Basic Terms of Business and Commerce

BASIC TERMS OF BUSINESS AND
COMMERCE
by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
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My words.....
My purpose here is to give basic terms used in business

and commerce. Let us spread knowledge as widely as
possible. I welcome your suggestions. I also request you
to help me in spreading social entrepreneurship across the
globe – for which I need support of you people – not of
any VIP. With your help, I can spread the ideas – for
which we stand....
What types of capital are there?
There are various types of accounts : 1.
authorised capital (which is mentioned in
memorandum of association) it is also called
registered capital 2 issued capital – which has
been issued in the market 3 subscribed capital
– which people have subscribed 4. paid up
capital – which people have actually paid 5.
uncalled capital - which has not yet been
called from public
What types of accounts are there
in banks ?
Savings a/c
current a/c
cash credit a/c (working capital loan)
WCTL (working capital term loan)
packing credit (pre export loan)
letter of credit (post export loan)
Fixed deposit a/c
recurring deposit a/c
FCNR (foreign currency non repatriation a/c)
What are scheduled commercial
banks ?
They are mentioned in 2nd schedule of RBI

ACT 1949
they have to fulfill requirements of capital etc

as given in section 42 (6) (a) of the Act.
What was the earlier name of
SBI?
SBI was set up in 1955, before this it was known as

imperial bank of India, which was set up in 1921.
Imperial bank was formed from merger of bank of
bengal, bank of bombay, and bank of madras.
Bank of bengal was earlier bank of colcata estd. In
1806 and bank of bengal was the first joint stock bank
of India.
What was the first bank of India
1786 general bank of India
The first bank to start ATM In
India
HSBC
What was 20 point programme ?
India's former prime minister Mrs. Indira

Gandhi launched a programme for poverty
removal and rural development, it was called
20 point programme
What is WPI / CPI ?
WPI = wholesale price index

CPI = consumer price index (on the basis of retail price)
these reflect the overall dearness in the economy.
They are prepared with the following formula :
Price this year / price in the base year * 100
here we take up a basket of commodities for calculation of
these indices. The base year is taken as 100. if the WPI is
200, it means that prices have doubled since the base year.
What is human development
index?
Every country and now every state prepares

HDI, which shows factors like education,
health care, facilities for better living standards
etc.
What is percapital income ?
Divide total incomeof acountry by the number

of citizens in that country and you get Per
capita income.
What is GDP at factor cost /
current prices ?
GDP (total income of the country ) = GROSS
DOMESTIC PRODUCT
it is called gross - because adjustments for
export / import / depreciation etc. Have to be
done from it to find Net Income.
GDP may be at factor cost or current prices.
Current prices = it shows current prices, which
ignore the impact of inflation
How is WPI calculated ?
Suppose price of wheat, rice, oil, etc. Is 100 in

the base year, and it has gone to 120 in this
year, it means that prices have gone up by 20%
from the base year.
Inflation is calculated on the basis of these
indices – on the basis of differences of the
indices.
What are the holidays in banks ?
The holidays in banks are as per Negotiable

instrument act.
What are the various types of
cheques ?
1. corss = it can go to bank account only

2. bearer = any person can take payment
3. not negotiable crossed = only the person
who is named can get the payment in account
4. mutilated = torn or damaged cheque
5. traveller cheque = it can be encashed
anywhere – it is like a demand draft
What is the role of NABARD &
SIDBI?
NABARD is for rural development. It

refinance other banks for rural development
SIDBI is for small industries – it refinances
other banks for small business.
How do banks undertake credit
creation?
A deposit of 100 will lead to credit of over
1000 (may be more) as the bank will give loan
on these 100 (let us say 70), they will again
receive deposit on this (let us say 70) they
again give loan on this (let us say 49), they will
again take deposit and give loan ... this cycle
will continue infinitely
this is called credit creation.
What is ULIP?
Unit Linked Investment Plan= here the
investments are attached to share markets.
They may rise and fall with share market.
Generally ULIPs have option of different
combination of equity and debt. A 60:40
scheme means 60% investment goes in equity
and 40% in debt (less risky). Higher the equity,
higher the risks and rewards (both). It is similar
to mutual funds.
What is a mutual fund or
collective investment scheme?
Mutual fund is a combined investment by

