BANKING TERMS AND DEFINITIONS PDF

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Complete List of Banking Terms with Definitions For Bank Exams Powered by holranskicknonpco.ga your A to Z competitive exam guide ww w. Gr 8A mb iti on. Glossary of Banking Terms and Definitions: Banking Terms that Begin With A. Banking Terms. Banking Definitions. AAA. AAA is a term or a grade that is used to . Banking terms and concepts are many and can sometimes be difficult to figure out, even for the industry professionals. However, since banking.


Banking Terms And Definitions Pdf

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Certificate of Deposit (CD) – a type of investment that requires you to invest your money for a certain length of time and guarantees the same rate of return. For educational purposes only. 1. A Glossary of Bank Terms. To help you better understand the terms used in the financial services industry. Read Important Banking Terminologies For Bank Exams PDF Download. Most of the questions in exam comes from below bank terminology.

See also Joint Account Holder. Accrued Interest: Interest that has been earned but not yet paid. Acquiring Bank: In a merger, the bank that absorbs the bank acquired. See also Acquiring Bank. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the loan as market conditions change. There is typically a maximum or ceiling and a minimum or floor defined in the loan agreement.

If interest rates rise, so does the loan payment. If interest rates fall, the loan payment may as well. Adverse Action: Under the Equal Credit Opportunity Act, a creditor's refusal to grant credit on the terms requested, termination of an existing account, or an unfavorable change in an existing account.

See also Credit Disputes. Adverse Action Notice: The notice required by the Equal Credit Opportunity Act advising a credit applicant or existing debtor of the denial of their request for credit or advising of a change in terms considered unfavorable to the account holder. Affidavit: A sworn statement in writing before a proper official, such as a notary public. See also Credit Disputes and Forgery and Fraud. Alteration: Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument.

See also Alteration. Amortization: The process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity. Annual Percentage Yield APY : A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a day year. Application: Under the Equal Credit Opportunity Act ECOA , an oral or written request for an extension of credit that is made in accordance with the procedures established by a creditor for the type of credit requested.

See also Loan Application. Appraisal: The act of evaluating and setting the value of a specific piece of personal or real property. See also Appraisal and Appraisal Cost. Authorization: The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction. See also Authorization and Pre-authorization. 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.

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. The amount automatically protected will depend upon the balance of the account on the day of review. See also Garnishments. Automatic Bill Payment: A checkless system for paying recurring bills with one authorization statement to a financial institution.

Availability Date: Bank's policy as to when funds deposited into an account will be available for withdrawal. See also Funds Availability Date. Availability Policy: Bank's policy as to when funds deposited into an account will be available for withdrawal.

See also Funds Availability. Available Balance: The balance of an account less any hold, uncollected funds, and restrictions against the account. See also Available Balance and Positive Balance.

Available Credit: The difference between the credit limit assigned to a cardholder account and the present balance of the account. See also Available Credit. B Balance Transfer: The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance. Transfers are sometimes subjected to a Balance Transfer Fee.

See also Balance Transfers. Bank Custodian: A bank custodian is responsible for maintaining the safety of clients' assets held at one of the custodian's premises, a sub-custodian facility or an outside depository. See also Asset Management - Bank Custodians. Bank Examination: Examination of a bank's assets, income, and expenses-as well as operations by representatives of Federal and State bank supervisory authority-to ensure that the bank is solvent and is operating in conformity with banking laws and sound banking principles.

Bank Statement: Periodically the bank provides a statement of a customer's deposit account. It shows all deposits made, all checks paid, and other debits posted during the period usually one month , as well as the current balance. Banking Day: A business day during which an office of a bank is open to the public for substantially all of its banking functions. See also Banking Day.

Bankrupt: A bankrupt person, firm, or corporation has insufficient assets to cover their debts. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee. Bankruptcy: The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws.

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There are two types of bankruptcy: Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt. Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt.

Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. See also Beneficiary. Billing Cycle: The time interval between the dates on which regular periodic statements are issued.

Billing Date: The month, date, and year when a periodic or monthly statement is generated. Calculations have been performed for appropriate finance charges, minimum payment due, and new balance. Billing Error: A charge that appears on a periodic statement associated with an extension of credit e.

A billing error can also be caused by a creditor's failure to credit a payment or other credit to an account as well as accounting and clerical errors. See also Credit Card Disputes. Bond, U. Savings: Savings bonds are issued in face value denominations by the U. They are typically long-term, low-risk investment tools.

See also Savings Bonds. Business Day: Any day on which offices of a bank are open to the public for carrying on substantially all of the bank's business. See also Credit Card Business Day.

Banking Terms in Easy Language PDF

C Canceled Check : A check that a bank has paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable. Cashier's Check: A check drawn on the funds of the bank, not against the funds in a depositor's account. However, the depositor paid for the cashier's check with funds from their account.

The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available. See also Cashier's Checks. 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. See also Certificates of Deposit.

Certificate of Release: A certificate signed by a lender indicating that a mortgage has been fully paid and all debts satisfied, also known as release of lien. See also Release of Lien. Certified Check: A personal check drawn by an individual that is certified guaranteed to be good. The face of the check bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the check.

The signature signifies that the signature of the drawer is genuine, and sufficient funds are on deposit and earmarked for payment of the check. Charge-off: The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.

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

Check 21 Act: Check 21 is a Federal law that is designed to enable banks to handle more checks electronically, which is intended to make check processing faster and more efficient.

Check 21 is the short name for the Check Clearing for the 21st Century Act, which went into effect on October 28, See also Check Check Truncation: The conversion of data on a check into an electronic image after a check enters the processing system. Check truncation eliminates the need to return canceled checks to customers. Checking Account: A demand deposit account subject to withdrawal of funds by check.

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. See also ChexSystems. 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.

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. Availability Date: Bank's policy as to when funds deposited into an account will be available for withdrawal.

Banking Terms in Easy Language PDF

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. This Scheme was announced in and is functioning with new guidelines from This scheme covers all scheduled banks, the RRBs and co-operative banks. 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. Under the revised accord the capital requirement is to be calculated for credit, market and operational risks.

A measure normally used in the statement of interest rate e. Bear Markets: Unfavorable markets associated with falling prices and investor pessimism. Bid Price: The highest price offered by a dealer to download 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. Broker: Individuals licensed by stock exchanges to enable investors to download 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 download 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 download 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. 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.

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.

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. 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 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. 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.

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 downloads any service for a fee like downloading 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. Debit Card: A plastic card issued by banks to customers to withdraw money electronically from their accounts. When you download things on the basis of Debit Card the amount due is debited immediately to the account.

Debtor: A person who takes some money on loan from another person. Demand Deposits: Deposits which are withdrawn on demand by customers. 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 download more shares through this demat Account. Derivative Call Put Warrants: Warrants issued by a third party which grant the holder the right to download sell the shares of a listed company at a specified price. Derivative Instrument: Financial instrument whose value depends on the value of another asset. 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. 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 downloader. 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.

Fixed-income Securities: Investment vehicles that offer a fixed periodic return. Floating Rate Bonds: Bonds bearing interest payments that are tied to current interest rates. Factoring: Business of downloading trade debts at a discount and making a profit when debt is realized and also taking over collection of trade debts at agreed prices.

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.

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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, 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. 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.Or, you can get a loan specifically designed for this purpose.

International Banking Banking involves more than two countries. Insolvent Insolvent is a person or organization who is unable to pay his debts, as his liabilities are more than the assets. Check: A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment.

Promissory notes are negotiable instruments Repo Rate Repo rate is the interest rate which is charged by RBI when RBI lends money to commercial bank for short period of time.

The amount which is paid back is includes principal and interest. It is given generally to both current and saving holders.

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