provides information on changes that may occur to the account. Account History: The payment history of an account over a specifc period of time, including the number of times the account was past due or over limit. Account Holder: Any and all persons designated and authorized to transact business on behalf of an account. Each account holder's signature needs to be on fle with the ban. The signature authorizes that person to conduct business on behalf of the account. Acquiring Bank: !n a merger, the ban that absorbs the ban ac"uired. Accrued interest# !nterest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price. Adjustable-Rate Mortgages (ARMS): Also nown as variable-rate mortgages. The initial interest rate is usually below that of conventional f$ed-rate loans. The interest rate may change over the life of the loan as maret conditions change. There is typically a ma$imum %or ceiling& and a minimum %or 'oor& defned in the loan agreement. !f interest rates rise, so does the loan payment. !f interest rates fall, the loan payment may as well. Arbitrage: (uying a fnancial instrument in one maret in order to sell the same instrument at a higher price in another maret. Adverse Action: )nder the E"ual *redit +pportunity Act, a creditor's refusal to grant credit on the terms re"uested, termination of an e$isting account, or an unfavorable change in an e$isting account. Adverse Action otice: The notice re"uired by the E"ual *redit +pportunity Act advising a credit applicant or e$isting debtor of the denial of their re"uest for credit or advising of a change in terms considered unfavorable to the account holder. A!R: Annual earnings rate on an investment. Alteration: Any change involving an erasure or rewriting in the date, amount, or payee of a chec or other negotiable instrument. Amorti"ation: The process of reducing debt through regular installment payments of principal and interest that will result in the payo, of a loan at its maturity. Anytime Banking: -ith introduction of AT.s, Tele-(aning and internet baning, customers can conduct their business anytime of the day and night. The '(aning /ours' is not a constraint for transacting baning business. Any#$ere Banking : 0efers to baning not only by AT.s, Tele-(aning and internet baning, but also to core baning solutions brought in by bans where customer can deposit his money, che"ues and also withdraw money from any branch connected with the system. All ma1or bans in !ndia have brought in core baning in their operations to mae baning truly anywhere baning. Annual %ercentage Rate (A%R): The cost of credit on a yearly basis, e$pressed as a percentage. Annual %ercentage &ield (A%&): A percentage rate re'ecting the total amount of interest paid on a deposit account based on the interest rate and the fre"uency of compounding for a 234-day year. Annuity : A life insurance product which pays income over the course of a set period. 5eferred annuities allow assets to grow before the income is received and immediate annuities %usually taen from a year after purchase& allow payments to start from about a year after purchase. A%R: The annual percentage rate of interest, usually on a loan or mortgage, usually displayed in bracets and representing the true cost of the loan or mortgage as it shows any additional payments beyond the interest rate. A''lication: )nder the E"ual *redit +pportunity Act %E*+A&, an oral or written re"uest for an e$tension of credit that is made in accordance with the procedures established by a creditor for the type of credit re"uested. A''raisal: The act of evaluating and setting the value of a specifc piece of personal or real property. Ask %rice: The lowest price at which a dealer is willing to sell a given security. Asset-Backed Securities (ABS): A type of security that is baced by a pool of ban loans, leases, and other assets. .ost A(6 are baced by auto loans and credit cards 7 these issues are very similar to mortgage- baced securities. At-t$e-money: The e$ercise price of a derivative that is closest to the maret price of the underlying instrument. A(M: AT.s are Automatic Teller .achines, which do the 1ob of a teller in a ban through *omputer 8etwor. AT.s are located on the branch premises or o, branch premises. AT.s are useful to dispense cash, receive cash, accept che"ues, give balances in the accounts and also give mini-statements to the customers. Aut$ori"ation: The issuance of approval, by a credit card issuer, merchant, or other a9liate, to complete a credit card transaction. Automated )learing House (A)H): A computerized facility used by member depository institutions to electronically combine, sort, and distribute inter-ban credits and debits. A*/s