ABOUT BANKING INDUSTRY

Reserve Bank of India (RBI)

RBI, India's /Central Bank/ came into existence on 1stApril 1935 as a private
share holders bank. *Note :* 1st Central Bank in the world :
Rick's Bank Sweden in 1656. But in the light of unctions, Bank of England is the
1st Central Bank 1694.
*Functions of RBI : *
* Monopoly of Note issue
* Banker, Adviser and Agent to the Govt. of India
* Banker to Banks
* Custodian of Foreign exchange and gold.
* Re-discounts bills of exchange and hundis.
* Lender of last Resort
* Maintains stability of foreign value of Rupee.
* Acts as clearing house
* Credit control
Here are some important points to remember about RBI :
* RBI's central office is in Mumbai.
* RBI has 22 regional offices.
* It was nationalized on 1st January 1949.
* It prints Currency in 15 Languages.
* Its predecessor was Imperial Bank of India (1921).
* RBI came into existence on the recommendation of Hilton Young (Royal)
commission as per RBI act 1934.
* It is the member bank of Asian Clearing Union (ACU) and IMF (International
Monetary Fund).
* RBI has Board of Directors with 21 (Governor and 4 Deputy Governors etc)
* The ex Governor of RBI is Duvvuri Subba Rao (Second Time).
* The present governor of RBI is Mr Raghuram rajan.

Current R.B.I rates

Decreased from
9.00% (w.e.f. 9.50% which was
Bank Rate 07/10/2013)

continuing since
20/09/2013

[Remember Bank Rate is not the same thing as Deposit Rates offered by banks for fixed
deposits and recurring deposits. If you are a non banker and have landed on this page
while looking at Deposit Rates

Cash
Reserve
Ratio
(CRR)

4.00% (wef
09/02/2013)
-announced on
29/01/2013

23%(w.e.f.
11/08/2012)
Liquidity (announce
d on
Ratio
31/07/2012)

Statutory

(SLR)

Decreased from
4.25%which was
continuing since
30/10/2012

Decreased from
24% which was
continuing since
18/12/2010

7.50%
(w.e.f.

Repo Rate

Increased from
7.25% which was

under LAF 20/09/2013 continuing since

)
03/05/2013

Reverse

6.50%
(w.e.f.

Increased from

6.25% which was

Repo Rate 20/09/2013
continuing since
under LAF *
)
03/05/2013

*Reverse Report rate was an independent rate till 03/05/2011. However, in the
monetary policy announced on 03/05/2011, RBI has decided that now onwards the
Reverse Repo Rate will not be announced separately, but will be linked to Repo rate and
it will always be 100 bps below the Repo rate (till RBI decides to delink the same)

Marginal

9.00%
(w.e.f.
Decreased from
07/10/2013

Standing
Facility (MSF)
**

9.50% which
was continuing
since 20/09/2013

** The concept of Marginal Standing Facility was announced by RBI wef 03/05/2011
(However implemented wef 09/05/2011). At that time it was decided that Marginal
Standing Facility i.e. MSF rate will be linked to Repo rate and will be 100 bps above the
Repo Rate (till RBI decides to change the same). WEF 15/07/2013, RBI has announced
that from now onwards the MSF Rate will be 300 basis points above the Repo Rate.
Once again MSF rates were revised wef 20/09/2013 to 9.50%, which is 200 bps above the
Repo Rate,

*Explanations : *
*Bank Rate*
Bank rate, also referred to as the discount rate, is the rate of interest which a
central bank charges on the loans and advances that it extends to commercial
banks and other financial intermediaries. Changes in the bank rate are often
used by central banks to control the money supply.

Repo Rate
Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the
banks have any shortage of funds they can borrow it from RBI. A reduction in the
repo rate will help banks to get money at a cheaper rate. When the repo rate
increases, borrowing from RBI becomes more expensive.
Reverse Repo Rate
This is exact opposite of Repo rate. Reverse Repo rate is the rate at which
Reserve Bank of India (RBI) borrows money from banks. RBI uses this tool when it
feels there is too much money floating in the banking system. Banks are always

happy to lend money to RBI since their money is in safe hands with a good
interest. An increase in Reverse repo rate can cause the banks to transfer more
funds to RBI due to this attractive interest rates.
CRR
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep
with RBI. If RBI decides to increase the percent of this, the available amount with
the banks comes down. RBI is using this method (increase of CRR rate), to drain
out the excessive money from the banks.
SLR
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to
maintain in the form of cash, or gold or govt. approved securities (Bonds) before
providing credit to its customers. SLR rate is determined and maintained by the
RBI (Reserve Bank of India) in order to control the expansion of bank credit. SLR
is determined as the percentage of total demand and percentage of time
liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the
customers on their anytime demand. SLR is used to control inflation and propel
growth. Through SLR rate tuning the money supply in the system can be
controlled efficiently.
Marginal Standing Facility (MSF)
Marginal Standing Facility (MSF) is the rate at which scheduled banks could
borrow funds overnight from the Reserve Bank of India (RBI) against approved
government securities. The basic difference between Repo and MSF scheme is
that in MSF banks can use the securities under SLR to get loans from RBI and
hence MSF rate is 1% more than repo rate.
6 august newsMeeting for next governor of R.B.I
Meet the Next Governor of RBI - Raghuram Rajan
As the present governor of RBI Mr. D. Subbarao is going to complete his 5 years
term and retire on 5th September 2013 the Finance Ministry's office anounced
that *Mr. Raghuram Rajan will be the new governor of RBI*. Mr Rajan is presently
working as the Chief Economic Advisor to the Ministry of Finance, Government of
India (from 10th August 2001). He will be serving as the governor of Central
Bank for 3 years. Mr Rajan will be the *23rd Governor of RBI*.

Review of monetary policy

Highlights of First Quarter Review of RBI Monetary Policy 2013-14 dated 30th
July 2013 In a meeting with the chief executives of major scheduled commercial
banks on Tuesday 30th July 2013 at the Central Office, Reserve Bank of India,

Mumbai, the Governor of RBI Dr. D. Subbarao has announced the*First Quarter
Review of Monetary Policy 2013-14*.
Check the highlights below.
*Here are highlights of RBI's first-quarter monetary policy review :*
* Repo rate unchanged at 7.25%.
* The Reverse Repo Rate stood at 6.25%
* Marginal Standing Facility (MSF) and Bank Rate stood at 10.25%
* Cash reserve ratio too unchanged at 4 percent
* Cuts GDP forecast for FY'14 to 5.5 percent from 5.7 percent earlier
* Next mid-quarter review of policy on September 18; second quarter policy
review on October 29.
* This is RBI Governor D Subbarao's last policy before expiry of his ive year
term.

Banking Abbreviations
Here are some Abbreviations which are useful for Banking Exams.
* *ADB

-----------------------

Asian Development Bank *

* *ADR* * ----------------------- American Deposit Reciepts*

* *AML * * ----------------------* *ANBC* *
* *ATM* *
* *BCSBI* *

Anti Money Laundering*

-------------------------------------------------------------------

Adjusted Net Bank Credit*

Automated Teller Machine*
Banking Codes and Standards

Board of India*
* *BPLR* *
* *CAR* *
* *CBLO* *

-------------------------------------------------------------------

Bench Mark Prime Lending Rate*

Capital Adequacy Ratio*
Collatarised Borrowing and

Lending Obligations*
* *CBS* *

-----------------------

Core Banking Solutions

(Centralized Banking Solutions)*

* *CD* *

-----------------------

* *CD Ratio * *
* *CDR* *

Certificate of Deposit*

-----------------------

-----------------------

* *CIBIL* *

Credit Deposit Ratio*

Corporate Debt Restructuring*

-----------------------

Credit Information Bureau of

India Limited*
* *CCIL* *

-----------------------

Clearing Corporation of India

Limited*
* *COPRA* *
* *CP* *

-----------------------

-----------------------

* *CRAR* *

Consumer Protection Act*

Commercial Paper*

-----------------------

Capital to Risk Weighed

Assets Ratio*
* *CRR* *

-----------------------

* *DGFT* *

Cash Reserve Ratio*

-----------------------

Director General of Foreign

Trade*
* *DICGC* *

-----------------------

Deposit Insurance and Credit

Guarantee Corporation*
* *DRI* *

-----------------------

Differential Rate of Interest*

* *DRT* *

-----------------------

Debt Recovery Tribunal*

* *DSCR* *

-----------------------

Debt Service Coverage Ratio*

* *ECGC* *

-----------------------

Exports Credit Guarantee

Corporation*
* *ECS* *
* *EEFC* *

---------------------------------------------

Electronic Clearing Service*

Exchange Earner's Foreign

Currency Account*
* *EFT* *

-----------------------

Electronic Fund Transfer*

* *EPF* *

-----------------------

Employee Provident Fund*

* *EXIM Bank * *

-----------------------

Exports and Imports

Bank of India*
* *FCNR* *

-----------------------

Foreign Currency Non-Resident

-----------------------

Foreign Exchange Management Act*

Account*
* *FEMA* *
* *GCC* *

-----------------------

General Credit Card*

* *GDR* *

-----------------------

Global Depository Receipts*

* *IBA* *

-----------------------

* *IDRBT* *

Indian Banks Association*

-----------------------

Institute for Development

and Research in Banking Technology *

* *IMF* *

-----------------------

* *IRAC Norms * *

International Monetary Fund*

-----------------------

Income Recognition and

Assets Classification Norms*

* *KCC* *

-----------------------

Kisan Credit Card*

* *KYC* *

-----------------------

Know Your Customer*

*Functions of Commercial Banks :*

We can divide the main functions of the commercial Banks into tow categories.
Those are *Primary functions* and *Secondary functions*. Primary Functions are
the functions the bank SHOULD do to be called as a Bank. And the secondary
functions are the functions which are also performed by the Bank.
You can get the Complete details Below.
Read Complete details of Primaryfunctions Here
http://guide4bankexams.blogspot.in/2012/10/primary-functions-ofcommercial-banks.html
Money
Money, a wonderful term. I don't think that I should explain more about It. But
here are some important points which are useful for Banking Exams.
Functions of Money:
Money is what money does. Money discharges Five functions.
1. Medium of Exchange
2. Measure of Value

3. Store of Value
4. Standard of Deferred Payments.
5. Transfer of Value

Some more important points about Money are....

