Thursday, 5 September 2013

Banking Terminology 3/8

Capital Expenditure: Expenditure of a non recurrent nature resulting in the acquisition of assets.

Cash: Money in the form of bank notes and coins.

Cash Discount: A deduction from a price charged payment made before a certain date.

Cash Flow: Refers to the sum of retained earnings and depreciation provision made by firms.

Cash Reserve Ratio (CRR): Refers to the liquid cash that banks have to maintain with Reserve Bank of India (RBI) as a certain percentage of their demand and time liabilities.

Certificate of Deposit (CD): A document that is issued by a bank acknowledging a deposit of money with it and constituting a promise to repay that sum, to the bearer, at a specified future date. It is negotiable i.e. can be transferred.

Cheap Money:  A term used to describe a situation where bank rate and other rates of interest are low.

Cheque: It is a bill of Exchange drawn on a specified banker and not expressed to be payable otherwise on demand.

Collateral Security: An additional security in addition to the personal security offered by a borrower.

Commercial Banks: Those banks which conduct a general rather than a specialized type of business. They accept deposits, make advances, etc.

Consumer Credit: A loan which is given to the consumer for a short period of time, for the purchase of a specific commodity. This can take the form of hire purchase or be in the form of a personal loan from a bank.

Core Banking: Core banking Solution provides Centralized accounting system which provides centralized accounting, customer information management and transaction processing functions.

Credit: A wide term which has been used in connection with operations or states involving lending, generally at short-term. To ‘give credit’ is to finance, directly or indirectly, the expenditure of others against future repayment.

Credit Card: A card which is issued by a bank or group of bodies or other agency which provides the holder direct access to credit e.g. from a merchant location, hotel, etc.


Credit Rating: An evaluation of soundness of an individual or business firm as a credit risk. It is usually based on 

I)                   Company’s track record
II)                Company’s current and prospective business
III)             Financial risk
IV)             Quality of management

Continued...4

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COPY-WRITE OWNED BY PRAMOD KUMAR

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