Articles Banking Terms Glossary of Bankin

Banking Terms - Glossary of Banking Terms and Definitions Page 1 of 27
Search
Home World News Latest Articles Escape Hatch Topics Free eCards Endless Buzz
Topics
Banking Terms - Glossary of Banking Terms and Definitions
Glossary
Banking terms are sometimes very complex to understand. In some cases we also tend to become confused
Encyclopedia about banking terms. The following is a banking glossary that shall be helpful in providing you with different
banking terminologies and banking definitions.
Ads by Google
Bank of Baroda Car Loans Ads by Google
Quick Car Loan in 2 Days. HK offshore Banking
Easy Repayment. Low Corporate offshore Bank Account-tax free,Online,100% Privacy Protection
Interest Rate. Apply www.CorporateOne.com.hk
BarodaNext.co.in/Know_More
MSc in Banking&Securities
Bank Account in St Kitts Top Financial Masters Degree, FT Listed, Scholarships + Visa Support
Personal, Corporate and www.LSBF.org.uk/MSc-Banking
Investment Bank Accounts
Opened in St Kitts Banking is one of the most important sectors of business and finance that assists
www.myoffshoreaccounts.com
the world of commerce to keep on running. Without banks and the banking
MBA in Finance services that they provide, commerce and trade would collapse and credit would
Management become virtually extinct. As the decades progress many new concepts are being
Find Top MBA Colleges in introduced into banking, thus making it apt to successfully fulfill the needs of trade, commerce finance
India.Get Info on and businesses.
Courses,Admission,Fees,Form
www.Shiksha.com/MBA_Finance_Colle
Many a times we walk into the bank and come across a word whose meaning we do not understand.
Rs 2,29,56,841 cash at 60 Well one of the best alternatives is go and refer a banking terms glossary and become aware of what
or 1,91,307 p.m. Tax Free you do not know. You will find that this glossary is also pretty easy to use. All you have to do is click on
Pension Compare 46insurers the letters given below and surf through the enlightening banking terms. The second alternative is to
2day. Get it now use a simpler method of search by just pressing Ctrl + F, and keying in the word into the box that
www.Policybazaar.com/Pension- appears.
plan
This glossary of banking terms and definition can also be used by all the people working in the field of
banking and finance, students and person who wants to clarify his/her doubts regarding banking
terminologies. I have also made an attempt to make the glossary very simple and yet comprehensive.
An effort has been made to explain all the primary concepts in the simplest possible manner. I hope
that this banking glossary of terms, meanings and definition helps you.
Banking Terms Index

| A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X |Y | Z |
Glossary of Banking Terms and Definitions: Banking Terms that Begin With A
Banking Terms
Banking Terms Banking Definitions Glossary: Notes
and References
AAA is a term or a grade that is used to rate a
particular bond. It is the highest rated bond that gives
AAA maximum returns at the time of maturity. Usually the
grade AAA is given to the best debt obligation or a
security, by a credit rating agency.
The ABA transit number is assigned by the American
Bankers Association. It is a numeric coding that
ABA Transit
indicates and facilitates the amount of check payments,
Number
balances and dues that are to be cleared among
different banks at the clearing house.
ABO is an abbreviation for the term 'Accumulated
Benefit Obligation'. It is basically the measure of the
ABO
liability of the pension plan of an organization and is
calculated when the pension plan is to be terminated.
To know more about
Absorption is a term related to real estate, banking and real estate and it's
finance fields. The word 'absorption' means the absorption, sale and
Absorption
process of renting a real estate property that is newly auction you can read
built or is recently renovated. more on:
Real Estate Auctions
http://www.buzzle.com/articles/banking-terms-glossary-of-banking-terms-and-definitions.... 8/17/2010
and Real Estate

Investment
The term 'absorption time' is used to define the time
Absorption Time period that is required to complete the process of
absorption.
The 'abstract of title' is a written report that defines,
Abstract of title records and identifies the history and ownerships of a
particular asset, usually a real estate.
Acceleration is the process, where the lender demands
a full and final payment of the debt or loan, before the
Acceleration allotted time period for repayment. A clause in the
document of the debt usually empowers the lender to
accelerate the time period.
A clause in the debt document that empowers the
Acceleration lender to accelerate the payment, (i.e. or that is) the

Clause lender can demand the full amount of loan before the
date of maturity.
A method of depreciation of fixed assets, where the
Accelerated
early deductions are greater in monetary terms and
Depreciation
later ones are smaller.
Acceptance which is also known as the banker's
acceptance is a signed instrument of acknowledgment
that indicates the approval and acceptance of all terms
Acceptance
and conditions of any agreement on behalf of the
banker. It is a very wide term that is used in context
with financial agreements and contracts.
An accepting house is a banking or finance
organization that specializes in the service of
acceptance and guarantee of bills of exchange. This
Accepting House
organization specializes in two prominent functions,
that is facilitating the different negotiable instruments
and merchant banking.
The party (either an individual or a group of individuals
or organizations) that accept the terms and conditions
Accepting Party
of a proposed agreement or contract put forth by
another party.
An account is a record of all financial transactions that
are related to an asset, individual, transaction or any
organization. It is a major term in the field of
Account accountancy and is conventionally denoted by the A/c.
It can also be defined as a transaction between a buyer
and a seller about payments and dues which develop
creditor-debtor relations.
An online facility that is made available by some banks
or financial organizations, in which all the transactions
related to the bank account, credit facilities, debts and
Account
investments can be handled and operated with the help
Aggregation
of a single interface or account. Account aggregation is
a form of Internet banking, provided for ease of
transaction.
The total amount of money in a particular bank
Account Balance account, along with the debit and credit amounts, the
net amount is also termed as the account balance.
Account reconciliation is a process with the help of To know more on
which the account balance can be easily verified. account reconciliation
Account Account reconciliation is usually done at the end of a read: Steps to Account
Reconciliation week, month, financial year or at the end of any Reconciliation and
financial period. It is usually done with the help of Purpose of Bank
receipts, ATM notes, bank statements etc. Reconciliation Process
A financial record that indicates the transaction and its
Account Statement effect on an account (usually bank account), in terms of
debit and credit. Sometimes, an account statement
also carries some precise details, like the date of
transaction, code of transaction, mode of transaction,

sales, purchases, etc.
An account value is the total value of any account,
applicable when a person has many accounts and
Account Value transactions in the same bank or financial institution.
The account value is a total value that is expressed in
monetary terms.
Indicates the acceptance of a document, agreement,
proposal or a negotiable instrument by authenticating it
Acknowledge with the help of a seal or a signature. Acknowledgment
signifies that the terms and conditions of the contract
have been accepted and the agreement authenticated.
The new physical goods that are physically united to
older goods, in the manner where identity, of both the
Accessions goods remains the same, are known as accessions.
For example, a new upgrade or addition on an already
existing piece of machinery.
A person who signs the note of application and renders
his credit history during the process of application of a
loan is called accommodation maker. The
Accommodation accommodation maker, usually receives no direct

