BANKING
At-the-money: The
exercise price of a derivative that is closest to the market price of the
underlying instrument.
ATM: ATMs are Automatic Teller Machines, which do
the job of a teller in a bank through Computer Network. ATMs are located on the
branch premises or off branch premises. ATMs are useful to dispense cash,
receive cash, accept cheques, give balances in the accounts and also give
mini-statements to the customers.
Authorization:
The issuance of approval, by a credit card issuer, merchant, or other
affiliate, to complete a credit card transaction.
Automated Clearing
House (ACH): A computerized facility used by member depository institutions
to electronically combine, sort, and distribute inter-bank credits and debits.
ACHs process electronic transfers of government securities and provided
customer services, such as direct deposit of customers' salaries and government
benefit payments (i.e., social security, welfare, and veterans' entitlements),
and preauthorized transfers.
Automated Teller
Machine (ATM): A machine, activated by a magnetically encoded card or other
medium that can process a variety of banking transactions. These include
accepting deposits and loan payments, providing withdrawals, and transferring
funds between accounts.
Automatic Bill
Payment: A checkless system for paying recurring bills with one
authorization statement to a financial institution. For example, the customer
would only have to provide one authorization form/letter/document to pay the
cable bill each month. The necessary debits and credits are made through an
Automated Clearing House (ACH).
Availability Date:
Bank's policy as to when funds deposited into an account will be available for
withdrawal.
Availability Policy: Bank's
policy as to when funds deposited into an account will be available for
withdrawal.
Available Balance:
The balance of an account less any hold, uncollected funds, and restrictions
against the account.
Available Credit:
The difference between the credit limit assigned to a cardholder account and
the present balance of the account.
Banking: Accepting
for the purpose of lending or investment of deposits of money from Public,
Repayable on demand or otherwise and withdraw able by cheques, drafts, order,
etc.
Bank Ombudsman: Bank
Ombudsman is the authority to look into complaints against Banks in the main
areas of collection of cheque / bills, issue of demand drafts, non-adherence to
prescribed hours of working, failure to honour guarantee / letter of credit
commitments, operations in deposit accounts and also in the areas of loans and
advances where banks flout directions / instructions of RBI. This Scheme was
announced in 1995 and is functioning with new guidelines from 2007. This scheme
covers all scheduled banks, the RRBs and co-operative banks.
Bancassurance: Bancassurance refers to the distribution of
insurance products and the insurance policies of insurance companies which may
be life policies or non-life policies like home insurance - car insurance,
medi-policies and others, by banks as corporate agents through their branches
located in different parts of the country by charging a fee.
Banker's Lien:
Bankers lien is a special right of lien exercised by the bankers, who can
retain goods bailed to them as a security for general balance of account.
Bankers can have this right in the absence of a contract to the contrary.
Basel-II: The
Committee on Banking Regulations and Supervisory Practices, popularity known as
Basel Committee, submitted its revised version of norms in June, 2004. Under
the revised accord the capital requirement is to be calculated for credit,
market and operational risks. The minimum requirement continues to be 8% of
capital fund (Tier I & II Capital) Tier II shall continue to be not more
than 100% of Tier I Capital.
Brick & Mortar
Banking: Brick and Mortar Banking refers to traditional system of banking
done only in a fixed branch premises made of brick and mortar. Now there are
banking channels like ATM, Internet Banking, tele banking etc.
Business of Banking :
Accepting deposits, borrowing money, lending money, investing, dealing in
bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody
Accounts, Issuing Letters of Credit, Travelers’ Cheques, doing Mutual Fund
business, Insurance Business, acting as Trustee or doing any other business
which Central Government may notify in the official Gazette.
Bouncing of a cheque:
Where an account does not have sufficient balance to honour the cheque issued
by the customer, the cheque is returned by the bank with the reason "funds
insufficient" or "Exceeds arrangement”. This is known as 'Bouncing of
a cheque’.
