• Banking Terms – R

    Term

    Meaning

    Range Bonds Bonds which cease the payments because the reference rate of the bond increases or decreases, as compared to predetermined rate on a given index.
    Rate of Return  A percentage showing the amount of investment gain or loss against the initial investment.
    Rate Sensitive Rate sensitive pertains to deposit account or security investment. If any changes are made to the related interest rate that causes variations in its demand and supply.
    RBI  The Reserve Bank of India is the apex bank of the country, which was constituted under the RBI Act, 1934 to regulate the other banks, issue of bank notes and maintenance of reserves with a view to securing the monetary stability in India.
    RC It’s the type of call report which deals with Balance Sheet.
    RC-C1 It’s the type of call report which deals with loans and leases.
    RC-C2 It’s the type of call report which deals with SBA Loans.
    RC-L It’s the type of call report which deals with Derivatives and Off-balance sheet items.
    RC-M It deals with Memoranda.
    RC-N It’s the type of Call report which is used to capture details regarding Past due loans, nonaccrual loans, leases and other assets.
    RDFI I_ It is the abbreviation for receiving depository financial institution where the transaction is received and this mainly used in ACH (automated clearing house).
    Real Estate Mortgages These refer to loans given against security of house property and security is in the form of mortgage of the property.
    Real Estate Settlement Procedures Act This is a Consumer Protection Act passed with dual purpose of making consumers better shoppers for different settlement services and to eliminate kickbacks which add to the costs of certain settlement services. The Act requires that borrowers receive disclosures at various stages associated with the settlement and it prohibits certain practices that increase the cost of settlement services.
    Real Interest Rate  The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.
    Real Property It is another term for real estate. It includes land and things permanently attached to the land, such as trees, buildings, and stationary mobile homes. Anything that is not real property is termed personal property.
    Realtor A real estate broker or an associate having membership with the local real estates board which is affiliated with the national association.
    Rebate Rebate is the return of certain amount by the bank to the customer based on some procedures. Discount is deducted before paid the amount. Rebate is given back after paid the full amount.
    Reconciliation Settling two transactions.
    Reconveyance In banking terms, reconveyance is transfer of property to its real owner, once the loan or the mortgage is paid off.
    Recovery The term recovery means taking steps which lead to the borrower repaying the overdue installments either in one lump sum or as per a recovery program. Recovery is different from repayment and applies to a situation where regular repayment does not take place.
    Recurring Deposits  These are also called cumulative deposits and in recurring deposit accounts, a certain amounts of savings are required to be compulsorily deposited at specific intervals for a specified period.
    Redemption Fee A commission or fee paid, when an agent or an individual sells an investment, such as mutual funds or annuity.
    Reference Asset An asset such as debt instrument which has a credit derivative is called as a reference asset.
    Reference Rate The basis of floating rate security is called as the reference rate.
    Refinance The process in which one replaces the original mortgage loan with a new one to take advantage of lower interest rates or better terms or to get cash is known as Refinance. It can be considered as applying for a secured loan intended to replace an existing loan secured by the same assets. The most common consumer refinancing is for a home mortgage.
    Refinance This refers to a bank pooling together its loans and obtaining finance from another agency at a specific cost. Thus, a bank may refinance its mortgage-based loans through a mortgage refinancing company and raise fresh funds for further mortgage based loans. The bank‘s mortgage based loans may have been given at an average rate of interest of say, 7% p.a. and may be refinanced at 6.5% p.a. On the original loans, the bank makes a margin of .05% and is again able to further finance Mortgage based loans at an appropriate rate of interest from the refinance received.
    Reflation It signifies general increase in the level of business activity in the economy. Reflation generally involves greater government expenditure and the easing of credit to encourage increased production.
    Regional Rural Banks These came into being on October 2, 1975 when 5 regional rural banks were established under what became the Regional Rural Banks Act 1975.  These were to bridge the gap in rural credit granting loans and advances to small and marginal farmers, artisans, small entrepreneurs and persons of small means engaged in trade, commerce, industry or other productive activities within their area of operation.
    Regressive Tax It is a tax in which rate of taxation falls with an increase in income. In regressive taxation total tax rate is more on people having lower incomes than that of those having higher incomes.
    Regulation B Regulation B is synonymous to Equal Credit Opportunity Act (ECOA).
    Regulation C Regulation C is synonymous to Home Mortgage Disclosure Act (HMDA).
    Regulation Z Regulation Z is synonymous to Truth in Lending Act (TILA).
    Reinvestment Risk The risk that arises from the fact that dividends or any coupon payment may not be eligible for investment to earn the normal market rate of interest is called as the reinvestment risk.
    Relative Strength Index (RSI) A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.
    Repayment Repayment is the returning back of the money borrowed by the borrower as per the terms and conditions of the loan agreement.
    Repo rate  the rate at which the RBI lends money to banks for short term
    Repossession Taking back of property by a seller or a lender from the buyer or the borrower due to default of payment.
    Repricing Repricing means a change in the rate of interest.
    Rescheduling of Payment Rearranging the repayment of a debt over a longer period than originally agreed upon due to financial difficulties of the borrower.
    Reserve Account An account which is maintained by depositing undistributed parts of profit for future needs is called as a reserve account.
    Residual Value The anticipated value that a company calculates, to sell its asset at the end of its full life.
    Restructuring Restructuring is the process in US. If customer is not able to pay the loan amount on time due to some reasons. Banks will restructure the loan process like to reduce the interest rate or will extend the time period.
    Retail Lending When the borrower is an individual and the purpose of borrowing is personal, such as purchase of a home or a car it is known as Retail Lending.
    Return on Capital A measure which determines how a company will optimize its funds.
    Return On Equity (ROE) This is the most popular indicator of financial performance. It is a measure of a corporation’s profitability that reveals how much profit a company generates with the money shareholders have invested.
    Reverse repo rate Reverse Repo rate is the rate at which the RBI borrows money from commercial banks
    Revolver The arrangement between bank and the customer in which credit limit is renegotiated.
    Revolving Credit It’s the arrangement between customers and banks. Customer can withdraw, repaid the amount at any time by any procedure till the arrangement expires.
    Right of Set-Off When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off.
    Rights Issue  An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.
    Risk This term may be defined as uncertainty of outcome, which may result in a loss for the bank. Thus, Credit Risk is uncertainty of repayment by the borrower and refers to the probable monetary loss the bank may suffer due to borrower‘s default.
    Risk Premium Many risks can be covered by obtaining insurance cover, thus risk of loss of human life resulting in loss of future income is covered by life insurance which requires the individual to pay regular premium to the insurance company for covering insurance on life. The risk of loss of income and loss of capital, which the bank is exposed to when it lends, is covered by the bank by adding a certain percent to the interest rate calculation while offering a loan product to the borrower. The bank may add to the prime rate an additional percentage towards risk premium and quote the interest rate to the borrower. The risk premium is added to all types of interest rates quoted above; however, the prime lending rate is an exception to this.
    Risk Weight Banks will weight their risk based on Assets.
    Routing transit number It is also called as routing number. It is a nine digit bank code used in US seen below cheques. This code is mainly used in ACH.

     

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