
  3. Service Charges [sur-vis char-juhz] – Fees levied by banks for providing various services, such as account maintenance, check printing, or wire transfers.
  4. Virtual Assistant [vur-choo-uhl uh-sis-tuhnt] – An automated online service that provides information and assistance to customers, often using artificial intelligence or chatbot technology.

Mortgage and Real Estate

  1. Amortization [uh-mawr-tuh-zey-shuhn] – The process of gradually reducing a loan balance through regular payments, which includes both principal and interest.
  2. Collateral [kuh-lat-uh-ruhl] – Property or assets offered by a borrower to secure a loan, which can be seized by the lender if the borrower fails to repay the loan.
  3. Title Insurance [tahyt in-shoor-uhns] – Insurance that protects property owners and lenders against financial loss due to defects in the property title or ownership claims.

Financial Technology (Fintech)

  1. Cryptocurrency [krip-toh-kur-uhn-see] – Digital or virtual currency that uses cryptography for security and operates independently of a central bank.
  2. Peer-to-Peer Lending [peer too peer len-ding] – A lending platform that connects borrowers directly with lenders, eliminating the need for traditional financial intermediaries.
  3. Robo-Advisor [roh-boh ad-vy-zer] – An online platform that uses algorithms and automation to provide investment advice and portfolio management services.

Regulatory Bodies

  1. FDIC (Federal Deposit Insurance Corporation) [ef-dik] – A U.S. government agency that insures deposits in banks and promotes stability in the banking system.
  2. SEC (Securities and Exchange Commission) [es-ee-see] – A regulatory agency in the United States that oversees the securities markets and enforces securities laws.
  3. Basel Committee on Banking Supervision [bey-zuhl kom-i-tee on bang-king suh-per-vizh-uhn] – An international committee that provides guidelines and standards for banking supervision and regulation globally.

Foreign Exchange

  1. Currency Exchange [kur-uhn-see ik-skheynj] – The conversion of one currency into another, typically facilitated by banks or currency exchange services.
  2. Exchange Rate [eks-change reyt] – The price at which one currency can be exchanged for another, determining the value of international transactions and currency conversions.
  3. Forex (Foreign Exchange) [for-eks] – The global market for trading currencies, involving buying, selling, and speculating on currency pairs.

Financial Crime

  1. Money Laundering [muhn-ee lawn-der-ing] – The process of disguising the origins of illegally obtained funds to make them appear legitimate.
  2. Fraud [frawd] – Intentional deception or misrepresentation to gain an unfair advantage, often resulting in financial loss to individuals or institutions.
  3. Identity Theft [ahy-den-ti-tee theft] – The fraudulent acquisition and use of someone’s personal information, such as social security numbers or credit card details, for financial gain.

Wealth Management

  1. High-Net-Worth Individual (HNWI) [hahy-net-wurth in-duh-vij-oo-uhl] – An individual with a high level of financial assets or net worth, typically seeking specialized financial services and investment strategies.
  2. Trust [truhst] – A legal entity created to hold and manage assets on behalf of beneficiaries, providing asset protection, estate planning, and wealth transfer solutions.
  3. Estate Tax [ih-steyt taks] – A tax levied on the value of an individual’s estate at the time of their death, often impacting high-net-worth individuals.

I hope these additional terms provide you with a comprehensive overview of the banking industry and its related concepts. If you have any further questions or need more information, feel free to ask!

International Banking Terms

  1. Correspondent Bank [kor-uh-spon-duhnt bangk] – A financial institution that provides services on behalf of another bank in a different geographic location, facilitating international transactions.
  2. Letter of Credit [let-er uhv kred-it] – A financial document issued by a bank guaranteeing payment to a seller on behalf of a buyer, often used in international trade.
  3. Offshore Banking [awf-shor bang-king] – Banking services provided in a foreign country with favorable regulations and tax advantages for non-residents.

Financial Reporting

Encompasses the preparation and disclosure of financial statements, such as balance sheets and income statements, to provide a transparent view of a bank’s financial performance and position.

  1. Balance Sheet [bal-uhns sheet] – A financial statement that provides a snapshot of a company’s assets, liabilities, and shareholders’ equity at a specific point in time.
  2. Income Statement [in-kuhm steyt-muhnt] – A financial statement that summarizes a company’s revenues, expenses, and net income over a specific period.
  3. Regulatory Reporting [reg-yuh-luh-tawr-ee ri-pawr-ting] – The process of submitting financial information and reports to regulatory authorities to ensure compliance with applicable regulations.