process electronic transfers of government securities and provided customer services, such as direct deposit of customers' salaries and government beneft payments %i.e., social security, welfare, and veterans' entitlements&, and preauthorized transfers. Automated (eller Mac$ine (A(M): A machine, activated by a magnetically encoded card or other medium that can process a variety of baning transactions. These include accepting deposits and loan payments, providing withdrawals, and transferring funds between accounts. Automatic Bill %ayment: A checless system for paying recurring bills with one authorization statement to a fnancial institution. :or e$ample, the customer would only have to provide one authorization form;letter;document to pay the cable bill each month. The necessary debits and credits are made through an Automated *learing /ouse %A*/&. Availability *ate: (an's policy as to when funds deposited into an account will be available for withdrawal. Availability %olicy: (an's policy as to when funds deposited into an account will be available for withdrawal. Available Balance: The balance of an account less any hold, uncollected funds, and restrictions against the account. Available )redit: The di,erence between the credit limit assigned to a cardholder account and the present balance of the account. Banking: Accepting for the purpose of lending or investment of deposits of money from <ublic, 0epayable on demand or otherwise and withdraw able by che"ues, drafts, order, etc. Bank +mbudsman: (an +mbudsman is the authority to loo into complaints against (ans in the main areas of collection of che"ue ; bills, issue of demand drafts, non-adherence to prescribed hours of woring, failure to honour guarantee ; letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances where bans 'out directions ; instructions of 0(!. This 6cheme was announced in =>>4 and is functioning with new guidelines from ?@@A. This scheme covers all scheduled bans, the 00(s and co-operative bans. Bancassurance: (ancassurance refers to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies lie home insurance - car insurance, medi-policies and others, by bans as corporate agents through their branches located in di,erent parts of the country by charging a fee. Banker,s -ien: (aners lien is a special right of lien e$ercised by the baners, who can retain goods bailed to them as a security for general balance of account. (aners can have this right in the absence of a contract to the contrary. Basel-..: The *ommittee on (aning 0egulations and 6upervisory <ractices, popularity nown as (asel *ommittee, submitted its revised version of norms in Bune, ?@@C. )nder the revised accord the capital re"uirement is to be calculated for credit, maret and operational riss. The minimum re"uirement continues to be DE of capital fund %Tier ! F !! *apital& Tier !! shall continue to be not more than =@@E of Tier ! *apital. Brick / Mortar Banking: (ric and .ortar (aning refers to traditional system of baning done only in a f$ed branch premises made of bric and mortar. 8ow there are baning channels lie AT., !nternet (aning, tele baning etc. Business o0 Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in :oreign E$change, /iring Gocers, +pening 6afe *ustody Accounts, !ssuing Getters of *redit, TravelersH *he"ues, doing .utual :und business, !nsurance (usiness, acting as Trustee or doing any other business which *entral Iovernment may notify in the o9cial Iazette. Bouncing o0 a c$eque: -here an account does not have su9cient balance to honour the che"ue issued by the customer, the che"ue is returned by the ban with the reason Jfunds insu9cientJ or JE$ceeds arrangementK. This is nown as '(ouncing of a che"ueH. Basis %oint: +ne hundredth of =E. A measure normally used in the statement of interest rate e.g., a change from 4.A4E to 4.D=E is a change of 3 basis points. (ear .arets# )nfavorable marets associated with falling prices and investor pessimism. Bid-ask S'read: The di,erence between a dealersHs bid and as price. Bid %rice: The highest price o,ered by a dealer to purchase a given security. Blue )$i's: (lue chips are unsurpassed in "uality and have a long and stable record of earnings and dividends. They are issued by large and well-established frms that have impeccable fnancial credentials. Bond: <ublicly traded long-term debt securities, issued by corporations and governments, whereby the issuer agrees to pay a f$ed amount of interest over a specifed period of time and to repay a f$ed amount of principal at maturity. Book 1alue: The amount of stocholdersH e"uity in a frm e"uals the amount of the frmHs assets minus the frmHs liabilities and preferred stoc. Broker: !ndividuals licensed by stoc e$changes to enable investors to buy and sell securities. Brokerage 2ee: The commission charged by a broer. Bull Markets: :avorable marets associated with rising prices and investor optimism. )all +'tion: The right to buy the underlying securities at a specifed e$ercise price on or before a specifed e$piration date. )allable Bonds: (onds that give the issuer the right to redeem the bonds before their stated maturity. )a'ital 3ain: The amount by which the proceeds from the sale of a capital asset e$ceed its original purchase price. )a'ital Markets# The maret in which long-term securities such as stocs and bonds are bought and sold. )erti4cate o0 *e'osits ()*s): 6avings instrument in which funds must remain on deposit for a specifed period and premature withdrawals incur interest penalties. )erti4cate o0 *e'osit:5 *ertifcate of 5eposits are negotiable receipts in bearer form which can be freely traded among investors. This is also a money maret instrument,issued for a period ranging from A days to f one year .The minimum deposit amount is 0s. = lah and they are transferable by endorsement and delivery. )$eque: *he"ue is a bill of e$change drawn on a specifed baner ordering the baner to pay a certain sum of money to the drawer of che"ue or another person. .oney is generally withdrawn by clients by che"ues. *he"ue is always payable on demand. )$eque (runcation: *he"ue truncation truncates or stops the 'ow of che"ues through the baning system. Ienerally truncation taes place at the collecting branch, which sends the electronic image of the che"ues to the paying branch through the clearing house and stores the paper che"ues with it. )losed-end (Mutual) 2und: A fund with a f$ed number of shares issued, and all trading is done between investors in the open maret. The share prices are determined by maret prices instead of their net asset value. )ollateral: A specifc asset pledged against possible default on a bond. .ortgage bonds are baced by claims on property. *ollateral trusts bonds are baced by claims on other securities. E"uipment obligation bonds are baced by claims on e"uipment. )ommercial %a'er: 6hort-term and unsecured promissory notes issued by corporations with very high credit standings. )ommon Stock: E"uity investment representing ownership in a corporationL each share represents a fractional ownership interest in the frm. )om'ound .nterest: !nterest paid not only on the initial deposit but also on any interest accumulated from one period to the ne$t. )ontract ote: A note which must accompany every security transaction which contains information such as the dealerHs name %whether he is acting as principal or agent& and the date of contract. )ontrolling S$are$older: Any person who is, or group of persons who together are, entitled to e$ercise or control the e$ercise of a certain amount of shares in a company at a level %which di,ers by 1urisdiction& that triggers a mandatory general o,er, or more of the voting power at general meetings of the issuer, or who is or are in a position to control the composition of a ma1ority of the board of directors of the issuer. )onvertible Bond: A bond with an option, allowing the bondholder to e$change the bond for a specifed number of shares of common stoc in the frm. A conversion price is the specifed value of the shares for which the bond may be e$changed. The conversion premium is the e$cess of the bondHs value over the conversion price. )or'orate Bond: Gong-term debt issued by private corporations. )ou'on: The feature on a bond that defnes the amount of annual interest income. )ou'on 2requency: The number of coupon payments per year. )ou'on Rate: The annual rate of interest on the bondHs face value that a bondHs issuer promises to pay the bondholder. !t is the bondHs interest payment per dollar of par value. )overed 6arrants: 5erivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon e$ercise. )redit Rating: An assessment of the lielihood of an individual or business being able to meet its fnancial obligations. *redit ratings are provided by credit agencies or rating agencies to verify the fnancial strength of the issuer for investors. )ollecting Banker: Also called receiving baner, who collects on instruments lie a che"ue, draft or bill of e$change, lodged with himself for the credit of his customer's account. )onsumer %rotection Act: !t is implemented from =>DA to enforce consumer rights through a simple legal procedure. (ans also are covered under the Act. A consumer can fle complaint for defciency of service with *onsumer 5istrict :orum for amounts upto 0s.?@ Gacs in 5istrict *ourt, and for amounts above 0s.?@ Gacs to 0s.