small investors – where there is an independent
trust which manages these investments – in
stock market / debt instruments and distributes
profit / returns to the investors
collective investment schemes are similar to
mutual fund, but not the same.
What is the difference between
equity and debt?
Equity = ownership in a company – so it

carries dividend – share in profit - if there is
no profit – no dividend – more profit = more
dividend
debt = fixed interest bearing time bound
instruments like debenture, bond, etc. (it is
similar to FD – fixed deposits )
What is ZERO COUPON BOND?
Coupon = interest rate

These bonds are issued at a price much lower
than face value (print price) they dont carry
any interest. But the benefit is in terms of price
difference. Suppose you buy them in 60 and
they are matured at 100 you get 40 on
investment of 60. they are for fixed period
they are also called deep discount bond
What is RRB?
Regional Rural banks – they are for

development of a particular area – rural area
there are many RRBs in India
However, most of these are in financial
difficulties
What is lead bank scheme?
This is the coordinating bank for a particular

area. It tries to promote banking in a particular
area and coordinates with other banks. w
What is clearing?
If you have an account in SBI, but your friend gives you a

cheque drawn on ICICI, you deposit the cheque in your
bank. Your bank will not give you credit immediately. It
will send the cheque for clearing. The cheque will go to
ICICI which will give credit to SBI, which will then give
you the credit. Local clearing takes 1 day, outstation
clearing may take 10 days – and there are some charges
also for this.
What is at par cheque book?
Now many banks give at par cheque book.

These cheques are such that there is no clearing
charge on these chques even if you deposit
them in any bank.
How does ATM work?
You have a card – which is called debit card (ATM card).

You can go to any bank. You insert the card in the ATM
machine. The machine will authenticate it. There is a
centralised hub in Mumbai – which has data connectivity
to all the banks. There will be authentication from this
data base – thus your balance will be ascertained and you
will be allowed to withdraw money from this balance.
debit card and credit card?
Debit card is ATM card you can withdraw cash
from this. A few organisations take ATM card
also for transactions.
CREDIT card gives you the facility to buy
goods from market using this card. The bank
gets commission from the listing / marketing
company and you get free credit facility (for 1
month) and you can pay to bank in 1 month.
What is difference between draft
and banker's cheque?
For local transactions, banks give banker's

cheque
for outstation, the banks give demand draft
(which is as good as money)
it is also similar to postal order
banks earn commission when they issue draft /
banker's cheque
What is money transfer ?
There are many types of money transfer like :
TT (telegraphic transfer) / RTGS (real time
gross settlement transfer)
here you can transfer money from one account
to another instantly (you have to pay some
charges if the amount is more than Rs. 25000)
the charges are very less and generally banks
have some minimum amount requirements
What is PAYPAL?
These are used in e-commerce

here you can make payment for international
transactions.
There is a secure system of authentication and
the company which has to receive money –
gets its account with paypal
What is public key and private
key ?
These are base of ecommerce.

Every transaction can be executed only with
combination of these two keys. Public key can
be known, but private key is known only to the
user.
What is dayend?
In any organisation, the software generates a

key at the time of day end. Which has to be
kept safe and it has to tally with the opening
key of the next day. Thus it is ensured that
there is no unauthorised transaction in between
and data are safe. Every organisation keeps a
register of the keys generated at the time of day
end and day start.
What is whistle blowing ?
If you are working in a company and finds that

some unethical (wrong) thing is taking place,
you can raise this issue with the top executives
– this is called whistle blowing
companies have some executives to look after
these issues.
What is ALM?
Asset Liability Management

banks have to ensure that their assets and
liabilities are balanced – for this they do ALM.
What is a cartel?
When a group of firms join together and fix

prices together, it is called cartel. They are in
collusion (an agreement).
What is ombudsman?
It is the executive, who tries to handle public

