Glossary of banking terms in India | Banking Dictionary | Important Banking terms to be known every Bank aspirant - PART 4
No.
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TERM
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DEFINITION
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151
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Market Value
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The value or price of the property prevailing
in the market.
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152
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Marketable Title
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The title of a property, which is clear,
and the owner
of the property have proper authority and rights
to transfer the same.
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153
|
Maturity Date
|
Maturity date in respect of a fixed deposit
account is the date on which the proceeds will become liable for payment by the
Bank.
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154
|
MICR Code
|
A unique 9-digit code assigned to each
Bank branch by Reserve Bank of India to facilitate sorting in clearing of instruments
using the Magnetic Ink Character Recognition Technology.
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155
|
Minimum Amount Due/Minimum Payment
|
The smallest amounts you can pay by the
due date and still meet the terms of your card agreement.
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156
|
Minimum daily balance
|
The lowest end-of-day balance in an account
during a statement cycle. It is often required to be kept in an account each day
to earn interest, avoid a service charge or qualify for special services. (also
see average daily balance)
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157
|
Money Laundering
|
Money laundering means acquiring, owning,
possessing or transferring any proceeds (or money) of crime or knowingly entering
into any transaction related to proceeds of the crime either directly or
indirectly or concealing or aiding in the concealment of the proceeds or gains
of cirme, within or outside India. It is a process for conversion of money obtained
illegally to appear to have originated from legitimate sources.
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158
|
Money Order
|
A financial instrument, issued by a bank
or other institutions like post office, allowing the individual named on the order
to receive a specified amount of cash on demand. Often used by people who do not
have saving accounts.
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159
|
Monopoly
|
Monopoly is a form of market structure
where there is solely one company that provides a particular product or service,
dominating that market and generally exerting powerful control over it.
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160
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Monthly
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A monthly report prepared by a lender about the transaction
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Statement
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carried on a particular loan account,
outstanding balances, current balances, fees and other charges, minimum payments
(if applicable) and other details. This written document is mailed to the borrower.
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161
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Mortgage
|
Mortgage is a written constructive pledge
of property that is used as security for the repayment of a loan.
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162
|
Multicity Cheque
|
Cheque issued by a customer under a pre
- approved arrangement with the Bank whereby the Bank agrees to pay them at designated
centres and branches in the country.
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163
|
National Clearing Cheque
|
Those cheque that are drawn on other
banks and payable at major cities of the country (as Per RBI list of centres participating
in national clearing) are called as National Clearing Cheque.
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164
|
National Electronic Funds Transfer (NEFT)
|
An Electronic Payment System in which
payment instructions between banks are
processed and settled on deferred net settlement (DNS) basis, which settles transactions
in batches at fixed times during the day.
RBI acts as the service provider and
transfers the credit to the other bank's account. Customer can send funds from
any bank branch to other bank-branches, which have IFS Code, and joined in NEFT
network. NEFT is enabled only in specific bank branches across India. A list of
these branches is available in the RBI website.
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165
|
Net Worth
|
Net worth is equal to all that you own
less all that you owe. It is the total of all assets minus the total liabilities
of an individual or company.
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166
|
No Dues/ No Objection Certificate
|
A certificate issued on closure of the Loan/Overdraft account, where the Bank affirms
that the dues have been paid towards loan/overdraft facility and also a confirmation
that the Bank has no objection in releasing the charge on the security or other
banks considering sanction of loan to the person concerned.
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167
|
Nomination facility
|
Section 45zA of the Banking Regulations
Act, 1949 provides that a depositor or depositors of a banking company may nominate
one person to receive the deposit in the event of the death of the depositor(s).
Nomination facility is also provided for articles in safe custody with banks and
in safe deposit lockers.
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168
|
Non-bank ATM (white lablled ATM)
|
An ATM or cash machine that does not
prominently display a bank's name or logo. Fees generally apply to cash withdrawals
at non-bank ATMs. Non-bank ATMs generally do not accept deposits. In India Non-banks
ATMs are not permitted
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169
|
Non-Home Branch
|
The other networked branches of a Bank
under the Core Banking system that facilitate conducting of transactions to a
customer having his account with a 'Home' branch.
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170
|
Non-performing Assets (NPA)
|
Any loan account that has been classified
by a bank or financial institution as sub-standard, doubtful or loss assets in
terms of asset classification norms of RBI.
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171
|
Non-taxable Income
|
Money you earn that is not taxed by the
Government. This money can come from several sources including disability pay
or legal settlements due to personal injury.