* RBI deals with three monetary aggregates. M1, M2 and M3.
* M1 and M3 are known as "Narrow Money" and "Broad Money" respectively. M4
is dropped.
* M0 is reserve money ; M0 = Currency in circulation + Other deposits with RBI
+ Cash Reserves.
* M3 growth in India is 17% for 2009-10. M3 = M1 + Net time deposits of Banks.
* Decimal system of Coinage started in India on 1st April 1957.
* Rs 2 and above currency and coins are issued by RBI but printing of Rs 1, 2
and 5 notes were discontinued.
* Currency notes by RBI are issued as per Minimum Reserve System 1957
according to which Rs 115 Cr. worth Gold and Rs 85 Cr. worth Foreign securities
to be kept as reserve.
* Paper Currency was introduced in India in 1882.
* Indian Rupee Coin was introduced during the regin of Sher Shah Suri (1484 1545 AD).
* Barter system existed in ancient times which means exchange of goods and
services for goods and services.
* There are 15 languages on 10 Rupee Note. 1000 Rupee currency notes in
circulation since Oct 9th 2000 after gap of 22 years. Parliament approved the
mining of Rs 1000 coin on 11th August 2011.
Coins of Rs 2 and Rs 5 are in
circulation since 1990.
* Indian Rupee is a token money. Indian rupee is accepted as legal tender in
Nepal and Bhutan.
* Y.V.Reddy, RBI working group on money supply, has introduced a new. Concept
"Liquid measures i.e., L1, L2, L3 on 23-06-1998.

Inflation

Persistent rise in the general price level or "fall in the value of money" is called
inflation. Have a look at some important points about Inflation.

Complete List of Indian Banks and their Heads / CMDs / CEOs

Friends, In this presents the *Complete List of the Heads
of the Banks in India*.
This list was made with the details available as of *4th October 2012*. We will
update whenever there are changes in the list. If you came to know about any
changes then please use the comment section below to comment, so that we will
change immediately. Good Day and Happy Reading :)
*STATE BANK and Its ASSOCIATES*

*State Bank of India*- Pratip Chaudhuri, CMD

o *State Bank of Bikaner And Jaipur*- Shiv Kumar,MD

o *State Bank of Hyderabad*- M Bhagavantha Rao,MD
o *State Bank of Mysore*- Dilip Mavinkurve,MD
o *State Bank of Patiala*- Achal Kumar Gupta,MD
o *State Bank of Travancore*- P. Nanda Kumaran,MD

*Nationalized Banks*

*Allahabad Bank*- Shubha Lakshmi Phans new-cmd-of-allahabad-bankshubhalakshmi(CMD) Replaced J.P. Dua on October 3rd 2012)
Indian Banks Heads List
Indian Banks and Their Heads
.

*Andhra Bank*- B. A. Prabhakar,CMD

*Bank of Baroda*- S. S. Mundra,CMD

*Bank of India*- Smt. V. R. Iyer,CMD

*Bank of Maharashtra*- Narendra Singh,CMD

*Canara Bank*- R K Dubey, CMD

*Central Bank of India*- M.V.Tanksale,CMD

*Corporation Bank*- Ajai Kumar,CMD

*Dena Bank*- Smt. Nupur Mitra,CMD

*IDBI Bank Ltd*- R. M. Malla,CMD

*Indian Bank*- T. M. Bhasin,CMD

*Indian Overseas Bank*- M.Narendra,CMD

*Oriental Bank of Commerce*- S. L. Bansal,CMD

*Punjab And Sind Bank*- Devendra Pal Singh, IAS,CMD

*Punjab National Bank*- K. R. Kamath,CMD

*Syndicate Bank*- M G Sanghvi,CMD

*UCO Bank*- Arun Kaul,CMD

*Union Bank of India*- D.Sarkar,CMD

*United Bank of India*-Bhaskar Sen,CMD

*Vijaya Bank*- H.S Upendra Kamath,CMD

*Private Sector Banks*

*Axis Bank*- Smt. Shikha Sharma,MD & CEO

*Catholic Syrian Bank*- Shri.V.P Iswardas ,MD & CEO

*City Union Bank*- Balasubramanian S

*Development Credit Bank*- Murali M. Natrajan,MD & CEO

*Dhanalakshmi Bank*- Amitabh Chaturvedi,MD & CEO

*Federal Bank*- Shyam Srinivasan,MD & CEO

*HDFC Bank*-Adtya Puri, MD & CEO

*ICICI Bank*-Smt Chanda Kochar, MD & CEO

*Indusind Bank*- Romesh Sobti, MD & CEO

*ING Vysya Bank*- Shailendra Bhandari, MD & CEO

*Jammu & Kashmir Bank*- Mushtaq Ahmad, MD & CEO

*Karnataka Bank*- P. Jayarama Bhat, MD & CEO

*Karur Vysya Bank*- K. Venkataraman, MD & CEO

*Kotak Mahindra Bank*- Uday Kotak , MD

*Lakshmi Vilas Bank*- P.R. Somasundaram, MD

*Nainital Bank*- Devendra Pratap Singh,Chairman CEO

*Ratnakar Bank*- Vishwavir Ahuja, MD & CEO

*South Indian Bank*- Dr.V.A.JOSEPH, MD & CEO

*Tamilnad Mercantile Bank*- K.B. Nagendra Murthy, MD & CEO

Yes Bank's Ltd- Rana Kapoor, Founder/MD & CEO

*Foreign Banks - Their Country Heads India*

City Bank- Pramit Jhaveri, Citi Country Officer, India

HSBC Bank- Naina Lal Kidwai,Country Head, HSBC

Standard Chartered Bank- Sunil Kaushal, chief of India operations

Major Financial Institutions of India - Short Notes

Financial institution is an establishment that focuses on dealing with financial
transactions, such as investments, loans and deposits etc. In simple words we
can say that the financial institution is an institution which provides financial
services for its clients or members. Most financial institutions are regulated by
the government. Almost all money related transactions, from depositing money
to taking out loans and exchange currencies must be done through financial
institutions. Almost all financial institutions are regulated by the government.
When it comes to india, The RBI (Reserve Bank of India) takes care of these
financial institutions in most of the cases. Some of the financial institutions of
India are RBI, Credit Rating Agencies, Commercial Banks, SEBI, Specialized
Financial Institutions and Insurance Companies.
Last 3 Five Year Plans In India
*10th Plan : 2002-07*
* Growth rate target 87%, Achieved 7.8%
* Highest in the entire planning era : 5 Crore employment, largest allocation to
energy.
*11th Plan : 2007-12*
* Theme : "Faster and more Inclusive Growth"
* Total proposed outlay : Rs. 36,44,718 Crores (doubled)

* Union Government Rs. 21,56,571 Crores (59.2%)

* States Rs. 14,88,147 Crores (40.8%)
* Approach paper to 11th Plan approved by the Planning Commission on 18-102006.
* 52nd National Development COuncil approved the Draft Plan on 09-12-2006.
* 54th National Development Council approved in its meeting on 19-12-2007
* 55th National Development council meet held on 24-07-2010
* Central Gross Budgetary Support. Rs 14,21,711 Crores.
* This is centre's support to plan.
* Midterm Review of the 11th plan is done by Planning commission on 23-032010, and the 11th plan growth target is reduced from 9% to 8.1% (It projects
the growth rate for 20-09-10, 20-10-11, 20-11-12 as 7.2%, 8.5% and 9%
respectively. Also to increase the outlay on infrastructure sector from the present
$ 500 billion in 11th Plan to $ 1 Trillion in 12th Plan.
*12th Plan : 2012-17*
* *This plans focus is on instilling inclusive growth. *
* *The plan is concentrated to encourages the development of Indias
agriculture, education, health and social welfare through government spending. *
* *It is also expected to create employment through developing Indias
manufacturing sector and move the nation higher up the value chain. *
* *Our PM Manmohan Singh, however, warned that maintaining fiscal discipline
is important as well. *

Shortnotes on ALM (Asset Liability Management) *What is ALM ?*

The full form of ALM is***Asset Liability Management*. This is the process of
managing risks that arise due to mismatches between the *assets* and
*liabilities* (debts and assets in simple words) of the bank.
*Here goes the technical definition of ALM.***
ALM is a comprehensive and dynamic framework for measuring, monitoring and
managing the market risk of a bank. It is the management of structure of
balance sheet (liabilities and assets) in such a way that the net earning from
interest is maximized within the overall risk-preference (present and future) of
the institutions.

