Banking Terminologies

 

  BANKING TERMINOLOGIES

 1. Acceptance :

           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 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.

 

2. Accepting House:

           An accepting house is a banking or finance organization that specializes in the service of acceptance and guarantee of bills of exchange. This organization specializes in two prominent functions, that is facilitating the different negotiable instruments and merchant banking.

 

3. Account Balance:

            The total amount of money in a particular bank account, along with the debit and credit amounts, the net amount is also termed as the account balance.

 

4. Accrued Interest:

              Accrued Interest is the interest, accumulated on an investment but is not yet paid often 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.

 

5. Administered Rates:

               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 also the payee. The laws and provisions that monitor the concept of administered rates differ in each jurisdiction.

 

6. American Depository Receipt (ADR):                              

American depository receipts are also known as ADRs are depository receipts which are equal to a specific number of shares of company that have been issued in a foreign country. American depository receipts are traded only in the United States of America. Similar mechanism exists for other countries also.

 

7. Annuities:

               Annuities are contracts that guarantee income or return, in exchange of a huge sum of money that is deposited, either at the same time or is paid with the help of periodic payments. Some of the common types of annuities include the deferred, fixed, immediate or variable variants.

 

8. Automated Clearing House:

               An automated clearing house is nation-wide electronic clearing houses that monitors and administers the process of cheque and fund clearance between banks. It is an electric system and thus minimizes the human work in the process of clearance. It distributes credit and debit balances

automatically.

 

9. Automated Teller Machines:                

               Automated teller machines are basically used to conduct transactions with the bank, electronically. The automated teller machine is an excellent example of integration of computers and electronics into the field of banking.

 

10. Bridge Financing:

            Also, known 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 begins at the end of the time period of the first loan 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.

 

11. Cap:

           A cap is a limit that regulates the increase or decrease in the rate of interest and instalments of an adjustable-rate mortgage.

 

12. Cashier's Cheque:

           The cashier's cheque is drawn by a bank on its own name to pay payments other organizations, banks, corporations or even individuals.

 

13. Cash Reserve:

           The cash reserve is the total amount of cash that is present in the bank account and can also be withdrawn immediately.

 

14. Certificate of Deposit:

            The certificate of deposit is a certificate of savings deposit that promises the depositor the sum-back along with appropriate interest.

 

15. Cheque:

           A cheque is a negotiable instrument that instructs the bank to pay a particular amount of money from the writer's bank, to the receiver of the cheque.

 

16. Clearing:

          Clearing of a cheque is basically a function that is executed at the clearing house, when all amount of the cheque is subtracted from the payer's account and then added to the payee's account.

 

17. Clearing House:

           The clearing house is a place where the representatives of the different banks meet for confirming and clearing all the cheques and balances with each other. The clearing house, in most countries across the world, is managed by the central bank.

 

18. Mortgage:

          A mortgage is a legal agreement between the lender and the borrower where real estate property is used as collateral for the loan, in order to secure the payment of the debt. According to the mortgage agreement, the lender of the loan is authorized to confiscate the property the moment the borrower stops paying the instalments.

 

19. Maturity:

            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 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.

 

20. Time deposit:

             A kind of bank deposit which the investor is not able to withdraw, before a time fixed when making the deposit.

 

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