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Terms of Banking and their Meaning

Terms of Banking and their Meaning

Account Holder

An individual or entity which is authorized to perform transactions on behalf of an account, such as a bank account. Authorization isprovided through signatures placed on file with the bank or company managing the account.

Acquiring Bank

An acquiring bank (or acquirer) is the bank or financial institution that processes credit and or debit card payments for products orservices for a merchant. The term acquirer indicates that the bank accepts or acquires credit card payment from the card-issuing banks within an association.

Adjustable-Rate, Mortgages (ARMS)

A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender’s standard variable rate or base rate.

Adverse Action

An action that denies an individual or business credit, employment,insurance or other benefits. An adverse action is generally taken by abusiness or government based on a criminal past or information found in credit reports.

Alteration

Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument.

Annual Percentage Rate

The cost of credit The term annual percentage rate (APR), also called nominal APR, and the term effective APR, also called EAPR, describes the interest rate for a whole year (annualized), rather than just amonthly fee/rate, as applied on a loan, mortgage loan, credit card, etc.on a yearly basis, expressed as a percentage.

Annual Percentage Yield

Annual percentage yield (APY) (also called Effective Annual Rate(EAR) in finance) is a normalized representation of an interest rate,based on a compounding period of one year. APY generally refers to the rate paid to a depositor by a financial institution.

Annuity

An Annuity is any continuing payment with a fixed total annual amount.

Automated Teller Machine (ATM)

It is a computerized telecommunication device that enables the clients of a financial institution to perform financial transactions without the need for a cashier, human clerk or bank teller.

Bad Debt
A bad debt is an amount owed to a business or individual that is written off by the creditor as a loss (and classified as an expense) because the debt cannot be collected and all reasonable efforts tocollect it have been exhausted. This usually occurs when the debtor has declared bankruptcy or the cost of pursuing further action in an attempt to collect the debt exceeds the debt itself.

Bank Statement
A bank statement or account statement is a summary of financial transactions which have occurred over a given period of time on abank account held by a person or business with a financial institution.

Bankruptcy
Bankruptcy is a legal status of a person or organization that can not repay the debts it owes to creditors.

Cease and Desist Letter
A cease and desist is an order or request to halt an activity (cease)and not to take it up again later (desist) or else face legal action. The recipient of the cease-and-desist may be an individual or an organization.

Collateral
In lending agreements, collateral is a borrower’s pledge of specific property to a lender, to secure repayment of a loan. The collateral serves as protection for a lender against a borrower’s default – that is,any borrower failing to pay the principal and interest under the termsof a loan obligation.

Credit Card

It is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder’s promise to pay for them.

Current Account

In economics, the current account is one of the two primary components of the balance of payments, the other being capital account. It is the sum of the balance of trade (i.e., net revenue on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers.

Debit Card
A debit card (also known as a bank card or check card) is a plastic card that provides the cardholder electronic access to his or her bank account(s) at a financial institution.

Deferred Payment

A standard of deferred payment is the accepted way, in a given market, to settle a debt – a unit in which debts are denominated. It is one of the defining functions of money.

Embezzlement
Embezzlement is the act of dishonestly withholding assets for the purpose of conversion (theft) of such assets by one or more individuals to whom such assets have been entrusted, to be held and/or used for other purposes.

Escheat
Reversion of real or personal property to the State when a person dies without leaving a will and has no heirs, or when the property(such as a bank account) has been inactive for a certain period of time.

Escrow Funds
Funds held in reserve by a mortgage company to pay taxes, insurance,and other mortgage-related items when due.

Estate Account
An account held in the name of a decedent that is administered by an executor or administrator of the estate.

Savings Bank Account
A savings account holder of a particular bank can carry out his or her banking transactions on daily basis. Mostly, these accounts areaccessed for non-commercial purposes

Repo Rate

The discount rate at which a central bank repurchases government securities from the commercial banks, depending on the level of money supply it decides to maintain in the country’s monetary system.

Reverse Repo
Reverse Repo rate is the rate at which Reserve Bank of India (RBI)borrows money from banks.

Liquidation
In law, liquidation is the process by which a company (or part of acompany) is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to aswinding-up or dissolution.

Frozen Account
An account on which funds may not be withdrawn until a lien is satisfied and a court order or other legal process makes the account available for withdrawal.

Foreclosure
Foreclosure is a specific legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan

Terms of Banking and their Meaning

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