Basis Point: One
hundredth of 1%. A measure normally used in the statement of interest rate
e.g., a change from 5.75% to 5.81% is a change of 6 basis points. Bear Markets:
Unfavorable markets associated with falling prices and investor pessimism.
Bid-ask Spread:
The difference between a dealers’s bid and ask price.
Bid Price: The
highest price offered by a dealer to purchase a given security.
Blue Chips: Blue
chips are unsurpassed in quality and have a long and stable record of earnings
and dividends. They are issued by large and well-established firms that have
impeccable financial credentials.
Bond: Publicly
traded long-term debt securities, issued by corporations and governments, whereby
the issuer agrees to pay a fixed amount of interest over a specified period of
time and to repay a fixed amount of principal at maturity.
Book Value: The
amount of stockholders’ equity in a firm equals the amount of the firm’s assets
minus the firm’s liabilities and preferred stock.
Broker:
Individuals licensed by stock exchanges to enable investors to buy and sell
securities.
Brokerage Fee:
The commission charged by a broker.
Bull Markets:
Favorable markets associated with rising prices and investor optimism.
Call Option: The
right to buy the underlying securities at a specified exercise price on or
before a specified expiration date.
Callable Bonds:
Bonds that give the issuer the right to redeem the bonds before their stated
maturity.
Capital Gain: The
amount by which the proceeds from the sale of a capital asset exceed its
original purchase price.
Capital Markets:
The market in which long-term securities such as stocks and bonds are bought
and sold.
Certificate of
Deposits (CDs): Savings instrument in which funds must remain on deposit
for a specified period and premature withdrawals incur interest penalties.
Certificate of
Deposit:. Certificate of Deposits are negotiable receipts in bearer form
which can be freely traded among investors. This is also a money market
instrument,issued for a period ranging from 7 days to f one year .The minimum
deposit amount is Rs. 1 lakh and they are transferable by endorsement and
delivery.
Cheque: Cheque is
a bill of exchange drawn on a specified banker ordering the banker to pay a
certain sum of money to the drawer of cheque or another person. Money is
generally withdrawn by clients by cheques. Cheque is always payable on demand.
Cheque Truncation:
Cheque truncation truncates or stops the flow of cheques through the banking
system. Generally truncation takes place at the collecting branch, which sends
the electronic image of the cheques to the paying branch through the clearing
house and stores the paper cheques with it.
Closed-end (Mutual)
Fund: A fund with a fixed number of shares issued, and all trading is done
between investors in the open market. The share prices are determined by market
prices instead of their net asset value.
Collateral: A
specific asset pledged against possible default on a bond. Mortgage bonds are
backed by claims on property. Collateral trusts bonds are backed by claims on
other securities. Equipment obligation bonds are backed by claims on equipment.
Commercial Paper:
Short-term and unsecured promissory notes issued by corporations with very high
credit standings.
Common Stock:
Equity investment representing ownership in a corporation; each share
represents a fractional ownership interest in the firm.
Compound Interest:
Interest paid not only on the initial deposit but also on any interest
accumulated from one period to the next.
Contract Note: A note which must accompany every security
transaction which contains information such as the dealer’s name (whether he is
acting as principal or agent) and the date of contract.
Controlling
Shareholder: Any person who is, or group of persons who together are,
entitled to exercise or control the exercise of a certain amount of shares in a
company at a level (which differs by jurisdiction) that triggers a mandatory
general offer, or more of the voting power at general meetings of the issuer,
or who is or are in a position to control the composition of a majority of the
board of directors of the issuer.
Convertible Bond:
A bond with an option, allowing the bondholder to exchange the bond for a
specified number of shares of common stock in the firm. A conversion price is
the specified value of the shares for which the bond may be exchanged. The
conversion premium is the excess of the bond’s value over the conversion price.
Corporate Bond:
Long-term debt issued by private corporations.