*Scope of ALM*
The ALM functions extend to liquidly risk management, management of market
risk, trading risk management, funding and capital planning and profit planning
and growth projection.

*Residual maturity*
Residual maturity is the time period which a particular asset or liability will still
take to mature i.e. become due for payment (once at a time, say in case of a
term deposit or in instalments, say in case of term loan).
*Maturity Buckets *
Maturity buckets are different time intervals (8 for the time being, namely 1-14
days, 15-28, 29-90, 91-180, 181-365 days, 1-3 years, 3-5 and above 5 years), in
which the value of a particular asset or liability is placed depending upon its
residual maturity.
*Mismatch position*
When in a particular maturity bucket, the amount of maturing liabilities or assets
does not match, such position is called a mismatch position, which creates
liquidity surplus or liquidity crunch position and depending upon the interest rate
movement, such situation may turnout to be risky for the bank. The mismatches
for cash flows for 1-14 days and 15-28 days buckets are to be kept to the
minimum (not to exceed 20% each of cash outflows for those buckets).
*Role of ALCO*
Asset-Liability Committee is the top most committee to oversee implementation
of ALM system, to be headed by CMD or ED. ALCO would consider product pricing
for both deposits and advances, the desired maturity profile of the incremental
assets and liabilities in addition to monitoring the risk levels of the bank. It will
have to articulate current interest rates view of the bank and base its decisions
for future business strategy on this view.
*Benefits of ALM*
As we've discussed above, ALM is a tool that enables bank managements to take
business decisions in a more informed framework with an eye on the risks that
bank is exposed to. It is an integrated approach to financial management,
requiring simultaneous decisions about the types of amounts of financial assets
and liabilities - both mix and volume - with the complexities of the financial
markets in which the institution operates. Thats all for now friends. In our next
post, we shall discuss some
more important points for bank interviews.

*Banking Terms* AND *Banking Definitions*

*AAA* AAA is a term or a grade that is used to rate a particular bond. It is the
highest rated bond that gives maximum returns at the time of maturity. Usually
the grade AAA is given to the best debt obligation or a security, by a credit rating
agency.
*ABA Transit Number* The ABA transit number is assigned by the American
Bankers Association. It is a numeric coding that indicates and facilitates the
amount of check payments, balances and dues that are to be cleared among
different banks at the clearing house.
*ABO* ABO is an abbreviation for the term 'Accumulated Benefit Obligation'. It is
basically the measure of the liability of the pension plan of an organization and is
calculated when the pension plan is to be terminated.
*Absorption* Absorption is a term related to real estate, banking and finance
fields. The word 'absorption' means the process of renting a real estate property
that is newly built or is recently renovated.
*Absorption Time* The term 'absorption time' is used to define the time period
that is required to complete the process of absorption.
*Abstract of title* The 'abstract of title' is a written report that defines, records
and identifies the history and ownerships of a particular asset, usually a real
estate.
*Acceleration* Acceleration is the process, where the lender demands a full and
final payment of the debt or loan, before the allotted time period for repayment.
A clause in the document of the debt usually empowers the lender to accelerate
the time period.
*Acceleration Clause* A clause in the debt document that empowers the lender
to accelerate the payment, (i.e. or that is) the lender can demand the full
amount of loan before the date of maturity.
*Accelerated Depreciation* A method of depreciation of fixed assets, where the
early deductions are greater in monetary terms and later ones are smaller.
*Acceptance* Acceptance which is also known as the banker's acceptance is a
signed instrument of acknowledgment that indicates the approval and
acceptance of all terms and conditions of any agreement on behalf of the banker.
It is a very wide term that is used in context with financial agreements and
contracts.
*Accepting House* An accepting house is a banking or finance organization that
specializes in the service of acceptance and guarantee of bills of exchange. This
organization specializes in two prominent functions, that is facilitating the
different negotiable instruments and merchant banking.

*Accepting Party* The party (either an individual or a group of individuals or

organizations) that accepts the terms and conditions of a proposed agreement or
contract put forth by another party.
*Account* An account is a record of all financial transactions that are related to
an asset, individual, transaction or any organization. It is a major term in the field
of accountancy and is conventionally denoted by A/c. It can also be defined as a
transaction between a buyer and a seller about payments and dues which
develop creditor-debtor relations. *Account Aggregation* An Online facility that
is made available by some banks or financial organizations, in which all the
transactions related to the bank account, credit facilities, debts and investments
can be handled and operated with the help of a single interface or account.
Account aggregation is a form of Internet banking, provided for ease of
transaction.
*Account Balance* The total amount of money in a particular bank account,
along with the debit and credit amounts, the net amount is also termed as the
account balance.
*Account Reconciliation*Account reconciliation is a process with the help of which
the account balance can be easily verified. Account reconciliation is usually done
at the end of a week, month, financial year or at the end of any financial period.
It is usually done with the help of receipts, ATM notes, bank statements etc.
*Account Statement* A financial record that indicates the transaction and its
effect on an account (usually bank account), in terms of debit and credit.
Sometimes, an account statement also carries some precise details, like the date
of transaction, code of transaction, mode of transaction, sales, purchases, etc.
*Account Value* An account value is the total value of any account, applicable
when a person has many accounts and transactions in the same bank or financial
institution. The account value is a total value that is expressed in monetary
terms.
*Acknowledge*
Indicates the acceptance of a document, agreement, proposal
or a negotiable instrument by authenticating it with the help of a seal or a
signature. Acknowledgment signifies that the terms and
conditions of the contract have been accepted and the agreement
authenticated.
*Accessions* The new physical goods that are physically united to older goods, in
the manner where identity, of both the goods remains the same, are known as
accessions. For example, a new upgrade or addition on an already existing piece
of machinery.
*Accommodation Maker* A person who signs the note of application and renders
his credit history during the process of application of a loan is called
accommodation maker. The accommodation maker, usually receives no direct

financial benefit from the loan. The term is also used in the concept of
'accommodation bills', when two or more people help each other by rendering
liquidity of a negotiable instrument.
*Account Analysis* The term 'account analysis' is used in basically two contexts.
First, it is used to define the study and conclusion of a single account. Second, it
is also a procedure, where the profitability of a single demand account or many
demand accounts is projected and analyzed.
*Account Control Agreement* An account control agreement is an agreement
that perfects the interests of the creditor in a securities account.
*Account Debtor* An account debtor is a person or an organization that is in debt
and is obliged to pay either on an account or chattel paper or contract right.
Account debtors are, sometimes, simply referred to as debtors.
*Account Reconciliation Services* Account reconciliation services are basically
services that specialize in the compilation of reconciliation documents and
statements. Reconciliation services cater to the demands of individuals and huge
organizations that have a large number of transactions taking place everyday.
*Accounts Payable* Accounts payable is a list of liabilities of an organization or
an individual that are due but not paid to creditors. Account payable, in some
cases also appears as a current liability in the balance sheet. One must note that
loans and liabilities to the bank which have not maturated, are not a part of
account payable.
*Accretion* Accretion, is a process, where increments and periodic increases are
made in the book value or the balance sheet value of an asset. In the field of
banking and finance, accretion is the process where the price of a bond that has
been bought at a discount is changed to the par value of the bond. It is also
defined as a change in the price of a bond that has been bought at a discount to
the par value of the bond.
*Accretion Bond* An accretion bond is basically a bond that has been purchased
at a discount and whose book value is incremented to the par value or the face
value.
*Accreting Swap* Accreting swap is a swap of interest which has an increasing
notional amount.
*Accrual Basis*
Accrual is the process of accumulation of interest or money.
Accrual basis, which is also known as accrual convention, is the method by
which, investors, economists and businessmen count the number of days in a
month or a year(s). Of the most common examples of accrual basis is the 30/360
convention, wherein the accrual basis is calculated by assuming that every
month has 30 days. Accrual basis is often used as the common parameter for the
calculation of interests and returns.

*Accrual Bond* An accrual bond is also known as range bond. An accrual bond is
a bond that has a tendency to pay the investors, an above the market rate.
Sometimes, an accrual rate is also defined as a security that does not have a
period payment for the rate of interest. The interest is accrued and then added
later on at the time of maturity.
*Accrual Convention* It is the method of calculating the time period on a specific
investment by the investors. Accrual convention is at times calculated with the
help of different interest calculation mechanisms. Accrual convention is also
known as accrual basis.
*Accrued Interest* Accrued Interest is the interest, accumulated on an
investment but is not yet paid. Often, accrued interest is also termed as interest
receivable. Some banking books prefer to call it as the interest that is earned,
but not yet paid.
*Accumulated Depreciation* Accumulated depreciation is the total all the
periodic reductions from the book value of fixed assets. It is also termed as an
allowance for depreciation.
*Accumulator*Accumulator is also known as capital appreciation bond. The
accumulator is a type of security that is related to capital and is issued on face
value, but the interest is not paid to the investor on the basis of the time period.
Instead, the total amount of accrued interest is paid along with the face value
upon the maturity of the security.
*ACH* ACH is the abbreviation of the banking term automated clearing house.
The automated clearing house operates on a national level and helps banks and
financial institutions in the clearance of balances and negotiable instruments
that are used at a personalized as well as a mercantile modes of transactions.
*Active Tranche* Active tranche basically stands for REMIC or Real Estate
Mortgage Investment Conduit. The REMIC tranche is basically a bond that is
backed up by a large set of mortgages. The principal and interest that are paid
by the borrowers, are transferred to the people who hold tranche (tranche refers
to a portion or money) in REMIC.
*Actual Delay Days* Actual delay days are also simply known as 'delay days'. The
actual delay days are the actual days of the lag times. The lag time is the time
period that starts after the expiry of the last date of repayment.
*Adjustable Rate Mortgage (ARM)* Adjustable rate mortgage or ARM is basically
a type of loan, where the rate of interest is calculated on the basis of the
previously selected index rate. Due to this, the rate of interest that is charged
differs periodically, usually in every month. Hence, the rate of interest and the
total interest remain variable throughout the term/time period
*Adjusted Trading* Adjusted trading is a mercantile understanding between an
investor and the broker or dealer. In this understanding, the investor overpays
the broker) for a recently purchased security. As a return favor, the broker