= *rore in 6tate *ommission and for amounts above 0s.= *rore in 8ational *ommission. )o-o'erative Bank : An association of persons who collectively own and operate a ban for the beneft of consumers ; customers, lie 6araswat *o-operative (an or Abhyudaya *o-operative (an and other such bans. )o-o'erative Society : -hen an association of persons collectively own and operate a unit for the beneft of those using its services lie Apna (azar *o-operative 6ociety or 6ahaar (handar or a *o- operative /ousing 6ociety. )ore Banking Solutions ()BS): *ore (aning 6olutions is a buzz word in !ndian baning at present, where branches of the ban are connected to a central host and the customers of connected branches can do baning at any breach with core baning facility. )redit#ort$iness: !t is the capacity of a borrower to repay the loan ; advance in time along with interest as per agreed terms. )rossing o0 )$eques: *rossing refers to drawing two parallel lines across the face of the che"ue. A crossed che"ue cannot be paid in cash across the counter, and is to be paid through a ban either by transfer, collection or clearing. A general crossing means that che"ue can be paid through any ban and a special crossing, where the name of a ban is indicated on the che"ue, can be paid only through the named ban. )ustomer: A person who maintains any type of account with a ban is a ban customer. *onsumer <rotection Act has a wider defnition for consumer as the one who purchases any service for a fee lie purchasing a demand draft or a pay order. The term customer is defned di,erently by Gaws, softwares and countries. )urrent Account: *urrent account with a ban can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. 8o interest is paid in this type of account. )urrency Board: A monetary system in which the monetary base is fully baced by foreign reserves. Any changes in the size of the monetary base have to be fully matched by corresponding changes in the foreign reserves. )urrent &ield: A return measure that indicates the amount of current income a bond provides relative to its maret price. !t is shown as# *oupon 0ate divided by <rice multiplied by =@@E. )ustody o0 Securities: 0egistration of securities in the name of the person to whom a ban is accountable, or in the name of the banHs nomineeL plus deposition of securities in a designated account with the banHs baners or with any other institution providing custodial services. *ebit )ard: A plastic card issued by bans to customers to withdraw money electronically from their accounts. -hen you purchase things on the basis of 5ebit *ard the amount due is debited immediately to the account. .any bans issue 5ebit-*um-AT. *ards. *ebtor: A person who taes some money on loan from another person. *emand *e'osits: 5eposits which are withdrawn on demand by customers. E.g. savings ban and current account deposits. *emat Account: 5emat Account concept has revolutionized the capital maret of !ndia. -hen a depository company taes paper shares from an investor and converts them in electronic form through the concerned company, it is called 5ematerialization of 6hares. These converted 6hare *ertifcates in Electronic form are ept in a 5emat Account by the 5epository *ompany, lie a ban eeps money in a deposit account. !nvestor can withdraw the shares or purchase more shares through this demat Account. *erivative )all (%ut) 6arrants: -arrants issued by a third party which grant the holder the right to buy %sell& the shares of a listed company at a specifed price. *erivative .nstrument: :inancial instrument whose value depends on the value of another asset. *iscount Bond: A bond selling below par, as interest in-lieu to the bondholders. *is$onour o0 )$eque: 8on-payment of a che"ue by the paying baner with a return memo giving reasons for the non-payment. 5efault 0is# The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner. *iversi4cation: The inclusion of a number of di,erent investment vehicles in a portfolio in order to increase returns or be e$posed to less ris. *uration: A measure of bond price volatility, it captures both price and reinvestment riss to indicate how a bond will react to di,erent interest rate environments. !arnings: The total profts of a company after ta$ation and interest. !arnings 'er S$are (!%S): The amount of annual earnings available to common stocholders as stated on a per share basis. !arnings &ield: The ratio of earnings to price %E;<&. The reciprocal is price earnings ratio %<;E&. !