Various Banking Terms letter O-Z

This is the final post on Banking terms from letter O-Z

Obligation of borrower: The things which a borrower has to take care of after taking the loan. it includes proper repayment, providing the bans with post dated cheques and following terms of the loan written carefully.

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.

Offer for Sale: An offer to the public by, or on behalf of, the holders of securities already in issue.

Offer for Subscription: The offer of new securities to the public by the issuer or by someone on behalf of the issuer.

Online Banking: Banking through internet site of the bank which is made interactive.

Open-end (Mutual) Fund: There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.

Open Offer: An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.

Option: A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.

Outstanding Amount:The total amount that you owe on a credit card or other loan.

Outstanding Cheque: It is issued by the company but not yet cleared by bank. 

Outstation Cheque: Cheque deposited by the customer of a branch by credit to his /her account and not payable at other  local clearing center where the ban is situated.

Overdraft: When you do not have enough available funds in your account to cover a cheque or other withdrawal.

Over draft Protection: A service that allows an account to be linked to another one that helps provide protection against returned items or overdrafts.

Overdraw:To write a check for an amount that exceeds the amount on deposit in the account.

Over-limit:An open-end credit account in which the assigned dollar limit has been exceeded.

Over the Credit Limit: When the amount you owe is more than the limit on your credit line.

Oversubscribed: When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public’s perception of the business potential of the IPO company.

 

 

Part Prepayment: The charges levied during prepayment towards the principal of loan account.

Pass Book: A record of all debit and credit entries in a customer's account. Generally all banks issue pass books to Savings Bank/Current Account Holders.

Par Bond: A bond selling at par (i.e. at its face value).

Par Value: The face value of a security.

Past Dues: The status of an account when minimum payment has not been received by the due date.

Penal Interest: Additional interest over and above the contracted rate that is levied by the lenders on the unpaid amount beyond the due date.

Perpetual Bonds: Bonds which have no maturity date.

Personal Identification Number (PIN): Generally a four-character number or word, the PIN is the secret code given to credit or debit cardholders enabling them to access their accounts. 

Placing: Obtaining subscriptions for, or the sale of, primary market, where the new securities of issuing companies are initially sold.

Periodic interest rate: The rate of interest assessed on a loan or investment over a set time period when compounding occurs more than once per year.

Personal Identification Number (PIN): Personal Identification Number is a number which an ATM card holder has to key in before he is authorized to do any banking transaction in a ATM .

Plastic Money: Credit Cards, Debit Cards, ATM Cards and International Cards are considered plastic money as like money they can enable us to get goods and services.

Pledge: A bailment of goods as security for payment of a debt or performance of a promise, e.g pledge of stock by a borrower to a banker for a credit limit. Pledge can be made in movable goods only.

Point of sale:It is the place where a retail transaction is completed. It is the point at which a customer makes a payment to the merchant in exchange for goods or services.

Post-Dated Cheque:  A Cheque which bears the date which is subsequent to the date when it is drawn. For example, a cheque drawn on 8th of February, 2007 bears the date of 12th February, 2007.

Power of Attorney: It is a document executed by one person - Donor or Principal, in favour of another person, Donee or Agent - to act on behalf of the former, strictly as per authority given in the document.

Portfolio: A collection of investment vehicles assembled to meet one or more investment goals.

Preference Shares: A corporate security that pays a fixed dividend each period. It is senior to ordinary shares but junior to bonds in its claims on corporate income and assets in case of bankruptcy.

Premature withdrawal from Fixed Deposit:It is withdrawing the money before the maturity expires.This may be necessary if you urgently require the funds or if there are better investment opportunities elsewhere.Also the same for RD,SD,CD.

Premium (Warrants): The difference of the market price of a warrant over its intrinsic value.

Premium Bond: Bond selling above par.

Present Value: The amount to which a future deposit will discount back to present when it is depreciated in an account paying compound interest.

Present Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will discount back to present when it is depreciated in an account paying compound interest.

Price/Earnings Ratio (P/E): The measure to determine how the market is pricing the company’s common stock. The price/earnings (P/E) ratio relates the company’s earnings per share (EPS) to the market price of its stock.

Prime Rate: Prime rate or prime lending rate is a term applied in many countries to reference an interest rate used by banks.

Privatization: The sale of government-owned equity in nationalized industry or other commercial enterprises to private investors.

