The terms used in banking business such as Savings Account,Safekeeping,Risk Weighted Asset,Risk Assessment etc.
This post explains about terms used in banking such as Restructuring,Return on Asset,Return on equity,Revenue Anticipation Notes,Revolving Fund,Revolving Letter of Credit,Right of Set-Off,Savings Account,Safekeeping,Risk Weighted Asset,Risk Assessment etc. These terms used in international business are arranged in alphabetical order and you may add more information about terms used in export business at the end of this article, if you wish.
The terms used in banking business
Restrictive Endorsement: Where endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as "Pay to Ashok only". Now Ashok cannot negotiate the instrument further.
Restructuring: A restructured account is one where the bank, grants to the borrower concessions that the bank would not otherwise consider. Restructuring would normally involve modification of terms of the advances/securities, which would generally include, among others, alteration of repayment period/ repayable amount/ the amount of installments and rate of interest. It is a mechanism to nurture an otherwise viable unit, which has been adversely impacted, back to health.
Retained earnings: Profit after tax - dividend paid/proposed.
Retire: To withdraw a security from circulation, usually by redeeming it.
Return on Asset (ROA)- After Tax: Return on Assets (ROA) is a profitability ratio which indicates the net profit (net income) generated on total assets. It is computed by dividing net income by average total assets. Formula- (Profit after tax/Av. Total assets)*100
Return on equity (ROE)- After Tax: Return on Equity (ROE) is a ratio relating net profit (net income) to shareholders' equity. Here the equity refers to share capital reserves and surplus of the bank. Formula- Profit after tax/(Total equity + Total equity at the end of previous year)/2}*100
Return: Amount of investment gain or loss.
Returned item: This is a check or debit that is turned back because there isn’t enough money in the account it’s drawn on. As with overdrafts, there is a fee for returned items, which can cost $5 to $35, depending on the financial institution, and there may also be charges from the recipient of the check or debit. You can avoid this situation most easily by keeping a cash cushion in the account.
Returning Bank:A Bank (other than the Paying Bank or BOFD) that forwards a returned unpaid check or a notice in lieu of return.
Revaluation reserves:Revaluation reserves are a part of Tier-II capital. These reserves arise from revaluation of assets that are undervalued on the bank's books, typically bank premises and marketable securities. The extent to which the revaluation reserves can be relied upon as a cushion for unexpected losses depends mainly upon the level of certainty that can be placed on estimates of the market values of the relevant assets and the subsequent deterioration in values under difficult market conditions or in a forced sale.
Revenue Anticipation Notes (RANs): Short-term notes sold in anticipation of receiving future revenues. The notes are to be paid from the proceeds of those revenues.
Revenue Bond: A state or local bond secured by revenues derived from the operations of specific public enterprises, such as bridges, toll roads, or utilities. Such bonds are not generally backed by the taxation power of the issuer unless otherwise specified in the bond indenture.
Revenue Producing Activities: A revenue producing activity is established when revenue is generated from the sale of products and/or services by Indiana University or its employees.
Revolving Credit: It is a bank credit that is renewed automatically until notice of cancellation is received. Revolving credits may be sanctioned for an unlimited amount in total but with a limit on the amount that may be drawn at any one time or within a specified period, e.g., one month.
Revolving Fund: A type of Custodial Fund that involves the establishment of a bank account in the name of an individual or department. This account is solely operated by the individual or department, but is responsible for operating the account according to University Policy.
Revolving Letter of Credit: A Letter of Credit in which the value of the Letter of Credit is automatically reinstated upon utilization. A Letter of Credit may revolve by value, time or both.
RFP: A Request For Proposal is a method used to solicit business plans from corporations. The RFP process allows for the equitable and simultaneous comparison and analysis of competing businesses’ product and service offerings.
Rich: Description of the price of a security when the current market quotation appears to be high (or the income return low) in comparison with either the past price record of the security or the current prices of comparable securities.
Right of Appropriation: As per Section 59 of the Indian Contract Act, 1972 while making the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. If the debtor does not do so, the banker can appropriate the payment to any debt of his customer.
Right of Set-Off : When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off. For example, debit balance of Rs.50,000/- in overdraft account can be set off against credit balance of Rs.75,000/- in the Savings Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the savings account.
Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
Rights: The privilege extended by an issuer to the holder of a security to subscribe to new or additional securities, sometimes at a price lower than the subscription price. This allows current stockholders the opportunity to avoid diluting their percentage of ownership.
Risk Assessment: A process used to identify and evaluate risks and their potential effect.
Risk management: management of the pure risks to which a company might be subject. It involves analysing all possible risks and determining how to handle this exposure through trading out, or transferring the risk with derivatives.
Risk Weighted Asset: The notional amount of the asset is multiplied by the risk weight assigned to the asset to arrive at the risk weighted asset number. Risk weight for different assets vary e.g. 0% on a Government Dated Security and 20% on a AAA rated foreign bank etc.
Risk-Averse, Risk-Neutral, Risk-Taking:Risk-averse describes an investor who requires greater return in exchange for greater risk.Risk-neutral describes an investor who does not require greater return in exchange for greater risk.Risk-taking describes an investor who will accept a lower return in exchange for greater risk.
Roll Over: To reinvest in a new issue of the same or a similar security after receiving funds from a matured security.
Round Lot: The normal minimum unit of trading for a particular issue or type of security. Compare Odd Lot.Investment Vocabulary
Safe Custody: When articles of value like jewellery, boxes, shares, debentures, Government bonds, Wills or other documents or articles are given to a bank for safe keeping in its safe vault, it is called safe custody.. Bank charges a fee from its clients for such safe custody.
Safekeeping: Holding securities in a bank's vaults for protection. This is a service banks offer to customers for a fee.
Sale: Transfer of ownership of some type of property from one person to another, for some consideration.
Sallie Mae: Trade name for the Student Loan Marketing Association (SLMA).
Salvage: The attempt to get repayment of some portion of a loan obligation which has already been written off the bank’s books.
savings account -- A bank account that accrues interest in exchange for use of the money on deposit.
Savings Account – Savings account is an account generally maintained by retail customers that deposit money (i.e. their savings) and can withdraw them whenever they need. Funds in these accounts are subjected to low rates of interest.
The above details describes about terms called in banking such as Restructuring,Return on Asset,Return on equity,Revenue Anticipation Notes,Revolving Fund,Revolving Letter of Credit,Right of Set-Off,Savings Account,Safekeeping,Risk Weighted Asset,Risk Assessment etc. These phrases may help importers and exporters on their day to day business activities. The readers can also add more information about terms used in overseas trade below this post.Terms used in banking business such as Repressed Inflation,Rate of Return,Reconciliation,Recurring Deposits etc
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