Banking Terms Glossary Edited

8/6/2019 Banking Terms Glossary Edited

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BANKING TERMS GLOSSARY

Compiled by S.Shantharam,Faculty, IMA-B

Act of God : Force Majeure , Any event or a natural calamity which might lead to non-

fulfilment or non-performance of any obligation under a contract. Inclusion of this clause in a

contract will protect the parties concerned from such non-performance.

Accounting : A System of maintaining record of financial transactions.

Account Payee: When a cheque is crossed (two parallel lines drawn across the left top corner) with

these terms, it means that the banker who is collecting proceeds of the cheque is obliged to ensure

collection only to the payees account.

Acceleration clause : A provision in a loan agreement which enables a lender to recall the entire

amount of loan in case there is a default in even a single instalment payment by the borrower.

Accrued interest / income : Income / interest earned but yet to be received / accounted.

Acceptance : An unqualified consent to honor or pay a bill of exchange by signing under the word

accepted.

Accommodation bill: A Bill of exchange endorsed or guaranteed by a third party which can be

discounted by banks (A bill usually drawn without an underlying actual trade or transaction)

Accounts payable: Money due to be paid to suppliers / services (classified as short term liabilities

in a balance sheet)

Accounts receivable: Moneys due to be received for sales made or services rendered (classified as

short term assets in a balance sheet)

Acid test ratio : Measure of a firm/companys liquidity. Ratio of highly liquid assets to its current

liabilities. Used by banks for financing short term loans.

Accumulation : Building up of reserves from profits earned

Acquisition: Acquiring / Taking control of a company by purchasing 51% of its shares

ACU: Asian Currency Unit ::Foreign Currency Deposits (in a bank) in an Asian Country.

Advance(s) : Cash loans or loans generally for short term

Advised credit : A letter of credit issued by a buyer (importer)s bank may be advised to the

exporter by another bank (in the seller exporters country).

Advising bank: A bank, (A correspondent bank in the exporters country) on behalf of another bank

(in the importers country) informs (advises) the exporter that an LC has been opened by the

importer favoring the exporter.

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Ad Valorem: Tax, duty or levy charged according to the value of goods.

Adjusting entries: Accounting entries posted on the balance sheet date to appropriate expenses

incurred (but not paid) and income due (but not received) for that period.

Adjusted book-value : Valuation of a running business by adjusting all its assets & liabilities to fair

market value.

Administrator : An individual appointed by a Court to wind up the estate of a deceased person

where there is no Will, or no executor named in the Will or if the named executor is unable or

unwilling to act.

Adventure Capitalist : An Investor who dares to finance a highly risky business and who also

actively participates in management of such a business.

Affidavit :Declaration of facts made under oath before a court or a notary.

Affiliate : A company / business which has the power to control another.

After sight : Term to indicate a specified period (number of days) after which a bill becomes

payable.

At sight : Term to indicate that a bill is payable immediately (at sight) on presentation

Agency : Fiduciary relationship between two parties in which one (agent) is under the control of

another (principal).

Agreement : A record of a negotiated settlement.

Airway bill : A bill or a receipt acknowledging receipt of goods(for transportation)by an Airline.

Alienation: Voluntary transfer of a property or an asset from one party to another.

Amalgamation: Merging of two or more business units into single entity.

Amendment: Valid change,addition, deletion, alteration made in a document by common consent of

all parties concerned.

American option: An option that can be exercised any time before or on expiry date.

Amortization: Spreading over or gradual reduction of a liability.

Annuity : Amounts periodically paid for an agreed length of time or for life of an individual

(depending on the investment contract) which includes both principal & interest. Similar to pension.

Appraisal: A professional method of assessment of a business or value of an asset.

Appropriation : Funds set aside for specific purpose. For example, debenture redemption reserve

is created for which funds are periodically set aside to facilitate repayment of the debenture at a

pre-determined date.

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APR :Annual Percentage Rate. The yearly cost of a loan, including interest, insurance, etc,

expressed as a percentage.

Articles of Association: A document containing the rights & obligations of the Directors and

shareholders among themselves and also the bye-laws, internal rules etc. of a company.

Arbitration: Settlement of a trade dispute by a neutral third party (Arbitrator).

Asset: Any item of economic value. Can be tangible like cash, real estate, gold or shares etc., or

intangible like, Trademarks, copyright, Goodwill,etc.,

Asset liability Management: Management of Banks Deposits and advances to maximize profits

and minimize risks and evolving optimum rates of interest for both.

At par :Anything sold at Market rate / face value

ATM : Acronym for automated teller machine, a machine at a bank branch or other location

which enables a customer to perform basic banking activities (checking one's balance, withdrawing

or transferring funds) even when the bank is closed.

Auction : Type of sale where the price is decided by competitive bidding.

Authentication : Verification that a legal document is genuine or valid, such as through a seal from

an authorized public official.

Authorised Share Capital : Capital that can be raised by a Company authorized in its Memorandum

of Association approved by shareholders

Autonomy: High level of freedom or discretionary powers.

Audit: A System of checking/verifying books of accounts and records in conformity with any given

standards / norms.

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Bank: An institution / organization licensed to accept deposits for lending.

Bailment :Transfer of possession (not ownership) of any movable property for a specific purpose.

(as security for a loan or for safe keeping). One who is the real owner is bailor and one who has

such possession is bailee.

Back to back :A pair of linked transaction or agreement mutually dependent.

Barter: A form of trading or exchanging goods for goods or services.

Backup credit: Arrangement of a Standby line of credit in case the first line fails

Backward Integration: A manufacturing unit, may like to have its own set up for supply of raw

materials & so might acquire an existing unit or start a new one.

Back-end load : A sales charge or commission paid when an individual sells an investment, such as

a mutual fund. It is Intended to discourage selling.

Bad-debt : A loan with limited or no chance of recovery.

Balance sheet: A statement of the financial position of a business enterprise as on a particular date.

Balanced fund: A Mutual fund which, by investing in both Stocks & Bonds, may provide regular

income as well as capital appreciation.

Balloon payment :A large, lump-sum payment scheduled at the end of a series of considerably

smaller periodic payments. A balloon payment may be included in the payment schedule for a loan,

lease, or other stream of payments.

Bankers lien: A special right enjoyed by Bankers to possess, appropriate the proceeds by sale, the

property that come to him in the normal course of business.

Bancassurance :Sale of Insurance products through Banks.

Bank Guarantee: Guarantee issued by a bank to pay the liabilities of a debtor in case of his default

Bank rate :the rate at which RBI lends to member banks.

BCSBI :Banking Codes & Standards Board of India :Set up jointly by RBI and members of

IBA(Indian Banks Association) in 2006 to set standards of fair banking practices for financial

institutions

BIS (Bank for International Settlements, Hqrs:BASEL,Switzerland, Estt.:1930) A representative

body of Central Banks of member countries. Lays down guidelines for effective management &

supervision of International financial System. Basel I accord laid down (in 1988) certain standards

& regulations for banks including a minimum capital base of 8% of a banks risk-weighted assets.