Maker financial benefit from the loan. The term is also used in
the concept of 'accommodation bills', when two or more
people help each other by rendering liquidity of a
negotiable instrument.
The term 'account analysis' is used in basically two
contexts. First, it is used to define the study and
conclusion of a single account. Second, it is also a
Account Analysis
procedure, where the profitability of a single demand
account or many demand accounts is projected and
analyzed.
An account control agreement is an agreement that
Account Control
perfects the interests of the creditor in a securities
Agreement
account.
An account debtor is a person or an organization that is
in debt and is obliged to pay either on an account or
Account Debtor
chattel paper or contract right. Account debtors are,
sometimes, simply referred to as debtors.
Account reconciliation services are basically services
that specialize in the compilation of reconciliation
Account
documents and statements. Reconciliation services
Reconciliation
cater to the demands of individuals and huge
Services
organizations that have a large number of transactions
taking place everyday.
Accounts payable is a list of liabilities of an
organization or an individual that are due but not paid
to creditors. Account payable, many a times, also
Accounts Payable
appears as a current liability in the balance sheet. One
must note that loans and liabilities to the bank which
have not maturated, are not a part of account payable.
Accretion, is a process, where increments and periodic
increases are made in the book value or the balance
sheet value of an asset. In the field of banking and
finance, accretion is the process where the price of a
Accretion
bond that has been bought at a discount is changed to
the par value of the bond. It is also defined as a
change in the price of a bond that has been bought at a
discount to the par value of the bond.
An accretion bond is basically a bond that has been
Accretion Bond purchased at a discount and whose book value is
incremented to the par value or the face value.
Accreting swap is a swap of interest which has an
Accreting Swap
increasing notional amount.
Accrual Basis Accrual is the process of accumulation of interest or

money. Accrual basis, which is also known as accrual
convention, is the method by which, investors,

economists and businessmen count the number of
days in a month or a year(s). Of the most common
examples of accrual basis is the 30/360 convention,
wherein the accrual basis is calculated by assuming
that every month has 30 days. Accrual basis is often
used as the common parameter for the calculation of
interests and returns.
An accrual bond is also known as range bond. An
accrual bond is a bond that has a tendency to pay the
investors, an above the market rate. Sometimes, an
Accrual Bond accrual rate is also defined as a security that does not
have a period payment for the rate of interest. The
interest is accrued and then added later on at the time
of maturity.
It is the method of calculating the time period on a
specific investment by the investors. Accrual
Accrual Convention convention is many a times calculated with the help of
different interest calculation mechanisms. Accrual
convention is also known as accrual basis.
Accrued Interest is the interest, accumulated on an
investment but is not yet paid. Often, accrued interest
Accrued Interest is also termed as interest receivable. Some banking
books prefer to call it as the interest that is earned, but
not yet paid.
Accumulated depreciation is the total all the periodic
Accumulated
reductions from the book value of fixed assets. It is
Depreciation
also termed as an allowance for depreciation.
Accumulator is also known as capital appreciation
bond. The accumulator is a type of security that is
related to capital and is issued on face value, but the
Accumulator interest is not paid to the investor on the basis of the
time period. Instead, the total amount of accrued
interest is paid along with the face value upon the
maturity of the security.
ACH is the abbreviation of the banking term automated
clearing house. The automated clearing house
operates on a national level and helps banks and
ACH
financial institutions in the clearance of balances and
negotiable instruments that are used at a personalized
as well as a mercantile modes of transactions.
Active tranche basically stands for REMIC or Real
Estate Mortgage Investment Conduit. The REMIC
tranche is basically a bond that is backed up by a large
Active Tranche set of mortgages. The principal and interest that are
paid by the borrowers, are transferred to the people
who hold tranche (tranche refers to a portion or money)
in REMIC.
Actual delay days are also simply known as 'delay
days'. The actual delay days are the actual days of the
Actual Delay Days
lag times. The lag time is the time period that starts
after the expiry of the last date of repayment.
Adjustable rate mortgage or ARM is basically a type of
loan, where the rate of interest is calculated on the To know more about
basis of the previously selected index rate. Due to this, Adjustable Rate
Adjustable Rate
the rate of interest that is charged differs periodically, Mortgage, read more
Mortgage (ARM)
usually in every month. Hence, the rate of interest and on Adjustable Rate
the total interest remain variable through out the Mortgage
term/time period
Adjusted trading is a mercantile understanding
between an investor and the broker or dealer. In this
understanding, the investor overpays the broker) for a
Adjusted Trading
recently purchased security. As a return favor, the
broker overpays the investor for the security or the
investment that he wants to get rid of.
Administered rates are the rates of interest which can

be changed contractually by lender. In some cases,
these rates can also be changed by the depositor and
Administered Rates
also the payee. The laws and provisions that monitor
the concept of administered rates differ in each
jurisdiction.
Administrative float is the frame of elapsed time that is
required in order to complete the paper work, in order
Administrative
to administratively sort the checks, or for that matter,
Float
any type of currency and negotiable instruments in the
bank itself or in the clearing house.
An administrative review is usually used in context to
the appraisal of the book value of a real estate and Read more on
Administrative
basically, deals in the underwriting issues. The Mortgage Loan
Review
administrative review is usually written from the point of Underwriting
view of loan underwriting during an estate appraisal.
American depository receipts, also known as ADRs,
American are depository receipts which are equal to a specific
Depository Receipt number of shares of a corporate stock that has been
(ADR) issued in a foreign country. American depository
receipts are traded only the United States of America.
The American Institute of Certified Public Accountants
American Institute (AICPA), is a national accountant's institute of the
of Certified Public United States of America, that represents the certified
Accountants public accountants, who conduct accounting operations
(AICPA) in the spheres of business and industry, public
practice, government, education and even NGO's.
One should not confuse between 'amortization' as an
accounting concept and amortization of loans.
Amortization of loans is nothing but the process of
To know more about
Amortization of liquidation of loans or securities with the help of
Amortization refer to
Loans periodic reductions. The principal amount of the loan is
Amortization
amortized periodically by the method of payments in
installments. The techniques that are used for the
amortization of a loan differs from case to case.
Amortization period is the time period that is
considered from the inception of the credit, investment
or negotiable instrument and ends upon the maturity or The column 'What is
expiry of the instrument. The amortization period is Amortization?' will
Amortization
basically considered in order to calculate the rate of give an even better
Period
interest, time line of installments and also the explanation about
appropriate amount of all the installments. The term amortization period
'amortization period' is also used in the field of
accountancy; however, in a different context.
Amortizing swap is a swap in the rate of interest that
Amortizing Swap
has a declining notional principal.
Alternative minimum tax, also known as the AMT, is a
type of tax that is levied by the United States
government and is a type of Federal income tax. The
Alternative alternative minimum tax (AMT) is basically levied on

Minimum Tax the individuals and organizations that misuse and take
advantage of tax benefit schemes that are in monetary
terms exorbitant, if rationally compared to their annual
incomes.
Analytical solutions, also known as closed form
solutions, are simple mathematical techniques and
models, used to calculate projections and interest rates
by the lending, banking and finance organizations.
Analytical Solution
Some of the analytical solutions are so simple and
effective that the calculations can also be conducted
orally, without writing it down on a paper or using a
calculator.
An analytical VAR is also known as the correlation
Analytical VAR VAR. An analytical VAR is basically the measurement
of a financial instrument, portfolio of the financial
instruments or an entity's exposure to the reductions in
its value resulting from changes in the prevailing

interest rates.
The annual percentage rate is calculated by dividing
Annual Percentage
the total financing costs associated with a loan divided
Rate (APR)
by the principal amount of the loan.
The annual percentage yield or APY is basically a very
Annual Percentage
accurate and calculated measure of yield that is paid
Yield (APY)
on a standard bank deposit account.
Annuities are contracts that guarantee income or To know more about

return, in exchange of a huge sum of money that is Annuities you may
deposited, either at the same time or is paid with the also read more on
Annuities Fixed Annuities
help of periodic payments. Some of the common types
Explained and
of annuities include the deferred, fixed, immediate or
Annuities Pros and
variable variants. Cons
The anticipated income doctrine of liquidity is basically
Anticipated Income an explanation of bank liquidity development in which
Doctrine of the net cash flow of the borrowers is considered as the
Liquidity source of loan repayment instead of usual subsequent
new borrowings.
An appraisal is basically a statement, document or an
estimated rise or drastic climb in the price of a
Appraisal
particular real estate. The term 'appraisal' is also used
in connection to raising the book value of a real estate.
An appraisal surplus is the difference between the
Appraisal Surplus
historical cost and the appraised cost of the real estate.
Arbitrage is the simultaneous purchase and sale of two
identical commodities or instruments. This
simultaneous sale and purchase is done in order to
Arbitrage take advantage of the price variations in two different
markets. For example, purchase of gold in one nation
and the simultaneous sale in another nation,
(international markets) to achieve profit.
Arbitrage free is a type of financial model that
Arbitrage Free generates market structures that exclude scenarios
generated by the arbitrage transactions and dealings.
An arbitrageur is an independent and individual broker
Arbitrageur
who deals in arbitrage.
Article of agreement is a contractual provision, with the
help of which a buyer purchases real estate from the
Article of
seller over a period of time, and pays the consideration
Agreement
in installments. This type of agreement or contract is
also known as a land contract.
As extracted collateral are extracted or non-extracted
minerals created by a debtor having an interest in
As-extracted
minerals, and are subject to security interest, either
Collateral
before or after extraction. In short, mined or non-mined
minerals can also be used as collaterals.
Security with which has a coupon rate that increases in
Ascending Rate
previously defined increments at scheduled intervals, is
Bond
termed as an ascending rate bond.
A security that is backed with the help of some kind of
Asset Backed valuable assets, is known as an asset backed security.

