Safe Custody: When articles of value like jewellery, boxes, shares, debentures, Government bonds, Wills or other documents or articles 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.
SAVING: Saving is that part of the disposable income which is not consumed. It amounts to accumulation of wealth through postponement of consumption. Saving and capital formation play a crucial role in economic development. For estimation of domestic saving, the economy is divided into three sectors; the public sector, the private corporate sector (organized sector) and the household sector (unorganized sector). Household sector consists of farm households, unincorporated enterprises engaged in industry, trade, finance, transport etc; charitable trusts and household proper. Public sector savings represent savings of Government administration, departmental commercial enterprises, and non-departmental non-financial and financial enterprises. Savings of household sector, which account for more than 2/3 of gross domestic savings in the country, are in the form of financial assets like currency, bank deposits, life insurance funds, provident funds, investment in shares/debentures, small savings etc; and physical assets such as investments in machinery and equipment, investment in agriculture, non-farm business and inventories held by household sector. The rate of saving is measured as the proportion of gross domestic savings to Gross Domestic Product. Income and interest rates are the major determinants of rate of saving.
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.
SCHEDULED BANKS: Banks in the country are broadly classified as scheduled banks and non- scheduled banks. A scheduled bank, which could be either cooperative bank or commercial bank, is one which has been included in the Second schedule of the Reserve Bank of India Act. These banks are eligible for certain facilities such as financial accommodation from RBI and are required to fulfil certain statutory obligation. The RBI is empowered to exclude any bank from the schedule whose (1) aggregate value of paid up capital and reserves fall below Rs 5 lakh (2) affairs are conducted in a manner detrimental to the interests of depositors and (3) goes into liquidation and ceases to transact banking business.
SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS: The government of India enacted the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act in 2002 to provide among other things, for enforcement of security interest for realisation of dues without the interventions of courts and tribunals. Secured creditors are enabled to authorise their officials to enforce the securities and recover the dues from the borrowers. Since the Act provides for sale of financial assets by banks and financial institution to securitisation companies (SCs) or reconstruction companies (RCs) guidelines have been issued to ensure that the process of asset reconstruction proceeds on sound lines.
SEIGNIORAGE: Net revenue gained from the issuing of currency and coins. It arises from the difference between the face value of a currency note and the cost of producing, distributing and eventually withdrawing it from circulation.
SELECTIVE CREDIT CONTROL: Selective credit control, as distinguished from general credit control is operated to ensure an adequate credit flow to the desired sectors while preventing excessive credit for less essential economic activities. The techniques of selective credit control involves prescribing (1) minimum margin for lending against the value of specified securities (2) ceiling on the level of credit and (3) minimum rate of interest on advances. Selective credit control is usually applied to achieve a reduction in excessive advances against certain sensitive commodities in short supply and to reduce pressure on demand supported by bank credit.
SELF-HELP GROUPS OR MICRO CREDIT PROGRAMME: Defined as a group of individual members who voluntarily come together for a common collective purpose basically for savings and borrowings. In practice these groups are comprised of individual members known to each other coming from the same village, community and even neighbourhood (homogenous group) and have certain pre-group social binding factors. Micro credit programme, enabling the poor people to be thrifty and in accessing loans and other financial services, was launched in 1992 with a SHG- BANK linkage arrangement. The poor are encouraged to voluntarily come together to save small amounts regularly and extent small loans among themselves. On attaining maturity to handle their own resources, they are in a position to negotiate with banks for credit facilities.
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.
SHREDDING AND BRIQUETTING SYSTEM: A system for destruction of unusable notes at the RBI. The system cuts the notes into small pieces and then converts them into fine shreds. These shreds are then automatically channelled into the briquetting system which compresses them under high pressure resulting into formation of briquettes.
SMALL COIN DEPOT: Small coin depots of the Government of India have been established at important branches of commercial banks and treasuries to facilitate distribution of small coins (paise 50 and below). RBI makes arrangements to keep adequate stock of coins at these depots so as to enable the treasury/bank to meet the demand for small coins. Surplus balances of coins are put back to the depots. Any withdrawal from or deposit into a depot is required to be reported to RBI where adjustments are made to the credit or debit to the government.
SOCIETY FOR WORLD-WIDE INTER-BANK FINANCIAL TELECOMMUNICATION (SWIFT): Stands for international computerised telecommunication network headquartered at La Hulpe, Belgium. It was operationalised in 1977 and operates from more than 100 countries. There are over 4000 member banks. India became a SWIFT member in 1991. Each bank is given a unique code by SWIFT.
SOILED CURRENCY NOTES: A note which has become limp or which has developed minor cuts due to wear and tear or which is disfigured by oil, colour, ink etc. will be treated as a soiled note. Notes, which have been divided vertically through or near the centre with numbers in tact are, also treated as soiled notes. These notes can be exchanged at the offices of RBI and public sector currency chest branches of private sector banks.
SOFT CURRENCY: Soft currency is opposite of hard currency and it indicates a type of currency whose value may depreciate rapidly or that is difficult to convert into other currencies. Soft currency can be in the form of paper, electronic or debt-based βIOUSβ which have in the past been used in place of hard currency. This currency has limited convertibility into gold and other currencies.
Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.
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.
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.
STATUTORY LIQUIDITY RATIO (SLR): is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit.Generally this mandatory ration is complied by investing in Govt bonds.
OR, Under the provision of Banking Regulation Act governing the banking operations, banks are required to hold liquid assets such as government securities, or other unencumbered approved securities, cash or gold, against their demand and time liabilities in India. This is known as supplementary reserve requirement or secondary reserve requirement. The main objective of this monetary policy instrument is to ensure solvency of commercial banks by compelling them to hold low risk assets up to a stipulated extent. It also helps to regulate the pace of credit expansion to commercial sector. SLR refers to the ratio of holdings of the prescribed liquid assets to total time and demand liabilities.
STOCK EXCHANGES: It is a market in which securities are bought and sold. The economic importance of stock exchanges is that they facilitate saving and investment, first by making it possible for investors to dispose of securities quickly if they wish to do so, and secondly in channeling savings into productive investment. However, they are declining in importance as a source of new capital for industrial and commercial companies. Ready marketability requires that new issues should be made or backed by reputable borrowers or institutions, that information should be available on existing securities, and that there should be both a legal framework and market rules to prevent fraud and sharp practice. Stock exchanges have their own rules and conventions, but their functioning depends also on the existence of company and other law and financial intermediaries, such as the issuing Houses.
SUBSIDY: It refers to government grants to suppliers of goods and services. A subsidy may be intended to keep prices down (i.e. to raise real incomes of buyers), to maintain incomes of producers (for example farmers) or to maintain a service or employment. An essential characteristic of a subsidy, as distinct from a Transfer Payment, is that it has the object of keeping prices below the Factor cost of production. Subsidies, by distorting market prices and costs, may lead to a misallocation of resources although they may be justified in certain circumstances (for example to correct for Externalities) and may be used banned by international agreements. It may be possible to achieve the objectives of subsidies by alternative means which have less distorting effects, for example by direct income support through the taxation system.
SUPERVISION: Is a means of ensuring that the banks or financial institutions comply with the prescribed regulations.