Basel II document of 2004 made more detailed recommendations on risks, market discipline &

supervision for banks.

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Bar-code: Computer generated symbols used to identify / track anything.

Below par: Any Security, share or bond if sold at a discount or below its face value, is known to be

sold below par.

Bid: The max. price a prospective buyer would be willing to pay.

Bill : a. An Invoice or a receipt

b. A Negotiable Instrument creating a loan obligation.

c. A Treasury bill is an instrument (a Promisory Note) issued by the Central Govt. to raise

short term loans; Also used for controlling / regulating money supply.

Bill of exchange: An unconditional written order issued by the maker / drawer directing the drawee

to pay a certain sum of money to a third party on a future date.

Bill of lading: A receipt for cargo received on board (of a ship) for transportation, issued by the

Master of the ship.

Blue chip Company: Any enterprise with solid record of performance & earnings, dividend

payments and stable with long term growth potential.

Blank endorsement : An endorsement consisting only of a signature on the back of a cheque or a

bill of exchange. This endorsement enables subsequent holder of the cheque/bill of exchange to be

the bonafide holder.

BOLERO : (Bill of Lading Electronic Registry Organisation) : A voluntary body created by some

of the leading banks, Trading houses and Shipping Companies to encourage paperless transactions

in international trade.

Bottom line: Profits of any organization after tax.

Bourse: Other word for Stock exchange (French)

Bond :A long-term debt instrument usually issued by Govt./ Quasi Govt. bodies.

Bona fide : Sincere, authentic, genuine.

Bonus: A gift or an extra-compensation given as reward for any achievement.

Book-building :A book that contains the indicated prices offered by investors for a Initial Public

Offer. The issue price will be finalized after an anlysis of these offers.

Book value : Present Value of an asset after deducting depreciation book profit :Profit which has

been made but not yet realized through a transaction. For instance equity which has risen in value

but is still being held. Also called unrealized gain or unrealized profit or paper gain or paper profit.

Break-even :A position of no loss or gain

Breakup value :Valuation of assets on forced sale on liquidation of a business

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Bridge-loan :Bridge financing :Finance extended to a person, company, or other entity, using

existing assets as collateral in order to acquire new assets. Bridge financing is usually short-term

and interim loan extended during the period leading upto the disbursement of the sanctioned loan.

Broker : A licensed professional dealing in shares & securities

Bullion : Precious metals in the form of Ingots or Bars.

Credit: a.Borrowing capacity of an individual or an enterprise.

b.An agreement in which a borrower receives a value now and repay later

Creditor: A person to whom you owe. A person who has extended credit to you.

Credit card: A Plastic card issued by Banks with a limited provision to borrow or to make credit

purchases.

Credit rating: Evaluation of credit worthiness or timely repayment capacity of a company based on

its past record, present financials and future potential.

Credit(rating)agency : Is a company which collects information about the creditworthiness of

individuals and corporations and provides it for a fee to interested parties.

Credit risk : Risk arising out of possibility of a borrowers default. Also known as default risk

4 C's of credit :The four key elements a borrower should have to obtain credit: character

(integrity), capacity (sufficient cash flow to service the obligation), capital (net worth or owned

funds), & collateral (assets to secure the debt).

Confirmed credit :A confirmed letter of credit . Confirmation is made by another bank nominated

as confirming bank.

Coupon rate : Interest rate quoted / offered on a fixed income security

Correspondent bank : A bank acting as an agent of another bank in another city or country.

Call money market : Market in which banks and dealers borrow money to satisfy their credit

needs or their short term needs of liquidity to cover their reserve ratio requirements. The money is

returnable on call.

CAMELS : It is an assessment of member banks by RBI to ascertain the capital adequacy, asset

quality, management, earnings appraisal, liquidity, systems and controls. It is an assessment of the

intrinsic strength of banks.

Capital expenditure : Business Expenses towards acquiring long term assets like land & building,

Plant & machinery etc.,(capital goods)

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Capital Market : Market exclusively for sale & purchase of Shares & securities.

Capital gain: Profits made by disposal of any capital asset.

Capital adequacy: A measure of a banks financial strength & stability indicated by percentage ratio

of capital to its assets. (Note: Assets for banks, are their loans & investments)

Capitalisation: Conversion of accumulated profits (reserves) of an enterprise into capital through

fresh issue of shares.

Cash credit : A kind of loan granted for day to day activities of an enterprise against a floating

charge on movable assets.

Cash flow statement :A summary of a company's cash flow over a given period of time. It gives

the net position of inflows and outflows of funds during the course of business.

Cash reserves :Cash, money market instruments, and Treasury Bills.

Central bank :The generic name given to a country's primary monetary authority, such as the

RESERVE BANK OF INDIA . Usually has responsibility for issuing currency, administering

monetary policy, holding member banks' deposits, and facilitating the nation's banking industry.

Certificate of deposit : It is an usance promissory note issued by bank enabling the investor to

negotiate it. It is short term surplus kept with the bank . It can be negotiated 30 days after issue.

Certificate of incorporation : Certificate issued by R O C that brings a company into existence.

Claytons rule : The first item on debit side is discharged by first item on credit side and so on

chronologically. This arises in case of default in payment or business. The rule is based upon the

simple notion of first-in, first-out to determine the effect of payments from an account, and will

normally apply in the absence of evidence of any other intention. For the banker it is important to

reconstitute the defaulter to avoid complete loss because the liability is thus crystallized and future

credits are not adjusted against old liabilities/dues.

Clearing house : cheques drawn on all banks are collected here, their respective balances

debited/credited, and returned to the banks on whom they are drawn.

Closed-end fund : A fund with a fixed number of shares outstanding, and one which does not

redeem shares the way a typical mutual fund does. Closed-end funds behave more like equity than

open-end funds:

Cheque :An instrument in writing, containing an unconditional order, directing the bank on whom it

is drawn, to pay on demand, a certain sum of money to or to the order of a certain person.

Collateral :Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in

the event of default. Also called security.

Collecting bank : The bank which collects the proceeds of cheques, bills and such other instruments

of value, to the customers accpounts.

Clean bill : A bill of exchange not supported by document of title to goods.

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Commercial Paper ::An unsecured obligation issued by a corporation or bank to finance its short-

term credit needs, such as accounts receivable and inventory. Commercial paper is usually issued

by companies with high credit ratings, meaning that the investment is almost always relatively low

risk. These papers are bought by organizations or even high networth individuals on short term

basis to provide liquidity to otherwise sound companies.

Commission :A fee charged by a broker or agent for his/her service in facilitating a transaction,

such as the buying or selling of securities or real estate. In the case of securities trading, brokers can

be split into two broad categories depending on the commissions they charge. Some brokers charge

higher commissions, but provide research and investment advisory services.

Commitment fee / charges :A charge by a lender for holding credit available for a borrower.

Simply put , the penalty charged for not availing credit sanctioned.

Compound interest :Interest which is calculated not only on the initial principal but also the

accumulated interest of prior periods. Compound interest differs from simple interest in that simple

interest is calculated solely as a percentage of the principal sum.

Consideration :Something of value, such as money or personal services, given by one party to

another in exchange for an act or promise.