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172
|
Obligation of the Borrower
|
The things, which a borrower has to take,
care of after taking the loan. These include proper repayment, providing the banks
with post-dated cheque and following the
terms written in the loan agreement carefully.
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173
|
Online Banking
|
A service that allows the account holder
to access their account information and conduct a set of pre defined banking transactions,
such as bill payment, fund transfer using
the Internet facility. However, a
customer needs to have Customer ID and a unique Net Banking Password in order
to undertake this facility.
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174
|
Outstanding Balance
|
The total amount that you owe on a credit
card or other loan.
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175
|
Outstanding Cheque
|
Outstanding cheque is issued by the company
but not yet cleared by the bank. In preparing the bank reconciliation, it is deducted
from the bank balance. The exception is an uncleared Certified cheque, which is
not considered outstanding since both parties, the company and the bank, know
about it and have subtracted it.
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176
|
Outstation Cheque
|
Cheque deposited by the customer of a
branch for credit to his/her account and not payable at Local clearing at the
centre where the branch is situated.
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177
|
Outward Remittances
|
Remittance of funds from the account
maintained by a customer or separately on his instructions to another account
with the same bank or another banks in the manner indicated by the customer (Demand
drafts, electronic funds transfer, telegraphic transfers etc.). Banks may levy service charges
for affecting the remittances.
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178
|
Over the Credit Limit
(Credit Card)
|
When the amount you owe is more than
the limit on your credit line. Any combination of purchases, cash advances, fees
or finance charges may cause you to exceed your credit limit.
For example, you will be over the credit
limit if you spend Rs. 20,000 when you have Rs. 10,000 of your credit line left.
If you go
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over your credit limit, you will be charged
an extra fee each month until the amount of money you owe is less than or equal
to your credit line.
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179
|
Overdraft
|
An overdraft occurs when you do not have
enough available funds in your account to cover a cheque or other withdrawal,
but the bank pays the items and overdraws your account.
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180
|
Overdraft Protection
|
A service that allows a account to be
linked to another account that helps provide protection against returned items
or overdrafts. When your checking account does not have sufficient available funds
to cover a cheque, funds are automatically transferred from the available balance
in the linked account to cover the cheque. Choices can include using a savings
account, credit card or a line of credit account as the linked account to provide
protection.
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181
|
Overlimit Fees
|
Whenever a credit card holder crosses
his credit limits an overlimit fees is charged on his account.
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182
|
Part- prepayment
|
Making Partial prepayment towards the Principal
of the loan
account.
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183
|
Part- prepayment fee
|
The quantum of charges levied at the
time of Part pre-payment.
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184
|
Passbook
|
Book issued by a bank or financial institutions
to record deposits, withdrawals, and interest earned in a savings account.
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185
|
Past Due
|
The status of an account when the minimum
payment has not been received by the due date.
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186
|
Payee (Drawee)
|
The person who receives a payment. This
often applies to cheque. If you receive a cheque you are the payee and the person or company
who wrote the cheque is the payer or drawer.
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187
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Payer (Drawer)
|
The person who makes a payment. This
often applies to cheque. If you write a cheque you are the payer and the recipient
of the cheque is the payee.
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188
|
Penal interest
|
Additional interest, over and above the
contracted rate, that is levied by lenders on amounts that remain unpaid beyond
the due date and / or non-adherence to the terms of sanction.
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189
|
Penalty on Premature Withdrawal of Fixed Deposit
|
It is a penalty on the premature breakage
of a Fixed Deposit. If a customer keeps a deposit with a bank for a fixed tenure
and in the event of the depositor withdrawing the deposit before the due maturity
date, the banks can charge a Penalty sum on premature withdrawal.
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190
|
Periodic Rate
|
The interest rate described in
relation to a specific amount of time.
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For example, the monthly periodic rate
is the cost of credit per month; the daily periodic rate is the cost of credit
per day.
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191
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Personal Identification Number (PIN)
|
Personal identification number (PIN)
is a secret number given to an account holder to be used when they put their credit
card or cash card into an automatic teller machine (ATM). If the number they use
is correct they will be allowed to access their account.
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192
|
Plinth area
|
The external area of the whole building
including the balconies but excluding the common area in apartment blocks, commercial
buildings and spaces.
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193
|
Point Of Sale (POS)
|
Point of Sale refers to the location
at which a payment of a card transaction occurs, usually by way of a device such
as a credit card terminal or cash register.
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194
|
Post Dated Cheque (PDCs) Mode of Repayment
|
A payment mode wherein
the customer provides Post Dated
Cheque (PDCs) for the repayment of the loan dues.