Prospectus: A detailed report published by the Initial Public Offering company, which includes all terms and conditions, application procedures, IPO prices etc, for the IPO

Put Option: The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.

Prime Lending Rate (PLR): The rate at which banks lend to their best (prime) customers.

Priority Sector Advances : consist of loans and advances to Agriculture, Small Scale Industry, Small Road and Water Transport Operators, Retail Trade, Small Business with limits on investment in equipments, professional and self employed persons, state sponsored organizations for lending to SC/ST, Educational Loans, Housing Finance up to certain limits, self-help groups and consumption loans.

Promissory Note: Promissory Note is a promise / undertaking given by one person in writing to another person, to pay to that person , a certain sum of money on demand or on a future day.

Provisioning:  Provisioning is made for the likely loss in the profit and loss account while finalizing accounts of banks. All banks are supposed to make assets classification and make appropriate provisions for likely losses in their balance sheets.

Public Sector Bank: A bank fully or partly owned by the Government.

 

Rate of Return: A percentage showing the amount of investment gain or loss against the initial investment.

Real Interest Rate: The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.

Recurring Billing: The credit card holder authorizes a merchant or vendor to charge his card on a regular basis.

Redemption Value: The value of a bond when redeemed.

Reference: A person who can vouch for your reliability, employment history etc needed for credit worthiness.

Refinancing: It refers to the replacement of an existing debt obligation with another debt obligation under different terms.

Reinvestment Value: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.

Relative Strength Index (RSI): A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.

Repurchase Agreement: An arrangement in which a security is sold and later bought back at an agreed price and time.

Resistance Level: A price at which sellers consistently outnumber buyers, preventing further price rises.

Return: Amount of investment gain or loss.

Rescheduling of Payment:  Rearranging the repayment of a debt over a longer period than originally agreed upon due to financial difficulties of the borrower.

Restrictive Endorsement: Where endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as "Pay to Ashok only". Now Ashok cannot negotiate the instrument further.

Returned Cheque: When one does not have enough funds in account to cover a cheque, the bank may not pay the cheque and return it to the payee.

Right of Appropriation: As per Section 59 of the Indian Contract Act, 1972 while making the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. If the debtor does not do so, the banker can appropriate the payment to any debt of his customer.

Right of Set-Off : When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off. For example, debit balance of Rs.50,000/- in overdraft account can be set off against credit balance of Rs.75,000/- in the Savings Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the savings account.

Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.

Risk-Averse, Risk-Neutral, Risk-Taking:

Risk-averse describes an investor who requires greater return in exchange for greater risk.

Risk-neutral describes an investor who does not require greater return in exchange for greater risk.

Risk-taking describes an investor who will accept a lower return in exchange for greater risk.

Safe Custody: When articles of value are given to a bank for safe keeping in its safe vault, it is called safe custody.. Bank charges a fee from its clients for such safe custody.

Savings Bank Account: All banks in India are having the facility of opening savings bank account with a nominal balance. This account is used for personal purposes and not for business purpose and there are certain restrictions on withdrawals from this type of account. Account holder gets nominal interest in this account. 

Secured Debt:Debt backed or secured by collateral to reduce the risk associated with lending. 

Senior Bond: A bond that has priority over other bonds in claiming assets and dividends.

Settlement: Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receive from the broker the proceeds of a sale.

Short Hedge: A transaction that protects the value of an asset held by taking a short position in a futures contract.

Short Position: Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.

Short Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.

Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.

Statement: A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.

Stock Splits: Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.

Stop Payment: When you ask bank not to pay a cheque or payment you have written or authorized. It is placed in case of lost or stolen cheques.

Subordinated Bond:  An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.

Substantial Shareholder: A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.

Support Level: A price at which buyers consistently outnumber sellers, preventing further price falls.

Surcharge: It is an additional charge imposed for a specific service, product or purpose.

Terms: The period of time and the interest rate arranged between creditor and debtor to repay a loan. 

Teller : Teller is a staff member of a bank who accepts deposits, cash cheques and performs other banking services for the public.

Technical Analysis:A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends.

Time Horizon: The duration of time an investment is intended for.

Trading Rules: Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.

Trust Deed: A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.

ULIP: It is a type of life insurance where cash value varies according to current net asset value of the investment asset.

Unsecured asset: This debt is not guaranteed by collateral hence no assets are guaranteed in the event of default.

Underwriting : is an agreement by the underwriter to buy on a fixed date and at a fixed rate, the unsubscribed portion of shares or debentures or other issues. Underwriter gets commission for this agreement.