Security (ABS) Sometimes, ABS is also referred to as the monthly rate
of repayment of a secured loan.
Asset sensitive is a sort of a position, wherein an
increase in the rate of interest will help the
Asset Sensitive
investor and the decline in the rate will not be helpful at
all.
Asset and Liability Asset and liability management is the coordinated

management of all the financial risks inherent in the
Management
business conducted by financial institutions. In real
practice, asset and liability management aims at

minimization of loss and maximization of profit.
'Assets repriced before liabilities' is a term that is used
Assets Repriced
to define a gap between the repricing of the assets and
Before Liabilities
liabilities in a given period of time.
Assignee is an individual or an organization or party to
Assignee
whom an assignment is made and commitment taken.
In the field of banking and finance, an assignment is
the transfer of any contractual agreement between two
Assignment or more parties. The party that assigns the contract is
the assignor and the party who receives the
assignment is the assignee.
Assumable is a very different type of mortgage loan
application, where the new buyers of a real estate that
Assumable has already been pledged as collateral, assumes the
liability of a loan and also the ownership of the real
estate.
An assumed name is a name which is assumed by an
individual, organization or corporation in order to
Assumed name conduct business. It must be noted that the assumed
name is always different from the original name of the
corporation.
Asymmetric behavior is the unbalanced behavior
displayed by the financial instruments. It is said to be
Asymmetric
observed when the rates and value of instruments
Behavior
change in different proportions, in comparison to the
market rates.
To know more about
The attorney's certificate of title, is also known as the legal concepts
Attorney's title option. This certificate is basically prepared by the related to real estate
Certificate of Title attorney, in order to state the ownership and the lien and ownership read
priority of an asset, particularly a real estate. more on Real Estate
Attorneys
Attrition analysis is basically carried out for the purpose
Attrition Analysis of reformation of the assets and liabilities in a balance
sheet.
Audited statements are supposed to be the most
reliable statements. The audited statements are
basically financial statements whose reliability and
Audited Statements second effect (according to the double entry system)
have been verified, cross checked and confirmed. The
word 'audited' (audit), signifies the process of
verification.
The agreement of security between debtor and banker
is known as the authenticated security agreement and
Authenticated
is accepted by the borrower The acceptance process is
Security Agreement
done, online and then the agreement is down loaded
and printed.
In the terms of banking, an authority is basically a
governmental department or agency that is empowered
by the judicial system of a nation to authenticate,
Authority
legalize, conduct and monitor the functions that are
related to banking, finance, economics and
transactions.
An automatic clearing house is a nation wide electronic
clearing house that monitors and administers the
Automated
process of check and fund clearance between banks.
Clearing House
The ACH is an electronic system and thus minimizes
(ACH)
the human work in the process of clearance. It
distributes credit and debit balances automatically.
Automated Teller Automated teller machines are basically used to

conduct transactions with the bank, electronically. The
Machines
automated teller machine is an excellent example of
integration of computers and electronics into the field of

banking.
The automatic stay is an injunction that automatically
becomes effective, after any person or organization
Automatic Stay files for bankruptcy. The automatic stay basically
precludes the creditors from taking the debtor or the
property of the debtor.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With B
Banking Banking Terms Glossary:

Banking Definitions
Terms Notes and References
The balance is the actual amount of money that is left
Balance in the account. Sometimes, the term balance also
refers to amount of the debt that is owed.
A balance transfer is the repayment of a credit debt
Balance with the help of another source of credit. In some

Transfer cases, balance transfer also refers to transfer of funds
from one account to another.
The balance transfer fee is charged by the bank for the
Balance transfer of balances from one source of credit to

Transfer Fee another. It also refers to the transfer of fees from one
bank account to another.
A bank is an establishment that helps individuals and
Bank organizations, in the issuing, lending, borrowing and
safeguarding functions of money.
A bank account is an account held by a person with a
Bank bank, with the help of which the account holder can

Account deposit, safeguard his money, earn interest and also
make check payments.
A bank debt is basically any debt that is owed to a
bank, by any kind of consumer, organization or To know more on bank
Bank Debt corporation. The debt may be anything from a bank debts, red more on Bank
loan to a credit card debt or an overdraft that has been Debt.
used.
A bankruptcy refers to economic insolvency, wherein To know more on
the person's assets are liquidated, to pay off all Bankruptcy read, Bankruptcy
Bankruptcy
liabilities with the help of a bankruptcy trustee or a Code, Bankruptcy Records
court of law. and Bankruptcy Filings.
A billing cycle is a time period that covers the credit
Billing Cycle
statement, that usually lasts for 25 days.
To know more about
A bankruptcy trustee is an individual or a corporation
different types of
or any organization that is appointed, in case of
Bankruptcy bankruptcies, read, Chapter
bankruptcy, in order to represent the interests of the
Trustee 7 Bankruptcy, Chapter 11
bankruptcy estate and the insolvent debtor according
Bankruptcy and Chapter 13
to Chapter 7, Chapter 11 and Chapter 13.
Bankruptcy.
To know more on
Bankruptcy advice is given by a bankruptcy lawyer or a bankruptcy advise, refer to,
Bankruptcy bankruptcy councelling service, so that a person can Bankruptcy Alternatives,
Advice overcome financial and economic difficulties after Bankruptcy Assistance,
bankruptcy. Bankruptcy Counseling and
Bankruptcy Advise.
A billing statement is a summary of all transactions,
Billing payments, purchases, finance charges and fees, that

Statement take place through a credit account during a billing
cycle.
A bond is a certificate that represents an interest
bearing debt, where the issuer is required to pay a sum
Bond
of money periodically till the maturity, and then receive
back the accumulated amount.
A borrower is the party that uses any kind of credit

Borrower facility and thus, becomes obliged to repay the
principal amount and interest on the borrowed amount.
Also know as gap financing, bridge financing is a loan
where the time and cash flow between a short term
loan and a long term loan is filled up. Bridge financing
Bridge
begins at the end of the time period of the first loan
Financing
and ends with the start of the time period of the second
loan, thereby bridging the gap between two loans. It is
also known as gap financing.
The bridge loan also known as a swing loan, is
basically a real estate loan or a home loan, where the
Read more on, What is a
Bridge Loan current residence/real estate is pledged by the
Bridge Loan.
borrower as a collateral in order to purchase a new
residence.
A bounced check is nothing but an ordinary bank
check that any bank can refuse to encash or pay
Bounced
because of the fact that there are no sufficient finances
Check
in the bank account of the originator or drawer of the
check.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With C
Banking Terms
Banking Terms Banking Definitions Glossary: Notes and
References
A cap is a limit that regulates the increase or
Cap decrease in the rate of interest and installments of an
adjustable rate mortgage.
The term 'capital' means the total net worth of any To know more on Capital
Capital business establishment, organization or corporation or you may also refer to
the total amount invested for financial returns. Venture Capital
Capital Capital improvement is the addition in the property of

Improvement an organization that adds to it's additional value.
The cardholder's agreement is a written statement To know more about
that depicts all the terms and conditions of a credit credit cards and
Cardholder card agreement. The cardholders agreement cardholder's agreement
Agreement constitutes many elements, such as rate of service you may refer to Credit
charges, billing dispute remedies and communications Cards and Credit Card
with the credit card companies or service providers. Companies
Bills and coins, checks and other negotiable
instruments, that are acceptable at banks and are
Cash
considered to be liquid assets are collectively known
as cash.
Cash advance fee is basically charged when a person
Cash Advance
uses a credit card to obtain cash. In most cases, it is
Fee
charged as a percentage to the cash advance.
The cash flow is often defined as the liquid balance of
cash as well as the bank balance that is available with
an organization or a corporation. In some cases, the To know more about
Cash Flow cash flow is also defined as the net amount of cash Cash Flow and related
that is generated by the net income that has been concepts read Cash Flow
generated by an organization or corporation in a
particular time period.
The cashier's check is drawn by a bank on it's own
Cashier's Check name to may payments other organizations, banks,
corporations or even individuals.
The cash reserve is the total amount of cash that is
Cash Reserve present in the bank account and can also be
withdrawn immediately.
The certificate of deposit is a certificate of savings

