• Banking Terms – B

    Term

    Meaning

    Bad debt The amount which can not be received in future.
    Balance The balance is the actual amount of money that is left in the account. Sometimes, the term balance also refers to amount of the debt that is owed.
    Balance of Payment Balance of payment shows the relationship between the one country’s total payment to all other countries and its total receipts from them. It shows the country’s trade and financial transactions (all economic transactions), in terms of net outstanding receivable or payable from other countries, with the rest of the world for a period of time
    Balance of Trade Balance of trade refers to the total value of a country’s export commodities and total value of imports commodities. Balance of trade is a part of Balance of payment statement and it includes only visible trade.
    Balance sheet The statement which consists of the company’s accounts at the end of the accounting year.
    Balance transfer Transferring of amount from one account to the other.
    Balance Transfer Fee The balance transfer fee is charged by the bank for the transfer of balances from one source of credit to another. It also refers to the transfer of fees from one bank account to another.
    Balanced Budget Balance budget happens when the total revenue of the government exactly equals the total expenditure incurred by the government. But nowadays, the government has to regulate a number of economic and social activities which increase the expenditure burden on the government and results in deficit budget.
    Balloon Mortgage A Balloon Mortgage is a loan in which after a set term, the entire balance of the loan comes due. This type of loan generally has a lower interest rate, and has a higher risk to the borrower. The loan can be done like an adjustable with a set term of 2, 3, 5,7,10 years. Or in a Home Equity Line of Credit, or Fixed Rate Second Mortgage where after a set period of time it becomes due. For example, a 30/15 Balloon is a second mortgage where the payment is based on 30 years; however the note becomes due after 15.
    Balloon Payment A final installment for the loan which is huge than the previous installments is called Balloon Payment. For example if a customer has paid only the interest during the loan tenure, at the end of the period he has to settle the principal amount with the interest amount to close the loan which is huge than the other monthly interest payment. The advantage of balloon payment is monthly payment prior to balloon payment is small.
    Bancassurance Bancassurance refers to the distribution of insurance products and the insurance policies of insurance companies by bank branches or its employees. Banks charge a fee for the same.
    Bank It’s the financial institution where deposits, lending, transactions of money happen. It is also an establishment that helps individuals and organizations, in the issuing, lending, borrowing and safeguarding functions of money.
    Bank Account A bank account is an account held by a person with a bank, which helps them can deposit, safeguard his money, earn interest and also make check payments.
    Bank branch It is an extension of the bank in a particular area, easy access for the customer.
    Bank code It is the code given by the bank supervisor body or the bankers association to the bank.
    Bank Credit Bank Credit includes Term Loans, Cash Credit, Overdrafts, Bills purchased & discounted, Bank Guarantees, Letters of Guarantee, Letters of credit.
    Bank discount The interest deducted for annual basis in advance of loan.
    Bank draft Cheque drawn by a bank to another bank for its own amount in the other.
    Bank Holding Company (BHC) Company that owns, or has controlling interest in, one or more banks is known as Bank Holding Company (BHC). The Board of Governors is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency (OCC or FDIC).
    Bank holiday Normal holiday held for a bank either it’s the normal week ends or the government holiday.
    Bank Note It is the term used synonymously with paper money or currency issued by a bank. Notes are, in effect, a promise to pay the bearer on demand the amount stated on the face of the note. A banknote (often known as a bill or simply note) is a kind of negotiable instrument; a promissory note made by a bank payable to the bearer on demand, used as money, and under many jurisdictions is used as legal tender.
    Bank Officer The Bank employee who has the authority to sign and agree for documents on behalf of the bank.
    Bank Ombudsman Bank Ombudsman is the authority to look into complaints against Banks which violate norms and rules set by the RBI. This Scheme was announced in 1995 and is functioning with new guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks.
    Bank Rate Bank rate is the rate at which central bank (RBI) lends money to other banks or financial institutions.   If the bank rate goes up, long-term interest rates also tend to move up, and vice-versa.
    Bank Statement A periodic record of a customer’s account details containing all the transactions done during a particular period.
    Banker’s bank A bank which does business with other banks and not with the public. Central bank of a country acts as Banker’s bank.
    Banker’s draft A Bank draws funds using draft against funds deposited in another bank
    Banker’s Lien Banker’s lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account.
    Banking Cash Transaction Tax (BCTT) Banking Cash Transaction Tax (BCTT)  is a small tax on cash withdrawal from bank exceeding a particular amount in a single day
    Banking industry Banks are collectively called as Banking industry.
    Bankrupt An entity or an individual is called as bankrupt if unable to meet its/his financial duty. A bankruptcy refers to economic insolvency, wherein the person’s assets are liquidated, to pay off all liabilities with the help of a bankruptcy trustee or a court of law.
