Banking terms and concepts are many and can sometimes be difficult to figure out, even for the industry professionals. However, since banking. Complete List of Banking Terms with Definitions For Bank Exams Powered by medical-site.info your A to Z competitive exam guide ww w. Gr 8A mb iti on. Glossary of Banking Terms and Definitions: Banking Terms that Begin With A. Banking Terms. Banking Definitions. AAA. AAA is a term or a grade that is used to .
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Certificate of Deposit (CD) – a type of investment that requires you to invest your money for a certain length of time and guarantees the same rate of return. banking medical-site.info - Free download as PDF File .pdf), Text File .txt) or read online for free. Read Important Banking Terminologies For Bank Exams PDF Download. Most of the questions in exam comes from below bank terminology.
See account reconciliation services Arrears Unpaid dividends or bond interest that a corporation owes its stockholders or bond holders after the payable or due date on which the dividends or interest should have been paid.
See Uniform Commercial Code. Article 8 Portion of the UCC covering collateral interests in both physical certificated and book-entry uncertificated securities.
Article 9 Portion of the UCC covering security interest in most personal property other than securities. Article of agreement Contractual arrangement used in some states under which a downloader downloads real estate from a seller over a period of time, usually by making periodic installment payments.
Title is not conveyed to the downloader until the final payment is made.
Also called land contract. Asian option An option whose payoff is based upon the average value of an underlying over a specified period of time. See underlying. Also see American option, European option and Bermuda option.
As-extracted collateral Oil, gas, or other minerals that are subject to a security interest that is created by a debtor having an interest in the minerals either before or after extraction. A security interest can also include accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction.
A category of personal property collateral defined by the revisions to Article 9 of the UCC. Ascending rate bonds Securities with a coupon rate that increases in previously defined increments at scheduled intervals. Asked or asking price The trading price proposed by the prospective seller of securities.
Also called the offer or offered price. Asset-backed security ABS A debt security collateralized by assets. Created from the securitization of any loans. ABSs may be structured in a variety of ways including simple "pass through" structures and complex, "multi-tranche" structures. The value that ABSs provide to investors is comprised of the cash flows due to the ABS holders from the underlying loans.
ABS issues are typically structured so that the bankruptcy or insolvency of an underlying borrower does not impact the cash flow received by the security owner. See special purpose vehicle and waterfall.
Asset sensitive Describes an entity's position when an increase in interest rates will help the entity and a decrease in interest rates will hurt the entity. An entity is asset sensitive when the impact of the change in its assets is larger than the impact of the change in its liabilities after a change in prevailing interest rates. This occurs when either the timing or the amount of the rate changes for liabilities causes interest expense to change by more than the change in interest income.
The impact of a change in prevailing interest rates may be measured in terms of the change in the value of assets and liabilities. In that case, an asset-sensitive entity's economic value of equity increases when prevailing rates rise or declines when prevailing rates fall. Alternatively, the impact of a change in prevailing rates may be measured in terms of the change in the interest income and expense for assets and liabilities.
In that case, an asset-sensitive entity's earnings or net income increases when prevailing rates rise and declines when prevailing rates fall.
In a financial institution, the ALCO is usually responsible for asset and liability distribution, asset and liability pricing, balance sheet size, funding, spread management, and interest rate sensitivity management.
Usually used somewhat redundantly, as in ALCO committee. The process of balancing the management of separate types of financial risk to achieve desired objectives while operating within predetermined, prudent risk limits. Accomplishing that task requires coordinated management of assets, liabilities, capital, and off-balance sheet positions. Therefore, in the broadest sense of the term, ALM is simply the harmonious management of cash, loans, investments, fixed assets, deposits, short-term borrowings, long-term borrowings, capital, and off-balance sheet commitments.
However, in practice, the term is often used to refer to segments of that broader definition such as only interest rate risk management or only interest rate and liquidity risk management.
