Banking terms - 2

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Banking terms

1. Appraisal:
The act of evaluating and setting the value of a specific piece of personal or real property.

2. Ask Price:
The lowest price at which a dealer is willing to sell a given security.

3. Asset-Backed Securities (ABS):
 A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards – these issues are very similar to mortgage-backed securities.

4. At-the-money:
 The exercise price of a derivative that is closest to the market price of the underlying
instrument.

5. ATM:
 ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer
Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to
dispense cash, receive cash, accept cheques, give balances in the accounts and also give mini-
statements to the customers.

6. Authorization:
 The issuance of approval, by a credit card issuer, merchant, or other affiliate, to
complete a credit card transaction.

7. Automated Clearing House (ACH):
A computerized facility used by member depository institutions to
electronically combine, sort, and distribute inter-bank credits and debits. ACHs process electronic
transfers of government securities and provided customer services, such as direct deposit of
customers' salaries and government benefit payments (i.e., social security, welfare, and veterans'
entitlements), and preauthorized transfers.

8. Automated Teller Machine (ATM):
 A machine, activated by a magnetically encoded card or other
medium that can process a variety of banking transactions. These include accepting deposits and loan
payments, providing withdrawals, and transferring funds between accounts.

9. Automatic Bill Payment:
A checkless system for paying recurring bills with one authorization
statement to a financial institution. For example, the customer would only have to provide one
authorization form/letter/document to pay the cable bill each month. The necessary debits and credits
are made through an Automated Clearing House (ACH).

10. Availability Date:
Bank's policy as to when funds deposited into an account will be available for withdrawal.

11. Availability Policy:
Bank's policy as to when funds deposited into an account will be available for withdrawal.

12. Available Balance:
The balance of an account less any hold, uncollected funds, and restrictions against the account.

13. Available Credit:
The difference between the credit limit assigned to a cardholder account and the present balance of the account.

14. Banking:
Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on demand or otherwise and withdraw able by cheques, drafts, order, etc.

15. Bank Ombudsman:
 Bank Ombudsman is the authority to look into complaints against Banks in the main areas of collection of cheque / bills, issue of demand drafts, non-adherence to prescribed hours of working, failure to honour guarantee / letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances where banks flout directions / instructions of RBI. This Scheme was announced in 1995 and is functioning with new guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks.

16. Bancassurance:
Bancassurance refers to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies like home insurance - car insurance, medi-policies and others, by banks as corporate agents through their branches located in different parts of the country by charging a fee.

17. Banker's Lien:
Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary.

18. Basel-II:
The Committee on Banking Regulations and Supervisory Practices, popularity known as
Basel Committee, submitted its revised version of norms in June, 2004. Under the revised accord the
capital requirement is to be calculated for credit, market and operational risks. The minimum
requirement continues to be 8% of capital fund (Tier I & II Capital) Tier II shall continue to be not more
than 100% of Tier I Capital.

19. Brick & Mortar Banking:
Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking, tele banking etc.

20. Business of Banking :
Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Travelers’ Cheques, doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central Government may notify in the official Gazette.