overpays the investor for the security or the investment that he wants to get rid
of.
*Administered Rates*
Administered rates are the rates of interest which can
be changed contractually by lender. In some cases, these rates can also be
changed by the depositor and also the payee. The laws and provisions that
monitor the concept of administered rates differ in each jurisdiction.
*Administrative Float*
Administrative float is the frame of elapsed time that is
required in order to complete the paperwork, in order to administratively sort the
checks, or for that matter, any type of currency and negotiable instruments in
the bank itself or in the clearing house.
*Administrative Review* An administrative review is usually used in context to
the appraisal of the book value of a real estate and basically, deals in the
underwriting issues. The administrative review is usually written from the point
of view of loan underwriting during an estate appraisal.
*American Depository Receipt (ADR)* American depository receipts, also known
as ADRs, are depository receipts which are equal to a specific number of shares
of a corporate stock that has been issued in a foreign country. American
depository receipts are traded only the United States of America.
*American Institute of Certified Public Accountants (AICPA)* The American
Institute of Certified Public Accountants (AICPA), is a national accountant's
institute of the United States of America, that represents the certified public
accountants, who conduct accounting operations in the spheres of business and
industry, public practice, government, education and even NGO's.
*Amortization of Loans* One should not confuse between 'amortization' as an
accounting concept and amortization of loans. Amortization of loans is nothing
but the process of liquidation of loans or securities with the help of periodic
reductions. The principal amount of the loan is amortized periodically by the
method of payments in instalments. The techniques that are used for the
amortization of a loan differs from case to case.
*Amortization Period *
Amortization period is the time period that is
considered from the inception of the credit, investment or negotiable instrument
and ends upon the maturity or expiry of the instrument. The amortization period
is basically considered in order to calculate the rate of interest, timeline of
instalments and also the appropriate amount of all the instalments. The term
'amortization period' is also used in the field of accountancy; however, in a
different context.
*Amortizing Swap* Amortizing swap is a swap in the rate of interest that has a
declining notional principal.
*Alternative Minimum Tax* Alternative minimum tax, also known as the AMT, is a
type of tax that is levied by the United States government and is a type of
Federal income tax. The alternative minimum tax (AMT) is basically levied on the

individuals and organizations that misuse and take advantage of tax benefit
schemes that are in monetary terms exorbitant, if rationally compared to their
annual incomes.
*Analytical Solution* Analytical solutions, also known as closed form solutions,
are simple mathematical techniques and models, used to calculate projections
and interest rates by the lending, banking and finance organizations. Some of
the analytical solutions are so simple and effective that the calculations can also
be conducted orally, without writing it down on a paper or using a calculator.
*Analytical VAR* An analytical VAR is also known as the correlation. VAR. An
analytical VAR is basically the measurement of a financial instrument, portfolio of
the financial instruments or an entity's exposure to the reductions in its value
resulting from changes in the prevailing interest rates.
*Annual Percentage Rate (APR)*The annual percentage rate is calculated by
dividing the total financing costs associated with a loan divided by the principal
amount of the loan.
*Annual Percentage Yield (APY)* The annual percentage yield or APY is basically a
very accurate and calculated measure of yield that is paid on a standard bank
deposit account.
*Annuities* Annuities are contracts that guarantee income or return, in exchange
of a huge sum of money that is deposited, either at the same time or is paid with
the help of periodic payments. Some of the common types of annuities include
the deferred, fixed, immediate or variable variants.
Anticipated Income Doctrine of Liquidity* The anticipated income doctrine of
liquidity is basically an explanation of bank liquidity development in which the
net cash flow of the borrowers is considered as the source of loan repayment
instead of usual subsequent new borrowings.
*Appraisal* An appraisal is basically a statement, document or an estimated rise
or drastic climb in the price of a particular real estate. The term 'appraisal' is also
used in connection to raising the book value of a real estate.
*Appraisal Surplus* An appraisal surplus is the difference between the historical
cost and the appraised cost of the real estate.
*Arbitrage* Arbitrage is the simultaneous purchase and sale of two identical
commodities or instruments. This simultaneous sale and purchase is done in
order to take advantage of the price variations in two different markets. For
example, purchase of gold in one nation and the simultaneous sale in another
nation, (international markets) to achieve profit.
*Arbitrage Free*Arbitrage free is a type of financial model that generates market
structures that exclude scenarios generated by the arbitrage transactions and
dealings.

*Arbitrageur* An arbitrageur is an independent and individual broker who deals

in arbitrage.
*Article of Agreement*Article of agreement is a contractual provision, with the
help of which a buyer purchases real estate from the seller over a period of time,
and pays the consideration in installments. This type of agreement or contract is
also known as a land contract.
*As-extracted Collateral* As extracted collateral are extracted or non-extracted
minerals created by a debtor having an interest in minerals, and are subject to
security interest, either before or after extraction. In short, mined or non-mined
minerals can also be used as collaterals.
*Ascending Rate Bond* Security with which has a coupon rate that increases in
previously defined increments at scheduled intervals, is termed as an ascending
rate bond.
*Asset Backed Security (ABS)* A security that is backed with the help of some
kind of valuable assets, is known as an asset backed security. Sometimes, ABS is
also referred to as the monthly rate of repayment of a secured loan.
*Asset Sensitive* Asset sensitive is a sort of a position, wherein an increase in
the rate of interest will help the investor and the decline in the rate will not be
helpful at all.
*Asset and Liability Management* Asset and liability management is the
coordinated management of all the financial risks inherent in the business
conducted by financial institutions. In real practice, asset and liability
management aims at minimization of loss and maximization of profit.
*Assets Repriced Before Liabilities* 'Assets repriced before liabilities' is a term
that is used to define a gap between the repricing of the assets and liabilities in a
given period of time.
*Assignee*Assignee is an individual or an organization or party to whom an
assignment is given and commitment taken.
*Assignment*In the field of banking and finance, an assignment is the transfer of
any contractual agreement between two or more parties. The party that assigns
the contract is the assignor and the party who receives the assignment is the
assignee.
*Assumable*Assumable is a very different type of mortgage loan application,
where the new buyers of a real estate that has already been pledged as
collateral, assumes the liability of a loan and also the ownership of the real
estate.
*Assumed name* An assumed name is a name which is assumed by an
individual, organization or corporation in order to conduct business. It must be
noted that the assumed name is always different from the original name of the
corporation.

*Asymmetric Behavior* Asymmetric behavior is the unbalanced behaviour

displayed by the financial instruments. It is said to be observed when the rates
and value of instruments change in different proportions, in comparison to the
market rates.
*Attorney's Certificate of Title*The attorney's certificate of title, is also known as
the title option. This certificate is basically prepared by the attorney, in order to
state the ownership and the lien priority of an asset, particularly a real estate.
*Attrition Analysis*Attrition analysis is basically carried out for the purpose of
reformation of the assets and liabilities in a balance sheet.
*Audited Statements* Audited statements are supposed to be the most reliable
statements. The audited statements are basically financial statements whose
reliability and second effect (according to the double entry system) have been
verified, cross checked and confirmed. The word 'audited' (audit), signifies the
process of verification.
*Authenticated Security Agreement* The agreement of security between debtor
and banker is known as the authenticated security agreement and is accepted by
the borrower The acceptance process is done, online and then the agreement is
down loaded and printed.
*Authority*In the terms of banking, an authority is basically a governmental
department or agency that is empowered by the judicial system of a nation to
authenticate, legalize, conduct and monitor the functions that are related to
banking, finance, economics and transactions.
*Automated Clearing House (ACH)* An automatic clearing house is a nationwide
electronic clearing house that monitors and administers the process of check and
fund clearance between banks. The ACH is an electronic system and thus
minimizes the human work in the process of clearance. It distributes credit and
debit balances automatically.
*Automated Teller Machines* Automated teller machines are basically used to
conduct transactions with the bank, electronically. The automated teller machine
is an excellent example of integration of computers and electronics into the field
of banking.
*Automatic Stay* The automatic stay is an injunction that automatically becomes
effective, after any person or organization files for bankruptcy. The automatic
stay basically precludes the creditors from taking the debtor or the property of
the debtor.

*Banking Terms that Begin With B*

*Balance* The balance is the actual amount of money that is left in the account.
Sometimes, the term balance also refers to amount of the debt that is owed.