Coupon: The
feature on a bond that defines the amount of annual interest income.
Coupon Frequency:
The number of coupon payments per year.
Coupon Rate: The
annual rate of interest on the bond’s face value that a bond’s issuer promises
to pay the bondholder. It is the bond’s interest payment per dollar of par
value.
Covered Warrants: Derivative call warrants on shares which have
been separately deposited by the issuer so that they are available for delivery
upon exercise.
Credit Rating: An
assessment of the likelihood of an individual or business being able to meet
its financial obligations. Credit ratings are provided by credit agencies or
rating agencies to verify the financial strength of the issuer for investors.
Collecting Banker:
Also called receiving banker, who collects on instruments like a cheque, draft
or bill of exchange, lodged with himself for the credit of his customer's
account.
Consumer Protection
Act: It is implemented from 1987 to enforce consumer rights through a
simple legal procedure. Banks also are covered under the Act. A consumer can
file complaint for deficiency of service with Consumer District Forum for
amounts upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to
Rs.1 Crore in State Commission and for amounts above Rs.1 Crore in National
Commission.
Co-operative Bank
: An association of persons who collectively own and operate a bank for the
benefit of consumers / customers, like Saraswat Co-operative Bank or Abhyudaya
Co-operative Bank and other such banks.
Co-operative Society
: When an association of persons collectively own and operate a unit for the
benefit of those using its services like Apna Bazar Co-operative Society or
Sahakar Bhandar or a Co-operative Housing Society.
Core Banking
Solutions (CBS): Core Banking Solutions is a buzz word in Indian banking at
present, where branches of the bank are connected to a central host and the
customers of connected branches can do banking at any breach with core banking
facility.
Creditworthiness:
It is the capacity of a borrower to repay the loan / advance in time along with
interest as per agreed terms.
Crossing of Cheques:
Crossing refers to drawing two parallel lines across the face of the cheque. A
crossed cheque cannot be paid in cash across the counter, and is to be paid
through a bank either by transfer, collection or clearing. A general crossing
means that cheque can be paid through any bank and a special crossing, where
the name of a bank is indicated on the cheque, can be paid only through the
named bank.
Customer: A
person who maintains any type of account with a bank is a bank customer.
Consumer Protection Act has a wider definition for consumer as the one who
purchases any service for a fee like purchasing a demand draft or a pay order.
The term customer is defined differently by Laws, softwares and countries.
Current Account:
Current account with a bank can be opened generally for business purpose. There
are no restrictions on withdrawals in this type of account. No interest is paid
in this type of account.
Currency Board: A
monetary system in which the monetary base is fully backed by foreign reserves.
Any changes in the size of the monetary base have to be fully matched by
corresponding changes in the foreign reserves.
Current Yield: A
return measure that indicates the amount of current income a bond provides
relative to its market price. It is shown as: Coupon Rate divided by Price
multiplied by 100%.
Custody of Securities:
Registration of securities in the name of the person to whom a bank is
accountable, or in the name of the bank’s nominee; plus deposition of
securities in a designated account with the bank’s bankers or with any other
institution providing custodial services.
Debit Card: A
plastic card issued by banks to customers to withdraw money electronically from
their accounts. When you purchase things on the basis of Debit Card the amount
due is debited immediately to the account. Many banks issue Debit-Cum-ATM
Cards.
Debtor: A person
who takes some money on loan from another person.
Demand Deposits:
Deposits which are withdrawn on demand by customers. E.g. savings bank and current account deposits.
Demat Account:
Demat Account concept has revolutionized the capital market of India. When a
depository company takes paper shares from an investor and converts them in
electronic form through the concerned company, it is called Dematerialization
of Shares. These converted Share Certificates in Electronic form are kept in a
Demat Account by the Depository Company, like a bank keeps money in a deposit
account. Investor can withdraw the shares or purchase more shares through this
demat Account.