Conversion : If there is a happening, that is inconsistent with owners right of possession, which

may be unlawful then conversion is said to take place. An example is of a third party cheque by

fraudulent endorsement transferred into the customers account. For this a banker needs protection

u/s 131 as provided by a formal introduction, of the customer, to the bank.Consumer loan: loans to individuals to acquire household goods or for personal consumption.

Contingent liability: An obligation that might arise on occurrence of an event or a possible default.

Contra account : An account that is offset by a matching associated account.

Control account: A General ledger account which represents the total balances of related subsidiary

ledger accounts, serving as a crosscheck of the arithmetical accuracy of records.

Convertible currency: Any currency that is freely accepted / exchanged in any other country.

Convertible loan : A debt / loan raised by issuing an interest bearing security with a promise of

conversion of that loan as equity or capital after a given term.

Core activity :Basic / fundamental activities of an organisation that define its purpose.(For ex., core

activity of a bank is to borrow from savers and lend to users.)

Corporate banking: Also known as Wholesale banking : Banking services tailor-made to large

corporates / business units.

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Corporate Governance: Set of rules & practices of any Corporate body ensuring fairness and

transperancy in their relationship with all its stakeholders.

Cost-benefit analysis: Quantifying the costs & benefits of any proposed / existing activity

to arrive at a decision as to continuation / discontinue the practice.

CIF (Cost, Insurance, Freight): Term of sale indicating that the price quoted includes Insurance &

carriage charges paid upto destination.

Covenant: A Written and binding agreement.

Crossing : Two parallel lines drawn diagonally on the top left corner of a cheque or a similar

instrument which indicates to the paying bank that such an instrument is not to be paid across the

counter.

Cumulative : successive periodical additions to the principal.

Current ratio: A ratio of current assets (immediately convertible to cash)to current liabilities

(immediately payable) indicative of a companys capacity to meet its short term obligations.

Currency risk : Uncertainty or risk inherent in dealing with other (foreign)currencies that have no

fixed exchange rate with our currency.

Customs duty : Tax levied mostly on imports (and sometimes on exports) generally as a protection

to domestic industries.

Custodian : An individual or an organization, which holds in custody and safekeeping the

securities and other assets of another organization or individual.

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DA bills : are bills which have a usance period and require acceptance by the drawee.

DP bills : are bills where delivery of goods is against payment by the drawee.

Debenture: An instrument to raise debt by a company offering regular predetermined rate of

interest.

Debt : amount of money borrowed usually for a longer term.

Debt instrument : A document evidencing a debt.

Debt restructuring : Re-scheduling or converting repayment obligations under a debt to borrowers

who are in financial trouble.

Debt service : Capacity to repay principal and interest due on a debt.

Debt instrument :A written promise to repay a debt. Examples include bills, bonds, notes, CDs,

commercial paper, and banker's acceptances/ L/Cs.

Debt market :The market for trading debt instruments.

Debt equity ratio: Ratio of Total loans to own capital indicating the leveraging capacity of a

companys capital.

Debit: An accounting entry which could result in increase in assets or decrease in liabilities.

Debit card :A card which allows customers to access their funds immediately, electronically.

Unlike a credit card, a debit card does not have any float.

Debtor: An individual who owes you or whom you have lent.

Deed: A document in writing, signed in presence of witnesses, and delivered to the beneficiary.

Usually made for transfer of title or ownership.

Day-loan : A Bank loan (repayable at the end of day)to a stock-broker for purchase of securitiespending delivery

Dealer: Bankers or Professionals who(are authorized to) deal in foreign exchange.

Deep discount bond: A loan instrument or a bond trading at a discounting of more than 20% of its

par value.

De facto: A condition or situation treated as fact or official.

Default risk: Risk of non-payment by a borrower. Also known as credit risk.

Deferred credit: Advance or payment received before delivery of goods or services.

Deflation: A slow-down in economic cycle indicated by decreasing employment & wages, high

interest rates and falling prices. Also known as Depression.

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Del Credere agent:An agent who guarantees creditworthiness of a buyer and undertakes to

compensate the seller in case of default.

Delinquency ratio : A tool employed by banks in sanctioning / pricing retail loans. Ratio of overdue

loans to current loans indicating the quality of loans.

Demand draft: An instrument (like a cheque) drawn by a bank, made payable on demand at another

branch of its own to the payee beneficiary named therein.

Demand deposit :An account balance which can be drawn upon on demand, i.e. without prior

notice. Savings deposit is an example.

Demand loan : A loan that is repayable on demand.

Dematerialisation or DEMAT: Conversion of Shares / Securities from physical form to Electronic

form

Demurrage : Penal charges for delay in taking delivery of goods that have arrived and stored in a

Transporters warehouse.

Deposit account : A Bank account which limits withdrawals to the amount existing in the account.Usually interest earning accounts.

Depository : An institution established for safe-keeping of securities (in electronic form).

Depreciation : Accounting the cost of natural wear & tear of a tangible asset for the purposes of

charging it to P & L account as an expenditure. Replacement cost of an asset over its normal life.

Derivatives: Financial Instruments involving future transactions related to Securities and whose

characteristics & value depend upon the underlying security.

Devaluation : A deliberate and planned reduction in exchange value of a countrys currency.

Development Bank or DFI : Financial institutions dedicated to finance specific & long-term needs

like infrastructure development or core industries.

Discharge : To satisfy or dismiss the obligation of a debt. Simply put, it is the full repayment of a

debt or an obligation.

Disclosure : The release of relevant information.

Dishonor :To not pay, such as for a bounced cheque. It is also failure to meet/pay legitimate

demand raised by a bill of exchange made in normal trade

Dividend:Share of profit of a Public company distributed pro rata among its shareholders

Divestiture : Reduction of debt burden, by a company, by disposing off some of its assets

Dissolution: End of an enterprise (by creditors or Govt., or Sharfeholders)

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Dormant account: A bank account, generally a savings account, not operated by the holder for a

long time.

Doubtful account: A loan account whose recovery appears doubtful

Domestic bond: A loan instrument issued in the currency of the country

Domestic credit: loans involving goods that are neither exported nor imported.

Domiciled credit :A letter of credit containing a stipulation that payment will be made by a

designated bank in the country of the exporter.

Drawer :Maker or Writer of a cheque or such an instrument who directs the bank (drawee) to pay

the amount of the instrument as stated therein.

Drawee : The bank or the institution on whom an instrument is drawn with instructions to honour as

stated therein.

Dun & Bradstreet: A US based firm which collates & publishes financial data /business information

of MNCs for a fee.

Due date :Date on which an obligation must be paid.

DBOM Contract (Design,Build,Operate & Maintain) contracts offered to Private Sector

participation for development of Public utility services and infrastructure like Airports, Highways,

etc.,

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E-commerce: Commercial transactions on electronic media.

Earnest money: A token money usually paid by a contractor to an organization to bind them to a

contract.

Earned income: Income earned from labour, sale, or services and not interest or dividend

EPS : Earning per share: ( Total revenue Total expenses ) divided by No. of outstanding shares.

