Coupon Accepted Successfully!



Account Holder: Any and all persons designated and authorized to transact business on behalf of an account. Each account holder's signature needs to be on file with the bank. The signature authorizes that person to conduct business on behalf of the account.
Acquiring Bank: In a merger, the bank that absorbs the bank acquired.
Arbitrage: Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.
Affidavit: A sworn statement in writing before a proper official, such as a notary public.
Alteration: Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument.
American Depository Receipts (ADRs): ADRs/GDRs are receipts (not shares) issued by an American Depository or any Global Depository to investors, giving them the title to underlying shares of a company. These receipts are listed by the company issuing the ADR/GDR on foreign exchanges (in American exchanges, it is called ADR and called GDR-or Global Depository Receipts if listed in international exchanges) and traded just like a share. An ADR/GDR can represent any number of underlying shares. All ADRs are a form of GDR. Corporates are allowed to access foreign equity capital in the form of ADR/GDR under an automatic route.
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. The term is also used as a synonym for Depreciation.
Anytime Banking: With introduction of ATMs, Tele-Banking and internet banking, customers can conduct their business anytime of the day and night. The 'Banking Hours' is not a constraint for transacting banking business.
Anywhere Banking : Refers to banking not only by ATMs, Tele-Banking and internet banking, but also to core banking solutions brought in by banks where customer can deposit his money, cheques and also withdraw money from any branch connected with the system. All major banks in India have brought in core banking in their operations to make banking truly anywhere banking.
Annual Percentage Rate (APR): The cost of credit on a yearly basis, expressed as a percentage.
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 365-day year.
Annuity: A life insurance product which pays income over the course of a set period. Deferred annuities allow assets to grow before the income is received and immediate annuities (usually taken from a year after purchase) allow payments to start from about a year after purchase.
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.
Appraisal: The act of evaluating and setting the value of a specific piece of personal or real property.
Ask Price: The lowest price at which a dealer is willing to sell a given security.
Asset Backing for Issue of Notes: The RBI Act stipulates that the assets of the Issue Department against which currency notes are issued have to consist of gold coin and bullion, foreign securities, rupee coin, Government of India rupee securities of any maturity and bills of exchange and promissory notes payable in India which are eligible for purchase by the bank. So far such bills have not formed part of the assets of the Issue Department. The aggregate value of gold coin and gold bullion and foreign securities held in the Issue Department should not at any time be less than Rs. 200 crore; of this, value of gold, not to be less than Rs 115 crore. There is no ceiling on the amount of notes that can be issued by the Reserve Bank at any time.
Asset Classification: A recommendation of high level Committee on Financial System (Narasimham Committee) is that the policy of income recognition should be objectively based on record of recovery. International practice is that an asset is treated as non-performing when interest is overdue for at least 90 days. Recognising the need that a balance sheet should reflect a bank's actual financial health, a system for recognition of income, classification of assets and provisioning for bad debts on a prudential basis was introduced. The assets portfolio of the banks is required to be classified as (1) standard assets (2) sub-standard assets (3) doubtful assets and (4) loss assets. Standard asset is one that does not disclose any problems and which does not carry more than normal risk attached to the business .An asset which has been classified as NPA for a period not exceeding 12 months is considered as sub-standard asset. Doubtful asset is one which has remained NPA for a period exceeding 12 months. An asset which is considered uncollectable and loss has been identified by the bank or internal or external auditors or the RBI inspection and the loss has not been written off is regarded as loss asset.
Asset Liability Management (ALM): Denotes a scientific way of measuring, monitoring and managing the various risks banks or financial institutions are exposed during the course of their operations. Earlier banks had concentrated essentially on credit and investment portfolios and liquidity and profitability were given prime importance in the distribution of assets. Accumulation of mismatches among items on balance sheet and off balance sheet accounts often led to liquidity crisis and even insolvency. In the process of globalisation of economy, the domestic markets get affected by developments in the international financial and exchange markets which expose banks to various kinds of risks. Risk management involves continuous process of planning, organising and controlling the volumes, maturities, rates and yields of assets and liabilities. To help achieve this the RBI has issued Asset Liability Management guidelines to form part of the management of credit, market and operation risks. Thrust of ALM is on managing market risk.