*Balance Transfer* A balance transfer is the repayment of a credit debt with the
help of another source of credit. In some cases, balance transfer also refers to
transfer of funds from one account to another.
*Balance Transfer Fee* The balance transfer fee is charged by the bank for the
transfer of balances from one source of credit to another. It also refers to the
transfer of fees from one bank account to another.
*Bank*
A bank is an establishment that helps individuals and organizations,
in the issuing, lending, borrowing and safeguarding functions of money.
*Bank Account* A bank account is an account held by a person with a bank, with
the help of which the account holder can deposit, safeguard his money, earn
interest and also make check payments.
*Bank Debt* A bank debt is basically any debt that is owed to a bank, by any
kind of consumer, organization or corporation. The debt may be anything from a
bank loan to a credit card debt or an overdraft that has been used.
*Bankruptcy* A bankruptcy refers to economic insolvency, wherein the person's
assets are liquidated, to pay off all liabilities with the help of a bankruptcy
trustee or a court of law.
*Billing Cycle* A billing cycle is a time period that covers the credit statement,
that usually lasts for 25 days.
*Bankruptcy Trustee* A bankruptcy trustee is an individual or a corporation or
any organization that is appointed, in case of bankruptcy, in order to represent
the interests of the bankruptcy estate and the insolvent debtor according to
Chapter 7, Chapter 11 and Chapter 13.
*Bankruptcy Advice* Bankruptcy advice is given by a bankruptcy lawyer or a
bankruptcy counseling service, so that a person can overcome financial and
economic difficulties after bankruptcy.
*Billing Statement* A billing statement is a summary of all transactions,
payments, purchases, finance charges and fees, that take place through a credit
account during a billing cycle.
*Bond* A bond is a certificate that represents an interest bearing debt, where the
issuer is required to pay a sum of money periodically till the maturity, and then
receive back the accumulated amount.
*Borrower* A borrower is the party that uses any kind of credit facility and thus,
becomes bliged to repay the principal amount and interest on the borrowed
amount.
*Bridge Financing* Also known as gap financing, bridge financing is a loan where
the time and cash flow between a short term loan and a long term loan is filled
up. Bridge financing begins at the end of the time period of the first loan and

ends with the start of the time period of the second loan, thereby bridging the
gap between two loans. It is also known as gap financing.
*Bridge Loan*
The bridge loan also known as a swing loan, is basically a real
estate loan or a home loan, where the current residence/real estate is pledged by
the borrower as a collateral in order to purchase a new residence.
*Bounced Check* A bounced check is nothing but an ordinary bank check that
any bank can refuse to encash or pay because of the fact that there are no
sufficient finances in the bank account of the originator or drawer of the check.

*Banking Terms that Begin With C*

*Cap* A cap is a limit that regulates the increase or decrease in the rate of
interest and installments of an adjustable rate mortgage. *Capital* The term
'capital' means the total net worth of any business establishment, organization
or corporation or the total amount invested for financial returns.
*Capital Improvement*
Capital improvement is the addition in the property of
an organization that adds to its additional value.
*Card Holders Agreement* The card holder's agreement is a written statement
that depicts all the terms and conditions of a credit card agreement. The
cardholders agreement constitutes many elements, such as rate of service
charges, billing dispute remedies and communications with the credit card
companies or service providers.
*Cash*
Bills and coins, checks and other negotiable instruments, that are
acceptable at banks and are considered to be liquid assets are collectively known
as cash.
*Cash Advance Fee* Cash advance fee is basically charged when a person uses a
credit card to obtain cash. In most cases, it is charged as a percentage to the
cash advance.
*Cash Flow* The cash flow is often defined as the liquid balance of cash as well
as the bank balance that is available with an organization or a corporation. In
some cases, the cash flow is also defined as the net amount of cash that is
generated by the net income that has been generated by an organization or
corporation in a particular time period.
*Cashier's Check* The cashier's check is drawn by a bank on its own name to
may payments other organizations, banks, corporations or even individuals.
*Cash Reserve* The cash reserve is the total amount of cash that is present in
the bank account and can also be withdrawn immediately.

*Certificate of Deposit* The certificate of deposit is a certificate of savings

deposit that promises the depositor the sum back along with appropriate
interest.
*Check* A check is a negotiable instrument that instructs the bank to pay a
particular amount of money from the writer's bank, to the receiver of the check.
*Clearing* Clearing of a check is basically a function that is executed at the
clearing house, when all amount of the check is subtracted from the payer's
account and then added to the payee's account.
*Clearing House* The clearing house is a place where the representatives of the
different banks meet for confirming and clearing all the checks and balances with
each other. The clearing house, in most countries across the world, is managed
by the central bank.
*Central Bank*
A central bank is the governing authority of all the other
banks in a country.
*Closing* Closing of an account is the final stage of any transaction where both
the parties receive almost equal consideration from each other. The term
'closing' from ledger books where the two accounts are 'closed down' i.e. both
debit and credit sides become equal.
*Co-borrower*
The co-borrower is a person who signs a promissory note as a
guarantee that the loan would be repaid. Thus the co-borrower plays the role of a
guarantor and is equally responsible for the loan.
*Consumer Credit* Consumer credit is the credit and loan facility that is provided
to the consumer for the purchase of goods, services and real estate property.
Most consumer credit is unsecured with the help of a collateral.
*Compound Interest* Compound interest is the interest that is 'compounded' on
a sum of money that is deposited for a long time. The compound interest, unlike
simple interest, is calculated by taking into consideration, the principal amount
and the accumulated interest.
*Credit Card Debt Consolidation Loan* Credit card debt consolidation loan is
availed from a bank in order to pay off all credit card debts.
*Credit Counseling* Credit counseling is a consultancy session where the credit
counselor suggests debt relief solutions and debt management solutions to the
clients.

*Banking Terms that Begin With D*

*Debit* Debit is a banking term that indicates the amount of money that is owed
by a borrower. It also indicates the amount that is payable, or the amount that

has been deducted from an account. The origin of the term is from the concept
of debit side of a ledger account.
*Debt*
A debt is any amount that is owed by an individual, organization or
corporation to a bank.
*Debit Card* A debit card is an instrument that was developed with digital cash
technology, and is used when a consumer makes that payment first to the credit
card company and then swipes the card. The debit card operates in the exact
opposite manner of the credit card.
*Deed* A deed is a very important document that indicates the ownership of an
asset, especially a real estate. The deed is also used to convey the property from
the seller to the buyer.
*Default* A default is a scenario where the debtors of a bank are unable to repay
the debt or the loan.
*Demand Deposit* A demand deposit is an account that is used as a checking
account.
*Deposit Slip* A deposit slip is a bill of itemized nature and depicts the amount of
paper money, coins and the check numbers that are being deposited into a bank
account.
*Depositor* The person who deposits money into a bank account is called a
depositor.
*Depreciation*
The degradation in the book and monetary value of a fixed
asset as a result of wear and tear in the course of time.
*Debentures*Debentures are long term corporate bonds that are unsecured in
nature. It must be noted that debentures holders are not protected by any
collateral and tend to be treated like rdinary creditors
*Discount* In the terms of banking, in the term 'discount' is used when any
negotiable instrument is converted into cash. For example, a person can
exchange a bearer check for cash with the amount being little less than the face
value of the check. This method is used by merchants who are in a dire need for
liquid finances. This definition is written from the banking point of view but has a
variable meanings.
*Dividend* A dividend is a part of the profit that is earned by a corporation or
joint stock companies, and is distributed amongst the shareholders.
*Debt Management* Debt management is a process of managing debts and
repaying creditors. Debt management is a very broad concept covering almost
anything related to debts and their repayment.

*Debt Consolidation Loan* A debt consolidation loan is a type of loan, where the
bank or the lending institution provides the borrower with a loan that helps the
borrower to pay off all his previous debts.
*Debt Settlement* Debt settlement is a procedure wherein a person in debt
negotiates the price with the lender of a loan, in order to reduce the installments
and the rate of repayment, and make sure a fast and guaranteed repayment.
*Debt Repayment* Debt repayment is the total process repayment of a debt
along with the interest. Sometimes, the consolidation that is provided is also
included in debt repayment.
*Debt Recovery* Debt recovery is the process that is initiated by the banks and
lending institutions, by various procedures like debt settlement or selling of
collaterals.

*Banking Terms that Begin With E*

*E-Cash* Also known as electronic cash and digital cash, e-cash is a technology
where the banking organizations resort to the use of electronics, computers and
other networks to execute transactions and transfer funds.
*Early Withdrawal Penalty* An early withdrawal penalty is basically a penalty that
is levied by a bank because of an early withdrawal of a fixed investment by any
investor. There can be several types of early withdrawal penalties, like forfeiting
the promised interest.
*Earning Assets* Earning assets generate returns, either in the form of returns or
in the form of interest or cash. One must note that in the case of earning assets,
the owner does not have to take any daily efforts to achieve returns.
*Encryption* Encryption is a process that is used to ensure the privacy and
security of a person's confidential financial information. The actual process
involves scrambling of the data of the person, in such a manner, so that only the
person himself can see the data.
*Exchange* An exchange is a trade of property, assets, goods or services for
consideration of any kind.
*Electronic Filing* Electronic filing is the method of filing of tax returns and tax
forms on the Internet.
*Earnest Money Deposit* An earnest money deposit is made by the buyer to the
potential seller of a real estate, in the initial stages of negotiation of purchase.
*Equity* Equity is the remainder balance between market value of a given
property and the outstanding real estate debt that is to yet be paid. The equity is
a risk that is basically borne by the lender.