-Banking : E-(aning or electronic baning is a form of baning where funds are transferred through e$change of electronic signals between bans and fnancial institution and customers AT.s, *redit *ards, 5ebit *ards, !nternational *ards, !nternet (aning and new fund transfer devices lie 6-!:T, 0TI6 belong to this category. !2( - (!lectronic 2und (rans0er): E:T is a device to facilitate automatic transmission and processing of messages as well as funds from one ban branch to another ban branch and even from one branch of a ban to a branch of another ban. E:T allows transfer of funds electronically with debit and credit to relative accounts. !it$er or Survivor: 0efers to operation of the account opened in two names with a ban. !t means that any one of the account holders have powers to withdraw money from the account, issue che"ues, give stop payment instructions etc. !n the event of death of one of the account holder, the surviving account holder gets all the powers of operation. !lectronic )ommerce (!-)ommerce): E- *ommerce is the paperless commerce where the e$change of business taes place by Electronic means. !ndorsement: -hen a 8egotiable !nstrument contains, on the bac of the instrument an endorsement, signed by the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement. Bouncing o0 a c$eque: -here the name of the endorsee or transferee is not mentioned on the instrument. !ndorsement in 2ull: -here the name of the endorsee or transferee appears on the instrument while maing endorsement. !quity: +wnership of the company in the form of shares of common stoc. !quity )all 6arrants: -arrants issued by a company which give the holder the right to ac"uire new shares in that company at a specifed price and for a specifed period of time. !7-dividend (8*): A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment %usually two days before the record date&. :or transactions during the e$-dividend period, the seller will receive the dividend, not the buyer. E$- dividend status is usually indicated in newspapers with an %$& ne$t to the stocHs or unit trustHs name. !7ecution o0 *ocuments: E$ecution of documents is done by putting signature of the person, or a9$ing his thumb impression or putting signature with stamp or a9$ing common seal of the company on the documents with or without signatures of directors as per articles of association of the company. 2ace 1alue9 ominal 1alue: The value of a fnancial instrument as stated on the instrument. !nterest is calculated on face;nominal value. 2i7ed-income Securities: !nvestment vehicles that o,er a f$ed periodic return. 2i7ed Rate Bonds: (onds bearing f$ed interest payments until maturity date. 2loating Rate Bonds: (onds bearing interest payments that are tied to current interest rates. 2actoring: (usiness of buying trade debts at a discount and maing a proft when debt is realized and also taing over collection of trade debts at agreed prices. 2oreign Banks: (ans incorporated outside !ndia but operating in !ndia and regulated by the 0eserve (an of !ndia %0(!&,. e..g., (arclays (an, /6(*, *itiban, 6tandard *hartered (an, etc. 2or0eiting: !n !nternational Trade when an e$porter fnds it di9cult to realize money from the importer, he sells the right to receive money at a discount to a forfaiter, who undertaes inherent political and commercial riss to fnance the e$porter, of course with assumption of a proft in the venture. 2orgery: when a material alteration is made on a document or a 8egotiable !nstrument lie a che"ue, to change the mandate of the drawer, with intention to defraud. 2undamental Analysis: 0esearch to predict stoc value that focuses on such determinants as earnings and dividends prospects, e$pectations for future interest rates and ris evaluation of the frm. 2uture 1alue: The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest. 2uture 1alue o0 an Annuity: The amount to which a stream of e"ual cash 'ows that occur in e"ual intervals will grow over a period of time when it is placed in an account paying compound interest. 2utures )ontract: A commitment to deliver a certain amount of some specifed item at some specifed date in the future. 3arnis$ee +rder: -hen a *ourt directs a ban to attach the funds to the credit of customer's account under provisions of 6ection 3@ of the *ode of *ivil <rocedure, =>@D. 3eneral -ien: A right of the creditors to retain possession of all goods given in security to him by the debtor for any outstanding debt. 3uarantee: A contract between guarantor and benefciary to ensure performance of a promise or discharge the liability of a third person. !f promise is broen or not performed, the guarantor pays contracted amount to the benefciary. Hedge: A combination of two or more securities into a single investment position for the purpose of reducing or eliminating ris. Holder: /older means any person entitled in his own name to the possession of the che"ue, bill of e$change