BANKING TERMINOLOGY PDF
Banking terms and concepts are many and can sometimes be difficult to figure out, even for the industry professionals. However, since banking. Complete List of Banking Terms with Definitions For Bank Exams Powered by resourceone.info your A to Z competitive exam guide ww w. Gr 8A mb iti on. Glossary of Banking Terms and Definitions: Banking Terms that Begin With A. Banking Terms. Banking Definitions. AAA. AAA is a term or a grade that is used to .
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Certificate of Deposit (CD) – a type of investment that requires you to invest your money for a certain length of time and guarantees the same rate of return. banking resourceone.info - Free download as PDF File .pdf), Text File .txt) or read online for free. Read Important Banking Terminologies For Bank Exams PDF Download. Most of the questions in exam comes from below bank terminology.
Home Equity Loan: A home equity loan allows you to tap into your home's built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe. Homeowners often use a home-equity loan for home improvements, to pay for a new car, or to finance their child's college education.
The interest paid is usually tax-deductible.
Because the loan is secured by your home's equity, if you default, the bank may foreclose on your house and take ownership of it. This type of loan is sometimes referred to as a second mortgage or borrowing against your home. Individual Retirement Account IRA : A retirement savings program for individuals to which yearly tax-deductible contributions up to a specified limit can be made.
The amount contributed is not taxed until withdrawn. Insufficient Funds: When a depositor's checking account balance is inadequate to pay a check presented for payment. Interest: The term interest is used to describe the cost of using money, a right, share, or title in property. Interest Rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time.
Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Late Charge: The fee charged for delinquent payment on an installment loan, usually expressed as a percentage of the loan balance or payment. Line of Credit: A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit.
The LTV will affect programs available to the borrower; generally, the lower the LTV, the more favorable the program terms offered by lenders. Loan Fee: A fee charged by a lender to make a loan in addition to the interest charged to the borrower. Loan Proceeds: The net amount of funds that a lending institution disburses under the terms of a loan, and which the borrower then owes. Local Check: A check payable by, at, or through a bank in the same check processing region as the location of the branch of the depository bank.
The depository bank is the bank into which the check was deposited. As of February 27, , the Federal Reserve consolidated its checking processing centers into one processing center. Therefore, all checks are now considered local. Minimum Balance: The amount of money required to be on deposit in an account to qualify the depositor for special services or to waive a service charge.
Money Market Deposit Account: A savings account that offers a higher rate of interest in exchange for larger than normal deposits. Insured by the FDIC, these accounts have limits on the number of transactions allowed and may require higher balances to receive the higher rate of interest.
Mortgage: A debt instrument used in a real estate transaction where the property is the collateral for the loan. A mortgage gives the lender a right to take possession of the property if the borrower fails to pay off the loan.
Mortgage Loan: A loan made by a lender to a borrower for the financing of real property. Mortgagee: The lender in a mortgage loan relationship. Mortgagor: The borrower in a mortgage loan relationship. Property is used as collateral to make payment. Official Check: A check drawn on a bank and signed by an authorized bank official. Also known as a cashier's check. Offset, Right of: Banks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default.
It is also known as right of setoff Online Banking: A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's web site on the Internet. This is also known as Internet or electronic banking. Outstanding Check: A check written by a depositor that has not yet been presented for payment to or paid by the depositor's bank.
Overdraft: When the amount of money withdrawn from a bank account is greater than the amount actually available in the account, the excess is known as an overdraft, and the account is said to be overdrawn. Overdraw: To write a check for an amount that exceeds the amount on deposit in the account.
Over limit: An open-end credit account in which the assigned dollar limit has been exceeded.
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Payment Due Date: The date on which a loan or installment payment is due. It is set by a financial institution. Any payment received after this date is considered late; fees and penalties can be assessed.
Payoff: The complete repayment of a loan, including principal, interest, and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments.
Periodic Rate: The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day. Periodic Statement: The billing summary produced and mailed at specified intervals, usually monthly. Personal Identification Number PIN : Generally a four-character number or word, the PIN is the secret code given to credit or debit cardholders enabling them to access their accounts.