Derivative Call (Put)
Warrants: Warrants issued by a third party which grant the holder the right
to buy (sell) the shares of a listed company at a specified price.
Derivative Instrument:
Financial instrument whose value depends on the value of another asset.
Discount Bond: A bond selling below par, as interest in-lieu
to the bondholders.
Dishonour of Cheque:
Non-payment of a cheque by the paying banker with a return memo giving reasons
for the non-payment. Default Risk: The possibility that a bond issuer will
default ie, fail to repay principal and interest in a timely manner.
Diversification:
The inclusion of a number of different investment vehicles in a portfolio in
order to increase returns or be exposed to less risk.
Duration: A
measure of bond price volatility, it captures both price and reinvestment risks
to indicate how a bond will react to different interest rate environments.
Earnings: The
total profits of a company after taxation and interest.
Earnings per Share
(EPS): The amount of annual earnings available to common stockholders as
stated on a per share basis.
Earnings Yield:
The ratio of earnings to price (E/P). The reciprocal is price earnings ratio
(P/E).
E-Banking :
E-Banking or electronic banking is a form of banking where funds are
transferred through exchange of electronic signals between banks and financial
institution and customers ATMs, Credit Cards, Debit Cards, International Cards,
Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this
category.
EFT - (Electronic
Fund Transfer): EFT is a device to facilitate automatic transmission and
processing of messages as well as funds from one bank branch to another bank
branch and even from one branch of a bank to a branch of another bank. EFT
allows transfer of funds electronically with debit and credit to relative
accounts.
Either or Survivor:
Refers to operation of the account opened in two names with a bank. It means
that any one of the account holders have powers to withdraw money from the
account, issue cheques, give stop payment instructions etc. In the event of
death of one of the account holder, the surviving account holder gets all the
powers of operation.
Electronic Commerce
(E-Commerce): E-Commerce is the paperless commerce where the exchange of
business takes place by Electronic means.
Endorsement: When
a Negotiable Instrument contains, on the back of the instrument an endorsement,
signed by the holder or payee of an order instrument, transferring the title to
the other person, it is called endorsement.
Bouncing of a cheque:
Where the name of the endorsee or transferee is not mentioned on the
instrument.
Endorsement in Full:
Where the name of the endorsee or transferee appears on the instrument while
making endorsement.
Equity: Ownership
of the company in the form of shares of common stock.
Equity Call Warrants:
Warrants issued by a company which give the holder the right to acquire new
shares in that company at a specified price and for a specified period of time.
Ex-dividend (XD):
A security which no longer carries the right to the most recently declared
dividend or the period of time between the announcement of the dividend and the
payment (usually two days before the record date). For transactions during the
ex-dividend period, the seller will receive the dividend, not the buyer.
Ex-dividend status is usually indicated in newspapers with an (x) next to the
stock’s or unit trust’s name.
Execution of
Documents: Execution of documents is done by putting signature of the
person, or affixing his thumb impression or putting signature with stamp or
affixing common seal of the company on the documents with or without signatures
of directors as per articles of association of the company.
Face Value/ Nominal
Value: The value of a financial instrument as stated on the instrument.
Interest is calculated on face/nominal value.
Fixed-income
Securities: Investment vehicles that offer a fixed periodic return.
Fixed Rate Bonds: Bonds bearing fixed interest payments until
maturity date.
Floating Rate Bonds:
Bonds bearing interest payments that are tied to current interest rates.
Factoring:
Business of buying trade debts at a discount and making a profit when debt is
realized and also taking over collection of trade debts at agreed prices.
Foreign Banks:
Banks incorporated outside India but operating in India and regulated by the
Reserve Bank of India (RBI),. e..g., Barclays Bank, HSBC, Citibank, Standard
Chartered Bank, etc.
Forfeiting: In
International Trade when an exporter finds it difficult to realize money from
the importer, he sells the right to receive money at a discount to a forfaiter,
who undertakes inherent political and commercial risks to finance the exporter,
of course with assumption of a profit in the venture.