EDI : Electronic Data Interchange :A Computer Network System like Internet used by European

banks which facilitates computer to computer exchange of electronic documents.

EFT : Electronic Funds Transfer :Transfer of funds between accounts of the same bank or different

banks without use of paper documents (electronically)

EMI :Equated Monthly Instalments :Monthly instalment -obligation of repayment of loan including

part of principal & interest

ERM Exchange Rate Mechanism: or the currency grid, is a system that limits currency fluctuations

to a range of 15 percent in either direction.

ERP : Enterprise Resource Planning :A multi-module integrated software system for planning the

resource need of an enterprise.

ESOP (Employee Stock Ownership Plan) : An incentive offered by Blue chip companies to existing

as well as potential employees by enabling them to purchase shares funded by a loan or at its face

value or below its market value.

Effective rate of interest: Actual interest paid on a loan or on a deposit depending on periodicity of

compounding.

Elasticity of demand: The tendency of demand going up or coming down depending on the price of

an item.

Empirical knowledge : Knowledge derived after thorough observation, experimentation and

experience

Encumbered asset : An asset or property on which there could be legal claims.

Endorsement :Signature in a legal capacity on a legal document. The endorser guarantees that he is

the lawful owner of the instrument and is legally capable of transferring the title to another person.

(endorsee)

Entity : A business unit which has a legal existence.

Equitable mortgage : A mortgage created by mere deposit of title deeds and related documents with

the bank and recording a recital of such deposit.

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Equity : : Ownership interest in a corporation in the form of equity capital, say. It also refers to

total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net

worth or book value. Simply put it is the money brought in by the owners/shareholders and over

time could also include accumulated profits.

Escrow account :A trust account held in the borrower's name to repay obligations such as

borrowing. Credits to the account are first appropriated to discharge the borrowers liability

Exchange :Any organization, association or group which provides or maintains a marketplace

where securities, options, futures, or commodities can be traded.

Executor :An individual or institution nominated in a will and appointed by a court to settle the

estate of a deceased.

Export-import Bank :An independent bank, which encourages exports by providing credit and

insurance. Also called Eximbank.

External Financing :Financing projects through new issues of securities; debt and/or equity.

European Option :A type of option that may be exercised only on its expiry date.

Face value :The nominal amount assigned to a security by the issuer. For an equity security, face

value is usually a very small amount that bears no relationship to its market price. For a debt

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security, face value is the amount repaid to the investor when the bond matures . In the secondary

market, a bond's price fluctuates with interest rates. If interest rates are higher than the coupon rate

on a bond, the bond will be sold below face value (at a "discount"). If interest rates have fallen, the

price will be sold above face value.

Factor : A firm engaged in the business of financing accounts receivable, an activity known as

factoring. The firm so buying the receivables become the creditors to the receivables. This helps the

liquidity of the selling entity.

Factoring : The selling of a company's accounts receivable, at a discount, to a factor, who then

assumes the credit risk of the account debtors and receives cash as the debtors settle their accounts.

Also called accounts receivable financing.

FEMA:Foreign Exchange Management Act 1999 (Earlier FERA) Laws relating to Foreign

exchange to facilitate external trade.

FEDAI :Foreign Exchange Dealers Association of India set up in 1958 with an objective to frame

rules governing conduct of inter-bank forex business & liaison with RBI

Financial Intermediaries :Financial institutions that assist the transfer of savings from economic

agents with excess savings to those that need capital for investments.

Financial Investment :Investment in financial assets.

Financial Engineering :The design of financial portfolios to achieve specified goals.

Firm : A business organization run either as a proprietary or as a partnership

Fixed assets: Land,building, Plant & machinery, etc., of an organization

Floating charge : A charge on current or floating assets like cash,Accounts

receivable,inventory,etc.,

Forex reserves : Valuable foreign currency reserves maintained by a country.

Full value: Value of exports declared to the customs dept., without discount or commission.

Financial institution :Institution which collects funds from the public and places them in financial

assets, such as deposits, loans, and bonds, rather than tangible property.

Floating rate :Any interest rate that changes on a periodic basis. The change is usually tied to movement of an outside

indicator, such as the prime interest rate. Movement above or below certain levels is often prevented by a predetermined floor

and ceiling for a given rate. For an individual taking out a loan when rates are low, a fixed rate loan would allow him or her to

"lock in" the low rates and not be concerned with fluctuations. On the other hand, if interest rates were historically high at the

time of the loan, he or she would benefit from a floating rate loan, because as the prime rate falls to historically normal levels, the

rate on the loan would decrease.

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Floating charge: Charge or right on goods & movables which undergo change , like from raw

materials to semis-finished & finished goods.

Forfeiture : A loss of money, property, or privileges due to a breach of legal obligation, which

serves as compensation for resulting losses. An example is of equity shares issued on part payment

basis. When calls for payment of the balance is not heeded then the amount initially paid is

forfeited or lost by the prospective investor and the shares are said to be forfeited.

Futures :An agreement to execute a transaction at some time in the future.

Futures contract : This is an agreement that allows an investor to buy or sell a commodity, like gold

or wheat, or a financial instrument, like a currency, at some time in future. A future is part of a class

of securities called derivatives, so named because such securities derive their value from the worth

of an underlying asset. These contracts trade on organized futures exchanges.

Futures Exchange:Traded contracts specifying a future date of delivery or receipt of a specific

product or asset. The assets include agricultural products like, pork bellies and oranges; metal; and

financial instruments and indices. They are used by firms to hedge against potentially unfavorable

price changes, and by speculators who hope to benefit from betting on the direction or magnitude of

change.

Futures Market:Where futures contracts are traded.

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Garnishee order : Monetary judgement by the court against defendant by ordering 3rd

party(garnishee) to pay, money owed to the defendant(judgement debtor), to the plaintiff(judgement

creditor). This is so when there is default in debt repayment.

General lien :A lien applied to all goods, not just the goods giving rise to the debt, owned by the

lienee.

Goodwill : Brand value :Advantage of market reputation a company or a product has which can be

valued in terms of money.

Golden Parachute. :A plan devised by existing management stipulating that an acquiring company

has to pay executives of the acquired company a substantial sum of money in the event of removing

the former.

Green clause : A clause in an LC (letter of credit) which permits the exporter to avail preshipment

advance as well as storage facility for the goods to be exported.

Gross profit: Total value of goods sold Total cost of production

government securities :Securities issued by a government to raise the funds necessary to pay for

meet expenses/investments.

Guarantee : To accept responsibility for an obligation if the entity with primary responsibility for

the obligation does not meet it. That is the guarantor pays when the debtor fails to do so.

Guarantor : One who guarantees an obligation and has a legal duty to fulfill it.

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Hedging : Protecting assets from currency fluctuations. This can be done by taking positions or

doing things which will offset the adverse effects on the original investment. For instance a weak

rupee leads to purchase of shares of export oriented companies, who will benefit from falling

rupee. This will provide a hedge against fall in value of other assets, if at all.

Hire purchase: A purchase contract under which payment for the goods is made in instalments after

completing which the ownership passes on to the buyer.

