Banking Terms

CASA Deposit

Deposit in bank in current and Savings account. Current Account Saving Account.

ALM

Asset Liability Management (ALM) is concerned with strategic balance sheet management involving all market risks. It also deals with liquidity management, funds management, trading and capital planning.

CRR

Cash reserve ratio is the cash parked by the banks in their specified current account maintained with RBI.

SLR

Statutory liquidity ratio is in the form of cash (book value), gold (current market value) and balances in unencumbered approved securities. 

LIBOR

London Inter Bank Offered Rate. The interest rate at which banks offer to lend funds in the interbank market.

Basis Point

Is one hundredth of one percent. 1 basis point means 0.01%. Used for measuring change in interest rate/yield.

Securitization

A process by which a single asset or a pool of assets are transferred from the balance sheet of the originator (bank) to a bankruptcy remote SPV (trust) in return for an immediate cash payment.

Special Purpose Vehicle (SPV)

An entity which may be a trust, company or other entity constituted or established by a ‘Deed’ or ‘Agreement’ for a specific purpose.

Coupon
The  rate  of  interest  paid  on  a  debt  security  as calculated on the basis of the security’s face value.

Maturity Date

The date when the principal (face value) is paid back. The final coupon and the face value of a debt security is repaid to the investor on the maturity date. The time to maturity can vary from short term (1 year) to long term (30 years).

Repo/Reverse Repo

Repo means an instrument for borrowing funds by selling securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government or foreign securities, with an agreement to repurchase the said securities on a mutually agreed future date at an agreed price which includes interest for the fund borrowed.

Reverse Repo means an instrument for lending funds by purchasing securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government or foreign securities, with an agreement to resell the said securities on a mutually agreed future date at an agreed price which includes interest for the fund lent.