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195
|
Postal Charges
|
Charges for dispatch of instruments for
collection/remittances on behalf of a customer. Normally postal charges are recovered
from instrument on actual basis.
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196
|
Posting Date
|
The date that a purchase, cash advance,
fee, service charge or payment is recorded on your charge or credit account.
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197
|
Power of Attorney
|
It is an instrument of law empowering
a specified person or persons to act for and in the name of the person executing
it. The person for whom the act is done or who is so represented is called principal.
The person who is so authorized to do or represent is called agent. It may be
either notarized or registered depending on the transaction.
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198
|
Pre-Approved Credit
|
Credit card or a line of credit that
is approved based upon available data without further information supplied by
the potential Card member.
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199
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Pre-Closure
|
Closure of the
loan account prior to the
tenure fixed for the
account.
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200
|
Prepayment
|
When a portion or the entire amount of
the principal of a loan is paid before it is due.
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201
|
Previous Balance
|
The total balance due at the end of the
last billing cycle.
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202
|
Prime Lending Rate
|
The minimum short-term interest rate
charged by commercial banks to their most creditworthy clients. It is a reference
interest rate used by banks for its lending purposes.
Note: The Benchmark Prime Lending Rate (BPLR) used by banks for
loan pricing till June 30, 2010 was different from this as BPLR was a reference
rate based on average cost).
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203
|
Prime Rate
|
The Prime Rate is the rate on which each
bank fixes its own prime lending rate for advances.
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204
|
Principal Outstanding
|
The balance principal amount in the
loan (i.e. Loan amount
disbursed less Principal repaid till date) taken from the Bank.
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205
|
Processing Date (card transaction)
|
It is the date on which the transaction
is processed by the acquiring bank.
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206
|
Processing Fee
|
The charges colleted by the Bank to process
the customer’s loan application.
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207
|
Promissory Note
|
A promissory note is a binding legal
document that a borrower signs to obtain a loan. It lists your rights and responsibilities
under the loan agreement, including how and when the loan must be repaid. Rights
and responsibilities for credit card accounts are listed in the Card member Agreement.
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208
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Property Tax
|
The tax levied by local corporations,
municipal bodies on a property. This tax has to be paid by the legal owner of
the property.
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209
|
Provisional
|
A certificate issued informing the
‘projected’ interest payment and
|
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Interest and
|
principal repayment for the
loan account for the
upcoming
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Principal
|
financial year based
on the current
financial year. This helps
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Certificate
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borrower in tax planning.
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210
|
Real Time Gross Settlement (RTGS)
|
RTGS is a system through which electronic
instructions can be given by banks to transfer funds from their account to the
account of another bank. The RTGS system is maintained and operated by the RBI
and provides a means of efficient and faster funds transfer among banks facilitating
their financial operations. As the name suggests, funds transfer between
banks takes place on a ‘real time’ basis. Therefore, money can reach the beneficiary
instantaneously and the beneficiary’s bank has the responsibility to credit the
beneficiary’s account within two hours.
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211
|
Recurring Billing
|
In recurring billing the credit card
holder authorizes a merchant or vendor to charge his credit card on a regular
basis.
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212
|
Reference
|
A person who can vouch for your reliability,
employment history
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or other factor needed to determine
your creditworthiness/ employability.
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213
|
Refinancing
|
Repayment of existing loan by a fresh
loan, usually on better terms and conditions. In case of loans secured through
mortgage of property etc., the same asset is taken over as security. Banks also
refinance their loans to certain category of borrowers through specified refining
agencies which provide refinance with matching repayment schedule.
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214
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Repayment
|
The process of returning of the borrowed
loan amount. The repayment has to be made for the entire tenure of the loan amount.
Based on fixed or floating interest rates on the loan amount, the banks or financial
institution decides on an EMI which has to be paid on or before a date mentioned
in the loan agreement every month.
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215
|
Repayment Holiday / Moratorium period
|
A specified period of time during which
recovery of loan remains suspended under a mutual agreement between the lender
and the borrower. Interest continues to be charged on the loan during this period.
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216
|
Repayment Mode
|
It refers to the payment instruction
given by the customer for the repayment of the loan dues. Cash, cheque, ECS and
other electronic channels are the primary payment modes.
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217
|
Repayment Schedule (amortization schedule)
|
The repayment schedule provides the details
of the interest and principal components of the EMIs payable by the customer on
a monthly basis.
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218
|
Repo Rate
|
Repo Rate is the interest rate for secured
overnight or short term financing involving the sale and repurchase of securities.
It is basically the rate at which RBI lends to commercials banks for meeting the
short term deficits. RBI varies Repo rate from time to time to achieve its monetary
policy objectives.