or promissory note and who is entitled to receive or recover the amount due on it from the parties. :or e$ample, if ! give a che"ue to my friend to withdraw money from my ban,he becomes holder of that che"ue. Even if he loses the che"ue, he continues to be holder. :inder cannot become the holder. Holder in due course : A person who receives a 8egotiable !nstrument for value, before it was due and in good faith, without notice of any defect in it, he is called holder in due course as per 8egotiable !nstrument Act. !n the earlier e$ample if my friend lends some money to me on the basis of the che"ue, which ! have given to him for encashment, he becomes holder-in-due course. Hy'ot$ecation: *harge against property for an amount of debt where neither ownership nor possession is passed to the creditor. !n pledge, possession of property is passed on to the lender but in hypothecation, the property remains with the borrower in trust for the lender. .denti4cation: -hen a person provides a document to a ban or is being identifed by a person, who is nown to the ban, it is called identifcation. (ans as for identifcation before paying an order che"ue or a demand draft across the counter. .ndemni4er: -hen a person indemnifes or guarantees to mae good any loss caused to the lender from his actions or others' actions. .ndemnity: !ndemnity is a bond where the indemnifer undertaes to reimburse the benefciary from any loss arising due to his actions or third party actions. .ncome: The amount of money an individual receives in a particular time period. .nde7 2und: A mutual fund that holds shares in proportion to their representation in a maret inde$, such as the 6F< 4@@. .nitial %ublic +:ering (.%+): An event where a company sells its shares to the public for the frst time. The company can be referred to as an !<+ for a period of time after the event. .nside .n0ormation: 8on-public nowledge about a company possessed by its o9cers, ma1or owners, or other individuals with privileged access to information. .nsider (rading: The illegal use of non- public information about a company to mae proftable securities transactions .nsolvent: !nsolvent is a person who is unable to pay his debts as they mature, as his liabilities are more than the assets . *ivil *ourts declare such persons insolvent. (ans do not open accounts of insolvent persons as they cannot enter into contract as per law. .nterest 6arrant: -hen che"ue is given by a company or an organization in payment of interest on deposit , it is called interest warrant. !nterest warrant has all the characteristics of a che"ue. .nternational Banking: involves more than two nations or countries. !f an !ndian (an has branches in di,erent countries lie 6tate (an of !ndia, it is said to do !nternational (aning. .ntroduction: (ans are careful in opening any account for a customer as the prospective customer has to be introduced by an e$isting account holder or a sta, member or by any other person nown to the ban for opening of account. !f ban does not tae introduction, it will amount to negligence and will not get protection under law. .ntrinsic 1alue: The di,erence of the e$ercise price over the maret price of the underlying asset. .nvestment: A vehicle for funds e$pected to increase its value and;or generate positive returns. .nvestment Adviser: A person who carries on a business which provides investment advice with respect to securities and is registered with the relevant regulator as an investment adviser. .%+ 'rice: The price of share set before being traded on the stoc e$change. +nce the company has gone !nitial <ublic +,ering, the stoc price is determined by supply and demand. ;H2 Account : Boint /indu :amily Account is account of a frm whose business is carried out by Marta of the Boint family, acting for all the family members.. The family members have common ancestor and generally maintain a common residence and are sub1ect to common social, economic and religious regulations. ;oint Account: -hen two or more individuals 1ointly open an account with a ban. ;unk Bond: /igh-ris securities that have received low ratings %i.e. 6tandard F <oorHs ((( rating or belowL or .oodyHs ((( rating or below& and as such, produce high yields, so long as they do not go into default. <arta: .anager of a /indu )ndivided :amily %/):& who handles the family business. /e is usually the eldest male member of the undivided family. <iosk Banking: 5oing baning from a cubicle from which food, newspapers, ticets etc. are also sold. <&) orms: Mnow your customer norms are imposed by 0.