Asset Reconstruction Companies (ARCs): These companies specialise in the recovery and liquidation of sticky assets of the banks and financial institutions. The non-performing assets can be assigned to ARC by banks at discounted price. In India the Committee on Financial Systems (1991) recommended creation of Asset Reconstruction Fund (ARF). The committee on Banking Sector Reforms (1998) suggested creation of Asset Reconstruction Company to which sticky advances of banks can be transferred. ARF was also considered essential as part of the comprehensive restructuring of weak banks. In pursuance of all this a legislation to regulate Securitisation and Reconstruction of Financial Assets and Enforcement of Security interest was passed by the Parliament.
Asset Securitisation: It is a process by which non-tradable assets are converted into tradable securities. Illiquid assets such as mortgage loans, auto loan receivable, cash credit receivables etc. on the balance sheet of the originator (such as Housing Finance Companies, Financial Institutions, banks etc.) are packaged, underwritten and sold in the form of securities to investors through a carefully structured process. These securities could be in the form of Commercial Paper, Participation Certificates, Notes or any other form of security permissible under the legal framework of the country. In a securitisation process, the underlying assets are used both as collateral and also to generate the income to pay the principal and interest to the investors of the asset backed securities.
Asset-Backed Securities (ABS): A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards – these issues are very similar to mortgage-backed securities.
At-the-money: The exercise price of a derivative that is closest to the market price of the underlying instrument.
ATM: ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense cash, receive cash, accept cheques, give balances in the accounts and also give mini-statements to the customers.
Autonomy: Autonomy of Central Bank is generally understood with reference to the degree of freedom a Central Bank enjoys in the formulation and implementation of monetary and banking policies. The Central Banks perform various roles such as banker to Government, banker to banks, issuing bank notes, management of public debt, managing foreign exchange reserves of the country, and regulation of banks and financial institutions. Central Banks' independence relate to three matters namely, personnel; financial (extent of finance to Govt;) and conduct of monetary policy. How far the Central Bank be independent of Government in matters of policies and what form should that independence take? The views vary from the position that Central Bank should be given absolute statutory independence from the Govt, both in determination and implementation of policies after listening to various opinions, to that it would be thoroughly undesirable for the bank to pursue policies, which did not have the concurrence and support of the Govt. and Parliament. In practice, the Central Bank, while having powers to formulate policies, is ultimately subordinate to government and is required to keep Govt informed of their policies and obtain specific government approvals for particular policies.
Authorised Capital: It is the amount of share Capital fixed in the Memorandum of Association and the article of association of a company as required by the companies Acts (Company Law). It is also known as nominal capital or registered capital.
Authorised Dealer: Scheduled commercial banks and other banks and financial institutions authorised to deal in foreign exchange are known as authorised dealers. The Reserve Bank has been delegating powers to authorised dealers for undertaking foreign exchange transactions without obtaining Bank's prior approval
Authorization: The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction.
Automatic Bill Payment: A checkless system for paying recurring bills with one authorization statement to a financial institution. For example, the customer would only have to provide one authorization form/letter/document to pay the cable bill each month. The necessary debits and credits are made through an Automated Clearing House (ACH).
Availability Date: Bank's policy as to when funds deposited into an account will be available for withdrawal.
Availability Policy: Bank's policy as to when funds deposited into an account will be available for withdrawal.
Available Balance: The balance of an account less any hold, uncollected funds, and restrictions against the account.
Available Credit: The difference between the credit limit assigned to a cardholder account and the present balance of the account.

Test Your Skills Now!
Take a Quiz now
Reviewer Name