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219
|
Rests
|
Rests refers to the length of time between
the dates on which the interest (on loans and deposits) is compounded. Eg: monthely,
quarterly, half-yearly, yearly.
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220
|
Returned Cheque
|
When you do not have enough available
funds in your account (including any overdraft protection transfer from another
account) to cover a cheque, the bank may decide not to pay the cheque and to return
it to the payee. A returned item fee may be charged to your account.
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221
|
Revalidation
|
Duly authenticated extension of the validity period for
negotiation/payment of cheque/draft or a negotiable instrument.
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222
|
Reverse Mortgage
|
A financial product, which provides senior
citizens with funds against their home equity. Senior citizens can get a regular
amount monthly, quarterly or as a lump sum. 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.
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223
|
Revolving Credit
|
A credit agreement that allows consumers
to pay all or part of the outstanding balance on a loan or credit card. As credit
is paid off, it becomes available again to use for another purchase or cash advance.
|
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224
|
Reward Points (Cards)
|
A loyalty scheme that supplies benefits
based upon the card's usage. Benefits are usually in the form of points that can
be redeemed for gift vouchers, gift items or services, such as airline tickets,
discounts on purchases or cash refunds. The credits accumulated toward these benefits
are often a percentage of each purchase.
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225
|
Safe Custody
|
Documents and articles placed with the
Bank for safe keeping under mutually agreed terms and conditions and payment of
fee/rent on a regular basis.
|
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226
|
Sale deed
|
It is a legal document, which transfers
the ownership of the property or objects for a mentioned price. Every sale deed
has to be registered with appropriate authority.
|
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227
|
Savings Account
|
An account maintained by a customer with
a bank for the purpose of accumulating funds over a period of time. Only the account
owner or a duly authorized agent may withdraw funds deposited in a savings account.
It attracts a modest rate of interest, which is fixed by RBI and is considerably
lower than the rates applicable on the Fixed Deposits. There is generally a limit
on the number of transactions that can be done without attracting a charge.
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229
|
Secured Card
|
A credit card that is guaranteed by a
cash deposit held in a special savings account or certificate of deposit. The
deposit must remain in the account until the credit line is closed or the issuer
decides security is no longer necessary. The credit line on the card is usually
equal to the amount of the deposit. If the Card member defaults on the card, the
issuer will apply the deposit toward the outstanding balance.
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229
|
Secured Debt
|
Debt for which
repayment is guaranteed
through collateral property of equal or greater value
than the amount of the loan. If
|
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you do not repay the loan, the issuer
may take possession of the collateral. Collateral may be an asset such as a car
or a home or, in the case of a secured credit card, a cash deposit held by the
issuer. For example, a mortgage is a secured debt in which the home is collateral.
If the person fails to repay the loan, the bank may take the home as payment.
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230
|
Security Documents
|
This refers to the list of original documents
to be collected from the customer towards the security of the loan amount sanctioned/disbursed
|
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231
|
Service Charges
|
Charges levied by a Bank for providing
various banking services. (The Tariff Schedule for commonly availed banking services
is displayed on the Branch Notice Board and on the Bank's Website.)
|
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232
|
Simple Interest
|
Simple interest is calculated solely
as a percentage of the principal sum from the date of the availment to the date
of repayment (also see compount interest).
|
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233
|
Stamp Duty
|
It is the duty to be paid to appropriate
authority on the different documents used in the loan process. Stamp duty varies
from state to state and the stamp duty should be adequate enough so as to make
the documents valid and enforceable.
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234
|
Standing Instruction
|
Signed instructions given by a customer
to his/her Bank to make regular transfer of funds for specified purposes and valid
for the period indicated by the customer until the instruction is withdrawn.
|
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235
|
Statutory Liquidity Ratio (SLR)
|
SLR is the portion that banks need to
invest in the form of cash, gold or government approved securities. The quantum
is specified as some percentage of the total demand and time liabilities of the
bank and is set by the Reserve Bank of India (also see Cash Reserve Ratio).
|
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236
|
Stop Payment
|
When you ask a bank not to pay a cheque
or payment you have written or authorized. Stop payments are generally placed
on lost or stolen cheques or on cheques related to disputed purchases. Banks usually
levy charges for registering stop payment instructions.
|
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237
|
Stored-Value Card
|
Stored-value card is a special type of
credit card, which has a stored money value. Stored value card can be reloadable,
in which case more money can be added to the stored value card and can be reused.
|
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238
|
Surcharge
|
Surcharge is an additional charge imposed
for a specific service, product or purpose. It is a fee charged on a card transaction
by the
|
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acceptor to cover the additional cost
of taking a card rather than cash or cheque.
|
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239
|
Taxable Income
|
Any money you earn or receive - such as salary, bonuses or interest
from investments - that can be taxed by the government. Taxable income is the
Total Income net of permissible deductions.
|
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240
|
Tenure of the Loan
|
The repayment period assigned for the
account.