Forgery: when a
material alteration is made on a document or a Negotiable Instrument like a
cheque, to change the mandate of the drawer, with intention to defraud.
Fundamental Analysis:
Research to predict stock value that focuses on such determinants as earnings
and dividends prospects, expectations for future interest rates and risk evaluation
of the firm.
Future Value: The
amount to which a current deposit will grow over a period of time when it is
placed in an account paying compound interest.
Future Value of an
Annuity: The amount to which a stream of equal cash flows that occur in
equal intervals will grow over a period of time when it is placed in an account
paying compound interest.
Futures Contract:
A commitment to deliver a certain amount of some specified item at some
specified date in the future.
Garnishee Order:
When a Court directs a bank to attach the funds to the credit of customer's
account under provisions of Section 60 of the Code of Civil Procedure, 1908.
General Lien: A
right of the creditors to retain possession of all goods given in security to
him by the debtor for any outstanding debt.
Guarantee: A
contract between guarantor and beneficiary to ensure performance of a promise
or discharge the liability of a third person. If promise is broken or not
performed, the guarantor pays contracted amount to the beneficiary.
Hedge: A
combination of two or more securities into a single investment position for the
purpose of reducing or eliminating risk.
Holder: Holder
means any person entitled in his own name to the possession of the cheque, bill
of exchange or promissory note and who is entitled to receive or recover the
amount due on it from the parties. For example, if I give a cheque to my friend
to withdraw money from my bank,he becomes holder of that cheque. Even if he
loses the cheque, he continues to be holder. Finder cannot become the holder.
Holder in due course
: A person who receives a Negotiable Instrument for value, before it was due
and in good faith, without notice of any defect in it, he is called holder in
due course as per Negotiable Instrument Act. In the earlier example if my
friend lends some money to me on the basis of the cheque, which I have given to
him for encashment, he becomes holder-in-due course.
Hypothecation:
Charge against property for an amount of debt where neither ownership nor
possession is passed to the creditor. In pledge, possession of property is
passed on to the lender but in hypothecation, the property remains with the
borrower in trust for the lender.
Identification:
When a person provides a document to a bank or is being identified by a person,
who is known to the bank, it is called identification. Banks ask for
identification before paying an order cheque or a demand draft across the
counter.
Indemnifier: When
a person indemnifies or guarantees to make good any loss caused to the lender from
his actions or others' actions.
Indemnity:
Indemnity is a bond where the indemnifier undertakes to reimburse the
beneficiary from any loss arising due to his actions or third party actions.
Income: The
amount of money an individual receives in a particular time period.
Index Fund: A mutual fund that holds shares in proportion
to their representation in a market index, such as the S&P 500.
Initial Public
Offering (IPO): An event where a company sells its shares to the public for
the first time. The company can be referred to as an IPO for a period of time
after the event.
Inside Information:
Non-public knowledge about a company possessed by its officers, major owners,
or other individuals with privileged access to information.
Insider Trading:
The illegal use of non-public information about a company to make profitable
securities transactions
Insolvent:
Insolvent is a person who is unable to pay his debts as they mature, as his
liabilities are more than the assets . Civil Courts declare such persons
insolvent. Banks do not open accounts of insolvent persons as they cannot enter
into contract as per law.
Interest Warrant:
When cheque is given by a company or an organization in payment of interest on
deposit , it is called interest warrant. Interest warrant has all the
characteristics of a cheque.
International
Banking: involves more than two nations or countries. If an Indian Bank has
branches in different countries like State Bank of India, it is said to do
International Banking.
Introduction:
Banks are careful in opening any account for a customer as the prospective
customer has to be introduced by an existing account holder or a staff member
or by any other person known to the bank for opening of account. If bank does
not take introduction, it will amount to negligence and will not get protection
under law.