Underlying Security:  The security subject to being purchased or sold upon exercise of the option contract.

Universal Banking : When Banks and Financial Institutions are allowed to undertake all types of activities related to banking like acceptance of deposits, granting of advances, investment, issue of credit cards, project finance, venture capital finance, foreign exchange business, insurance etc. it is called Universal Banking.

Valuation: Process by which an investor determines the worth of a security using risk and return concept.

Virtual Banking: Virtual banking is also called internet banking, through which financial and banking services are accessed via internet's World Wide Web. It is called virtual banking because an internet bank has no boundaries of brick and mortar and it exists only on the internet.

Warrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.

Wholesale Banking: Wholesale banking is different from Retail Banking as its focus is on providing for financial needs of industry and institutional clients.

Window Dressing: Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.

Yield (Internal rate of Return): The compound annual rate of return earned by an investment

Yield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investor’s capital gain or loss on the security are taken into account.

Zero Balance: When the outstanding money is paid and there is no new charge or cash advances.

Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par value.

Zero Liability Protection: It is a bank guarantee. It is free and available to all consumers cards.

Various Banking Terms with Letter (J-N)

This post includes banking terms from letter J-N.

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.

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.

Late Charge: The fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment.

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:A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent).

Various Banking Terms with Letter(G-I)

This article includes all the banking terms from letter G-I.

Garnishment Order:A legal process that allows a creditor to remove funds from your bank account to satisfy a debt that you have not paid. If you owe money to a person or company, they can obtain a court order directing your bank to take money out of your account to pay off your debt.

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.

Guarantor:A party who agrees to be responsible for the payment of another party's debts should that party default.Guaranteed Student Loan: An extension of credit from a financial institution that is guaranteed by a Federal or State government entity to assist with tuition and other educational expenses.

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.

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.

Home Equity Line of Credit (HELOC): A line of credit secured by the equity in a consumer's home. It can be used for home improvements, debt consolidation, and other major purchases. Interest paid on the loan is generally tax deductible (consult a tax advisor to be sure).

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.

Inactive Account:An account that has little or no activity; neither deposits nor withdrawals having been posted to the account for a significant period of time.

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.

Insufficient Funds:When a depositor's checking account balance is inadequate to pay a check presented for payment.

Insurance: Insurance to protect the homeowner and the lender against physical damage to a property from sources such as but not limited to fire, wind, or vandalism.

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.

Interest Rate Index:IA table of yields or interest rates being paid on debt that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.

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.

Introducer: 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.

Various Banking Terms with letter E and F

The list of banking terms with letter E and F

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: This 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 Cheque Conversion: Electronic cheque conversion is a process in which your check is used as a source of information-for the check number, your account number, and the number that identifies your financial institution.

Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce where the exchange of business takes place by Electronic means.

Embezzlement: In most States, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets.  

Encoding: The process used to imprint or inscribe MICR characters on checks, deposits, and other financial instruments. [Magnetic Ink Character Recognition (MICR) is a character-recognition technology adopted mainly by the banking industry to facilitate the processing of cheques.

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.

Endorsement in Full: Where the name of the endorsee or transferee appears on the instrument while making endorsement.

Equal Credit Opportunity Act (ECOA): Prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program.

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.

Error Resolution:The required process for resolving errors involving electronic transfers to and from deposit accounts.

Escheat:Reversion of real or personal property to the State when 1) a person dies without leaving a will and has no heirs, or 2) when the property (such as a bank account) has been inactive for a certain period of time.

Escrow Funds:Funds held in reserve by a mortgage company to pay taxes, insurance, and other mortgage-related items when due.

Estate Account:An account held in the name of a decedent that is administered by an executor or administrator of the estate.

Exception Hold:A period of time that allows the banks to exceed the maximum hold periods defined in the Expedited Funds Availability Act.

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.

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.

Fiduciary:Undertaking to act as executor, administrator, guardian, conservator, or trustee for a family trust, authorized trust, or testamentary trust, or receiver or trustee in bankruptcy.

Finance Charge:The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge.

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.

Fixed Rate Mortgage: A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default.

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.

Frozen Account: An account on which funds may not be withdrawn until a lien is satisfied and a court order or other legal process makes the account available for withdrawal.

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.

Various Banking Terms with Letter D

This is the list of terms with letter D. I am posting this because it is easy to remember alphabetically.