Holder in due course : Is a person who is in possession of an instrument for which consideration

has been paid and who believes that there is no defect in the title..

Hundi: An indigenous Bill of exchange, a negotiable instrument, usually governed by local customs

and drawn in local language.

Hybrid instrument / debt : Instruments which are similar to equity , which absorb losses without

forcing/causing liquidation.

Hypothecation :The mode of creating a charge on securities or other assets as collateral to secure

a loan. This is without transfer of possession or ownership of goods or assets hypothecated.

Horizontal merger: Merger between two companies that produce similar products. Also referred to

as horizontal integration.

Hostile take-over :A merger or acquisition in which management resists the group initiating the

transaction.

Hurdle rate:The minimum required return on a project.

Inactive account: A bank account in which there have been no transactions for an extended period

of time.

Inalienable : A right that is not assignable, not transferable.

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Incentive : A reward designed to encourage a productive activity

Indemnity :Expressed or implied contract to compensate for loss or damange. Ex., Insurance

Indenture:The legal agreement between the firm issuing the bond and the bondholders, providing

the specific terms of the loan agreement.

Index :A yardstick to measure change from a base year.

Index Funds: Mutual funds whose objective is to replicate the performance of an index. The most

popular equity index is the BSE Sensex.

Inflation :A general increase in prices of goods and services.

Injunction: An order of a Court of law, directing a person/company to refrain from doing or

continuing to do any act complained of.

Inside market:The highest bid and the lowest offer prices among all competing dealers in a Nasdaq

security, i.e., the best bid and offer prices.

Insiders :These are directors and senior officers of a corporation -- in effect those who have access

to inside information about a company. An insider also is a shareholer who owns more than 10

percent of the voting shares of a company.

Interest rate cap :A derivative instrument which is linked to interest rates.

Interest rate floor :A derivative instrument which is linked to interest rates.

Interest rate parity:A relationship which must hold between the interest rates of two countries.

Internal financing :Financing projects through retained earnings.

International banking: Extending banking services globally, including dealing in forex, managing

overseas branches,financing foreign trade & projects,overseas loan syndication

In-the-money option :An option that would be worth exercising if it expired immediately. Also see

out-of-the-money options.

Intrinsic value::A component of the market value of an option.

Inverse floater : A type of fixed income instrument.

Investment banks : are firms that assist companies in initial sale of securities in primary market.

Investment company:A company that uses its capital to invest in other companies.

IMF ; International Monetary Fund : A Global organization (Hqrs.: USA) providing financial

assistance to its member countries to finance their deficits,maintain external value of their

currency,etc.,

IPO: Initial Public Offer :Securities are offered for the first time to the public.

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Inactive account :A bank account in which there have not been any transactions for an extended

period of time. Accounts are often charged a fee if there is not enough activity.

Initial public offering : IPO. The first sale of shares by a company to the public.

Insolvent :Unable to meet debt obligations. Opposite of solvent.

Interest cover : A company's pretax operating income (or occasionally, cash flow) divided by its

interest obligations, for a given period. Mathematically it is the ratio of earnings before interest, tax,

and depreciation divided by the amount of interest payable. A ratio of 1.5 to 2% is considered ideal

by lending institutions.

Interest rate :A rate which is charged or paid for the use of money. An interest rate is expressed as

an annual percentage of the principal.

Internal Rate of Return :IRR. The rate of return that would make the present value of future cash

flows of an investment or business opportunity plus the terminal value of the business equal the

current market price of the investment or opportunity. Simply put, it is the discount rate which

makes the current investment in a business equal to the present value of, future cash flows arising

out of the business plus the terminal value of the business. i.e. the NPV of the business equals zero.

Introduction : Introduction of a potential customer to a bank by an account holder, employee, or a

well known person. It is necessary for a bank seeking protection under sec. 131 of the N.I. act. This

formality is necessary for opening of accounts.

Irrevocable : Not able to be undone. There are certain terms in a negotiable instrument or a legal

document or a document whose tenor cannot be overlooked/avoided/bypassed and have to be

adhered to.

Joint account :Any account owned by two or more people.

Joint and several liability :An obligation for which multiple individuals are liable for payment as in

case of obligations of a partnership concern.

Judgement creditor : Under garnishee order the creditor or person to receive its benefit is called so.

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Judgement debtor : Under garnishee order the debtor or the person liable to the creditor is called

so.

Junk bond: A bond which pays a high yield due to significant credit risk.

Kai Zen : Japanese concept of maintenance / improvement of work place using simple techniques

Key factor :A risk factor which is used in estimating value at risk.

Knock-In Option :A type of path-dependent option.

KnockOut Option :A type of path-dependent option.

Law of limitation : Law that sets out a period after which a legal document cannot be enforced

unless revalidated before the said date.

Lease : A contractual arrangement whereby the lessor grants the lessee the right to use his asset

for a fixed period in return for periodic (lease) rentals.

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Ledger : A book/folder/file of accounting entries where transactions are listed in separate

accounts.

Legal risk:Risk relating to legal uncertainties

Lender of last resort :A function of a central bank, such as the Reserve bank, in which it lends

money to a bank which is facing unusually heavy withdrawals.

Lessee : A person who obtains a property on lease from its owner.

Lessor : An owner of property who rents it to another party.

Letter of credit :L/C. A binding document that a buyer can request from his bank in order to

guarantee that the payment for goods will be tranferred to the seller. Basically, a letter of credit

gives the seller reassurance that he will receive the payment for the goods. In order for the payment

to occur, the seller has to present the bank with the necessary documents .

Leverage : Is the amount of long term debt relative to equity with a higher ratio meaning a greater

amount of leverage. A business entitys funding pattern generally is a judicious mix of equity and

debt. Loosely speaking, it represents the influence one financial variable has over some other

related financial variable.

Liability : It is a claim on the assets of a business. It is the amount owed by the business to the

shareholders, both preferential and equity, creditors both long term(banks and institutions), and

short term.

LIBOR : It is the London inter bank offered rate. It is the standard for international transactions

by Indian entities.

Lien :A legal claim against an asset which is used to secure a loan and which must be paid when

the asset is sold. Liens can be structured in many different ways. In some cases, the creditor will

have legal claim against an asset, while not actually hold it in possession, and in other cases the

creditor will actually hold on to the asset until the debt is paid of.

Lien, bankers : bankers lien gives it a right of sale on possession of goods in the event of failure of

the debtor to meet the obligation.

Lien, negative : In which borrowers assets are free from any charge and no charge will be created

without bankers prior consent. The first right of charge lies with bank.

Liquidate : To convert an asset to cash. Or : to sell off an entity to meet legal

obligation.

Liquidity ratio :Total value of cash and marketable assets(receivables easily realizable) divided by

current liabilities. For a bank this is the cash held by the bank as a proportion of deposits in the

bank. The liquidity ratio measures the extent to which a corporation or other entity can quickly

liquidate assets and cover short-term liabilities, and therefore is of interest/concern to short-term

creditors.

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Listing :When a company's stock trades on an official exchange.