(.!. on bans and other fnancial institutions to ensure that they now their customers and to ensure that customers deal only in legitimate baning operations and not in money laundering or frauds. -a# o0 -imitation: Gimitation Act of =>32 f$es the limitation period of debts and obligations including bans loans and advances. !f the period f$ed for particular debt or loan e$pires, one cannot fle a suit for is recovery, but the fact of the debt or loan is not denied. !t is said that law of limitation bars the remedy but does not e$tinguish the right. -ease 2inancing: :inancing for the business of renting houses or lands for a specifed period of time and also hiring out of an asset for the duration of its economic life. Geasing of a car or heavy machinery for a specifc period at specifc price is an e$ample. -etter o0 )redit: A document issued by importers ban to its branch or agent abroad authorizing the payment of a specifed sum to a person named in Getter of *redit %usually e$porter from abroad&. Getters of *redit are covered by rules framed under )niform *ustoms and <ractices of 5ocumentary *redits framed by !nternational *hamber of *ommerce in <aris. -imited )om'anies Accounts: Accounts of companies incorporated under the *ompanies Act, =>43 . A company may be private or public. Giability of the shareholders of a company is generally limited to the face value of shares held by them. -everage Ratio: :inancial ratios that measure the amount of debt being used to support operations and the ability of the frm to service its debt. -ibor: The Gondon !nterban +,ered 0ate %or G!(+0& is a daily reference rate based on the interest rates at which bans o,er to lend unsecured funds to other bans in the Gondon wholesale money maret %or interban maret&. The G!(+0 rate is published daily by the (ritish (anerHs Association and will be slightly higher than the Gondon !nterban (id 0ate %G!(!5&, the rate at which bans are prepared to accept deposits. -imit +rder: An order to buy %sell& securities which specifes the highest %lowest& price at which the order is to be transacted. -imited )om'any: The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions. -iquidity: The ability to convert an investment into cash "uicly and with little or no loss in value. -isting: Nuotation of the !nitial <ublic +,ering companyHs shares on the stoc e$change for public trading. -isting *ate: The date on which !nitial <ublic +,ering stocs are frst traded on the stoc e$change by the public Margin )all: A notice to a client that it must provide money to satisfy a minimum margin re"uirement set by an E$change or by a ban ; broing frm. Market )a'itali"ation: The product of the number of the companyHs outstanding ordinary shares and the maret price of each share. Market Maker: A dealer who maintains an inventory in one or more stocs and undertaes to mae continuous two-sided "uotes. Market +rder: An order to buy or an order to sell securities which is to be e$ecuted at the prevailing maret price. Money Market: .aret in which short- term securities are bought and sold. Marginal Standing 2acility Rate: .6: scheme has become e,ective from @>th .ay, ?@== launched by the 0(!. )nder this scheme, (ans will be able to borrow upto =E of their respective 8et 5emand and Time Giabilities. The rate of interest on the amount accessed from this facility will be =@@ basis points %i.e. =E& above the repo rate. This scheme is liely to reduce volatility in the overnight rates and improve monetary transmission. Mandate: -ritten authority issued by a customer to another person to act on his behalf, to sign che"ues or to operate a ban account. Material Alteration: Alteration in an instrument so as to alter the character of an instrument for e$ample when date, amount, name of the payee are altered or maing a che"ue payable to bearer from an order one or opening the crossing on a che"ue. Merc$ant Banking : -hen a ban provides to a customer various types of fnancial services lie accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice, information or assistance on starting new business, ac"uisitions, mergers and foreign e$change. Micro 2inance: .icro :inance aims at alleviation of poverty and empowerment of weaer sections in !ndia. !n micro fnance, very small amounts are given as credit to poor in rural, semi-urban and urban areas to enable them to raise their income levels and improve living standards. Minor Accounts: A minor is a person who has not attained legal age of =D years. As per *ontract Act a minor cannot enter into a contract but as per 8egotiable !nstrument Act, a minor can draw, negotiate, endorse, receive payment on a 8egotiable !nstrument so as to bind all the persons, e$cept himself. !n order to boost their deposits many bans open minor accounts with some restrictions. Mobile Banking : -ith the help of .