Certificate of
deposit that promises the depositor the sum back
Deposit
along with appropriate interest.
A check is a negotiable instrument that instructs the
Check bank to pay a particular amount of money from the
writer’s bank, to the receiver of the check.
Clearing of a check is basically a function that is
executed at the clearing house, when all amount of
Clearing
the check is subtracted from the payer's account and
then added to the payee’s account.
The clearing house is a place where the
representatives of the different banks meet for
Clearing House confirming and clearing all the checks and balances
with each other. The clearing house, in most countries
across the world, is managed by the central bank.
A central bank is the governing authority of all the
Central Bank
other banks in a country.
Closing of an account is the final stage of any
transaction where both the parties receive almost
equal consideration from each other. The term
Closing
'closing' from ledger books where the two accounts
are 'closed down' i.e. both debit and credit sides
become equal.
The co-borrower is a person who signs a promissory
note as a guarantee that the loan would be repaid.
Co-borrower
Thus the co-borrower plays the role of a guarantor
and is equally responsible for the loan.
Consumer credit is the credit and loan facility that is
Consumer provided to the consumer for the purchase of goods,

Credit services and real estate property. Most consumer
credit is unsecured with the help of a collateral
Compound interest is the interest that is 'compounded'
on a sum of money that is deposited for a long time.
Compound
The compound interest, unlike simple interest, is
Interest
calculated by taking into consideration, the principal
amount and the accumulated interest.
To know more about
Credit Card Debt
Credit card debt consolidation loan is availed from a credit card consolidation
Consolidation
bank in order to pay off all credit card debts. read more no, Credit Card
Loan
Debt Consolidation
To know more about
credit counseling you may
Credit counseling is a consultancy session where the
Credit read more on Credit
credit counselor suggests debt relief solutions and
Counseling Counseling, Debt Relief
debt management solutions to the clients.
Solutions and Debt
Management.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With D
Banking Terms
References
Debit is a banking term that indicates the amount of
money that is owed by a borrower. It also indicates the
Debit amount that is payable, or the amount that has been
deducted from an account. The origin of the term is from
the concept of debit side of a ledger account.
To know more about
A debt is any amount that is owed by an individual,
Debt the concept of debt
organization or corporation to a bank.
read more on: Debt
A debit card is an instrument that was developed with To know more about
digital cash technology, and is used when a consumer debit cards, read more
Debit Card makes that payment first to the credit card company and on Reloadable Prepaid
then swipes the card. The debit card operates in the Debit Card and Universal
exact opposite manner of the credit card. Prepeid Debit Card.
A deed is a very important document that indicates the
ownership of an asset, especially a real estate. The deed
Deed
is also used to convey the property from the seller to the
buyer.
A default is a scenario where the debtors of a bank are
Default
unable to repay the debt or the loan.
Demand A demand deposit is an account that is used as a

Deposit checking account.
A deposit slip is a bill of itemized nature and depicts the
Deposit Slip amount of paper money, coins and the check numbers
that are being deposited into a bank account.
The person who deposits money into a bank account is
Depositor
called a depositor.
The degradation in the book and monetary value of a
Depreciation fixed asset as a result of wear and tear in the course of
time.
Debentures are long term corporate bonds that are
unsecured in nature. It must be noted that debenture
Debentures
holders are not protected by any collateral and tend to be
treated like ordinary creditors
In the terms of banking, in the term 'discount' is used
when any negotiable instrument is converted into cash.
For example, a person can exchange a bearer check for
Discount cash with the amount being little less than the face value
of the check. This method is used by merchants who are
in a dire need for liquid finances. Tins definition is written
fro the banking point of view but has a variable meanings.
A dividend is a part of the profit that is earned by a
Dividend corporation or joint stock companies, and is distributed
amongst the shareholders.
To know more on debt
Debt management is a process of managing debts and
management read, Debt
Debt repaying creditors. Debt management is a very broad
management, Debt
Management concept covering almost anything related to debts and
Assistance and Debt
their repayment.
Advise.
A debt consolidation loan is a type of loan, where the
Debt
bank or the lending institution provides the borrower with More on: Debt
Consolidation
a loan that helps the borrower to pay off all his previous Consolidation
Loan
debts.
Debt settlement is a procedure wherein a person in debt
To know more on Debt
Debt negotiates the price with the lender of a loan, in order to
settlement refer to Debt
Settlement reduce the installments and the rate of repayment, and
Settlement
ensure a fast and guaranteed repayment.
Debt repayment is the total process repayment of a debt
Debt
along with the interest. Sometimes, the consolidation that
Repayment
is provided is also included in debt repayment.
Debt recovery is the process that is initiated by the banks
Debt Recovery and lending institutions, by various procedures like debt
settlement or selling of collaterals.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With E
Banking Terms
and References
Also known as electronic cash and digital cash, e-cash is a To more about the
technology where the banking organizations resort to the concept you may
E-Cash
use of electronics, computers and other networks to execute refer to: Digital Cash
transactions and transfer funds. Technology
An early withdrawal penalty is basically a penalty that is
Early levied by a bank because of an early withdrawal of a fixed
Withdrawal investment by any investor. There can be several types of
Penalty early withdrawal penalties, like forfeiting the promised
interest.
Earning assets generate returns, either in the form of
returns or in the form of interest or cash. One must note that
Earning Assets
in the case of earning assets, the owner does not have to
take any daily efforts to achieve returns.
Encryption is a process that is used to ensure the privacy
and security of a person's confidential financial information.
Encryption The actual process involves scrambling of the data of the
person, in such a manner, so that only the person himself
can see the data.
An exchange is a trade of property, assets, goods or
Exchange
services for consideration of any kind.
Electronic Electronic filing is the method of filing of tax returns and tax
Filing forms on the Internet.
An earnest money deposit is made by the buyer to the
Earnest Money
potential seller of a real estate, in the initial stages of
Deposit
negotiation of purchase.
Equity is the remainder balance between market value of a
given property and the outstanding real estate debt that is to
Equity
yet be paid. The equity is a risk that is basically borne by the
lender.
Expiration This term indicates the invalidity of a financial document or
Date instrument, after a specified period of time.
An education loan, also known as student's loan, is
specifically meant to provide forthe borrower's expenditure
To know more on
Education towards education. In the majority of countries, educational
educational loans
Loan loans tend to have a low rate of interest. The period of
read, Students Loan
repayment also starts after the completion period of the
loan.
An exchange rate is a basically a rate, with the help of
Exchange Rate which one country's currency can be exchanged with the
currency of another country.
Endorsement is basically the handing over of rights of a
financial/legal document or a negotiable instrument to
Endorsement another person. The person who hands over his/her rights is
known as the endorser, and the person to whom the rights
have been transferred is known as the endorsee.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With F
Banking Terms
and References
Face value is the original value of any security or negotiable
Face Value
instrument.
Field audits are basically the audits that are conducted by bank
officials, on the site itself, in order to assess the status and
Field Audits condition of the collateral. Many a times, field audits are also
conducted in order to assess the financial situation of debtors,
especially corporations, who have availed huge loans.
A final maturity is the date of maturity when a last, single loan

Final Maturity matures from a pool of loans. The final maturity indicates the
total and final payment of the pool of mortgage loans.
A financial instrument is anything that ranges from cash, deed,
Financial negotiable instrument, or for that matter any written and

Instrument authenticated evidence, that shows the existence of a
transaction or agreement.
A financial intermediary is basically a party or person who acts
Financial as a link between a provider who provides securities and the

Intermediary user, who purchases the securities. Share broker, and almost
all the banks, are the best examples of financial intermediaries.
A financial statement is a record of historical financial figures,
Financial
reports and a record of assets, liabilities, capital, income and
Statement
expenditure.
The term 'fixture' is used in the context of a real estate
property, when assets like furniture are attached to the real
Fixtures estate and are also included in its book value. Banks, in many
a cases, are known to include fixtures in the value, if the real
estate property has been pledged as a collateral.
A forbearance agreement is an authenticated agreement
Forbearance between a debtor and a creditor, and is utilized by the creditor,