*Expiration Date*This term indicates the invalidity of a financial document or

instrument, after a specified period of time.
*Education Loan* An education loan, also known as student's loan, is specifically
meant to provide for the borrower's expenditure towards education. In the
majority of countries, educational loans tend to have a low rate of interest. The
period of repayment also starts after the completion period of the loan.
*Exchange Rate* An exchange rate is a basically a rate, with the help of which
one country's currency can be exchanged with the currency of another country.
*Endorsement* Endorsement is basically the handing over of rights of a
financial/legal document or a negotiable instrument to another person.The
person who hands over his/her rights is known as the endorser, and the person
to whom the rights have been transferred is known as the endorsee.

*Banking Terms that Begin With F*

*Face Value* Face value is the original value of any security or negotiable
instrument.
*Field Audits* Field audits are basically the audits that are conducted by bank
officials, on the site itself, in order to assess the status and condition of the
collateral. At times, field audits are also conducted in order to assess the
financial situation of debtors, especially corporations, who have availed huge
loans.
*Final Maturity* A final maturity is the date of maturity when a last, single loan
matures from a pool of loans. The final maturity indicates the total and final
payment of the pool of mortgage loans.
*Financial Instrument*A financial instrument is anything that ranges from cash,
deed, negotiable instrument, or for that matter any written and authenticated
evidence, that shows the existence of a transaction or agreement.
*Financial Intermediary* A financial intermediary is basically a party or person
who acts as a link between a provider who provides securities and the user, who
purchases the securities. Share broker, and almost all the banks, are the best
examples of financial intermediaries.
*Financial Statement* A financial statement is a record of historical financial
figures, reports and a record of assets, liabilities, capital, income and
expenditure.
*Fixtures* The term 'fixture' is used in the context of a real estate property, when
assets, like furniture, are attached to the real estate and are also included in its
book value. Banks, in many a cases, are known to include fixtures in the value, if
the real estate property has been pledged as a collateral.

*Forbearance Agreement* A forbearance agreement is an authenticated

agreement between a debtor and a creditor, and is utilized by the creditor, when
the debtor initiates a debt settlement or the loan is defaulted, or the former
becomes bankrupt.
*Foreclosure*
A foreclosure is a standardized procedure where creditors like
banks, are authorized to obtain the title of the real estate property that has been
pledged as a collateral.
*Free Cash Flow* A free cash flow is basically is a total of financially liquid assets
that does not include capital expenditures and dividends.
*Fixed Rate Mortgage*
A fixed rate mortgage is a home loan, for which the
interest rate remains constant and fixed throughout the lifetime of loan.
*Foreign Currency Surcharge* The foreign currency surcharge is levied by some
banks and credit card companies, when a credit card or an ATM is used in a
foreign country.

*Banking Terms that Begin With G*

*Government Bonds* A government bond, which is also known as a government
security, is basically any security that is held with the government and has the
highest possible rate of interest.
*Gross Dividends* Gross dividends are basically the total amount of dividends
that are earned by an individual, or corporation in a single
accounting and tax year. It must be noted that capital gains are also included in
gross dividends.
*Gross Income Test* A gross income test, is a kind of test, where one can prove
to any government authority that a person is one's dependent.
*Grace Period*
A grace period is an interest-free period that is to be given by
a creditor to a debtor after the period of the loan gets over, before initiating the
process of loss recovery. The grace period depends on the amount of the loan
and also the credit score of the borrower.
*Gross Income* Gross income is the total income of a person, organization or
corporation in one financial year, before making any deductions.
*Ground Rent*
Ground rent is the amount of rent that a leaseholder pays
periodically to the owner for using a piece of land.
*Grant* A grant is any type of financial aid that is given by the government.
*Guarantor* A guarantor is a creator of trust who takes the responsibility of the
repayment of a loan, and is also, in some cases, liable and equally responsible
for the repayment of the loan.

*Banking Terms that Begin With H*

*Household Income* Household income is the income of all the members of one
household put together. One must note that the income earned through the
family business, is also counted in the household income.
*Holding Period* The holding period is the time duration during which a capital
asset is held/owned by an individual or corporation. The holding period is taken
into consideration, while pledging the asset as a collateral.
*Home Equity Debt* A home equity debt is a debt, where the borrower's house is
pledged as a collateral.
*Hedge* Hedge is a strategy that is used to minimize the risk of a particular
investment and maximize the returns of an investment. A 'hedge' strategy is,
most of the time, implemented with the help of a hedge fund. This term has been
written from the banker's point of view and may be interpreted differently in the
field of finance.

*Banking Terms that Begin With I*

*Installment Contract*
An installment contract is a contract where the
borrower, who is also the purchaser, pays a series of installments that includes
the interest of the principal amount.
*Interest* Interest is a charge that is paid by any borrower or debtor for the use
of money, which is calculated on the basis of the rate of interest, time period of
the debt and the principal amount that was borrowed. Interest is, sometimes,
also titled as the 'cost of credit'.
*Interest Accrual Rate*
The interest accrual rate is a percentage of interest
that is calculated on the basis of the rate of interest and is expressed in terms of
annual percentage rate or APR.
*Investment Property*
An investment property is a real estate property that
generates income for the owner, in terms of rent and lease.
*Interest Rate*
Interest rate is the percentage of principal amount that is
paid as an interest for the use of money. Usually, the interest rate is decided by a
country's central bank, on the basis of the economic conditions.
*Internet Banking* Internet banking is a system wherein customers can conduct
their transactions through the Internet. This kind of banking is also known as ebanking or online banking.
*Installment Credit* Installment credit is a debt or loan that is to be returned to
the lender in a set of periodic installments. Auto loans, home loans and other
types of loans are included in installment credit.

*Banking Terms that Begin With J*

*Joint and Several Liability* This is a legal term utilized to point that two or more
entities are individually entirely responsible, instead of being collectively
responsible.
*Judgment Clause* This relates to a provision regarding bank notes of hand or
guarantees, and includes the authorization of the borrowers or sureties given to
the bank, to create a judgment lien, at any time after the completion of the legal
instruments.
*Judicial Lien* It pertains to an interest in the holdings ,which are gained from
judicial or court orders.
*Jump Z-Tranche* A Z-tranche is a real estate mortgage investment conduit
(REMIC), which is countenanced to obtain principal sums, before prior tranches
are no longer active.
*Junior Debt*
The responsibilities of an issuing entity, for which quittance
has contractually been considered, as a priority of miscellaneous liabilities of the
same debtor.
*Junior Creditor* A creditor who possesses junior debt.
*Junk Bonds* This is a recognized term for high-yield sureties with quality
standings below investment grade.

*Banking Terms that Begin With K*

*Kappa* This is a Greek term utilized in the banking sector that relates to the
sensitiveness of an option's rate to alterations in the unpredictability cost.
*Key Rate Duration* This pertains to a measure of duration, which computes
efficient or empirical duration by altering the market price for a particular
maturity date on the yield curve, while keeping all other variables constant.
*Knot Points* It relates to the points that are on the yield curve for which there
are discernible rates for traded instruments.

*Banking Terms that Begin With L*

*Land Contract* Otherwise known as an article of agreement, a land contract

denotes a form of contract, wherein the buyer makes periodic installment

payments to the seller, in order to buy a real estate. But, the title to the property
is not transferred to the buyer, until he makes the final payment.
*Land Flip* A colloquial expression used to denote a real estate fraud, wherein
the prices of undeveloped property is artificially increased to high amounts,
which are above the fair market value. This is often accomplished by a group of
colluding buyers, who purchase and resell the same property, among its
members, several times, each time increasing the price. When the price
becomes unrealistically high, they sell the property or raise a loan for its
development.
*Lease* A contract, through which, the owner (lessor) of a certain property,
allows another (lessee) to use the same for a specified period, in exchange for a
value called the rent.
*Letter of Credit* A document issued by a bank (on behalf of the buyer or the
importer), stating its commitment to pay a third party (seller or the exporter), a
specific amount, for the purchase of goods by its customer, who is the buyer. The
seller has to meet the conditions given in the document and submit the relevant
documents, in order to receive the payment. Letters of credit are mainly used in
international trade transactions of huge amounts, wherein the customer and the
supplier live in different countries.
*Life Cap* The upper and lower limit for changes in the borrower's interest rate
over the term of his/her loan.
*Lifeline Account* A bank account meant for customers with low incomes. These
accounts are characterized by little or no monthly fees and there is no strict rule
regarding the minimum balance.
*Liquidated Damages*
A clause, which is commonly found in contracts,
wherein the parties agree to pay a fixed amount, in case of any breach of the
contractual provisions. The party, who violates the provisions has to pay the
amount to the aggrieved party.
*Lock-in Period* A guarantee given by the lender that there will be no change in
the quoted mortgage rates for a specified period of time, which is called the lockin period.
*Long Term Debt* An amount owed for a period exceeding one year, from the
date of last balance sheet/accounting year. Otherwise known as funded debts,
long term debts refers to those loans, which become due, after one year from the
last balance sheet/accounting year. Such debts can be a bank loan, bonds,
mortgage, debentures, or other obligations.
*Loss Given Default (LGD)* A term used to denote the actual loss incurred by a
bank, in case of default by a debtor to pay off the loan. If there is any collateral
pledged by the debtor, the value of such assets will be reduced from the loan
amount.