Total Tenure - The period for which the
loan has been granted Balance Tenure - The balance period for which the EMIs need
to be paid. Personal loans, car loans, education loans have shorter tenures as
compared to home loans. Some banks and financial institutions extend the loan
tenure for an extra fee or a slight increase in interest rates.
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241
|
Tenure of Fixed Deposit
|
It is the period for which a customer
deposits a sum of amount with a Bank. This tenure is generally fixed and the customer
cannot withdraw his deposit before the tenure expires. The amount can be withdrawn
before the fixed tenure by paying pre-payment penalty.
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242
|
Time deposit
|
An account for a fixed term with the
understanding that the funds will remain on deposit until the end of the term.
Penalties for early withdrawals may apply.
|
||
243
|
Transaction Account Linked Home Loans
|
A special home loan that allows the customer
to link a transaction account to his/her loan account. The interest is then calculated
periodically on the loan outstanding less
balance maintained in the transaction account. These loans help the customer
reduce their interest payment by parking
their extra liquidity in the linked account. Majority of the Home Loan players
today offer this product under different names.
|
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244
|
Transaction Date
|
The date a purchase is made or cash is
withdrawn. Some companies assess interest from the transaction date, others from
the posting date. (See processing date)
|
||
245
|
Transaction Fee
|
An extra charge for various credit activities
such as using an ATM or receiving a cash advance.
|
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246
|
Transfer of funds
|
A movement of funds from one account
to another.
|
||
247
|
Travelers cheque
|
Travellers' cheque - are issued through
banks acting as sales agents, or sold directly to the public. The purchaser pays
for the cheque in advance, and signs them twice - once when ordering the cheque
and once when cashing them. The cheques are payable by the issuing company, sold
in numerous foreign currencies, and are insured against loss or theft
|
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248
|
Uncollected funds
|
Refers to items deposited in an account
that have not yet been collected, or paid, by the bank on which they were drawn
|
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249
|
Unsecured Debt
|
This is debt that is not guaranteed by
collateral; therefore, no assets are committed in the event of default. If the
issuer is unable to collect on the loan, its value is lost. Most credit cards
are unsecured.
(As the Card member’s promise is the
only guarantee, credit card issuers require more information regarding income
and credit history than with a secured loan.)
A loan where no collateral or security
is given or charged to the lender. Unsecured lending is viewed as higher risk
than secured lending and interest rates are generally higher to reflect this.
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250
|
Valuation
|
Before disbursal of a loan against a
property, usually the bank conducts a valuation check on the property being offered
as collateral. This is done to find out the market value of the property. The
value of the property will be a factor considered while granting the loan.
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251
|
Variable Expenses
|
Variable expenses are those that can
change from month to month. Variable expenses include necessities that can be
reduced (such as food and utilities) and
non-essentials that could be eliminated (e.g., long distance telecall charges,
cable, magazine subscriptions, etc). Reducing these expenses is the simplest step
in getting control of your finances.
|
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252
|
Variable Interest Rate
|
An interest rate that is not fixed but
can vary within a pre-fixed band by the loan-issuing bank. For example some credit
card issuers charge variable Interest rate on the outstanding un-paid balance
depending upon the credit score or credit behavior/payment pattern of the customer.
An interest rate that is not fixed but
can vary within a pre-fixed band by the loan-issuing bank. For example some credit
card issuers charge variable Interest rate on the outstanding un-paid balance
depending upon the credit score or credit behavior/payment pattern of the customer.
(See floating rates)
|
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253
|
Wire transfer
|
An electronic payment service for transferring
funds by wire (for example, through the Federal Reserve Wire Network or the Clearing
House Inter Bank Payments System).
|
||
254
|
Withdrawal
|
A removal of funds from an account.
|
||
255
|
Zero Balance
|
Zero balance is when the total outstanding
balance is paid and there are no new charges or cash advances during a billing
cycle.
|
||
256
|
Zero Liability Protection
|
A bank guarantee. If your card is lost
or stolen, you may not be responsible for unauthorized purchases made with
your card if you report the theft promptly. The Zero Liability Protection
program is free and automatically available on all bank consumer credit cards.
|
||
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