Long-term debt : Loans and obligations with a maturity of longer than one year; accompanied by

interest payments.

Long-term Gain :A gain on the sale of a capital asset where the holding period was six months or

more and the profit was subject to the long-term capital gains tax.

Mandate : Power given to a person or group of persons for carrying out certain

jobs/activities/obligations.

Margin : Margin refers to an amount required to be brought in by a borrower, as specified by the

lender, as his own contribution(equity) to the business.

Market value : A security's last reported sale price on an exchange.

OR : The market price of an entire company, calculated by multiplying the number

of shares outstanding by the price per share. Here also called market cap or market capitalization.

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Marketable security :Security that probably could be converted into cash quickly and easily.

Marked-to-Market :An arrangement whereby the profits or losses on a futures contract are settled

up each day.

Material alteration : Any alteration that changes the tenor of an instrument . To validate a material

alteration the drawer must authenticate .

Maturity date :The date on which a debt becomes due for payment.

Memorandum of association : Document which governs the association of a company with the

outside world ; gives details of the type of company, objects of the company(activities the company

may carry out), capital structure, etc.

Moratorium : A period of time during which a certain activity is not allowed or required. For

instance when repayment on a loan starts only after a lapse of a certain period after its

disbursement, then that period is called the moratorium on the loan.

Mortgage : A loan to finance the purchase of real estate, or plant and machinery, usually with

specified payment periods and interest rates. The borrower (mortgagor) gives the lender

(mortgagee) a lien on the property as collateral for the loan.

Mortgage Backed Security :A security interest in a pool of mortgages.

NAV : Net Asset Value. The rupee value of a single mutual fund share, based on the value of the

underlying assets of the fund minus its liabilities/expenses, divided by the number of shares

outstanding. Calculated at the end of each business day.

Negligence : Failure to act during the normal course of business in an usually accepted manner.

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Open-End Fund : A mutual fund that stands ready to redeem stocks and issue new stock. Also see

closed-end funds.

Option : A type of derivative instrument.

Option :The choice to take a specific action in the future. The action considered in finance are the

purchase (call option) or sale (put option) of an asset.

Order nisi : To freeze all transactions in debtors account and use the amount to pay off the

judgement debit.

Overdraft :The amount by which withdrawals exceed deposits, or the extension of credit by a

lending institution to allow for such a situation.

Passbook :Book issued by a bank to record deposits, withdrawals, and interest earned in a deposit

account.

Payee : One who receives a payment, such as through cash, cheque, money order, bill of

exchange etc.

Paying banker : Bank on whom the negotiable instrument is drawn and which is sent for

collection.

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Payout Ratio :Percent of earnings that is paid out as dividends.

Pension Fund :Assets held in trust to cover the costs of pension benefits to participants.

Personal guarantee :Promise made by an entrepreneur which obligates him/her to personally repay

debts his/her corporation defaults on.

Personal identification number :PIN. Code used by an individual so that he/she can access his/her

bank account at an ATM machine, but others can't.

Pledging :Offering assets to a lender as collateral for a loan. Though the asset will be pledged and

may be in the custody of the lender, it is still owned by the borrower unless he/she defaults on the

loan.

Post-date :To put a future date on a document or cheque, postponing the effective or negotiable

date.

Power of Attorney :A legal document that enables an individual to designate another person,

called the attorney, in fact, to act on his/her behalf as long as the individual does not become

disabled or incapacitated.

Preamble : It is an introductory statement, a preliminary explanation. It tells about the rules

governing a body which form the basis for their existence and future action.

Preferential shares : shares on which a specific dividend is paid before any dividends are paid

to equity shareholders, and which takes precedence over equity in the event of a liquidation.

Preferential shareholders do not enjoy any of the voting rights of equity shareholders.

Primary Market is where firms sell new financial assets typically with the assistance of an

investment banker.

Prime rate :The interest rate that commercial banks charge their most creditworthy borrowers,

such as large corporations. The prime rate is a lagging indicator. Also called prime.

Probate : The review or testing of a will before a court of law to ensure that the will is authentic.

Profit and loss statement : An official quarterly or annual financial document published by a

public company, showing earnings, expenses, and net profit. Net income is determined from this

financial report by subtracting total expenses from total revenue. The profit and loss statement and

the balance sheet are the two major financial reports that every company publishes. The difference

between this statement and the balance sheet deals with the periods of time that each one represents.

The profit and loss statement shows transactions over a given period of time (usually quarterly or

annually), whereas the balance sheet gives holdings on a specific date.

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Promissory note : a promise by the drawer of the note to pay a certain sum of money on certain

date to the drawee.

Prospectus : Description of a company, raising funds from the capital market , to the prospective

investors.

Prudential limits : limits of sector wise credit exposure set by RBI on commercial banks. These

limits helps control among other things too much exposure to a particular sector vis--vis others as

also the effects of artificial prices, demand-supply mismatches, default situations and so on.

P/E Ratio :Price to earnings ratio. The price of a share of stock divided by earnings per share of

stock for a twelve-month period.

Quote : The highest bid to buy and the lowest offer to sell a security at a given time

Real Assets :Tangible assets include: plant and equipment; intangible include: technical expertise,

trademarks & patents.

Reconciliation :Adjusting one's cheque/cash book balance to match a bank statement.

Red Herring :A preliminary prospectus.

Redemption : The return of an investor's principal amount in a security, such as a bond, debenture

or mutual fund shares, at or prior to maturity.

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Remit :To make a payment by transfer. Examples of remittance include cash, cheque/draft and

electronic transfer.

Repo (Repurchase Agreement) :Purchase of Treasury securities from a securities dealer with an

agreement that the dealer will repurchase them at a specified price.

Reverse Repo : An agreement to purchase and resell an asset.

Reserve ratio :Amount of money and liquid assets that the Reserve Banks member banks must

hold in gilt securities or cash with the RBI, usually a specified percentage of their demand deposits

and time deposits. Also called reserve requirement.

Resolution :An official document representing an action on the part of the board of directors of a

corporation. For instance a board may resolve to borrow funds from or place deposits in a bank

and may appoint certain directors or officials to operate the bank account.

Retail banking : Banking services for individual customers.

Retained earnings : Earnings not paid out as dividends but instead reinvested in the core business

or used to pay off debt.

Revaluation reserves : reserves that are created after revaluation of assets that are under valued in

the books of accounts. An example is of an asset which commands a market price well above the

book value(after depreciation) such as land, and therefore the company decides to increase its value

in the books and create a reserve(notional).

Revolving line of credit : An agreement by a bank to lend a specific amount to a borrower, and to

allow that amount to be borrowed again once it has been repaid. Also called revolving credit.

Right of recourse :The right to recover a bad debt.

Round Lot :The purchase or sale of a quantity of stocks that is in multiples of 100, such as 200,

1,000, etc.

Sans recourse : without liability to the endorser. The liability is solely that of the drawee/acceptor.

Savings deposits :Accounts that pay interest and can be withdrawn on upon demand. Offered by

banks.

Secondary market : A market in which an investor purchases a security from another investor

rather than the issuer, subsequent to the original issuance in the primary market. It is a place where

buyers and sellers of a security meet to deal/operate.