    Bankruptcy Bankruptcy is a legally declared inability of an individual or an organization to pay the creditors.
    Barcode Labeling A Barcode is a printed code that consists of a series of vertical bars with different thickness. Barcodes are capable of being ‘read’ and decoded by barcode scanners. They are used in various industries as application tools and to track supply chain.
    Basel Norms The Committee on Banking Regulations and Supervisory Practices, popularity known as Basel Committee. Their norms are termed as BASEL I, BASEL II and BASEL III.
    Basis Point (bps) One basis point is one-hundredth of a percentage point. It is normally used for indicating spreads or cost of finance.
    Basket Trading Basket Trading provides a facility to create offline order entry file for a selected portfolio.
    BCS Business Credit Services
    Bear Markets Unfavorable markets associated with falling prices and investor pessimism.
    Best Efforts Contract The undertaker agrees to do his best to sell the offering at a pre-determined price, but does not buy the securities and also does not guarantee that issuing company will particular set amount for it. It limits the responsibility of the firm to the shares that it can sell and all unsold shares are absorbed by the issuer.
    Bid price The price which is the highest offered by the dealer to purchase a given security.
    Bid-ask Spread  The difference between a dealer’s bid and ask price.
    Bilateral Bilateral Netting is arriving at net obligations (i.e. netting) of securities and funds between two brokers / parties.
    Billing Cycle A billing cycle is a time period that covers the credit statement, for which no interest rate is charged.
    Billing Statement A billing statement is a summary of all transactions, payments, purchases, finance charges and fees, that take place through a credit account during a billing cycle.
    Bills of Exchange It is a financial instrument that facilitates funding of a trade transaction. It is a negotiable instrument and hence is easily transferable. Further, depending on the repayment period and the documents attached, these bills of exchange are classified into different types.
    Black Money It is unaccounted money which is concealed from tax authorities. All illegal economic activities are dealt with this black Money.
    Blank cheque A cheque which is signed by the account holder where the amount field is left blank.
    Blank endorsement An endorsement where there is no payee and so the payable to the bearer which is done on a commercial paper.
    Bloomberg Bloomberg Trade book is a global electronic agency brokerage. Bloomberg Trade book provides agency broking services to institutional investors and broker – dealers.
    Blue Chip Blue Chip refers to the big companies with sound and solid financial records. It is considered to be the most safe investment in the equity market.
    Bonds A bond is a debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and interest at a later date, termed maturity. Other stipulations may also be attached to the bond issue, such as the obligation for the issuer to provide certain information to the bond holder, or limitations on the behavior of the issuer. Bonds are generally issued for a fixed term longer than ten years.
    Bonus Issue or Stock Dividend In this case the company creates new shares by distributing free shares to its shareholders.
    Book Building A process used to ascertain and record the indicative subscription bids of interested investors to a IPO or FPO. It makes the overall subscription process transparent and investors can see the book building completely.
    Book Value The amount of stockholders’ equity in a firm equals the amount of the firm’s assets minus the firm’s liabilities and preferred stock. The book value of an equity share tends to increase as the ratio of reserves and surplus to the paid-up equity capital increases.
    Bounced Check A bounced check is nothing but an ordinary bank check that any bank can refuse to encash or pay because of the fact that there are no sufficient finances in the bank account of the originator or drawer of the check.
    BR Act Banking Regulation Act
    Brick & Mortar Banking  Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now advancement of technology has changed the complete dynamics of banking services.
    Bridge Financing Bridge financing is a loan where the time and cash flow between a short term loan and a long term loan is filled up. Bridge financing begins at the end of the time period of the first loan and ends with the start of the time period of the second loan, thereby bridging the gap between two loans. It is also known as gap financing.
    Bridge Loan A loan made by a bank for a short period to make up for a temporary shortage of cash.
    Broker Licensed individuals by stock exchanges to enable investors to buy and sell securities.
    Brokerage fee The amount charged by the brokers as commission.
    Brokers Brokers are the intermediaries in a transaction between buyers and sellers of securities.
    Budget Deficit Budget may take a shape of deficit when the public revenue falls short to public expenditure. Budget deficit is the difference between the estimated public expenditure and public revenue. The government meets this deficit by way of printing new currency or by borrowing.
    Bull Bull is that type of speculator who gains with the rise in prices of shares and stocks. It refers favorable markets associated with rising prices and investor optimism.
    Buoyancy When the government fails to check inflation, it raises income tax and the corporate tax. Such a tax is called Buoyancy.

     

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