 

Dealer Bank:                                                                                      

A commercial bank authorized to buy and sell government debt securities including federal and municipal bonds. This debt is usually issued to fund large government projects such as road and bridge construction.

 

Debit:

  A debit may be an account entry representing money you owe a lender or money that has been taken from your deposit account.

Debit Card:

  A debit card allows the account owner to access their funds electronically. Debit cards may be used to obtain cash from automated teller machines or purchase goods or services using point-of-sale systems.Its main function is for debiting and crediting money in an account.

Debt Collector:

  Any person who regularly collects debts owed to others.

Debt Elimination Scheme:

  A debt elimination scheme is a plan that is advertised as a way for an individual to eliminate various types of debt simply by paying someone a small fee compared to the amount of debt to be eliminated. These schemes are fraudulent. By this individual can lose their money and property.

Debtor:

  Someone who owes money to another party.

Debt-to-Income Ratio (DTI):

  The percentage of a consumer's monthly gross income that goes toward paying debts. Generally, the higher the ratio, the higher the perceived risk. Loans with higher risk are generally priced at a higher interest rate.

Decedent:

  A deceased person, ordinarily used with respect to one who has died recently.

Deferred Payment/ Availability: A payment postponed until a future date.

Delayed Disbursement:

A cash management technique that involves a company paying vendors and/or other creditors by cheques drawn on banks located in remote areas. Commercial banks will typically delay the availability of funds to the depositor of such cheques for up to five days as they await payment from the paying bank.

Delinquency:

  A debt that was not paid when due.

Demand Deposit:

  A deposit of funds that can be withdrawn without any advance notice.

Deposit Slip:

  An itemized memorandum of the cash and other funds that a customer presents to the bank for credit to his or her account.

Depository Transfer Cheque   

A cheque used by a designated collection bank for depositing the daily receipts of a corporation from multiple locations.

Derogatory Information:

  Data received by a creditor indicating that a credit applicant has not paid his or her accounts with other creditors according to the required terms.

Direct Deposit:

  A payment that is electronically deposited into an individual's account at a depository institution.

Direct Dispute:

  A dispute submitted directly to the furnisher about the accuracy of information in your consumer report that relates to an account or other relationship you have with the furnisher.

Disclosures:

  Certain information that Federal and State laws require creditors to give to borrowers relative to the terms of the credit extended.

Dishonour of Cheque: 
Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment.

Diversification:  
The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.

Draft:

  A signed, written order by which one party (the drawer) instructs another party (the drawee) to pay a specified sum to a third party (the payee), at sight or at a specific date. Typical bank drafts are negotiable instruments and are similar in many ways to cheques.

Drawee:

  The person (or bank) who is expected to pay a cheque or draft when it is presented for payment.

Drawee bank:

  The bank upon which a cheque is drawn.

Drawer:

  The person who writes a cheque or draft instructing the drawee to pay someone else.

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.

Various Banking Term with Letter C

This is the list of various banking terms starting with letter C

 

Callable Bonds: Bonds that give the issuer the right to redeem the bonds before their stated maturity.

Call Option: The right to buy the underlying securities at a specified exercise price on or before a specified expiration date.

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.

Cancelled Cheque :A cheque that a bank has paid, charged to the account holder's account, and then endorsed. Once canceled, a cheque is no longer negotiable.

Cashier's Cheque:A cheque drawn on the funds of the bank, not against the funds in a depositor's account. However, the depositor paid for the cashier's cheque with funds from their account. The primary benefit of a cashier's cheque is that the recipient of the cheque is assured that the funds are available.

Cease and Desist Letter:A letter requesting that a company stops the activity mentioned in the letter.

Certificate of Deposit:A negotiable instrument issued by a bank in exchange for funds, usually bearing interest, deposited with the bank.

Certificate of Release:A certificate signed by a lender indicating that a mortgage has been fully paid and all debts satisfied.

Certified Cheque:A personal cheque drawn by an individual that is certified (guaranteed) to be good. The face of the cheque bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the cheque. The signature signifies that 

• the signature of the drawer is genuine, and 
• sufficient funds are on deposit and earmarked for payment of the cheque.

Charge-off:The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.

Cheque:A written order instructing a financial institution to pay immediately on demand a specified amount of money from the cheque writer's account to the person named on the cheque or, if a specific person is not named, to whoever bears the cheque to the institution for payment.