Secured debt : Backed by a pledge of collateral/assets. Opposite of unsecured.

Secured loan :A loan which is backed by assets belonging to the borrower in order to decrease the

risk assumed by the lender. The assets may be forfeited to the lender if the borrower fails to make

the necessary payments.

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Securitization : The process of aggregating similar instruments, such as loans or mortgages, into a

negotiable/tradable security.

Set off : adjusting debit in one account of a borrower with credit in another.

Short Sale Sale of an asset that the investor does not own or any sale that is completed by the

delivery of a security borrowed by the seller. Short selling is a legitimate trading strategy. Short

sellers assume the risk that they will be able to buy the stock at a more favorable price than the

price at which they sold short.

Simple interest :The interest calculated on a principal sum, not compounded on earned interest.

Sinking fund :A fund into which a company sets aside money over time, in order to retire its

preferential shares, bonds or debentures.

Spin-Off :A newly created company that used to be part of a parent company. Parent company

shareholders receive a pro rata ownership in the new company.

Spot :For immediate delivery.

Statutory : Something which is enacted by legislation. As law perhaps.

Stop payment : An order to a bank not to honor the payment of a cheque after it has been delivered

but before it has been cashed.

Subordinated debt : Debt that is either unsecured or has a lower priority than that of another debt

claim on the same asset or property. Also called junior debt.

Surety : A pledge, guarantee or bond, usually to back the performance of an individual or

company.

Swap : An exchange of streams of payments over time according to specified terms. Also

exchange of loan portfolio by banks

Systemic Risk :Risk which threatens an entire financial system.

Tangible asset : Assets having a physical existence, such as cash, equipment, and real estate;

accounts receivable are also usually considered tangible assets for accounting purposes. Opposite of

intangible asset.

Tenor : instructions appearing on the face of a negotiable instrument such as date, amount , name

of payee and so on.

Terminal value : it is the value of an asset at some point in time in future. It is a notional value

assigned while estimating the future cash flows of a business but is essential nevertheless.

Third party : Someone other than the principals directly involved in a transaction or agreement

Time deposit : money kept as deposit in a financial institution, usually a bank, for a fixed term or

with the understanding that the customer can withdraw only by giving advanced notice.

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Transfer :A movement of funds from one account to another

Traveller's cheque : cheque issued by a financial institution which functions as cash but is

protected against loss or theft. Traveller's checks are useful when traveling, especially in case of

overseas travel when not all credit and debit cards carried by a person will be accepted. A charge or

commission is usually incurred when a person exchanges cash for traveller's checks, though some

issuers provide them free of charge.

Treasury Bill :A negotiable debt obligation issued by the government and backed by its full faith

and credit, having a short maturity. Also called T-Bill . These instruments, liquid in nature, are a

source for meeting the Central Banks(RBI) reserve ratios.

Trust : A legal arrangement in which an individual gives fiduciary control of property to a person

or institution (the trustee) for the benefit of beneficiaries.

Tangible asset : Assets having a physical existence, such as cash, equipment, and real estate;

accounts receivable are also usually considered tangible assets for accounting purposes. Opposite of

intangible asset.

Tenor : instructions appearing on the face of a negotiable instrument such as date, amount , name

of payee and so on.

Terminal value : it is the value of an asset at some point in time in future. It is a notional value

assigned while estimating the future cash flows of a business but is essential nevertheless.

Third party : Someone other than the principals directly involved in a transaction or agreement.

Time deposit : money kept as deposit in a financial institution, usually a bank, for a fixed term or

with the understanding that the customer can withdraw only by giving advanced notice.

Transfer :A movement of funds from one account to another

Underwrite :To assume risk, as when offering an policy or bringing a corporation's new securities

issue to the public; in the latter case, the term originally applied only to firm commitment offerings,

but is now used for all offerings. To put it simply if the IPO is undersubscribed the underwriter

subscribes to the extent of his commitment for a fee/commission which is payable in all situations.

Usance : the length of time allowed on the payment of a bill of exchange

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Variable rate :Any interest rate or dividend that changes on a periodic basis. Variable rates are

often used for convertibles, mortgages, and certain other kinds of loans. The change is usually tied

to movement of an outside indicator, such as the prime interest rate. Movement above or below

certain levels is often prevented by a predetermined floor and ceiling for a given rate. Also called

adjustable rate..

Venture Capital :Capital supplied to particularly high-risk projects, such as start-ups or tocompanies denied conventional financing.

Vertical Integration :Merger between a supplier and its customers. An example would be when an

oil-refining firm acquires a firm that owns oil fields.

Vicarious liability : Liability that arises out of the responsibility of a superior for the acts of his

subordinate. As in case of a bank which is liable to the acts of its employees in the natural

discharge of duties.

Waiver : The act of voluntarily giving up a right or covenant. Convenants are certain clauses in an

agreement.

Warrant :A certificate, usually issued by a corporation along with a bond or debenture, entitling

the holder to buy a specific amount of securities of that corporation at a specific price, usuallyabove the prevailing market price at the time of issuance. In case the price of the security rises to

above that of the warrant's exercise(entitled) price, then the investor can buy the security at the

warrant's exercise price and resell it for a profit. Otherwise, the warrant may simply expire or

remain unused.

White Knight: A firm that comes to the rescue of a corporation that is being taken over.

Wholesale banking : Banking services for institutions.

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Wire transfer :An electronic transfer of funds.

Withdrawal : A removal of funds from an account.

Working capital : Is current assets minus current liabilities . Working capital measures how much

liquid assets a company has available, to build its business. The number can be positive or

negative, depending on how much debt the company is carrying. In general, companies that have a

lot of working capital will be more successful since they can expand and improve their operations.

Companies with negative working capital may lack the funds necessary for growth.

Working capital loan :A short-term loan which provides money to buy earning assets.

Write-off : To charge an asset amount to expense or loss, in order to reduce the value of that asset

and one's earnings. An example, is of receivables not recoverable being charged to the profit and

loss account in order to offset the income that has already accrued to the account.

Written down value method : It is a method of calculation by which depreciation is charged as a

percentage of the net asset value(written down value) in the books year after year.

Yield :A measure of a bond's potential return.

Yield to Maturity (YTM): The rate of return the investor will earn if the bond is held to maturity.

Zero Coupon Bond :A bond that has no coupon payments. It pays only a single cash flow at

maturity.

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Glossary Of Information Technology Terms

Algorithm - : A step-by-step method of accomplishing a task. A series of mathematical commands

that cipher and de-cipher.

Batch - : A group of commands that are executed one at a time.

Batch File - : A file in a DOS/Windows environment with the .bat extension. This file type is

executable in DOS or at a Windows command prompt. Batch programs are written in a batch

programming language that utilizes a superset of standard DOS commands.

Buffer - : A temporary location to store or group information in hardware or software. Buffers are

used whenever data is received in sizes that may be different than the ideal size for the hardware or

software that uses the buffer.

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Buffered memory - : Memory modules that have extra chips on them to support Error Checking

and Correcting (ECC) functionality.