Customer Relationship Management

Centers around building and managing relationships with customers, incorporating practices like KYC, relationship pricing, and upselling to enhance customer satisfaction and loyalty.

  1. Know Your Customer (KYC) [noh yoor kus-tuh-mer] – The process of verifying and gathering information about customers to ensure compliance with anti-money laundering (AML) regulations and assess potential risks.
  2. Relationship Pricing [ri-ley-shuhn ship prahy-sing] – A pricing strategy where banks offer preferential rates, discounts, or personalized services to customers with multiple accounts or significant relationships.
  3. Upselling [uhp-sel-ing] – The practice of persuading customers to purchase additional or upgraded products or services, often based on their existing relationship or needs.

Digital Banking

Focuses on the use of technology and digital channels to deliver banking services, encompassing aspects like biometric authentication, mobile banking, and open banking, enhancing convenience and accessibility for customers.

  1. Digital Wallet [dij-i-tl waw-lit] – An electronic system that securely stores payment card information, allowing individuals to make online or mobile payments.
  2. Online Banking [awn-lahyn bang-king] – The provision of banking services and transactions conducted electronically through the internet.
  3. Two-Factor Authentication (2FA) [too-fak-ter aw-then-ti-key-shuhn] – A security measure that requires users to provide two different forms of identification to access online banking accounts.
  4. Biometric Authentication [bahy-oh-met-rik aw-then-ti-key-shuhn] – The use of unique biological characteristics, such as fingerprints or facial recognition, to verify the identity of individuals accessing digital banking services.
  5. Mobile Banking [moh-buhl bang-king] – Banking services accessible through mobile devices, allowing customers to perform transactions, check balances, and manage accounts on the go.
  6. Open Banking [oh-puhn bang-king] – A banking approach that allows third-party financial service providers to access and use customer banking data to offer innovative products and services.

Capital Adequacy

  1. Basel III [bey-zuhl three] – International regulatory framework that sets standards for bank capital adequacy, liquidity, and risk management to promote financial stability.
  2. Tier 1 Capital [teer wuhn kap-i-tal] – The core measure of a bank’s financial strength, consisting of equity capital and disclosed reserves, serving as a cushion against potential losses.
  3. Stress Testing [stres tes-ting] – Analysis conducted by banks to assess their resilience under adverse economic scenarios, ensuring they can withstand financial shocks.

Treasury and Cash Management

  1. Cash Pooling [kash poo-ling] – The centralization of cash balances from multiple bank accounts to optimize liquidity management and maximize interest earnings.
  2. Liquidity Risk [li-kwid-i-tee risk] – The risk that a bank may not have enough cash or liquid assets to meet its short-term obligations and funding needs.
  3. Treasury Single Account (TSA) [trezh-uh-ree sing-guhl uh-kount] – A centralized bank account used by governments to consolidate and manage their cash resources, enhancing transparency and control.

Financial Markets

  1. Capital Markets [kap-i-tal mahr-kits] – The markets where long-term securities, such as stocks and bonds, are bought and sold, providing a platform for raising capital.
  2. Derivatives [dih-ri-vuh-tivs] – Financial contracts whose value is derived from an underlying asset, used for hedging risks, speculation, or arbitrage.
  3. Initial Public Offering (IPO) [ih-nish-uhl pub-lik oh-fer-ing] – The process by which a private company offers its shares to the public for the first time, raising capital and becoming publicly traded.

Also Read: Various Jobs in Banking

By understanding these terms, individuals can navigate the complexities of banking more effectively. Whether it’s assessing risk, managing customer relationships, embracing digital innovations, or complying with regulations, the banking industry encompasses a diverse range of concepts and practices. Armed with this knowledge, readers can gain a deeper appreciation for the intricacies of banking and make informed decisions within this dynamic and ever-evolving field.

To send your feedback, suggestions, or requests for including new words in our banking terms dictionary, please comment below or reach out to us on LinkedIn at BusinessTenet.

Also read: Escrow Based Funding: A Defense Mechanism for Business Ecosystem

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