The code is either randomly assigned by the bank or selected by the customer. It is intended to prevent unauthorized use of the card while accessing a financial service terminal. Power of Attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies.
Alternatively or in addition, the process may be used to give the creditor a security interest in property owned by a guarantor or by another third party.
Banking Terms & Banking Terminology
Often, attachment alone is not sufficient to establish the priority of the creditor's interest relative to the interests of other creditors. See financing statements and perfection. Attorney's certificate of title See title opinion. Attrition analysis Evaluation of the reduction in the amount of an asset or liability held. For example, an analysis of the reduction in savings account balances caused by withdrawals over time. Audited statements The most reliable type of financial statements.
The audit is based on information submitted by the client, and the CPA does not verify all of the information.
Limits on the scope of the audit and on the CPA's responsibility are described in the opinion letter that accompanies the audited statements. However, the value of an audited statement is that the independent CPA is responsible for testing and verifying any numbers that seem questionable or unusual as well as the most material financial information.
For example, if a firm has a material amount of accounts receivable, the auditor will typically confirm at least a sample of those accounts. If a firm has a material amount of inventory, the auditor will typically perform a physical verification of that inventory. Authenticated security agreement A electronic security agreement between the debtor and the bank that is accepted by the borrower either by downloading the agreement into a personal database or by printing a copy.
As an alternative to a security agreement physically signed by the debtor, the amendments to the UCC provide for an authenticated security agreement. Authority A government or public agency created to perform a single function or a restricted group of related activities. Usually, such units are financed from service charges, fees, and tolls, but in some instances they also have taxing powers. An authority may be completely independent of or partially dependent upon other governments for its financing or the exercise of certain powers.
Automated clearinghouse ACH The ACH network is a nationwide electronic funds transfer system for participating depository financial institutions. The ACH network serves 20, financial institutions, 3 million businesses, and million individuals.
The ACH Network is commonly used for direct deposit of payroll and government benefits such as Social Security, direct payment of consumer bills, business-to-business payments, federal tax payments, and, increasingly, e-commerce payments. In there were 6. Automatic stay An injunction that automatically becomes effective upon the filing of any bankruptcy proceeding.
The stay precludes creditors from taking action against the debtor or the debtor's property. In Chapter 12 or 13 bankruptcy proceedings, the automatic stay also applies to co-obligors and guarantors. Availability The condition in which deposited funds are available for use by the depositor.
The time lag between the date of a deposit and the date it is credited to the collected balance. Availability schedule A schedule that determines when each bank in the check-clearing process will receive credit and when the depositor of checks will be able to withdraw or invest the funds.
The schedule sets a standard time period since each check cannot be individually traced through the check-clearing process. Every major bank publishes its availability schedule based on its location and on the location of the bank on which the check is drawn.
Available balance The balance in an account that can be invested or withdrawn. Available balance refers to the bank ledger balances less checks in the process of collection. Also called collected balances, good funds, or usable funds. If interest rates fall, the loan payment may as well. Adverse Action: Under the Equal Credit Opportunity Act, a creditor's refusal to grant credit on the terms requested, termination of an existing account, or an unfavorable change in an existing account.
See also Credit Disputes. Adverse Action Notice: The notice required by the Equal Credit Opportunity Act advising a credit applicant or existing debtor of the denial of their request for credit or advising of a change in terms considered unfavorable to the account holder.
Affidavit: A sworn statement in writing before a proper official, such as a notary public. See also Credit Disputes and Forgery and Fraud. Alteration: Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument. See also Alteration. Amortization: The process of reducing debt through regular installment payments of principal and interest that will result in the payoff of a loan at its maturity.
Annual Percentage Yield APY : A percentage rate reflecting the total amount of interest paid on a deposit account based on the interest rate and the frequency of compounding for a day year. Application: Under the Equal Credit Opportunity Act ECOA , an oral or written request for an extension of credit that is made in accordance with the procedures established by a creditor for the type of credit requested.