See earnings at risk, market value at risk and market value of portfolio equity. Assets repriced before liabilities A measure of the gap between the quantity of assets repricing and the quantity of liabilities repricing within a given period of time. A simple measure of a financial institution's exposure to beneficial or adverse consequences from changes in prevailing interest rates. Assignee The party to whom an assignment is made.
Assignment Transfer of any contractual agreement between two parties. One of the parties, the assignor, transfers its rights or obligations to another party, the assignee. If interests in assets of the assignor are assigned, the assignment transfers all or some of the rights of ownership to the assignee. If interests in obligations of the assignor are assigned, the assignor is totally or partially absolved from further performance.
Lenders sometimes see leased property assigned from the original lessor to another party who then pledges them to the bank as collateral for a loan.
For personal property collateral, a secured party may enter an assignment of its security interest into the public record by using a standard form called UCC Assignment of downloader's interest in land contract A document used when a borrower is downloading real estate over time under an article of agreement or land contract.
The document assigns the lender all of the borrower's personal property, real property, and contractual rights under the land contract. Assignment of lease and rentals A document used in real estate loans when the mortgaged property is leased to third-party tenants.
However, the depositor paid for the cashier's check with funds from their account. The primary benefit of a cashier's check is that the recipient of the check is assured that the funds are available. See also Cashier's Checks. Cease and Desist Letter: A letter requesting that a company stops the activity mentioned in the letter. Certificate of Deposit: A negotiable instrument issued by a bank in exchange for funds, usually bearing interest, deposited with the bank.
See also Certificates of Deposit. Certificate of Release: A certificate signed by a lender indicating that a mortgage has been fully paid and all debts satisfied, also known as release of lien. See also Release of Lien. Certified Check: A personal check drawn by an individual that is certified guaranteed to be good. The face of the check bears the words "certified" or "accepted," and is signed by an official of the bank or thrift institution issuing the check.
The signature signifies that the signature of the drawer is genuine, and sufficient funds are on deposit and earmarked for payment of the check. Charge-off: The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt. See also Charge Off. Check: A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check or, if a specific person is not named, to whoever bears the check to the institution for payment.
Check 21 Act: Check 21 is a Federal law that is designed to enable banks to handle more checks electronically, which is intended to make check processing faster and more efficient. Check 21 is the short name for the Check Clearing for the 21st Century Act, which went into effect on October 28, See also Check Check Truncation: The conversion of data on a check into an electronic image after a check enters the processing system.
Check truncation eliminates the need to return canceled checks to customers. Checking Account: A demand deposit account subject to withdrawal of funds by check. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts. ChexSystems only shares information with the member institutions; it does not decide on new account openings. Generally, information remains on ChexSystems for five years.
See also ChexSystems. Closed-End Credit : Generally, any credit sale agreement in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date.
Most real estate and automobile loans are closed-end agreements. See also Closed-end Credit. Closed-End Loan: Generally, any loan in which the amount advanced, plus any finance charges, is expected to be repaid in full by a specified date. See also Consumer Loans and Mortgages. Closing a Mortgage Loan: The consummation of a contractual real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender.
Closing Costs: The expenses incurred by sellers and downloaders in transferring ownership in real property.
The costs of closing may include the origination fee, discount points, attorneys' fees, loan fees, title search and insurance, survey charge, recordation fees, and the credit report charge. Collateral: Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house. Collateral becomes subject to seizure on default.
See also Insurance and Mortgages. Collected Funds: Cash deposits or checks that have been presented for payment and for which payment has been received. See also Collected Funds. Collection Agency: A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls.
Collection Items: Items-such as drafts, notes, and acceptances-received for collection and credited to a depositor's account after payment has been received. Collection items are usually subject to special instructions and may involve additional fees. Most banks impose a special fee, called a collection charge, for handling collection items. The Federal securities laws generally require entities that pool securities to register those pooled vehicles such as mutual funds with the SEC.