Intrinsic Value:
The difference of the exercise price over the market price of the underlying
asset.
Investment: A
vehicle for funds expected to increase its value and/or generate positive
returns.
Investment Adviser:
A person who carries on a business which provides investment advice with
respect to securities and is registered with the relevant regulator as an
investment adviser.
IPO price: The
price of share set before being traded on the stock exchange. Once the company
has gone Initial Public Offering, the stock price is determined by supply and
demand.
JHF Account :
Joint Hindu Family Account is account of a firm whose business is carried out
by Karta of the Joint family, acting for all the family members.. The family
members have common ancestor and generally maintain a common residence and are
subject to common social, economic and religious regulations.
Joint Account:
When two or more individuals jointly open an account with a bank.
Junk Bond:
High-risk securities that have received low ratings (i.e. Standard & Poor’s
BBB rating or below; or Moody’s BBB rating or below) and as such, produce high
yields, so long as they do not go into default.
Karta: Manager of
a Hindu Undivided Family (HUF) who handles the family business. He is usually
the eldest male member of the undivided family.
Kiosk Banking:
Doing banking from a cubicle from which food, newspapers, tickets etc. are also
sold.
KYC Norms: Know
your customer norms are imposed by R.B.I. on banks and other financial
institutions to ensure that they know their customers and to ensure that
customers deal only in legitimate banking operations and not in money
laundering or frauds.
Law of Limitation:
Limitation Act of 1963 fixes the limitation period of debts and obligations
including banks loans and advances. If the period fixed for particular debt or
loan expires, one cannot file a suit for is recovery, but the fact of the debt
or loan is not denied. It is said that law of limitation bars the remedy but
does not extinguish the right.
Lease Financing:
Financing for the business of renting houses or lands for a specified period of
time and also hiring out of an asset for the duration of its economic life.
Leasing of a car or heavy machinery for a specific period at specific price is
an example.
Letter of Credit:
A document issued by importers bank to its branch or agent abroad authorizing
the payment of a specified sum to a person named in Letter of Credit (usually
exporter from abroad). Letters of Credit are covered by rules framed under
Uniform Customs and Practices of Documentary Credits framed by International
Chamber of Commerce in Paris.
Limited Companies
Accounts: Accounts of companies incorporated under the Companies Act, 1956
. A company may be private or public. Liability of the shareholders of a
company is generally limited to the face value of shares held by them.
Leverage Ratio:
Financial ratios that measure the amount of debt being used to support
operations and the ability of the firm to service its debt.
Libor: The London
Interbank Offered Rate (or LIBOR) is a daily reference rate based on the
interest rates at which banks offer to lend unsecured funds to other banks in
the London wholesale money market (or interbank market). The LIBOR rate is
published daily by the British Banker’s Association and will be slightly higher
than the London Interbank Bid Rate (LIBID), the rate at which banks are
prepared to accept deposits.
Limit Order: An order
to buy (sell) securities which specifies the highest (lowest) price at which
the order is to be transacted.
Limited Company:
The passive investors in a partnership, who supply most of the capital and have
liability limited to the amount of their capital contributions.
Liquidity: The
ability to convert an investment into cash quickly and with little or no loss
in value.
Listing:
Quotation of the Initial Public Offering company’s shares on the stock exchange
for public trading.
Listing Date: The
date on which Initial Public Offering stocks are first traded on the stock
exchange by the public
Margin Call: A
notice to a client that it must provide money to satisfy a minimum margin
requirement set by an Exchange or by a bank / broking firm.
Market
Capitalization: The product of the number of the company’s outstanding
ordinary shares and the market price of each share.
Market Maker: A
dealer who maintains an inventory in one or more stocks and undertakes to make
continuous two-sided quotes.
Market Order: An
order to buy or an order to sell securities which is to be executed at the
prevailing market price.
Money Market:
Market in which short-term securities are bought and sold.
