• Banking Terms – M



    Margin Margin is defined as the difference between incomes generated on loans, investments, and cost of deposits.
    Margin The margin is the rate percentage a lender adds to the index rate to determine the new interest rate on an adjustable-rate mortgage.
    Margin Call Immediate requirement of money that the investor must deposit now in order to satisfy a minimum margin requirement set by an Exchange or by a bank / broking firm.
    Market Capitalization It is achieved by multiplying number of the company’s outstanding ordinary shares with the market price of each share. It is same as total valuation of a company determined by the market share price.
    Market Order An order to buy or an order to sell securities which is to be executed at the prevailing market price.
    Maturity It indicates the end of investment period of any fixed investment or security. After maturity, the investor is repaid the invested amount along with the interest that has been accumulated.
    Maturity Date It’s the final payment date. Customer has to pay back the remaining balances on that day.
    Merchant Banker  An intermediary who provides IPO related and Investment banking related services like managing public issues, underwriting new issues, arranging loan syndications and giving advice on portfolio management, financial restructuring, mergers and acquisitions etc.
    Mezzanine Level A mezzanine level in general refers to an intermediate floor between two main floors of a building and hence is not counted as a storey of the building. In financial terminology, this refers to a company that is between a Startup and IPO or a company in which capital has been invested 6 to 12 months before going public. The capital committed at this level for a company has more risk and more potential return than an IPO but less than that of a startup company.
    MICR MICR stands for Magnetic Ink Character Recognition. This character recognition technology is used in banks for cheque processing. These codes are printed with magnetic ink or toner which contains Iron oxide. The bottom line of the cheque contains MICR code. A standard format is followed across banks to print this MICR code. Mostly it is of 14 characters in length. The MICR codes in a cheque can be read by a MICR reader. The first nine digits is the routing number which is otherwise called as ABA number which contains the bank and the branch code. Next few digits contain the account number which is followed by the cheque number.
    Micro Finance  In micro finance, very small amounts are given as credit to poor in rural and semi-urban areas to enable them to raise their income levels and improve living standards.
    MIFOR MIFOR is an interest rate derivative, which is calculated by adding dollar London Interbank Offered Rate (LIBOR) rates with the rupee-dollar forward premia. The MIFOR rate is hence, the borrowing cost from overseas.
    Mobile Banking It denotes Banking services availability on Mobile device. With the help of M-Banking or mobile banking customer can perform some basic banking transactions like checking bank balance, ordering a demand draft, stop payment of a cheque, Transferring funds etc.
    Monetary Policy Monetary Policy is another important part of economics which is used by the Government or the central bank to maintain the liquidity in the market and keep long term interest rate stable. It also provides the favorable monetary platform for economic growth and stability with the aim of stable prices and low unemployment.
    Money Laundering When a customer uses banking channels to cover up his suspicious and unlawful financial activities, it is called money laundering.
    Money Market Money Market is the financial market for short-term borrowing and lending which deals with the short term fund requirements of different financial entities. It offers short-term liquid funding instruments such as Treasury bills, Commercial paper, Certificate of Deposit etc. The money market consists of financial institutions and dealers who wish to either borrow or lend for short period of time, typically up to one year.
    Money Market Mutual Funds (MMMFs) The Money Market Mutual Funds (MMMFs) provide an avenue to the retail investor to invest in the money market. Retail investors normally deposit short-term surplus funds into a savings bank account, the returns from which are relatively low. The returns from MMMFs will be higher than the interest earned in a bank.
    Money order It’s a written order for a payment of the sum of amount which can be got from the post office.
    Monopsony Monopsony is that market situation in which there is only one single buyer of the product in the market. In other word, ‘buyer’s monopoly’ is termed as monopsony.
    Monthly Statement statement including all the transactions performed in a month received by customers at the end of that month.
    Moratorium  R.B.I. imposes moratorium on operations of a bank; if the affairs of the bank are not conducted as per banking norms. After moratorium R.B.I. and Government explore the options of safeguarding the interests of depositors by way of change in management, amalgamation or take over or by other means.
    Mortgage A mortgage is a method of using property (real or personal) as security for the payment of a debt. The term mortgage refers to the legal device used for this purpose, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan.
    Mortgage backed Lending Lending related to immovable property and activity of construction of residential premises is referred to as mortgage-based lending. Mortgage loans are generally given to home buyers to acquire now and pay for the acquisition over a period of time.
    Mortgage Bankers Major mortgage lending institutions such as Fannie Mae, Freddie Mac, or Ginnie Mae buy loans from Mortgage Bankers who are large enough to originate loans.
    Mortgage Brokers A mortgage broker is an intermediary between borrowers and lenders to facilitate the loan process between these two parties.
    Mortgage Insurance (MIP or PMI) Insurance purchased by the borrower to insure the lender or the government against loss in case if the borrower default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of borrower LTV (loan-to-value). PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When the borrower has accumulated 20% of his home’s value as equity, the lender may waive PMI at request.
    Mortgage Note The borrower‘s current mortgage note is the document that describes the details of a person‘s current loan. This note documents information such as the loan amount, interest rate, payments, late payment penalties, early pay provisions, etc.
    Mortgage Refinance A mortgage refinance involves the replacement of current debt with another debt with more convenient terms and conditions.
    Mortgage/Deed of Trust A debt instrument by which the borrower gives the lender a lien on property as security for the repayment of a loan.
    Multicurrency loan The loan involved many currencies.
    Mutual Fund  A company that invests in and professionally manages a diversified portfolio of securities and sells shares of the portfolio to investors.
    Mutual savings bank A bank owned by its depositors and is managed by a board of trustees.


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