However, Congress created exemptions from these registration requirements for CIFs so long as the entity offering these funds is a bank or other authorized entity and so long as participation in the fund is restricted to only those customers covered by the exemption. See also Collective Investment Funds. Comaker: A person who signs a note to guarantee a loan made to another person and is jointly liable with the maker for repayment of the loan.
Also known as a Cosigner. Community Reinvestment Act: The Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. It was enacted by the Congress in Consumer Credit Counseling Service: A service which specializes in working with consumers who are overextended with debts and need to make arrangements with creditors.
Consumer Reporting Agency: An agency that regularly collects or evaluates individual consumer credit information or other information about consumers and sells consumer reports for a fee to creditors or others. Typical clients include banks, mortgage lenders, credit card companies, and other financing companies.
Conventional Fixed Rate Mortgage: A fixed-rate mortgage offers you a set interest rate and payments that do not change throughout the life, or "term," of the loan. A conventional fixed-rate loan is fully paid off over a given number of years-usually 15, 20, or A portion of each monthly payment goes towards paying back the money borrowed, the "principal"; the rest is "interest.
Also known as a Comaker. See also Cosigner. Credit Application: A form to be completed by an applicant for a credit account, giving sufficient details residence, employment, income, and existing debt to allow the seller to establish the applicant's creditworthiness. Sometimes, an application fee is charged to cover the cost of loan processing.
See also Credit or Loan Application. Credit Bureau: An agency that collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans. Also commonly referred to as a consumer reporting agency or a credit reporting agency.
See also Credit Bureaus. Credit Card Account Agreement: A written agreement that explains the terms and conditions of the account, credit usage and payment by the cardholder, and duties and responsibilities of the card issuer. See also Credit Cards. Credit Card Issuer: Any financial institution that issues bank cards to those who apply for them. See also Credit Card Issuer. Credit Disability Insurance: A type of insurance, also known as accident and health insurance, that makes payments on the loan if you become ill or injured and cannot work.
See also Credit Disability Insurance. Credit Life Insurance: A type of life insurance that helps repay a loan if you should die before the loan is fully repaid. This is optional coverage. See also Credit Life Insurance. Credit Limit: The maximum amount of credit that is available on a credit card or other line of credit account.
See also Credit Limit. Credit Repair Organization: A person or organization that sells, provides, performs, or assists in improving a consumer's credit record, credit history or credit rating or says that that they will do so in exchange for a fee or other payment.
It also includes a person or organization that provides advice or assistance about how to improve a consumer's credit record, credit history or credit rating. There are some important exceptions to this definition, including many non-profit organizations and the creditor that is owed the debt.
See also Credit Repair Organization. Credit Report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. See also Credit Reports.
Credit Score: A number, roughly between and , that measures an individual's credit worthiness. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Banks use a credit score to help determine whether you qualify for a particular credit card, loan, or service. See also Credit Scores. Cut-Off Time: A time of day established by a bank for receipt of deposits.
After the cut-off time, deposits are considered received on the next banking day.
D Debit: A debit may be an account entry representing money you owe a lender or money that has been taken from your deposit account. Debit Card: A debit card allows the account owner to access their funds electronically.
Debit cards may be used to obtain cash from automated teller machines or download goods or services using point-of-sale systems. The use of a debit card involves immediate debiting and crediting of consumers' accounts.
Debt Collector: Any person who regularly collects debts owed to others. See also Debt Collection and Debt Collector.
Debt Elimination Scheme: A debt elimination scheme is a plan that is advertised as a way for an individual to eliminate various types of debt simply by paying someone a small fee compared to the amount of debt to be eliminated.
These schemes are fraudulent. As a result of using a fraudulent scheme, individuals will lose money, could lose property, will damage their credit rating, and possibly incur additional debt. In addition, a creditor may take legal action against an individual to resolve a fraudulent attempt to eliminate debt.