Agreement when the debtor initiates a debt settlement or the loan is
defaulted, or the former becomes bankrupt.
A foreclosure is a standardized procedure where creditors like More on:
Foreclosure banks, are authorized to obtain the title of the real estate Foreclosure and
property that has been pledged as a collateral. Stop Foreclosure
Free Cash A free cash flow is basically is a total of financially liquid assets

Flow that does not include capital expenditures and dividends.
Fixed Rate A fixed rate mortgage is a home loan, for which the interest

Mortgage rate remains constant and fixed throughout the lifetime of loan.
Foreign The foreign currency surcharge is is levied by some banks and
Currency credit card companies, when a credit card or an ATM is used in
Surcharge a foreign country.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With G
Banking Terms
Banking
Banking Definitions Glossary: Notes
Terms
and References
A government bond, which is also known as a government
Government
security, is basically any security that is held with the
Bonds
government and has the highest possible rate of interest.
Gross dividends are basically the total amount of dividends that
Gross are earned by an individual, or corporation in a single

Dividends accounting and tax year. It must be noted that capital gains are
also included in gross dividends.
Gross A gross income test, is a kind of test, where one can prove to

Income Test any government authority that a person is one's dependent.
A grace period is an interest-free period that is to be given by a
creditor to a debtor after the period of the loan gets over,
Grace Period before initiating the process of loss recovery. The grace period
depends on the amount of the loan and also the credit score of
the borrower.
Gross income is the total income of a person, organization or
Gross
corporation in one financial year, before making any
Income
deductions.
Ground rent is the amount of rent that a leaseholder pays
Ground Rent
periodically to the owner for using a piece of land.
A grant is any type of financial aid that is given by the

Grant
government.
A guarantor is a creator of trust who takes the responsibility of
Guarantor the repayment of a loan, and is also, in some cases, liable and
equally responsible for the repayment of the loan.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With H
Banking Terms
Banking
Banking Definitions Glossary: Notes and
Terms
References
Household income is the income of all the members of one
Household household put together. One must note that the income

Income earned through the family business, is also counted in the
household income.
The holding period is the time duration during which a capital
Holding asset is held/owned by an individual or corporation. The

Period holding period is taken into consideration, while pledging the
asset as a collateral.
To know more about
Home A home equity debt is a debt, where the borrower's house is home equity debt you
Equity Debt pledged as a collateral. may also read more on
Home Equity Loans
Hedge is a strategy that is used to minimize the risk of a
particular investment and maximize the returns of an
You can refer to Hedge
investment. A 'hedge' strategy is, most of the times,
Hedge Funds to get more
implemented with the help of a hedge fund. This terms has
information
been written from the banker's point of view and may be
interpreted differently in the field of finance.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With I
Banking Terms
Banking
Terms
References
An installment contract is a contract where the borrower, who
Installment
is also the purchaser, pays a series of installments that
Contract
includes the interest of the principal amount.
Interest is a charge that is paid by any borrower or debtor for
the use of money, which is calculated on the basis of the rate
Interest of interest, time period of the debt and the principal amount
that was borrowed. Interest is, sometimes, also titled as the
'cost of credit'.
The interest accrual rate is a percentage of interest that is
Interest
calculated on the basis of the rate of interest and is expressed
Accrual Rate
in terms of annual percentage rate or APR.
TO know more you
Investment An investment property is a real estate property that
may also refer to
Property generates income for the owner, in terms of rent and lease.
Investment Property
Interest rate is the percentage of principal amount that is paid
as an interest for the use of money. Usually, the interest rate
Interest Rate
is decided by a country's central bank, on the basis of the
economic conditions.
Internet banking is a system wherein customers can conduct To know more about
Internet
their transactions through the Internet. This kind of banking is the topic you can refer
Banking
also known as e-banking or online banking. to Internet Banking.
Installment credit is a debt or loan that is to be returned to the

Installment lender in a set of periodic installments. Auto loans, home
Credit loans and other types of loans are included in installment
credit.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With J
Banking Terms
Banking
Terms
and References
Joint and This is a legal term utilized to point that two or more entities
Several are individually entirely responsible, instead of being
Liability collectively responsible.
This relates to a provision regarding bank notes of hand or
Judgment guarantees, and includes the authorization of the borrowers or

Clause sureties given to the bank, to create a judgment lien, at any
time after the completion of the legal instruments.
It pertains to an interest in the holdings ,which are gained from
Judicial Lien
judicial or court orders.
A Z-tranche is a real estate mortgage investment conduit
Jump Z-
(REMIC), which is countenanced to obtain principal sums,
Tranche
before prior tranches are no longer active.
The responsibilities of an issuing entity, for which quittance has
Junior Debt contractually been considered, as a priority of miscellaneous
liabilities of the same debtor.
Junior
A creditor who possesses junior debt.
Creditor
This is a recognized term for high-yield sureties with quality
Junk Bonds
standings below investment grade.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With K
Banking Terms
Banking
Terms
References
This is a Greek term utilized in the banking sector that relates to
Kappa the sensitiveness of an option's rate to alterations in the
unpredictability cost.
This pertains to a measure of duration, which computes efficient
Key Rate or empirical duration by altering the market price for a particular

Duration maturity date on the yield curve, while keeping all other
variables constant.
Knot It relates to the points that are on the yield curve for which there

Points are discernible rates for traded instruments.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With L
Banking Terms
Banking Glossary:
Banking Definitions
Terms Notes and
References
Land Otherwise known as an article of agreement, a land contract denotes

a form of contract, wherein the buyer makes periodic installment
Contract
payments to the seller, in order to buy a real estate. But, the title to
the property is not transferred to the buyer, until he makes the final
payment.
A colloquial expression used to denote a real estate fraud, wherein
the prices of undeveloped property is artificially increased to high
amounts, which are above the fair market value. This is often
Land Flip accomplished by a group of colluding buyers, who purchase and
resell the same property, among its members, several times, each
time increasing the price. When the price becomes unrealistically
high, they sell the property or raise a loan for its development.
A contract, through which, the owner (lessor) of a certain property,
Lease allows another (lessee) to use the same for a specified period, in
exchange for a value called the rent.
A document issued by a bank (on behalf of the buyer or the
importer), stating its commitment to pay a third party (seller or the
exporter), a specific amount, for the purchase of goods by its
Letter of customer, who is the buyer. The seller has to meet the conditions

Credit given in the document and submit the relevant documents, in order
to receive the payment. Letters of credit are mainly used in
international trade transactions of huge amounts, wherein the
customer and the supplier live in different countries.
The upper and lower limit for changes in the borrower's interest rate
Life Cap
over the term of his/her loan.
A bank account meant for customers with low incomes. These
Lifeline
accounts are characterized by little or no monthly fees and there is
Account
no strict rule regarding the minimum balance.
A clause, which is commonly found in contracts, wherein the parties
Liquidated agree to pay a fixed amount, in case of any breach of the contractual

Damages provisions. The party, who violates the provisions has to pay the
amount to the aggrieved party.
A guarantee given by the lender that there will be no change in the
Lock-in
quoted mortgage rates for a specified period of time, which is called
Period
the lock-in period.
An amount owed for a period exceeding one year, from the date of
last balance sheet/accounting year. Otherwise known as funded
Long Term debts, long term debts refers to those loans, which become due,

Debt after one year from the last balance sheet/accounting year. Such
debts can be a bank loan, bonds, mortgage, debenture, or other
obligations.
A term used to denote the actual loss incurred by a bank, in case of
Loss Given
default by a debtor to pay off the loan. If there is any collateral
Default
pledged by the debtor, the value of such assets will be reduced from
(LGD)
the loan amount.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With M
Banking Terms
Banking
Terms
and References
A mortgage is a legal agreement between the lender and
To know more about
borrower where real estate property is used as a collateral for
mortgages you may
the loan, in order to secure the payment of the debt. According
Mortgage refer to Mortgage
to the mortgage agreement, the lender of the loan is authorized
Companies and
to confiscate the property, the moment the borrower stops
Mortgage Debt
paying the installments.
The term maturity is used to indicate the end of investment
period of any fixed investment or security. After maturity, the
investor is repaid the invested amount along with the interest
Maturity that has been accumulated. For example, on the maturity of a
one year fixed deposit, the invested sum along with the
accumulated interest, is transferred by the bank to the account
of the investor.
Maturity Maturity date is the date on which the investment or security

