• Banking Terms – O

    Term

    Meaning

    Obligation Obligation is nothing but loan.
    Obligor Obligor is nothing but Customer or borrower who borrowed loan from a bank
    ODFI It is the abbreviation for Originating depository financial institution. This is mainly used in ACH (automated clearing house). This warrants that the transaction happens according to the rules.
    Off balance sheet Off-Balance sheet items are the items which is not present in Bank balance sheet.
    Offer for Subscription  The offer of new securities to the public by the issuer or by someone on behalf of the issuer.
    Offline Debit Card This refers to a card which is issued by a bank and has a VISA or Master card logo on it. It can be issued, either instead of or along with a ATM card.
    Oligopoly Oligopoly is that form of imperfect competition in which there are only a few firms in the industry (or group) producing either homogeneous products or may be having product differentiation in a given line of production.
    Open Economy Open economy is that economy which is left free and the government imposes no restrictions on trade with areas outside that economy.
    Open End Credit A line of credit that may be used repeatedly up to a certain limit. Also called a charge account or revolving credit. It is actually an agreement by a bank to lend a specific amount to a borrower and to allow that amount to be borrowed again once it has been repaid. Also called revolving credit or revolving line of credit.
    Open-end (Mutual) Fund  There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.
    Open-ended Loans Open-ended loans come more from Credit Unions and are used for big-ticket purchasing without additional documentation being required. These loans are similar to Revolving Lines of Credit.
    Opening Price The price of a share quoted at the beginning of a business day. The opening price can be either the first bid and offer prices of the day, or the price at which the first transaction of the day was completed.
    Opinion Report This is a written report, which is taken by the lending bank from the existing banker of the subject. This report details relationship between the existing banker and the borrower. The report gives details of existing borrowings of the subject and bank‘s opinion on the pat dealings of the subject.
    Option A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.
    Origination Fee A fee charged by a lender for processing a loan application, expressed as a percentage of the mortgage amount. Bank will charge this fee to the customer. It typically cost 1% of the loan amount.
    Overallotment It is the offering wherein more securities than available are sold in the assumption that some orders will not be confirmed. It is also known as Green shoe. It is one of the ways for stabilizing the price of the issue post-pricing.
    Overdraft A draft or check written for an amount that exceeds the funds in the account on which the check is drawn. An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance – a person can be said to have gone “overdrawn”. If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorized overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply.
    Overdraft Protection A service which permits a verification account to be connected to other savings or line of credit for facilitation of protection against overdrafts is called overdraft protection.
    Overdraw To write a check for more money than what is present in the account.
    Overhead Costs The term refers to certain costs, which have to be incurred by the business irrespective of volume of business. Costs such as salaries and allowances, rent on premises, electricity and water expenses are examples of overhead costs in business.
    Oversubscribed When an Initial Public Offering has got more subscriptions than actual shares available for offering. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public’s perception of the business potential of the IPO company.
    Owner Financing When the seller loans the whole sum or a part of it to a buyer, it is called owner financing.

     

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