grievances (complaint). Now ombudsman is
appointed in every department
In banks also we have banking ombudsman
it is there to stop corruption
What is IBA?
Indian Banks association

it promotes knowledge about banking and
promotes research in this sector. It conducts
some sources for banking professionals
What is IDRBT?
Institute of development and research in

banking technology
it is located in Hyderabad
it introduces latest technology in banking
it also conducts training programmes in
banking technology
What is SLR?
Statutory liquidity ratio : banks have to keep

some part of their deposits in government
securities / specified investments, this is called
SLR
WHAT IS CRR?
Cash Reserve Ratio : banks have to keep some

% of their deposits in cash with RBI, this is
called CRR.
Current rate : 5.75 %
when liquidity is more in the system, CRR is
increase. Reently RBI increase it by .75 so as
to reduce liquidity in the system and to reduce
inflation.
WHAT IS BANK RATE?
The rate at which RBI lends to other banks or

discounts the bills of other banks is called bank
rate. It is 6% now
What is PLR ?
The rate at which banks give loans to their best

customers, is called PLR.
P=prime (best customers) L = lending R = rate
suppose a bank is giving loan to a govt.
Department - it will give at PLR.
To an ordinary customer, the bank will give at
PLR + SOME POINTS.
Who decides PLR ?
Each bank decides at its own – what is its PLR.

PLR depends on the costing of the bank.
What is LIBOR?
LONDON INTERBANK OFFERED RATE

it is the most popular international base rate.
Most international transactions take place on
this rate.
There are many other rates also like this like :
MIBOR = mumbai inter bank offered rate.
What is REPO rate?
Repo= REPURCHASE rate. 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. To temporarily expand the money supply, the
central bank decreases repo rates (so that banks can swap
their holdings of government securities for cash), to
contract the money supply it increases the repo rates.
Alternatively, the central bank decides on a desired level
of money supply and lets the market determine the
appropriate repo rate.
What is inflation and what are its
types ?
When prices are rising it is called inflation. It
may be due to two reasons :
1. demand is more than supply (called demand
pull inflation)
2. cost is increasing (cost push inflation)
due to inflation, the purchasing price of money
falls. Small level of inflation is healthy for
growth of industries, but hyper inflation is
dangerous.
What is deficit financing ?
When government uses deficits (expenses are more
than revenue) in its budget, it is called deficit
financing.
Every govt. Goes for deficit financing. Revenue
deficit is acceptable, but fiscal deficit should not be
excessive. Then it would result in inflation, and
anomalies in economic system.
Deficit should be small so that it is less than half of
the growth in the GDP so that it can be absorbed in
the economy.
What is fiscal policy ?
Fiscal = relating to government revenues

policy = overall guidelines for action
Overall policy of the government regarding

taxation, revenue and expenditure is called
fiscal policy
fiscal deficit and revenue deficit?
Fiscal deficit is broader in comparison to

revenue deficit.
Revenue deficit takes into account only
revenues and expenditure (it doesnt include
capital expenditure and long term borrowings).
But fiscal deficit includes capital revenues and
captial expenditure also.
plan and non plan expenditure ?
Plan expenditure = for new projects,

developmental work
nonplan expenditure = every year the
government has to spend some money on
maintenance, staff salary, interest payments
etc. All these are called non-plan expenditure
What is the difference betwen
revenue and capital expenditure ?
Revenue expenditure is for revenue head

(which is having impact on one year).
Capital expenditure is related to long term
impact creating things – like building / assets
etc. (capital = long term investment)
What are the sources of revenue
for the governments?
1. indirect tax (the biggest source of income for any government – it
includes excise, customs, etc.) (the burden of this tax is borne by
common people as consumers)
2. direct tax – it includes that tax whic is borne by the tax payer
(example : income tax, wealth tax, etc. )
3. income from PSUs (now the govt. Is disinvesting its profit making
units, so this source of income will reduce in future).
4. disinvestment = sale of PSU – now this is becoming a major
source of income for the govt – who will tell that it is not good to kill
the goose that gives golden eggs.
What is PSU?
PSU = public sector unit – there are many