Date attains maturity.
To know more on
Mortgage A mortgage refinance involves the replacement of current debt mortgage refinance,
Refinance with another debt with more convenient terms and conditions. read Mortgage
Refinance
Market value is the value at which the demand of consumers
and the supply of the manufacturers decide the price of a
commodity or service. The market value is the equilibrium point
Market
on the supply and demand graph, where the demand and supply
Value
curves meet. Thus, market value is decided on the basis of the
number people who demand a commodity and the number of
commodities that the sellers are capable of selling.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With N
Banking Terms
and References
A home loan, which is at a lower interest, an amount
No Cash Out
which does not go over the closing costs and the
Refinance
outstanding principal of the original mortgage.
When the applicant furnishes minimum information,
No
giving, only name, address, contact information for the
Documentation
employer and social security number, for the application
Loan
of the loan, it is called a no-documentation loan.
A lumpsum fees paid at a real estate set up, which
Non-Recurring includes appraisal, origination, title insurance, credit

Closing Costs report and points, is referred to as non-recurring closing
costs.
A bank which is chartered by the federal government and
National Bank is a member of the Federal Reserve System by default, is
called a national bank.
Net Operating A total loss that is calculated for a tax year and is

Loss attributed to business or casualty losses.
The amount that is left after paying the taxes is called the
Net Income
net income.
When the monthly payment is unable to cover the
Negative principal and the interest due, there is a slow increase in

Amortization the mortgage debt. This situation is termed as negative
amortization.
A possession or asset which cannot be changed into
Non-Liquid Asset
cash very easily is called non liquid asset.
A loan which is secured by collateral and for which the
Non Recourse
borrower is not personally liable, is called a non recourse
Loan
loan.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With O
Banking Terms
Banking
Terms
and References
Original
The amount borrowed by any borrower is called the original
Principal
principal balance.
Balance
Owner When the seller loans the whole sum or a part of it to a

Financing buyer, it is called owner financing.
The accessing of bank information, accounts and

Online transactions with the help of a computer through the financial

Banking institution's website on the Internet, is called online banking.
It is also called Internet banking or e-banking
As the name suggests, it is a check or rather an amount of
Overdraft check ,which is above the balance available in the account of
the payer.
A service which permits a verification account to be
Overdraft
connected to other savings or line of credit for facilitation of
Protection
protection against overdrafts is called overdraft protection.
The charges a lender or creditor levies for processing a loan.
Origination It includes cost of loan document preparation, verification of

Fee the credit history of the borrower and conducting an overall
appraisal.
Ordinary Dividends, which are a distribution of the profits of a

Dividends company, are called ordinary dividends.
Ordinary Income, not qualifying as a capital gain, is called ordinary

Income income.
This refers to a card which is issued by a bank and has a
Offline Debit
VISA or Mastercard logo on it. It can be issued, either
Card
instead of or along with a ATM card.
Open end credit means a line of credit that can be used a
Open End
number of times, up to a certain limit. Another name for this
Credit
type of credit is charge account or revolving credit.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With P
Banking Terms
References
Payee is the person to whom the money is to be paid
Payee
by the payer.
Payer Payer is the person who pays the money to the payee.
Extra payment made to workers for working more than
Penalty Rate
normal working hours is called as penalty rate.
Personal identification number or PIN is a secret code
Personal
of numbers and alphabets given to customers to
Identification
perform transactions through an automatic teller
Number (PIN)
machine or an ATM.
Point of Sale Point of sale a terminal is where cash registers are

(POS) replaced by computerized systems.
Posting date is the date on which outdoor
Posting Date advertisements hit the markets. Usually these dates are
in multiples of five.
A preliminary stage prior to bidding process, where the
Pre-Qualification applicant is verified of whether he has the resources
and the ability to do a given job.
Previous balance is an outstanding amount which
Previous Balance appears on the credit card statement on date when it is
generated.
Principal is basic amount which is invested to yield
Principal returns over a certain period of time at a given rate of
interest.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With Q
Banking Terms
Banking
Terms
References
An auditor's opinion mentioned in his report which holds
Qualified
some reservations regarding the process of audit is called
Opinion
as a qualified opinion.
The difference between the yields of Treasury securities
Quality
and non-Treasury securities, as a result of different ratings
Spread
or quality, is termed as quality spread.
Quick ratio is also called as the acid-test ratio. It measures
Quick Ratio the company’s liabilities and determines its position to pay
off its obligations.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With R
Banking Terms
References
Bonds which cease the payments because the
Range Bonds reference rate of the bond increases or decreases, as
compared to predetermined rate on a given index.
A rate is a measure which forms the basis of any
Rate
financial transaction.
Rate covenant in a municipal bond determines the
Rate Covenant
rates to be charged to buyers.
Refinance means clearing the current loan with the
Refinance proceeds of a new one and using the same property for
collateral.
Revolving line of credit is a rule followed by the lender,
Revolving Line
which binds him to allow a certain credit to the
of Credit
borrower.
Rate risk is the rate of return determined to attract
Rate Risk
capital on a given investment.
Rate sensitive pertains to deposit account or security
investment. If any changes are made to the related
Rate Sensitive
interest rate that causes variations in its demand and
supply.
To know more about
A piece of land developed or undeveloped which
Real Estate real estate read Real
comes for a price.
Estate Appraisal
Real Property Real property refers to anything that is built on land.
A date set by the issuer, on which an individual must
Record Date own the shares, so as to be eligible to receive the
dividend.
In banking terms, reconveyance is transfer of property
Reconveyance to its real owner, once the loan or the mortgage is paid
off.
A commission or fee paid, when an agent or an
Redemption Fee individual sells an investment, such as mutual funds or
annuity.
An asset such as debt instrument which has a credit
Reference Asset
derivative is called as a reference asset.
The basis of floating rate security is called as the
Reference Rate
reference rate.
The act of paying back the amount or returning the
Refunding
funds is called as refunding.
The risk that arises from the fact that dividends or any
Reinvestment
yields may not be eligible for investment to earn the
Risk
rate of interest is called as the reinvestment risk.
The liquidity, risk and return of one instrument in
Relative Value relation to another financial instrument is the relative
value.
Taking back of property by a seller or a lender from the
Repossession
buyer or the borrower due to default of payment.
Repricing Repricing means a change in the rate of interest.
An account which is maintained by depositing
Reserve Account undistributed parts of profit for future needs is called as
a reserve account.
Reserve Cash money or liquidity that member banks need to

Requirements hold with the Federal Reserve System.
The anticipated value that a company calculates, to sell
Residual Value
its asset at the end of its full life.
Return on A measure which determines how a company will

Capital optimize its funds.
The yield or earning at the end of a given period at a
Returns
given rate of interest.
The probability of threat, danger, damage, liability or
Risk
loss is called as risk.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With S
Banking Terms
Banking Glossary:
Banking Definitions
Terms Notes and
References
An arrangement for holding and protecting a customer's assets,
like valuables, documents, etc. Such arrangements are commonly
provided by banks and some financial institutions, usually for a
Safekeeping
fee. The customer is issued a safekeeping receipt, which indicates
that the assets do not belong to the bank and they have to be
returned to the customer, upon his request.
This banking term refers to the funds or money balances, which
can be transferred or withdrawn on the same day of presenting
and collection. In short, a transfer of money, which can be used by
the recipient on the same day of transfer and this provision is
Same Day subject to the net settlement of accounts between the bank,

