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).

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.

Lien:Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.

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.

Line of Credit: A pre-approved loan authorization with a specific borrowing limit based on creditworthiness.

Linked Account: Any account linked to another account at the same financial institution so that funds may be transferred electronically between the accounts and in some case the combined balance  may be used to meet the balance required to waive a monthly service charge on one of the accounts.

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.

Loan Agreement: It is a written contract between the borrower and the bank or financial institution providing loan.It carries all the conditions of the loans. 

Loan Contract:The written agreement between a borrower and a lender in which the terms and conditions of the loan are set.

Loan Disbursement: It is the second stage of loan processing. It is the checking made by the bank as per its credit criteria. The disbursal will be done on meeting the credit criteria.

Loan Sanction: The first stage of loan processing.It is the confirmation to the customer on the sanction of the loan facility.

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.

Marketable Title: The title of a propertyand the owner of the property have the right to transfer the same 

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.

Margin Amount: It is the difference between total cost of the project and the sanctioned loan amount.

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.

MICR: The unique 9 digit code assigned to each bank branch by RBI to facilitate sorting in clearing of instruments using Magnetic In Character Recognition Technology.

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.

Minimum Daily Balance: The lowest end of day balance in an account during a statement cycle.

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.It is a process for conversion of illegal money to appear to originate from legitimate sources.

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.

Multicity Cheque: Cheque issued by a customer under a pre approved arrangement with the Bank whereby the bank agrees to pay them at designated centers across the country. 

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.

National Clearing Cheque: Those cheques which are drawn on other banks and payable at major cities of the country.

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.

NOC: A certificate issued on closure of the Loan account where the bank affirms that the dues have been paid towards the facility. 

Non Bank ATM:An ATM that does not prominently bear the bank name or logo.

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.

Non Taxable Income: Money you earn that is not taxed by the government. This money can come from several sources including disability pay or legal settlements due to personal injury.

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.