*Banking Terms that Begin With M*

*Mortgage* A mortgage is a legal agreement between the lender and borrower
where real estate property is used as a collateral for the loan, in order to secure
the payment of the debt. According to the mortgage agreement, the lender of
the loan is authorized to confiscate the property, the moment the borrower stops
paying the installments.
*Maturity* The term maturity is used to indicate the end of investment period of
any fixed investment or security. After maturity, the investor is repaid the
invested amount along with the interest that has been accumulated. For
example, on the maturity of a one year fixed deposit, the invested sum along
with the accumulated interest, is transferred by the bank to the account of the
investor.
*Maturity Date* Maturity date is the date on which the investment or security
attains maturity.
*Mortgage Refinance*
A mortgage refinance involves the replacement of
current debt with another debt with more convenient terms and conditions.
*Market Value* Market value is the value at which the demand of consumers and
the supply of the manufacturers decide the price of a commodity or service. The
market value is the equilibrium point on the supply and demand graph, where
the demand and supply curves meet. Thus, market value is decided on the basis
of the number people who demand a commodity and the number of commodities
that the sellers are capable of selling.

*Banking Terms that Begin With N*

*No Cash Out Refinance* A home loan, which is at a lower interest, an amount
which does not go over the closing costs and the outstanding principal of the
original mortgage.
*No Documentation Loan* When the applicant furnishes minimum information,
giving, only name, address, contact information for the employer and social
security number, for the application of the loan, it is called a no-documentation
loan.
*Non-Recurring Closing Costs* A lump sum fees paid at a real estate set up,
which includes appraisal, origination, title insurance, credit report and points, is
referred to as non-recurring closing costs.
*National Bank* A bank which is chartered by the federal government and is a
member of the Federal Reserve System by default, is called a national bank.

*Net Operating Loss* A total loss that is calculated for a tax year and is
attributed to business or casualty losses.
*Net Income* The amount that is left after paying the taxes is called the net
income.
*Negative Amortization* When the monthly payment is unable to cover the
principal and the interest due, there is a slow increase in the mortgage debt. This
situation is termed as negative amortization.
*Non-Liquid Asset* A possession or asset which cannot be changed into cash
very easily is called non liquid asset.
*Non Recourse Loan* A loan which is secured by collateral and for which the
borrower is not personally liable, is called a non recourse loan.

*Banking Terms that Begin With O*

*Original Principal Balance* The amount borrowed by any borrower is called the
original principal balance.
*Owner Financing* When the seller loans the whole sum or a part of it to a buyer,
it is called owner financing.
*Online Banking* The accessing of bank information, accounts and transactions
with the help of a computer through the financial institution's website on the
Internet, is called online banking. It is also called Internet banking or e-banking
*Overdraft* As the name suggests, it is a check or rather an amount of check
,which is above the balance available in the account of the payer.
*Overdraft Protection*
A service which permits a verification account to be
connected to other savings or line of credit for facilitation of protection against
overdraft is called overdraft protection.
*Origination Fee* The charges a lender or creditor levies for processing a loan. It
includes cost of loan document preparation, verification of the credit history of
the borrower and conducting an overall appraisal.
*Ordinary Dividends* Dividends, which are a distribution of the profits of a
company, are called ordinary dividends.
*Ordinary Income* Income, not qualifying as a capital gain, is called ordinary
income.
*Offline Debit Card* This refers to a card which is issued by a bank and has a
VISA or MasterCard logo on it. It can be issued, either instead of or along with a
ATM card.

*Open End Credit* Open end credit means a line of credit that can be used a
number of times, up to a certain limit. Another name for this type of credit is
charge account or revolving credit.

*Banking Terms that Begin With P*

*Payee*Payee is the person to whom the money is to be paid by the payer.
*Payer* Payer is the person who pays the money to the payee.
*Penalty Rate*
Extra payment made to workers for working more than
normal working hours is known as penalty rate.
*Personal Identification Number (PIN)* Personal identification number or PIN is a
secret code of numbers and alphabets given to customers to perform
transactions through an automatic teller machine or an ATM.
*Point of Sale (POS)* Point of sale a terminal is where cash registers are replaced
by computerized systems.
*Posting Date*
Posting date is the date on which outdoor advertisements hit
the markets. Usually these dates are in multiples of five.
*Pre-Qualification* A preliminary stage prior to bidding process, where the
applicant is verified of whether he has the resources and the ability to do a given
job.
*Previous Balance* Previous balance is an outstanding amount which appears on
the credit card statement on date when it is generated.
*Principal* Principal is basic amount which is invested to yield returns over a
certain period of time at a given rate of interest.

*Banking Terms that Begin With Q*

*Qualified Opinion* An auditor's opinion mentioned in his report which holds
some reservations regarding the process of audit is known as a qualified opinion.
*Quality Spread* The difference between the yields of Treasury securities and
non-Treasury securities, as a result of different ratings or quality, is termed as
quality spread.
*Quick Ratio* Quick ratio is also known as the acid-test ratio. It measures the
company's liabilities and determines its position to pay off its obligations.

*Banking Terms that Begin With R*

*Range Bonds*
Bonds which cease the payments because the reference rate
of the bond increases or decreases, as compared to predetermined rate on a
given index.
*Rate*
A rate is a measure which forms the basis of any financial
transaction.
*Rate Covenant* Rate covenant in a municipal bond determines the rates to be
charged to buyers.
*Refinance* Refinance means clearing the current loan with the proceeds of a
new one and using the same property for collateral.
*Revolving Line of Credit* Revolving line of credit is a rule followed by the lender,
which binds him to allow a certain credit to the borrower.
*Rate Risk* Rate risk is the rate of return determined to attract capital on a given
investment.
*Rate Sensitive* Rate sensitive pertains to deposit account or security
investment. If any changes are made to the related interest rate that causes
variations in its demand and supply.
*Real Estate* A piece of land developed or undeveloped which comes for a price.
*Real Property*

Real property refers to anything that is built on land.

*Record Date* A date set by the issuer, on which an individual must own the
shares, so as to be eligible to receive the dividend.
*Reconveyance* In banking terms, reconveyance is transfer of property to its real
owner, once the loan or the mortgage is paid off.
*Redemption Fee* A commission or fee paid, when an agent or an individual sells
an investment, such as mutual funds or annuity.
*Reference Asset*An asset such as debt instrument which has a credit derivative
is known as a reference asset.
*Reference Rate* The basis of floating rate security is known as the reference
rate.
*Refunding* The act of paying back the amount or returning the funds is known
as refunding.
*Reinvestment Risk* The risk that arises from the fact that dividends or any
yields may not be eligible for investment to earn the rate of interest is known as
the reinvestment risk.
*Relative Value* The liquidity, risk and return of one instrument in relation to
another financial instrument is the relative value.

*Repossession* Taking back of property by a seller or a lender from the buyer or

the borrower due to default of payment.
*Repricing* Repricing means a change in the rate of interest.
*Reserve Account* An account which is maintained by depositing undistributed
parts of profit for future needs is known as a reserve account.
*Reserve Requirements* Cash money or liquidity that member banks need to
hold with the Federal Reserve System.
*Residual Value* The anticipated value that a company calculates, to sell its
asset at the end of its full life.
*Return on Capital* A measure which determines how a company will optimize its
funds.
*Returns* The yield or earning at the end of a given period at a given rate of
interest.
*Risk* The probability of threat, danger, damage, liability or loss is known as risk.

*Banking Terms that Begin With S*

*Safekeeping*
An arrangement for holding and protecting a customer's
assets, like valuables, documents, etc. Such arrangements are commonly
provided by banks and some financial institutions, usually for a fee. The
customer is issued a safekeeping receipt, which indicates that the assets do not
belong to the bank and they have to be returned to the customer, upon his
request.
*Same Day Funds* This banking term refers to the funds or money balances,
which can be transferred or withdrawn on the same day of presenting and
collection. In short, a transfer of money, which can be used by the recipient on
the same day of transfer and this provision is subject to the net settlement of
accounts between the bank, through which the money is sent and the receiving
bank. This term is also used to refer to the transfer of federal funds from one
bank to another over Fedwire and the transfers through the Clearing House
Interbank Payments System (CHIPS) in New York.
*Sale Contract* A sale contract refers to a written agreement between the buyer
and the seller of an asset (usually real estate), with details regarding the terms
and conditions of the sale.
*Sale Leaseback* A sale of property, wherein the title is transferred to the buyer,
on condition that the property will be leased to the seller on a long-term basis,
after the sale.
*Second Mortgage* Otherwise known as 'second trust', a second mortgage is a
mortgage which is taken out on property, which has been pledged as security to

ensure payment (collateral) of an original or first mortgage. A first mortgage has

priority in settlement of claims, before all other subsequent mortgages. Unlike a
first mortgage, a second mortgage has a shorter repayment term, with higher
interest rates.
*Secured Loan* A loan which is backed by a pledging of real or personal
property (collateral) by the borrower to the lender. Unlike unsecured loans, which
is backed by a mere promise by the borrower that he will repay the loan, in case
of a secured loan, the lender can initiate legal action against the borrower to
reclaim and sell the collateral (pledged property).
*Security* Property or assets, which are pledged to the lender by the borrower,
as a guarantee to the repayment of a loan.
*Seller Broker*
A person who finds a buyer for the seller of a property and
aids the latter in negotiation, in lieu of a commission.
*Seller Carryback* A form of financing, wherein the seller of a property finances
the buyer, who finds it difficult to procure a loan or falls short of the amount
needed to buy the property. In short, it is a part of the purchase amount, which
the seller offers to finance. This term is also known as carryback loan or seller's
second.
*Seller's Market* A market, which has more buyers, as compared to the number
of sellers. This condition leads to a rise in the prices, which is favorable for
sellers.
*Sort Code* A sort code is a specific number, which is assigned to a particular
branch of a bank for internal purposes. Each branch is assigned with a sort code,
which makes it easier to designate that particular branch of bank, than writing
down the whole address.
*Standard Payment Calculation* A method used to calculate the monthly
payment required to repay a loan, based on the loan balance, term of the loan
and the current interest rate.
*Starter Home* A term used to denote a small house, which is inexpensive, and
is often meant for first time home buyers.
*Smart Cards* Unlike debit and credit cards (with magnetic stripes), smart cards
possess a computer chip, which is used for data storage, processing and
identification.
*Syndicated Loan* A very large loan extended by a group of small banks to a
single borrower, especially corporate borrowers. In most cases of syndicated
loans, there will be a lead bank, which provides a part of the loan and syndicates
the balance amount to other banks.