See also Loan Application. Appraisal: The act of evaluating and setting the value of a specific piece of personal or real property. See also Appraisal and Appraisal Cost. Authorization: The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction. See also Authorization and Pre-authorization. Automated Clearing House ACH : A computerized facility used by member depository institutions to electronically combine, sort, and distribute inter-bank credits and debits.
ACHs process electronic transfers of government securities and provided customer services, such as direct deposit of customers' salaries and government benefit payments i. Automated Teller Machine ATM : A machine, activated by a magnetically encoded card or other medium, that can process a variety of banking transactions. These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts.
The amount automatically protected will depend upon the balance of the account on the day of review. See also Garnishments. Automatic Bill Payment: A checkless system for paying recurring bills with one authorization statement to a financial institution. Availability Date: Bank's policy as to when funds deposited into an account will be available for withdrawal. See also Funds Availability Date.
Availability Policy: Bank's policy as to when funds deposited into an account will be available for withdrawal.
See also Funds Availability. Available Balance: The balance of an account less any hold, uncollected funds, and restrictions against the account.
See also Available Balance and Positive Balance. Available Credit: The difference between the credit limit assigned to a cardholder account and the present balance of the account. See also Available Credit. B Balance Transfer: The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower interest rate on the outstanding balance. Transfers are sometimes subjected to a Balance Transfer Fee.
See also Balance Transfers. Bank Custodian: A bank custodian is responsible for maintaining the safety of clients' assets held at one of the custodian's premises, a sub-custodian facility or an outside depository. See also Asset Management - Bank Custodians.
Bank Examination: Examination of a bank's assets, income, and expenses-as well as operations by representatives of Federal and State bank supervisory authority-to ensure that the bank is solvent and is operating in conformity with banking laws and sound banking principles.
Dictionary of Banking Terms and Phrases
Bank Statement: Periodically the bank provides a statement of a customer's deposit account. It shows all deposits made, all checks paid, and other debits posted during the period usually one month , as well as the current balance. Banking Day: A business day during which an office of a bank is open to the public for substantially all of its banking functions. See also Banking Day. Bankrupt: A bankrupt person, firm, or corporation has insufficient assets to cover their debts. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts.
In some cases, the debtor must surrender control of all assets to a court-appointed trustee. Bankruptcy: The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws.
There are two types of bankruptcy: Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having the debtor declared bankrupt. Voluntary bankruptcy-the debtor files a petition claiming inability to meet financial obligations and willingness to be declared bankrupt. Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract.
See also Beneficiary. Billing Cycle: The time interval between the dates on which regular periodic statements are issued. Billing Date: The month, date, and year when a periodic or monthly statement is generated. Calculations have been performed for appropriate finance charges, minimum payment due, and new balance. Billing Error: A charge that appears on a periodic statement associated with an extension of credit e. A billing error can also be caused by a creditor's failure to credit a payment or other credit to an account as well as accounting and clerical errors.
See also Credit Card Disputes. Bond, U.
Savings: Savings bonds are issued in face value denominations by the U. They are typically long-term, low-risk investment tools. See also Savings Bonds. Business Day: Any day on which offices of a bank are open to the public for carrying on substantially all of the bank's business. See also Credit Card Business Day. C Canceled Check : A check that a bank has paid, charged to the account holder's account, and then endorsed. Once canceled, a check is no longer negotiable.
Cashier's Check: A check drawn on the funds of the bank, not against the funds in a depositor's account.When we invest money in primary market, it directly go to company.
They can live in their homes for their lifetime and after that banks can recover the amount by selling the property or if the heirs of the property want they can claim it by repaying the dues to the bank.
Finance & Banking Abbreviations
Banks do not open accounts of insolvent persons as they cannot enter into contract as per law. Wilson Dave. Loan payments and balances into a single account with one creditor. See also Credit Life Insurance. However, in practice, the term is often used to refer to segments of that broader definition such as only interest rate risk management or only interest rate and liquidity risk management.
Electronic Check Conversion: Electronic check conversion is a process in which your check is used as a source of information-for the check number, your account number, and the number that identifies your financial institution.
A mortgage gives the lender a right to take possession of the property if the borrower fails to pay off the loan.