Funds through which the money is sent and the receiving bank. This
term is also used to refer to the transfer of federal funds from one
bank to another over Fedwire and the transfers through the
Clearing House Interbank Payments System (CHIPS) in New
York.
A sale contract refers to a written agreement between the buyer
Sale Contract and the seller of an asset (usually real estate), with details
regarding the terms and conditions of the sale.
A sale of property, wherein the title is transferred to the buyer, on
Sale
condition that the property will be leased to the seller on a long-
Leaseback
term basis, after the sale.
Otherwise known as 'second trust', a second mortgage is a
mortgage which is taken out on property, which has been pledged
as security to ensure payment (collateral) of an original or first
Second
mortgage. A first mortgage has priority in settlement of claims,
Mortgage
before all other subsequent mortgages. Unlike a first mortgage, a
second mortgage has a shorter repayment term, with higher
interest rates.
Secured Loan A loan which is backed by a pledging of real or personal property To know more
(collateral) by the borrower to the lender. Unlike unsecured loans, about secured
which is backed by a mere promise by the borrower that he will

repay the loan, in case of a secured loan, the lender can initiate loans read
legal action against the borrower to reclaim and sell the collateral Secured Loans
(pledged property).
Property or assets, which are pledged to the lender by the
Security
borrower, as a guarantee to the repayment of a loan.
A person who finds a buyer for the seller of a property and aids
Seller Broker
the latter in negotiation, in lieu of a commission.
A form of financing, wherein the seller of a property finances the
buyer, who finds it difficult to procure a loan or falls short of the
Seller
amount needed to buy the property. In short, it is a part of the
Carryback
purchase amount, which the seller offers to finance. This term is
also known as carryback loan or seller's second.
A market, which has more buyers, as compared to the number of
Seller's
sellers. This condition leads to a rise in the prices, which is
Market
favorable for sellers.
A sort code is a specific number, which is assigned to a particular
branch of a bank for internal purposes. Each branch is assigned
Sort Code
with a sort code, which makes it easier to designate that particular
branch of bank, than writing down the whole address.
Standard A method used to calculate the monthly payment required to
Payment repay a loan, based on the loan balance, term of the loan and the
Calculation current interest rate.
A term used to denote a small house, which is inexpensive, and is
Starter Home
often meant for first time home buyers.
To know more
Unlike debit and credit cards (with magnetic stripes), smart cards about smart
Smart Cards possess a computer chip, which is used for data storage, cards you may
processing and identification. also refer Smart
Cards
A very large loan extended by a group of small banks to a single
Syndicated borrower, especially corporate borrowers. In most cases of

Loan syndicated loans, there will be a lead bank, which provides a part
of the loan and syndicates the balance amount to other banks.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With T
Banking Terms
References
The time (period) when a borrower receives
Takedown Period finances from a lender under a line of credit or loan
commitment.
This term relates to a written promise by a loaner to
Takeout
make a long-term financial arrangement to
Commitments
substitute or replace a short-run loan.
It is the insurance for a certain time period which
To know more about term
provides for no defrayal to the insured individual,
Term Insurance insurance, you may also
excluding losses during the period, and that
refer to Term Life Insurance
becomes null upon its expiration.
A legal notice offered by a particular organization to
Term Note
investors through a dealer.
This phrase relates to the relationship between
Term Structure of interest rates on bonds of different due dates,

Interest Rates generally described in the form of a chart, often
known as a 'yield curve'.
A kind of bank deposit which the investor is not able
Time Deposit to withdraw, before a time fixed when making the
deposit.
This term relates to a draft that is collectible at a

Time Draft
particular future date.
A 'time note' is a financial instrument, like a 'note of
Time Note
hand', which stipulates dates or a date of defrayal.
This is the sum of money that an option's premium
Time Value surpasses its intrinsic worth, and is also called as
'time premium'.
It pertains to a measure of the financial
Times Interest
trustworthiness of an organization, which is equal to
Earned
Eb divided by interest.
It is the insurance for the purpose of protecting a For more information on
Title Insurance loaner or owner against loss, if there is any kind of a title insurance you may
property ownership conflict. refer to Title Insurance
This term is concerned with the commitment which
Title Insurance is brought out by a title insurance firm, and

Commitment comprises the stipulations under which a title
insurance policy will be made out.
It pertains to a legal instrument confirming that a
Title Opinion property title is clear and can be offered for sale in
the market.
This refers to the procedure of analyzing all
applicable records to affirm that the vendor is the
Title Search
legal possessor of the property and that there are
no liens or other claims undischarged.
This term relates to the analysis of the real rate of
Total Return
return that is earned over a certain evaluation time
Analysis
period.
It is a kind of switch wherein an entity pays another
Total Return
entity according to the fixed rate in return for
Swap
defrayals based on the return of a given asset.
It is the credit which a company gives to another
Trade Credit organization for the purpose of buying products or
services.
The finances that are provided for startup
Total Risk-Based
companies and small businesses with prodigious
Capital
growth abilities.
The day on which the actual transaction takes
Trade Date place; one to five days before the settlement period,
according to the kind of transaction.
The incorporated legal name under which an
Trade Name organization carries out all its operations, functions,
and dealings.
This refers to a legal document that a customer
Trade Letter of asks for from his bank for the purpose of assuring

Credit that the defrayal for products would be transferred
to the vendor.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With U
Banking Terms
and References
A line of credit which is sanctioned by the bank but not
Unadvised Line revealed to the borrower till the time of some particular
occasion.
This is a legal word that is utilized as an adjective to
depict stocks, bonds, miscellaneous investments and
Uncertificated
deposit certificates, which are held in immaterial form as
electronic computer records.
It is the condition of an option bearer who doesn't even

Uncovered possess an offsetting position in the underlying
instrument.
Any investment or commercial financial firm or a
Underwriter securities house that works with an issuing entity for the
purpose of selling a new issue.
Undivided Profits This is a banking work for retained earnings.
Unexpected Loss
The element or part of risk or loss which surpasses the
or Unexpected
anticipated amount.
Risk
Universal Life A type of life insurance which blends term insurance

Insurance protection with a savings element.
A guarantee understanding which doesn't consist of any
Unlimited Guaranty
provisos limiting the amount of debt guaranteed.
Unqualified A word used to depict a suggestion letter concomitant

Opinion with scrutinized financial statements.
A word that is utilized to give a description of a
guarantee of a loan to a borrowing entity, when the
Upstream Guaranty
borrowing party is an owning company or shareholder
of the surety.
The state and federal jurisprudences setting up
uttermost permissible rates of interest that can be
Usury Laws
charged on certain types of credit extensions to
particular kinds of borrowers.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With V
Banking Terms
and References
Value At Risk The sum or portion of the value that is at stake of subject

(VAR) to loss from a variation in prevalent interest rates.
Value Based It is a structured approach to evaluate the performance of
Management the company's unit managers or goods and services, in
(VBM) terms of the aggregate gains they render to stockholders.
This type of insurance is very similar to whole life
Variable Life
insurance, wherein the cash worth is invested in equity or
Insurance
debt sureties.
Variable Rate This is just another term used for Adjustable Rate