*Banking Terms that Begin With T*

*Takedown Period* The time (period) when a borrower receives finances from a
lender under a line of credit or loan commitment.
*Takeout Commitments* This term relates to a written promise by a loaner to
make a long-term financial arrangement to substitute or replace a short-run loan.
*Term Insurance* It is the insurance for a certain time period which provides for
no defrayal to the insured individual, excluding losses during the period, and that
becomes null upon its expiration.
*Term Note* A legal notice offered by a particular organization to investors
through a dealer.
*Term Structure of Interest Rates* This phrase relates to the relationship between
interest rates on bonds of different due dates, generally described in the form of
a chart, often known as a 'yield curve'.
*Time Deposit* A kind of bank deposit which the investor is not able to withdraw,
before a time fixed when making the deposit.
*Time Draft* This term relates to a draft that is collectible at a particular future
date.
*Time Note* A 'time note' is a financial instrument, like a 'note of hand', which
stipulates dates or a date of defrayal.
*Time Value* This is the sum of money that an option's premium surpasses its
intrinsic worth, and is also known as 'time premium'.
*Times Interest Earned* It pertains to a measure of the financial trustworthiness
of an organization, which is equal to Eb divided by interest. *Title Insurance* It is
the insurance for the purpose of protecting a loaner or owner against loss, if
there is any kind of property ownership conflict.
*Title Insurance Commitment* This term is concerned with the commitment
which is brought out by a title insurance firm, and comprises the stipulations
under which a title insurance policy will be made out.
*Title Opinion*
It pertains to a legal instrument confirming that a property
title is clear and can be offered for sale in the market.
*Title Search* This refers to the procedure of analyzing all applicable records to
affirm that the vendor is the legal possessor of the property and that there are
no liens or other claims undischarged.
*Total Return Analysis* This term relates to the analysis of the real rate of return
that is earned over a certain evaluation time period.
*Total Return Swap* It is a kind of switch wherein an entity pays another entity
according to the fixed rate in return for defrayals based on the return of a given
asset.

*Trade Credit*It is the credit which a company gives to another organization for
the purpose of buying products or services.
*Total Risk-Based Capital* The finances that are provided for startup companies
and small businesses with prodigious growth abilities.
*Trade Date* The day on which the actual transaction takes place; one to five
days before the settlement period, according to the kind of transaction.
*Trade Name* The incorporated legal name under which an organization carries
out all its operations, functions, and dealings.
*Trade Letter of Credit* This refers to a legal document that a customer asks for
from his bank for the purpose of assuring that the defrayal for products would be
transferred to the vendor.

*Banking Terms that Begin With U*

*Unadvised Line* A line of credit which is sanctioned by the bank but not
revealed to the borrower till the time of some particular occasion.
*Uncertificated* This is a legal word that is utilized as an adjective to depict
stocks, bonds, miscellaneous investments and deposit certificates, which are
held in immaterial form as electronic computer records.
*Uncovered* It is the condition of an option bearer who doesn't even possess an
offsetting position in the underlying instrument.
*Underwriter* Any investment or commercial financial firm or a securities house
that works with an issuing entity for the purpose of selling a new issue.
*Undivided Profits* This is a banking work for retained earnings.
*Unexpected Loss or Unexpected Risk*
which surpasses the anticipated amount.

The element or part of risk or loss

*Universal Life Insurance* A type of life insurance which blends term insurance
protection with a savings element.
*Unlimited Guaranty* A guarantee understanding which doesn't consist of any
provisos limiting the amount of debt guaranteed.
*Unqualified Opinion*A word used to depict a suggestion letter concomitant with
scrutinized financial statements.
*Upstream Guaranty* A word that is utilized to give a description of a guarantee
of a loan to a borrowing entity, when the borrowing party is an owning company
or shareholder of the surety.

*Usury Laws* The state and federal jurisprudence setting up uttermost

permissible rates of interest that can be charged on certain types of credit
extensions to particular kinds of borrowers.

*Banking Terms that Begin With V*

* *Value At Risk (VAR)* The sum or portion of the value that is at stake of subject
to loss from a variation in prevalent interest rates.
*Value Based Management (VBM)* It is a structured approach to evaluate the
performance of the company's unit managers or goods and services, in terms of
the aggregate gains they render to stockholders.
*Variable Life Insurance* This type of insurance is very similar to whole life
insurance, wherein the cash worth is invested in equity or debt sureties.
*Variable Rate Mortgage* This is just another term used for Adjustable Rate
Mortgage (ARM).
*Variance* This is a stats-related word which measures the distribution of
information, like rates or costs around the mean.
*Vector Path* A series of the rate of paying finances in advance, in succession
that is chosen to contemplate an assumed rate of interest scenario.
*Variance Swap* This relates to a OTC fiscal derivative which enables a person to
speculate on or hedging jeopardizes connected with unpredictability of some
underlying product, such as an exchange rate, interest rate or stock index.
*Vested Accumulated Benefit Obligation* The part of the conglomerated benefit
obligation under a specified benefit plan to which the workers possess a legal
right, even if their employment is terminated before retirement.

*Banking Terms that Begin With W*

*Waiver* In banking terms, a waiver is relinquishing the rights. Sometimes also
considered to be the exemption or settlement of a part of debt.
*Warehouse Lines of Credit* Warehouse line of credit is a facility provided to the
borrower to get a warehouse mortgage portfolio for future security.
*Warehouse Receipt* A document or a statement which states the quantity and
quality of the items at the warehouse for safekeeping.
*Warranty Deed* A deed which states that the seller holds the clear title of the
goods or real estate to be sold. This gives him or her the right to sell the title to a
prospective buyer.

*When-Issued (WI)* 'When issued' or WI is a conditional transaction made due to

its authorized security or debt obligation.
*Whole Life Insurance*
A whole life insurance is a contract between the
insurer and the policy owner, that the insurer will pay the sum of money on the
occurrence of the event mentioned in the policy to the insured. It's a concept
wherein the insurer mitigates the loss caused to the insured on the basis of
certain principles.
*Wholesale Banking*Wholesale banking is a term used for banks which offer
services to other corporate entities, large institutions and other financial
institutions.
*Wire Transfers* Wire transfers is an Electronic medium used while transferring of
funds.
*With Recourse* A term used to signify that a seller or a drawer will be liable in
case of non-performance of asset or non-payment of an instrument.
*Withdrawals*Removing of funds from a bank account is known as making a
withdrawal.
*Without Recourse*A term which signifies that the buyer is responsible for nonperformance of an asset or non-payment of an instrument, instead of the seller.
*Working Capital* In banking terms, working capital is defined as the difference
between current assets and current liabilities.
*Wraparound Mortgage* An arrangement, wherein existing mortgage is
refinanced with more money, with a rate of interest ranging between the old
rates and current market rates.
*Writer* A writer is an entity or a financial institution which promises to sell a
certain number of shares or stocks at a price before a certain date.

*Banking Terms that Begin With Y*

Yield Curve* Yield curve is a graph or a curve that shows the relationship
between maturity dates and yield.
*Yield*
The returns earned on a stock or bonds, as per the effective rate of
interest on the effective date, is known as a yield in the banking terms.
*Yield Curve Risk* Yield curve risk is the huge risk involved in a fixed income
instrument, due to major fluctuations in the market rates of interest.
*Yield to Call (YTC)* The yield on a bond calculated on the supposition that the
issuer will redeem the amount at the first call as stated on the bond's prospectus
is known as yield to call.

*Yield-to-Maturity (YTM)* The average annual yield that an investor receives

because he holds it for life or till the maturity date is known as the yield to
maturity.

*Banking Terms that Begin With Z*

*Z score* Z score is a measure, used in the banking field, to determine the
difference between a single data point and a normal data point.
*Zero Balance Account* A bank account which does not require any minimum
balance is termed as a zero balance account.
*Zero Cost Collar* A type of arrangement, wherein, the borrower buys a cap from
the bank and sells the floor. In this arrangement, the cost of the cap is recovered
by sale proceeds of the floor or vice versa.
*Zero Coupon Yield Curve* Zero coupon yield curve is also known as spot yield
curve, and is used to determine discount factors.
*Zoning* A government controlled area where only certain uses of the land are
permitted is called zoning.
*Zoning Variance* An exception made in the zoning rule by the local
government is zoning variance.
*Zero-Lot Line* Structure of a housing area such that every house has a
designated plot. They may or may not have same walls.
*Zero-Down-Payment Mortgage* Zero-down-payment mortgage is a type of
mortgage given to a buyer who does not make any down payments while
borrowing. The mortgage buyer borrows the amount at the entire purchase price.