examples :
Navratnas & Maharatnas : for example : IOC,
ONGC, GAIL, SAIL, NTPC, MTNL etc.
Which are the PSUs that have
been privatised recently ?
THERE ARE MANY :
VSNL – SOLD TO TATA
CMC - SOLD TO TATA
IPCL – SOLD TO RELIANCE
MODERN BREAD – SOLD TO HUL –
WHICH ALSO SOLD IT OUT
What is QIP?
Qualified institutional placement :

here a company can issue equity shares, fully
and partly convertible debentures, or any
securities other than warrants which are
convertible to equity shares to
Who are qualified institutional
buyers ?
They have expertise and the financial analytical skills to
evaluate and invest in the capital markets
Public financial instituions
Pension funds
Provident funds
mutual funds
venture capital funds
FIIs
other such bodies as approved by SEBI (DIP) guidelines
What is ADR?
ownership in the shares of a non-U.S. company

that trades in U.S. financial markets. An owner
of an ADR has the right to obtain the foreign
stock it represents, but US investors usually
find it more convenient simply to own the
ADR. The price of an ADR often tracks the
price of the foreign stock in its home market,
What is GDR?
If you want your shares to be traded in London

stock exchange and Luxumberg stock
exchange, you can issue GDR. GDR represent
shares of non-european company. GDRs are
traded on the International Order Book (IOB).
Normally 1 GDR = 10 Shares, but not always.
What is green shoe option?
It allow underwriters to sell up to 15% more shares than

the original number set by the issuer, if demand is more..
What is red herring prospectus?
Now most companies fix share prices through bidding process

(when the go for IPO). Prospectus require that they have to
disclose price in advance. So companies go for red herring
prospectus. There is no price or issue size stated in the red
herring, and it is sometimes updated several times before being
called the final prospectus. It also contains a passage in red that
states the company is not attempting to sell its shares before
the registration is approved by the SEBI.
What is gum jumping ?
If companies invite investors to subscribe their

share even before their prospectus is approved
by SEBI it is called gum jumping. It is illegal.
Trading securities on the basis of information
that has not yet been disclosed to the public is
illegal. It is done before IPO, insider trading is
generally for shares which are already issued.
What is IPO Locking?
It is a period of time after a company has

initially gone public, usually between 90 to 180
days. During these initial days of trading,
company insiders or those holding majority
stakes in the company are forbidden to sell any
of their shares. Once the lock-up period ends,
most trading restrictions are removed.
What is underwriting?
Underwriting means an agreement with or

without conditions to subscribe to the securities
of a body corporate when public (for IPO) OR
the existing shareholders (for rights issue) of
such body corporate or the public (for rights
issue or FPO) do not subscribe to the
securities offered to them.
What is FPO?
FPO = follow on public issue

IPO = initial public offering
FPO is for a company which had earlier also
issues shares, so now it again wants to issue
shares.
What is the meaning of
SUBSCRIPTION LIST IS
OPEN?
When a company invites public to subscribe to its
shares, it is called subscription list is open.
Subscription list must be kept open for Min. 3
working days and max. 10 working days and
operation of subscription list be disclosed in the
prospectus. For infrastructure company/ designated
financial institution maximum period is 21 working
days. Rights issue should be kept open for at least 30
days and maximum 60 days.
What is the minimum price to be
paid on application?
The minimum application value should be

within the range of Rs. 5,000 to Rs. 7,000. The
issuer company, in consultation with the
merchant banker, stipulates the minimum
application size (in terms of number of shares)
falling within the aforesaid range of minimum
application value
What is private placement ?
The sale of securities to a relatively small

number of select investors as a way of raising
capital. Investors involved in private
placements are usually large banks, mutual
funds, insurance companies and pension funds.
Private placement is the opposite of a public
issue
What is book building ?
In this, an underwriter attempts to determine at

