Categories: Banks
Question 1: What is the line of credit? Answer: Line of credit is an agreement between the bank and a borrower, to provide a certain amount of loans on borrower’s demand. The borrower can withdraw the amount at any moment and pay the interest only on the amount withdrawn. Question 2: How do banks earn a profit? Answer: The bank earns profit in various ways: 1. Accepting deposit 2. Banking Value chain 3. Interest spread 4. Providing funds to borrowers on interest 5. Additional charges on services like checking account maintenance, online bill payment etc. Question 3: What is the payroll card? Answer: Payroll cards are types of smart cards issued by banks to facilitate salary payments between employer and employees. Through a payroll card, the employer can load salary payments onto an employee’s smart card, and the employee can withdraw the salary even if he or she doesn’t have an account in the bank. Question 4: What is card-based payment? Answer: There are two types of card payments: 1. Credit Card Payment 2. Debit Card Payment Question 5: What is a Payday loan? Answer: A Payday loan refers to a small amount and a short term loan available at the high-interest rate. Question 6: What is a charge off? Answer: Charge off is a declaration by a lender to a borrower for non- payment of the remaining amount when borrower badly falls into debt. The unpaid amount is settled as a bad debt. Question 7: What are the different types of loans offered by commercial banks? Answer: Borrowers can avail of loans from lending institutions. Let us talk about the different types of loans available in the market. 1. Personal Loans 2. Credit Card Loans 3. Home Loans 4. Car Loans 5. Two-Wheeler Loans 6. Small Business Loans 7. Payday Loans 8. Cash Advances 9. Home Renovation Loan 10. Agriculture Loan 11. Gold Loan 12. Loan Against Credit Card 13. Education Loan 14. Consumer Durable Question 8: What are the different types of fixed deposits? Answer: Before you invest in FD, you should be aware of the different types of fixed deposits that would help you maximize returns. 1. Standard Bank Fixed Deposits 2. Corporate Fixed Deposits 3. Tax-Saving Fixed Deposits 4. Senior Citizen Fixed Deposits 5. Cumulative Fixed Deposits 6. Non-cumulative Fixed Deposits 7. Flexi Fixed Deposits 8. NRI Fixed Deposits Question 9: What is a home equity loan? Answer: Home equity loans provide the opportunity to secure a loan at a fixed interest rate by leveraging the portion of your home that you fully own. Question 10: What is the interbank deposit? Answer: An interbank deposit is a mutual agreement between two banks, wherein one bank holds funds in an account on behalf of another institution. To facilitate this arrangement, the holding bank establishes a due-to account for the other bank. Question 11: What is a non-performing asset? Answer: A non-performing asset (NPA) refers to a loan or advance that has not received timely principal or interest payments for a duration of 90 days or more.