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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.
Para Banking - the activities which are done by a Bank apart from its normal day to day transactions ( like deposit , withdrawl etc..) are called Para-Banking Activities / Operations. Examples for the Para-Banking acticities that a Bank normally involves: Global Debit Card, Global Credit Card, Bancassurance etc
PARTICIPATION CERTIFICATE (PCs): The PCs were introduced in 1969 with a basic idea that it would even out the liquidity pressure within money market. This is an instrument which enables a bank to sell to a third party (the transferee) a part or all of an advance made by it to a borrower or client against hypothecation of goods or book-debt. Legally speaking the PC is a deed of transfer. The PC in practice represented a borrower-lender relationship between the PC issuer and the banks /institutions purchasing it. The issuing bank is bound to repay the purchaser bank or participant on maturity irrespective of the position of borrower mentioned in the certificate. There are two types of inter-bank participations: one on risk sharing basis and the other without risk sharing. The maximum amount for which inter-bank participation would be issued is restricted to 40 percent of outstanding advances. Inter-bank participations with sharing is exempted from Statutory Liquidity Ratio and Cash Reserve Ratio.
PARTICIPATORY NOTES: These are derivative instruments issued by registered Foreign Institutional Investors (FII) to their clients, who are not directly allowed to buy or sell in Indian markets. Participatory notes are like contract notes and are issued by foreign institutional investors to their overseas clients who may not be eligible to invest in Indian stock market. Foreign institutional investors invest funds on behalf of such investors, who prefer to avoid making disclosures required by various regulators. These clients could be high net worth non-resident individual or Overseas Corporate Bodies or other unregistered units (in India). FIIs use their client's money to buy or sell stocks in Indian market. Returns for clients depend on the gains/loss made by these registered FIIs from Indian markets.
Perpetual Bonds: Bonds which have no maturity date.
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.
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.
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
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.
POVERTY LINE: The poverty line, a measure of poverty is fixed in terms of consumption expenditure (per capita monthly consumption expenditure of Rs 49.1 for rural area and Rs 56.6 for urban area at 1973-74 prices or Rs 329.1 and Rs 455.2 monthly per capita expenditure in 1999-2000) at which the norm of adequate nutrition intake (2250 kilocalories per person per day in urban area and 2400 kilocalories per person in rural areas) is realised.
PREFERENCE SHARES: Holders of preference shares precede the holders of ordinary shares, but follow debenture holders, in the payment of dividends and in return of capital if the issuing company is liquidated. Preference shares normally entitle the holder only to a fixed rate of dividend, but participating preference shares also entitle the holder to a share of residual profits. Preference shares carry limited voting rights and they may be redeemable or not. Cumulative preference shares carry forward the right to preferential dividends, if unpaid, from one year to the next. From the investor’s point of view, preference shares lie between debentures and ordinary shares in terms of risk and income, while to the issuing company they permit some flexibility in distribution policy at a lower cost than debentures. Preference shares now account for a very small proportion of issues.
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.
PRIMARY DEALERS: (PDs) In India the primary dealer system was set up in 1995 to strengthen and develop the government securities market and enhance the efficiency of open market operation. Primary dealers can be subsidiaries of scheduled commercial banks, or all India financial institutions or companies under the companies act 1956 engaged predominantly in government securities market and subsidiaries of foreign banks or securities firms. Every PD has to maintain minimum net owned funds of Rs 50 crores deployed daily in the government securities market. They are subjected to certain obligations with regard to bidding, turnover, commitments etc. RBI provides liquidity support to PDs against central government securities.
PRIORITY SECTOR ADVANCES: Priority Sector advances broadly comprise advances to agriculture, (both direct and indirect) small scale industries, other activities/ borrowers, such as small business, retail trade, small road and water transport operators, professionals and self employed persons, housing and educational loans, micro credit to self help groups, consumption loans, small loans to software and food processing sector.
PRIME LENDING RATE: The rate of interest charged by banks on working capital and short-term loans to their most creditworthy borrowers. The prime lending rate serves as a benchmark for deciding on the interest rate to be charged to other borrowers. Accordingly, major banks and also Financial Institutions periodically announce their PLRs depending on their cost of funds and competitive lending rates. From October 1997, the Reserve Bank of India’ has decided to permit banks to announce separate Prime Term Lending Rates on term loans of three years and beyond. More recently, banks have been given the freedom to have different PLRs for different maturities. Now it has been substituted by Base Rate (w.e.f. July 01, 2010)
Privatization: The sale of government-owned equity in nationalized industry or other commercial enterprises to private investors.
Premature Withdrawals: Term deposits like Fixed Deposits, Call Deposits, Short Deposits and Recurring Deposits have to mature on a particular day. When these deposits are sought to be withdrawn before maturity, it is premature withdrawal.
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.
PUBLIC DEBT: Refers to the means by which the government raises resources for financing public expenditure by issuing government securities both long term and short term securities like treasury bills. Internal debt of the Central government includes loans floated on the market, bonds such as prize bonds, bank compensation bonds, treasurry bills and non-negotiable non interest-bearing securities issued to international financial institutions like IMF, IBRD. Apart from this there are "other liabilities" of the Union Government, comprising small savings, state provident funds, postal insurance and life annuity fund etc. These liabilities are also to be serviced through interest payments and redemption on maturity. Government securities are in the form of government promissory notes or in the form of stock certificates. Government promissory note is a negotiable instrument and transferable by endorsement and delivery. Stock can be in the form of book debt which could be held in the form of stock certificate or an account called subsidiary general ledger account. Stock certificate is not negotiable but transferable by execution of transfer deed and registration of change in the name in the books of Public Debt Office of RBI. Thus, public debt consists of total value of accumulated borrowings by the government from the public-house holds, banks, and financial institutions and others.
PURCHASING POWER PARITY (PPP): This refers to a theory of exchange rate based on relative domestic and foreign prices and used as a valuable tool for assessing proper currency valuation and measuring relative competitiveness. The basic proposition of PPP is that identical goods must sell at identical prices in a competitive market place. Otherwise, there will be opportunities for arbitrage. Competition will tend to equalise the price of identical basket of goods in domestic and foreign markets, through movements in exchange rate or through competitive bidding of the price of the commodities. Under PPP, exchange rate is in equilibrium when it equalises the prices of basket of similar goods and services in two countries. The PPP in other words is the ratio of the level of prices abroad to the level of home prices. This measurement called absolute PPP does not often hold true because of quality differences, transportation costs, and other tariffs etc and therefore a relative version of PPP is suggested focussing on changes in prices and exchange rates. This version of PPP predicts that changes in the nominal exchange rates will reflect differences in inflation rates among countries over time. Thus the countries in which inflation is persistently higher than that of the trading partners will experience a devaluation of their currencies.
Put Option: The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.

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