Marginal Standing
Facility Rate: MSF scheme has become effective from 09th May, 2011 launched
by the RBI. Under this scheme, Banks will be able to borrow upto 1% of their
respective Net Demand and Time Liabilities.
The rate of interest on the amount accessed from this facility will be
100 basis points (i.e. 1%) above the repo rate. This scheme is likely to reduce
volatility in the overnight rates and improve monetary transmission.
Mandate: Written
authority issued by a customer to another person to act on his behalf, to sign
cheques or to operate a bank account.
Material Alteration:
Alteration in an instrument so as to alter the character of an instrument for
example when date, amount, name of the payee are altered or making a cheque
payable to bearer from an order one or opening the crossing on a cheque.
Merchant Banking :
When a bank provides to a customer various types of financial services like
accepting bills arising out of trade, arranging and providing underwriting, new
issues, providing advice, information or assistance on starting new business,
acquisitions, mergers and foreign exchange.
Micro Finance:
Micro Finance aims at alleviation of poverty and empowerment of weaker sections
in India. In micro finance, very small amounts are given as credit to poor in
rural, semi-urban and urban areas to enable them to raise their income levels
and improve living standards.
Minor Accounts: A
minor is a person who has not attained legal age of 18 years. As per Contract Act
a minor cannot enter into a contract but as per Negotiable Instrument Act, a
minor can draw, negotiate, endorse, receive payment on a Negotiable Instrument
so as to bind all the persons, except himself. In order to boost their deposits
many banks open minor accounts with some restrictions.
Mobile Banking :
With the help of M-Banking or mobile banking customer can check his bank
balance, order a demand draft, stop payment of a cheque, request for a cheque
book and have information about latest interest rates.
Money Laundering:
When a customer uses banking channels to cover up his suspicious and unlawful
financial activities, it is called money laundering.
Money Market:
Money market is not an organized market like Bombay Stock Exchange but is an
informal network of banks, financial institutions who deal in money market
instruments of short term like CP, CD and Treasury bills of Government.
Moratorium:
R.B.I. imposes moratorium on operations of a bank; if the affairs of the bank
are not conducted as per banking norms. After moratorium R.B.I. and Government
explore the options of safeguarding the interests of depositors by way of
change in management, amalgamation or take over or by other means.
Mortgage:
Transfer of an interest in specific immovable property for the purpose of
offering a security for taking a loan or advance from another. It may be
existing or future debt or performance of an agreement which may create
monetary obligation for the transferor (mortgagor).
Mutual Fund: A
company that invests in and professionally manages a diversified portfolio of
securities and sells shares of the portfolio to investors.
NABARD: National
Bank for Agriculture & Rural Development was setup in 1982 under the Act of
1981. NABARD finances and regulates rural financing and also is responsible for
development agriculture and rural industries.
Negotiation: In
the context of banking, negotiation means an act of transferring or assigning a
money instrument from one person to another person in the course of business.
Net Asset Value:
The underlying value of a share of stock in a particular mutual fund; also used
with preferred stock.
Non-Fund Based Limits:
Non-Fund Based Limits are those type of limits where banker does not part with
the funds but may have to part with funds in case of default by the borrowers,
like guarantees, letter of credit and acceptance facility.
Non-Resident: A
person who is not a resident of India is a non-resident.
Non-Resident Accounts:
Accounts of non-resident Indian citizens opened and maintained as per R.B.I.
Rules.
Notary Public: A
Lawyer who is authorized by Government to certify copies of documents .
NPA Account: If
interest and instalments and other bank dues are not paid in any loan account
within a specified time limit, it is being treated as non-performing assets of
a bank.
Off Balance Sheet
Items: Those items which affect the financial position of a business
concern, but do not appear in the Balance Sheet E,g guarantees, letters of
credit . The mention "off Balance Sheet items" is often found in
Auditors Reports or Directors Reports.