what price to offer an IPO based on demand
from institutional investors.
Example : if in book building the prices are
coming at 500, the share will be priced 500
(premium is 490 on face value of 10)
What do you understand from
book runner?
The managing or lead underwriter who

maintains the books of securities sold for a new
issue.
What is FCCB?
Foreign currency convertible bond : It is a
convertible bond issued in a currency different
than the issuer's domestic currency. It is issued
to raise foreign currency. A convertible bond is
a mix between a debt and equity instrument. It
acts like a bond by making regular coupon and
principal payments, but these bonds also give
the bondholder the option to convert the bond
into shares.
What is Yankee bond?
It is a bond denominated in U.S. dollars that is

publicly issued in the U.S. by foreign banks
and corporations. According to the Securities
Act of 1933, these bonds must first be
registered with the Securities and Exchange
Commission (SEC) before they can be sold.
Minimum issue size = $ 1 billion
What is eurobond?
A bond issued in a currency other than the

currency of the country is eurobond.it is issued
by an international syndicate and categorized
according to the currency in which it is
denominated. A eurodollar bond that is
denominated in U.S. dollars and issued in
Japan by an Australian company would be an
example of a eurobond.
What is bulldog bond?
A sterling denominated bond that is issued in

London by a company that is not British.
What is a Dragon Bond?
A bond that is issued in Asia but denominated

in U.S. dollars.
What Does Samurai Bond Mean?
A yen-denominated bond issued in Tokyo by a

non-Japanese company and subject to Japanese
regulations. Other types of yen-denominated
bonds are Euroyens issued in countries other
than Japan.
What is shogun bond?
A type of foreign-currency denominated bond

that is issued in Japan by foreign entities.
Organizations such as the World Bank have
issued such debt instruments in the past .
What Does Kangaroo Bond
Mean?
A type of foreign bond that is issued in the

Australian market by non-Australian firms and
is denominated in Australian currency. The
bond is subject to Australian laws and
regulations.
What Does Euroyen Mean?
Japanese yen-denominated deposits held in

banks outside Japan
What Does Sushi Bond Mean?
A Eurobond that is issued by a Japanese issuer

and does not count against a Japanese
institution's limits on the holdings of foreign
securities.
What is currency risk?
A form of risk that arises from the change in

price of one currency against another.
What Does Tequila Effect Mean?
Informal name given to the impact of the 1994

Mexican economic crisis on the South
American economy. The Tequila Effect
occurred because of a sudden devaluation in
the Mexican peso,
What Does Hedge Mean?
Making an investment to reduce the risk of adverse price
movements in an asset. Normally, a hedge consists of taking an
offsetting position in a related security, such as a futures
contract.
Example 1. You have a share of $ 100 you want to sell it after
5 months. If you sell it in future market / option market now –
you can ensure that there will not be any risk to you due to fall
in dollar.
Example 2 : suppose you have to pay $ 1000 after 6 months, if
you buy a future contract now, you save yourself from
fluctuations in dollars.
What Does CNY Mean?
In currencies, this is the abbreviation for the

China Yuan Renminbi.- it is a Foreign
Exchange market, is the largest financial
market in the world, with a daily average
volume of over US $1 trillion.
What Does Delta Hedging Mean?
An options strategy that aims to reduce (hedge)

the risk associated with price movements in the
underlying asset by offsetting long and short
positions.
WHAT IS EQUITY ?
It refers to shares.
What is a share : a share in ownership of a company
If you have share of a company, you are one of the owners
of the company
The person who has 50% or more shares of a company,
becomes the true and real owner of the company – and
decide about its management also. If no one has 51%
shares, the person who has largest shares, becomes the
decision maker regarding the company.
How is a company managed?
A company is managed by a board of directors.