Cheque 21 Act:Cheque 21 is a Federal law that is designed to enable banks to handle more cheques electronically, which is intended to make cheque processing faster and more efficient. Cheque 21 is the short name for the Cheque Clearing for the 21st Century Act, which went into effect on October 28, 2004.

Cheque Truncation:The conversion of data on a cheque into an electronic image after a cheque enters the processing system. Cheque truncation eliminates the need to return cancelled cheques to customers.

Chequeing Account:A demand deposit account subject to withdrawal of funds by cheque.

ChexSystems:The ChexSystems, Inc. network is comprised of member financial institutions that regularly contribute information on mishandled chequeing and savings accounts to a central location. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts.ChexSystems only shares information with the member institutions; it does not decide on new account openings. Generally, information remains on ChexSystems for five years.

Closed-End Credit :Generally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end agreements.

Closed-End Loan:Generally, any loan in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. Most real estate and automobile loans are closed-end agreements.

Closing a Mortgage Loan:The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender.

Closing Costs:The expenses incurred by sellers and buyers in transferring ownership in real property. The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge.

Collateral:Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house. Collateral becomes subject to seizure on default.

Collected Funds:Cash deposits or cheques that have been presented for payment and for which payment has been received.

Collection Agency:A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls.

Collection Items:Items-such as drafts, notes, and acceptances-received for collection and credited to a depositor's account after payment has been received. Collection items are usually subject to special instructions and may involve additional fees. Most banks impose a special fee, called a collection charge, for handling collection items.

Collective Investment Funds (CIFs):A Collective Investment Fund (CIF) is a trust created and administered by a bank or trust company that commingles assets from multiple clients. The Federal securities laws generally require entities that pool securities to register those pooled vehicles (such as mutual funds) with the SEC. However, Congress created exemptions from these registration requirements for CIFs so long as the entity offering these funds is a bank or other authorized entity and so long as participation in the fund is restricted to only those customers covered by the exemption. If these limitations are met, CIFs are exempt from SEC registration and reporting requirements.

Co-Maker:A person who signs a note to guarantee a loan made to another person and is jointly liable with the maker for repayment of the loan. (Also known as a Co-signer.)

Community Reinvestment Act:The Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. It was enacted by the Congress in 1977.

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.

 

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.

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.

Consumer Credit Counseling Service:A service which specializes in working with consumers who are overextended with debts and need to make arrangements with creditors.

Consumer Reporting Agency:An agency that regularly collects or evaluates individual consumer credit information or other information about consumers and sells consumer reports for a fee to creditors or others. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies.

Conventional Fixed Rate Mortgage:A fixed-rate mortgage offers you a set interest rate and payments that do not change throughout the life, or "term," of the loan.A conventional fixed-rate loan is fully paid off over a given number of years-usually 15, 20, or 30. A portion of each monthly payment goes towards paying back the money borrowed, the "principal"; the rest is "interest."

Co-Signer:An individual who signs the note of another person as support for the credit of the primary signer and who becomes responsible for the obligation. (Also known as a Co-maker.)

Credit Application:A form to be completed by an applicant for a credit account, giving sufficient details (residence, employment, income, and existing debt) to allow the seller to establish the applicant's creditworthiness. Sometimes, an application fee is charged to cover the cost of loan processing.

Credit Bureau:An agency that collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies. Also commonly referred to as a consumer reporting agency or a credit reporting agency.

Credit Card Issuer:Any financial institution that issues bank cards to those who apply for them.

Credit Disability Insurance:A type of insurance, also known as accident and health insurance, that makes payments on the loan if you become ill or injured and cannot work.

Credit Life Insurance:A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. This is optional coverage.

Credit Limit:The maximum amount of credit that is available on a credit card or other line of credit account.

Credit Repair Organization:A person or organization that sells, provides, performs, or assists in improving a consumer's credit record, credit history or credit rating (or says that that they will do so) in exchange for a fee or other payment. It also includes a person or organization that provides advice or assistance about how to improve a consumer's credit record, credit history or credit rating. There are some important exceptions to this definition, including many non-profit organizations and the creditor that is owed the debt.
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.

Credit Report:A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

Credit Score:A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO® score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report.Banks use a credit score to help determine whether you qualify for a particular credit card, loan, or service.

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.

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.

Cut-Off Time: A time of day established by a bank for receipt of deposits. After the cut-off time, deposits are considered received on the next banking day.