Banking terms beginning with C

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The part of the total deposits that is maintained in cash by the banks is referred to as CRR or Cash-Reserve Ratio. The banks in India do not keep this part of their deposits with themselves. They need to submit this amount to RBI or currency chests. RBI has the right to decide on the minimum ratio of the deposits that need to be maintained by the banks.


The term 'cashback' is used in case of credit cards. Some of the banks that issue credit cards give back some money to the card holder, if he/she uses the credit card to make payments at some particular retailers or merchandise stores. In the credit card statement, the user would get to know about the amount of cash back offered to him/her. The final amount, that is due on the credit card, is calculated by subtracting the payments that have been made during the billing cycle along with the cash back amount.


These credit cards are just like any other credit cards and can be availed from retailers or airlines apart from banks. These cards have some user benefits. A co-branded card user can gain travel points or avail attractive discounts related to the product. These cards are available in the sectors like telecom, travel, petrol pump, entertainment and retail. Nowadays, banks are offering co-branded debit cards also.


When a cheque is deposited in the bank, the receiving bank has to actualize the amount from the drawee bank before it is transferred to the concerned person's account. The drawee bank is presented with the cheque in the clearing house by the receiving bank. The clearing house is a main collection area for the banks to deal in financial securities including drafts, cheques and others. This activity is carried out during working days on daily basis.


A loan seeker needs to provide collateral or the security to the lending institution. For example, in case of education loans, the seeker needs to furnish the lender with the collateral beyond a fixed amount. A collateral security can be referred to as the security that falls outside the limit of the loan.


If a person applies for a particular loan, the lending institution runs a complete check on his/her credit profile to gather information on residence, age, occupation, service experience and the years of service as applicable to present job. Among these, the institution will also check if the person has taken any other loan. This entire process is referred to as credit appraisal.


Credit History is a record of an individual's credit payment including borrowing and refunding of any kind of loans, credit cards, mortgages and any kind of debt that needs to be repaid. The credit history contains records on open accounts, status of loans and credit card accounts. From credit history, a lender can know if the borrower had any late payment, bankruptcy or loan default issues. The Credit Information Bureau India ltd (Cibil) maintains these records and a lender can gain access to these details from Cibil as credit information report (CIR). A person needs to pay fee for this.


When a lending institution grants loan to a customer, it assumes this risk. The banks ask for collaterals from the borrowers because of this risk factor. This risk factor is high in case of personal loans or any other form of unsecured loans. In addition, in case of secured loans such as home loans, the lender asks the borrower to share some portion of the risk, giving margin money. The interest rates are decided depending on credit risk. Interest rates are kept high, if loan involves high risk factor.