The board of directors then appoint other
executives for day to day management. Board
of directors are appointed by Shareholders
through their annual general meeting. First
board of directors is appointed by the
promotors – thereafter, the shareholders select
them.
Are companies truly democratic?
Yes – but here votes are not counted on the

basis of number of persons, but on the basis of
capital (shares) held by a person. So if you
have more shares, you have more votes, if you
have less shares, you have less votes.
Why is company called a symbol
of capitalism?
Here a person who has money, controls

everything. The person who has money is able
to generate more money and this promotes
accumulation (concentration) of wealth.
This is just opposite of socialism or marxism -
where all the means of production are
controlled by the government.
What is capital, is it really a
liability?
Yes,
Capital is the money invested in a business.
Since business is different from the owners, so
the capital is also a liability for the business.
What is the difference between a
liability and an asset?
Asset is used to generate more asset and to
generate revenue. Asset is what you actually
own. Asset belong to you. You can take money
out of this asset. You can liquidate it (convert it
into money).
Liability is what you have to pay. It belong to
someone else – they may demand it from you
anytime.
What is the biggest asset of bank?
Theoretically – their main assets are the loans

that they have given – so in their balance sheet
– 90% of their assets are in the form of loans
given by them.
But practially , their biggest assets are their
committed people, who are not shown in any
balance sheet.
equity and debenture?
Equity = ownership – so you get dividend (not
interest) but this dividend will be available
only if there is profit. If there is no profit – no
dividend. You can never demand your money
back from the company (as you are the owner)
debenture – it is just like an FD – here you get
fixed interest per annum you are paid back
your money after some time (let us say 7
years).
debenture and bond?
Practically – yes (both carry interest, in both
the cases, the money is returned back after
some years and both are liability for the
company).
there is little difference.
Debentures are generally secured
Bonds are generally unsecured
Operationally – there is difference between
these two instruments.
If I purchase shares of a
company, but want my money
back, what should I do ?
Go to the secondary market (stock exchanges)

and sell out the share in open market – through
some broker. You will get your money back.
The person who buys the share will now
become the owner of the comapny (being share
holder).
What is liquidity ?
Liquidity = cash
because you can use cash for any purpose.
No business can work without liquidity
to some extent, debtors, inventory, bonds, short
term instruments are also liquid – as you can
convert them into cash any time.
Land, building, plant etc. Are less liquid – as
you will rarely convert them into cash.
equity and preference shares?
Prefernce shares are just like debentures. They

carry fixed interest (although it is called
dividend). They are for a fixed period (let us
say for 7 years). Preference shareholders get
preference in comparison to equity
shareholders at the time of payment of
dividend or the money.
How can I invest in equity /
preference / debentures?
You can invest in primary market or in
secondary market.
In order to invest through secondary market –
just go to a share broker – he will tell you all
the procedure and you can invest.
If you want to invest in primary market (fresh
issue) – look for advertisements of the
company and apply against the advertisement –
again through proper system.
What is IPO?
It is primary market
IPO = initial public offer
when a company issues shares for the first time
– it is called IPO.
When the comapny again issues shares – it is
called rights issue.
What is the biggest IPO in India
so far?
Reliance Power
($3 billion on 15 January 2008)

Who supervises primary &
secondary market ?
SEBI (ESTD IN 1992)

What was the institution before
SEBI?
CICA
controller of capital issues
But SEBI has much wider role

Which is India's biggest stock
exchange ?
NSE
(BSE is the oldest stock exchange – from
1875)

What is SENSEX?
Group of 30 shares based market index -

which represents the rise and fall of shares. All
the shares are listed on BSE.
(NSE has NIFTY – which has 50 shares listed
on NSE)

How many stock exchanges are
there in India ?
23
only two are corporatised (as a company) so far
: 1. NSE 2. OTCEI

How are share prices determined ?
Purely on the basis of market forces. Demand and supply
determine price. If demand will go up – prices will
increase, if demand is less than supply – prices will fall. It
is like perfect market.
Demand and supply depends on information. Market
discounts every information. Market has all the
information uptodate. If there is a good news about a
company, the market will discount it – as more people
will buy that share and less people will sell it – so the
prices will go up.
How do people decide about
shares – whether to buy or not?
People look at future earnings potential of a company before

buying a share. If they believe that the company will be able to
earn and grow manifold – they will buy at premium (more
price than the print price). If they belive that the company will
be a sick company (in huge losses) – they will sell it at a
discount (below the print price). If FM (finance minister) gives
a good budget – people expect a good future of company and
the prices will shoot up.

