Important Banking Terms: Every IBPS PO aspirant must have a strong understanding of the fundamental banking terms that are commonly used in the financial sector. These terms form the core of many interview questions, and knowing them not only boosts your confidence but also helps you present well-rounded, accurate answers. To support your preparation, we’ve created a comprehensive list of the most important banking concepts you should revise before the interview.
Important Banking Terms for IBPS PO Interview 2025
Below is a set of essential banking terms that every IBPS PO candidate should understand thoroughly before facing the interview panel. Whether you’re a beginner or revising your basics, these concepts will strengthen your foundational knowledge and give you an advantage during the final selection process.
| Banking Term | Explanation |
| Repo Rate | The rate at which RBI lends money to commercial banks to control inflation and manage liquidity. |
| Reverse Repo Rate | The rate at which RBI borrows money from banks, helping absorb excess liquidity from the system. |
| Bank Rate | The long-term interest rate at which RBI lends funds to banks; used to regulate credit and inflation. |
| CASA Ratio | The percentage of a bank’s total deposits that must be kept with RBI in cash form. |
| SLR | The share of deposits banks must maintain in liquid assets like cash, gold, or government securities. |
| Base Rate | The minimum lending rate below which banks cannot give loans (now replaced by MCLR). |
| Marginal Standing Facility (MSF) | A special window for banks to borrow overnight from RBI during urgent liquidity shortages. |
| Monetary Policy | RBI’s policy to control money supply, interest rates, and inflation in the economy. |
| Capital Adequacy Ratio (CAR) | Shows whether a bank has enough capital to cover risks and absorb losses. |
| Non-Performing Asset (NPA) | A loan where interest or principal has not been paid for 90+ days. |
| Securitization | Converting loans (like home loans) into tradable securities and selling them to investors. |
| Letter of Credit | A bank guarantee assuring a seller that the buyer will make payment on time. |
| Payments Bank | A bank that can accept deposits (up to ₹1 lakh) but cannot give loans or credit cards. |
| Soft Loan | A loan with very low interest rates or easy repayment terms, usually for development projects. |
| No-Frills Account | A basic savings account with no or very low minimum balance requirements. |
| Plastic Money | Debit cards, credit cards, and prepaid cards used instead of cash. |
| Special Drawing Rights (SDR) | International reserve assets created by the IMF to support member countries’ forex reserves. |
| RTGS (Real-Time Gross Settlement) | A system for transferring large-value funds instantly between banks. |
| Nostro Account | An account a bank holds in another country in that country’s currency. |
| Vostro Account | An account a foreign bank holds in India on behalf of an Indian bank. |
| Balloon Mortgage | A loan with small payments initially but a large lump-sum payment at the end. |
| Call Money | Borrowing or lending of funds for one day. |
| Notice Money | Funds borrowed or lent for 2–14 days. |
| Term Money | Interbank lending or borrowing for more than 14 days. |
| MIBOR (Mumbai Interbank Offer Rate) | The rate at which banks lend to each other in the Indian money market. |
| LIBOR (London Interbank Offer Rate) | A benchmark interest rate for global interbank borrowing. |
| Bank Ombudsman | An authority appointed by RBI to handle customer complaints against banks. |
| On-Lending | When banks lend money to intermediaries, who then give loans to priority-sector borrowers. |
| Currency Deposit Ratio | The proportion of currency held by the public versus deposits held in banks. |
| Returned Item Fee | The charge applied when a cheque bounces or fails to clear. |
| Government Securities (G-Secs) | Bonds issued by the government to borrow money; considered safe investments. |
| Prime Lending Rate (PLR) | The interest rate banks charge their most creditworthy customers. |
| Current Account | A deposit account mainly used by businesses for frequent transactions, with no interest. |
| Savings Account | A basic account for individuals to save money and earn interest. |
| Open Market Operations (OMO) | RBI buying or selling government securities to control liquidity. |
| Priority Sector Lending (PSL) | Loans that banks must give to important sectors like agriculture, MSMEs, housing, and education. |
| Basel Norms | International banking rules to strengthen banks’ capital structure and reduce risk. |
| Treasury Bills | Short-term government securities with maturities up to 1 year. |
| KYC (Know Your Customer) | Process used by banks to verify customer identity to prevent fraud and money laundering. |
| AML (Anti-Money Laundering) | Rules to prevent illegal money from entering the banking system. |
| Financial Inclusion | Providing affordable and accessible financial services to all sections of society. |
| Balance of Payments (BoP) | A statement showing all financial transactions between a country and the rest of the world. |
| Foreign Exchange Reserves | Assets held by RBI in foreign currencies, gold, and SDRs to stabilize the currency. |
Important Banking Terms for IBPS PO Interview, FREE PDF
Understanding important banking terms is essential for performing well in the IBPS PO interview, as many questions are directly related to core banking concepts and RBI regulations. To help candidates revise quickly and confidently, we have compiled all key terms in one place along with clear, easy-to-understand explanations. You can also download the FREE PDF to access this complete list anytime and prepare more effectively for the interview.
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