Mortgage Mortgage (ARM).
This is a stats-related word which measures the
Variance distribution of information, like rates or costs around the
mean.
A series of the rate of paying finances in advance, in
Vector Path succession that is chosen to contemplate an assumed
rate of interest scenario.
This relates to an OTC fiscal derivative which enables a
person to speculate on or hedging jeopardies connected
Variance Swap
with unpredictability of some underlying product, such as
an exchange rate, interest rate or stock index.
The part of the conglomerated benefit obligation under a
Vested
specified benefit plan to which the workers possess a
Accumulated
legal right, even if their employment is terminated before
Benefit Obligation
retirement.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With W
Banking Terms
Banking
Terms
and References
In banking terms, a waiver is relinquishing the rights.
Waiver Sometimes also considered to be the exemption or
settlement of a part of debt.
Warehouse Warehouse line of credit is a facility provided to the borrower
Lines of Credit to get a warehouse mortgage portfolio for future security.
Warehouse A document or a statement which states the quantity and
Receipt quality of the items at the warehouse for safekeeping.
A deed which states that the seller holds the clear title of the
Warranty
goods or real estate to be sold. This gives him or her the
Deed
right to sell the title to a prospective buyer.
When-Issued 'When issued' or WI is a conditional transaction made due to
(WI) its authorized security or debt obligation.
A whole life insurance is a contract between the insurer and
To know more about
the policy owner, that the insurer will pay the sum of money
Whole Life whole life insurance
on the occurrence of the event mentioned in the policy to the
Insurance refer to Whole Life
insured. It’s a concept wherein the insurer mitigates the loss
Insurance
caused to the insured on the basis of certain principles.
Wholesale banking is a term used for banks which offer
Wholesale
services to other corporate entities, large institutions and
Banking
other financial institutions.
Wire transfers is an Electronic medium used while
Wire Transfers
transferring of funds.
A term used to signify that a seller or a drawer will be liable
With Recourse in case of non-performance of asset or non-payment of an
instrument.
Removing of funds from a bank account is called as making
Withdrawals
a withdrawal.
A term which signifies that the buyer is responsible for non-
Without
performance of an asset or non-payment of an instrument,
Recourse
instead of the seller.
You can also read
Working In banking terms, working capital is defined as the difference more on working
Capital between current assets and current liabilities. capital by referring
Working Capital
An arrangement, wherein existing mortgage is refinanced
Wraparound
with more money, with a rate of interest ranging between the
Mortgage
old rates and current market rates.
A writer is an entity or a financial institution which promises
Writer to sell a certain number of shares or stocks at a price before
a certain date.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With Y
Banking Terms
Banking
Terms
References
Yield curve is a graph or a curve that shows the relationship
Yield Curve
between maturity dates and yield.
The returns earned on a stock or bonds, as per the
Yield effective rate of interest on the effective date, is called as a
yield in the banking terms.
Yield curve risk is the huge risk involved in a fixed income

Yield Curve
instrument, due to major fluctuations in the market rates of
Risk
interest.
The yield on a bond calculated on the supposition that the
Yield to Call
issuer will redeem the amount at the first call as stated on
(YTC)
the bond's prospectus is called as yield to call.
Yield-to- The average annual yield that an investor receives because
Maturity he holds it for life or till the maturity date is called as the
(YTM) yield to maturity.
Top
Glossary of Banking Terms and Definitions: Banking Terms that Begin With Z
Banking Terms
Banking
Terms
References
Z score is a measure, used in the banking field, to
Z score determine the difference between a single data point and a
normal data point.
Zero Balance A bank account which does not require any minimum
Account balance is termed as a zero balance account.
A type of arrangement, wherein, the borrower buys a cap
Zero Cost from the bank and sells the floor. In this arrangement, the
Collar cost of the cap is recovered by sale proceeds of the floor or
vice versa.
Zero Coupon Zero coupon yield curve is also called as spot yield curve,
Yield Curve and is used to determine discount factors.
A government controlled area where only certain uses of the
Zoning
land are permitted is called zoning.
Zoning An exception made in the zoning rule by the local
Variance government is zoning variance.
Structure of a housing area such that every house has a
Zero-Lot Line
designated plot. They may or may not have same walls.
Zero-down-payment mortgage is a type of mortgage given
Zero-Down-
to a buyer who does not make any down payments while
Payment
borrowing. The mortgage buyer borrows the amount at the
Mortgage
entire purchase price.
Well that was that in addition to this you may also refer to some other glossaries such as
• Accounting Terms Glossary

• Business Terms Glossary
• Credit Terms Glossary
• Law Terms Glossary
• Finance Terms Glossary
• Stock Terms Glossary
I also wish to thank Stephen, Mukta, Medha, Sonia and Sagorika for contributing to this glossary of
banking terms. I hope that you find the banking terms and the banking glossary helpful.
By Scholasticus K
Ads by Google
New Banking Jobs
100s of Openings in Banks Submit Resume to Apply Monsterindia.com
Distance Study LLM in Law
Advance your Career in Financial Services Sector. Join Online now! www.liverpool.ohecampus.com
Can you trade in Mutual
Fund through your online broker Open a/c with IDBI & Start Trading! banking.idbipaisabuilder.info
Education Loan MBA/MS etc
Education loans for studying in India & going to USA (100% Finance) www.credila.com
SMU-DE Banking & Finance
OnJob project, Exposure to Finnacle S/w, online learning & much more! Smudde.edu.in/AdmissionOpen2010
London Mortgages
Looking for a mortgage in London? Expert advice from London Brokerage www.CapitalFortune.com
Pvt Company Financials
Over 3,000 pvt company financials and PE/VC/M&A data of India www.vccedge.com
What is Sensex?
You don’t need tuitions to learn. The First Step Kit teaches enough. Sharekhan.Sharekhan-Firststep.com
Discuss Email Article Read Comments
Use the feedback form below to submit your comments.
Your Comments:
Your Name:
Purpose of Bank Reconciliation Process

Future of Investment Banking
Mobile Banking Services
Types of Bank Accounts
Basics of Investment Banking
The Danger of Banking Abroad
Gain a Financial Edge by Understanding these Basic Banking Terms
Debunking the 4 Major Myths About Banking Today
HSBC Drops Bid for Korean Bank
US Banking: Merrill Lynch Boss to Get $11m Payoff After Nine Months' Work
Lloyds Tsb Shines Through Banking Gloom
Banking Solutions for All Banking Needs
Investment Banking Simplified: Variants Synergized
Mobile banking in India
Take a Sneak Peek into the World of Private Banking
Compare Bank CD Rates across the US
Bank Foreclosures 2007, trend, statistics, opportunities
Bank penalties a leading cause for complaint
Banking on cooperation
Before Buying a Banking Software
Accounting Terms - Glossary of Accounting Terms and Definitions
Law Terms - Glossary of Legal Terms and Meanings
Ad Hoc Definition
Stock Terms - Glossary of Stock Market Terms and Definitions
Business Terms - Glossary of Business Terms and Definitions
Psychology Terms - Glossary of Psychology Terms and Definitions
Financial Terms - Glossary of Financial Terms and Definitions
Glossary of Literary Terms
Science - Glossary of Science Terms and Scientific Definitions
Biology Terms - Glossary of Biology Terms and Definitions
Botany Terms - Glossary of Botanical Terms

Glossary of Credit Terms and Definitions
Math Terms - Glossary of Math Terms and Definitions
Geography Terms - Glossary of Geography Terms and Definitions
Chemistry Terms - Glossary of Chemistry Terms and Definitions
Geology Terms - Glossary of Geology Terms and Definitions
Golf Terminology - Glossary of Golf Terms
Basic Internet Terms and Terminology
Medical Glossary - Definitions of Medical Terms
Business & Finance » Business Articles
Search
Custom Search
Author Login | Become An Author | Advertising Info | RSS Feeds | Articles | About Buzzle | Privacy Policy | Message Boards
©2000-2009, 2010 Buzzle.com® · All rights reserved.

Articles Banking Terms Glossary of Bankin

Uploaded by

Copyright:

Available Formats

Articles Banking Terms Glossary of Bankin

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Articles Banking Terms Glossary of Bankin

Uploaded by

Copyright:

Available Formats

Banking Terms - Glossary of Banking Terms and Definitions Page 1 of 27

Banking Terms Index

and Real Estate

transaction, code of transaction, mode of transaction,

Accrual Basis Accrual is the process of accumulation of interest or

convention, is the method by which, investors,

Administered rates are the rates of interest which can

its value resulting from changes in the prevailing

Annuities are contracts that guarantee income or To know more about

Asset and Liability Asset and liability management is the coordinated

practice, asset and liability management aims at

Automated Teller Automated teller machines are basically used to

integration of computers and electronics into the field of

Banking Banking Terms Glossary:

A borrower is the party that uses any kind of credit

The certificate of deposit is a certificate of savings

A final maturity is the date of maturity when a last, single loan

A grant is any type of financial aid that is given by the

Installment credit is a debt or loan that is to be returned to the

Land Otherwise known as an article of agreement, a land contract denotes

Maturity Maturity date is the date on which the investment or security

The accessing of bank information, accounts and

which is backed by a mere promise by the borrower that he will

This term relates to a draft that is collectible at a

It is the condition of an option bearer who doesn't even

Yield curve risk is the huge risk involved in a fixed income

• Accounting Terms Glossary

Discuss Email Article Read Comments

Use the feedback form below to submit your comments.

Purpose of Bank Reconciliation Process

Botany Terms - Glossary of Botanical Terms

Business & Finance » Business Articles

You might also like