Thursday 5 September 2013

Banking Terminology 8/8

Pro Forma: An invoice sent to a buyer before the goods are sent, so that payment can be made or business documents can be produced.

Recession: Negative growth of Economy for 2 quarters and above.

Recurring or Cumulative Deposits: A particular fixed amount or installment is deposited in this account every month; this account is useful to build a capital sum through regular small savings.

Repo: It is a short term for repurchase agreement for RBI selling a government security at a competitive rate in the market to absorb what it considers is excess liquidity. The buyers are either banks or registered primary dealers.

Repo rate: A transaction where funds are borrowed through the sale of short term securities by the money market to the central bank. It is a means of relieving short term shortage of funds and used as a device for monetary control.

Reverse Repo Rate: The sale of securities is by the central bank to the money market.

Revolving Credit: A loan facility that is renewed as it is repaid and may be used repeatedly. It also termed as open end credit. A credit card limit is a form of revolving credit.

Savings Account: This kind of accounts is given to the individuals and a specific amount of interest is paid. There are restrictions on the number of withdrawals.

Securitization: The process of converting a bank loan into a marketable, negotiable security.

Statutory Liquidity Ratio (SLR): Refers to the amount that all banks require to maintain in cash or in the form of gold or approved securities.

Sweep Facility: An automatic service available on some bank accounts that shifts creit balances into a deposit account where they will earn interest.

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COPY-WRITE OWNED BY PRAMOD KUMAR

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