How do we ensure that our money
is safe in a company ?
There are auditors, independent directors, and
independent audit comitees in every company to
ensure that there are no frauds and our money remains
safe there. Still there are possibilities for fraud.
Investors have to be very careful. They should not
invest just at the advice of someone. They must
themselves study the fundamentals of a company
before investing and invest in A class shares only.

What are A class shares?
In BSE, they have classified shares on some

basis – like market capitalisation, daily
business, regularity of information submission
etc.
There are different types of companies like : A,
B, T, Z, etc. So you must invest in A class
shares only.
What is market capitalisation?
Total market value of all the shares issued is

called market capitalisation.
If a company has issued 1000 shares and
market price of each share is 189, the market
capitalisation of this company is : 189 * 1000 =
189000 answer

face value and market value ?
Face value may be : 1, or 2, or 5, or 10 or 100
or 1000. etc. It remains fixed – until company
changes it.
but market price keeps changing every day –
every minute
market price of good companies is always
higher than its face price.
Face price is print price (it is not listed or issue
price).
Do companies issue on face
price ?
Generally no
companies generally issue at premium
for example reliance power : face price =10
issue price = 450

Which company has the largest
number of shareholders in India
Reliance Industries Ltd.

General retail investors more than 35 lakhs

debtors and creditors ?
Debtor is a firm from whom a business has to

collect money. (it is an asset)
Creditor is one who will collect money from
the company (it is a liability)

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Basic Terms of Business and Commerce

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Basic Terms of Business and Commerce

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BASIC TERMS OF BUSINESS AND

My purpose here is to give basic terms used in business

They are mentioned in 2nd schedule of RBI

they have to fulfill requirements of capital etc

SBI was set up in 1955, before this it was known as

1786 general bank of India

India's former prime minister Mrs. Indira

WPI = wholesale price index

Every country and now every state prepares

Divide total incomeof acountry by the number

Suppose price of wheat, rice, oil, etc. Is 100 in

The holidays in banks are as per Negotiable

1. corss = it can go to bank account only

NABARD is for rural development. It

Mutual fund is a combined investment by

Equity = ownership in a company – so it

Coupon = interest rate

Regional Rural banks – they are for

This is the coordinating bank for a particular

If you have an account in SBI, but your friend gives you a

Now many banks give at par cheque book.

You have a card – which is called debit card (ATM card).

For local transactions, banks give banker's

These are used in e-commerce

These are base of ecommerce.

In any organisation, the software generates a

If you are working in a company and finds that

Asset Liability Management

When a group of firms join together and fix

It is the executive, who tries to handle public

Indian Banks association

Institute of development and research in

Statutory liquidity ratio : banks have to keep

Cash Reserve Ratio : banks have to keep some

The rate at which RBI lends to other banks or

The rate at which banks give loans to their best

Each bank decides at its own – what is its PLR.

LONDON INTERBANK OFFERED RATE

Fiscal = relating to government revenues

Overall policy of the government regarding

Fiscal deficit is broader in comparison to

Plan expenditure = for new projects,

Revenue expenditure is for revenue head

PSU = public sector unit – there are many

Qualified institutional placement :

ownership in the shares of a non-U.S. company

If you want your shares to be traded in London

It allow underwriters to sell up to 15% more shares than

Now most companies fix share prices through bidding process

If companies invite investors to subscribe their

It is a period of time after a company has

Underwriting means an agreement with or

FPO = follow on public issue

The minimum application value should be

The sale of securities to a relatively small

In this, an underwriter attempts to determine at

The managing or lead underwriter who

It is a bond denominated in U.S. dollars that is

A bond issued in a currency other than the

A sterling denominated bond that is issued in

A bond that is issued in Asia but denominated

A yen-denominated bond issued in Tokyo by a

A type of foreign-currency denominated bond

A type of foreign bond that is issued in the