Bug - : This is commonly an error in design or programming in a hardware device or piece of

software.

Bus Topology - : This network topology has computers connected to a strand of network cabling

that is connected to network repeaters at one end and terminated at the other.

Cable Modem - : The device that you attach a coaxial cable from your cable company directly

into that can provide you with high speed Internet access.

Channel : It consists of controller card , interface cable & power supply.

Cheque truncation : It stops the flow of cheques thru the banking system & converts into

electronic processing system.

Coaxial cable -. : It consists of a single copper wire, surrounded by a copper braid or foil that acts

as a ground. The entire wire is then coated with an insulation. The cable carries digital signals at

high speeds.

Data - Information. : Any series of bits, characters, or objects that has meaning. Data is stored and

transmitted by computers.

Data Compression - : Takes something large and makes it smaller.

Data Encryption Standard (DES) - : An encryption method developed by IBM in 1977. It uses a

private 56-bit key that is applied to each 64- bit block of data.

Data Mining - : The act of analyzing a database or data warehouse and searching for new facts

based on the data.

Database - : An ordered set of data.

Data Compression (Compression) - : Takes something large and makes it smaller.

Digital signature - : A form of electronic signature that works with a public and private key

encryption system and a certificate authority.

Disk Mirroring -. : Disk mirroring involves two hard drives that are on the same drive controller.

The same data is written to both drives over same channel.

Disk Duplexing . : Disk duplexing is much like disk mirroring, but each drive is on a separate

controller.

Dumb Terminal - : These are hooked up to mainframes, and are little more than a monitor

attached to a keyboard. All they are good for is running programs using the mainframe's hard drive

and memory, thus the "dumb" in the name.

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Dynamic signature verification : it finds out whether a signature is genuine or not.

E-mail - : This stands for electronic mail. It is a service provided over the Internet that allows you

to send information to another person or list of people.

Electronic purse : the space in a card is used to store different types of accounts of a user.

Electronic signature - : Any form of electronic identifier, including a digital signature.

Encryption - : The act of altering data to make it unreadable unless you know how to decrypt it.

Ethernet - : A network topology that is able to send data at 10 Mbits/second. Workstations can

exist on the same cable, but only one can communicate at a time. To get by these limitations,

switched Ethernet and Fast Ethernet were invented, and were also combined. Nowadays, most

networking devices you would purchase are switched fast Ethernet.

FTP (File Transfer Protocol) - : A common method of moving files from system to system using

TCP/IP. To work properly, it requires an FTP client to contact an FTP server in order to transmit

data back and forth.

Fault Tolerant Computer system - : . The ability of a system to continue operations followingfailure in one or more components.

Full Duplex - : Originally this referred to a communication between a modem and a remote

system, where characters were sent both ways over the phone line so that they could be accurately

displayed on a terminal.

Gopher - : This is often said to be the first incarnation of the World Wide Web. It is an

information source based on textual links, now outdated and superceded by the Web.

Graphical User Interface (GUI) - : Any system that uses graphics to represent the functions of a

program. All Windows operating systems are GUIs.

Host - : A generic term used to describe a computer or program that makes a resource available,

usually over a network.

Half Duplex - : Originally a modem communications term, half duplex now mainly refers to

network communications that transmit in one direction at a time. Also see duplex and full duplex.

Internet : global network of networks. It is system that allows user computers to exchange data,

messages etc.

LAN - : A small isolated network at one office or physical location. Most office computers are

connected to a LAN, but may also be connected to the Internet or a WAN.

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Management Information Systems/Services (MIS) - : The department at most companies that

provides real- time information to the management.

MODEM (Modulator/Demodulator) - : A device that serves as a bridge between your digital

computer and some form of analog line used to transmit data, such as a phone line (standard

modem) or analog cable connection (cable modem).

Multiplexer (Mux) - : A logic circuit that sends one of several inputs out over a single output

channel.

Node - : One computer/machine or address on a network. If you managed a network with 10

printers, 50 servers, and 150 client machines, you could say you managed a network with 210

nodes.

Online - This term refers to anything that's on the Internet and electronically transmitted.

Optical fibre : provides high quality transmission at very high speeds.

Packet - : A collection of information. This term is most often used to refer to the chunks of

information sent over computer networks.

Peripheral - : Any device that is not part of the motherboard, aside from memory and the CPU.

For example, video cards, sound cards, modems, and hard drives are peripherals.

Point to Point Protocol (PPP) - : The mode of transport used to connect a computer to the Internet

via a dial-up adapter (a modem).

Protocol - : A general behavior that computers and network devices must follow to understand

one another.

Real-time - : Tasks that are time-critical and must happen in our time (as opposed to the much

faster computer). The user interface should always be real-time. If you move the mouse, your

pointer should move on screen immediately. Unfortunately, Windows can bog down enough so that

this doesn't happen

Ring topology - : A network that is connected on both ends to one source, with client machines

hanging off of the ring. If you break the ring, all computers in the ring lose connectivity

RTGS : Real time gross settlement system. Instant credit thru the RBI clearing system.

Safe Mode - : An operating mode used in Microsoft operating systems. It was first introduced in

Windows 95 and was loaded automatically if Windows 95 crashed during boot up. You can access

Safe Mode if you press the "F8" key when new Windows operating systems are booting--this will

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bring you to a menu that allows you to boot into safe mode. Safe Mode boots the operating system

with minimal driver support. The purpose of it is to help resolve boot problems.

Server - : A machine whose sole purpose is to supply data so that other machines can use that

data.

Simplex transmission : it transmits data in one direction only.

Smart card : A plastic card with an Integrated chip installed.

Standalone - : A hardware device or piece of software that works with nothing else required.

Star topology - : A network topology that has network hubs at the center, with all connected

computers linked back to the hub by a single cable. Thus, if one cable goes down, the rest of the

computers can still communicate.

SWIFT : Society for worldwide inter-bank financial telecommunication, is an instant transfer

of messages internationally.

Token Ring - : A network topology pioneered by IBM and eventually made into the IEEE 802.5

standard.. Token ring networks are wired in a ring topology, and nodes on the network pass a tokenaround. Whichever node has the token is allowed to use the network.

Usenet Newsgroups - : Also referred to simply as "newsgroups," Usenet newsgroups are a huge

bunch of Internet discussion groups that replicate across the Internet every so often.

Vein recognition : uses unique vein structure of the human body to to identify individuals.

Visual recognition : digitizing a picture of a person ,storing in a smart card then using it for

identification.

Voice recognition system : it compares voicres with original recorded.

VSAT - . : an outdoor small dish antenna interfacing with a satellite.

WAN (Wide Area Network) - : Any network that spans more than one location. Typically at least

one of the locations is fairly remote..

WAP (Wireless Application Protocol) - : A proposed standard that allows for transfer of data

securely between wireless devices, such as PDAs, cellphones, pagers, or other combinations of

those devices. WAP supports many different wireless networks.

World Wide Web (WWW or Web) - : This is basically a means of communicating text, graphics,

and other multimedia objects over the Internet.

Banking Terms Glossary Edited

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