- (aning or mobile baning customer can chec his ban balance, order a demand draft, stop payment of a che"ue, re"uest for a che"ue boo and have information about latest interest rates. Money -aundering: -hen a customer uses baning channels to cover up his suspicious and unlawful fnancial activities, it is called money laundering. Money Market: .oney maret is not an organized maret lie (ombay 6toc E$change but is an informal networ of bans, fnancial institutions who deal in money maret instruments of short term lie *<, *5 and Treasury bills of Iovernment. Moratorium: 0.(.!. imposes moratorium on operations of a banL if the a,airs of the ban are not conducted as per baning norms. After moratorium 0.(.!. and Iovernment e$plore the options of safeguarding the interests of depositors by way of change in management, amalgamation or tae over or by other means. Mortgage: Transfer of an interest in specifc immovable property for the purpose of o,ering a security for taing a loan or advance from another. !t may be e$isting or future debt or performance of an agreement which may create monetary obligation for the transferor %mortgagor&. Mutual 2und: A company that invests in and professionally manages a diversifed portfolio of securities and sells shares of the portfolio to investors. ABAR*: 8ational (an for Agriculture F 0ural 5evelopment was setup in =>D? under the Act of =>D=. 8A(A05 fnances and regulates rural fnancing and also is responsible for development agriculture and rural industries. egotiation: !n the conte$t of baning, negotiation means an act of transferring or assigning a money instrument from one person to another person in the course of business. et Asset 1alue: The underlying value of a share of stoc in a particular mutual fundL also used with preferred stoc. on-2und Based -imits: 8on-:und (ased Gimits are those type of limits where baner does not part with the funds but may have to part with funds in case of default by the borrowers, lie guarantees, letter of credit and acceptance facility. on-Resident: A person who is not a resident of !ndia is a non-resident. on-Resident Accounts: Accounts of non-resident !ndian citizens opened and maintained as per 0.(.!. 0ules. otary %ublic: A Gawyer who is authorized by Iovernment to certify copies of documents . %A Account: !f interest and instalments and other ban dues are not paid in any loan account within a specifed time limit, it is being treated as non-performing assets of a ban. +: Balance S$eet .tems: Those items which a,ect the fnancial position of a business concern, but do not appear in the (alance 6heet E,g guarantees, letters of credit . The mention Jo, (alance 6heet itemsJ is often found in Auditors 0eports or 5irectors 0eports. +:er 0or Sale: An o,er to the public by, or on behalf of, the holders of securities already in issue. +:er 0or Subscri'tion: The o,er of new securities to the public by the issuer or by someone on behalf of the issuer. +nline Banking: (aning through internet site of the ban which is made interactive. +'en-end (Mutual) 2und: There is no limit to the number of shares the fund can issue. The fund issues new shares of stoc and flls the purchase order with those new shares. !nvestors buy their shares from, and sell them bac to, the mutual fund itself. The share prices are determined by their net asset value. +'en +:er: An o,er to current holders of securities to subscribe for securities whether or not in proportion to their e$isting holdings. +'tion: A security that gives the holder the right to buy or sell a certain amount of an underlying fnancial asset at a specifed price for a specifed period of time. +versubscribed: -hen an !nitial <ublic +,ering has more applications than actual shares available. !nvestors will often apply for more shares than re"uired in anticipation of only receiving a fraction of the re"uested number. !nvestors and underwriters will often loo to see if an !<+ is oversubscribed as an indication of the publicHs perception of the business potential of the !<+ company. %ass Book: A record of all debit and credit entries in a customer's account. Ienerally all bans issue pass boos to 6avings (an;*urrent Account /olders. %ar Bond: A bond selling at par %i.e. at its face value&. %ar 1alue: The face value of a security. %er'etual Bonds: (onds which have no maturity date. %lacing: +btaining subscriptions for, or the sale of, primary maret, where the new securities of issuing companies are initially sold. %ersonal .denti4cation umber (%.): <ersonal !dentifcation 8umber is a number which an AT. card holder has to ey in before he is authorized to do any baning transaction in a AT. . %lastic Money: *redit *ards, 5ebit *ards, AT. *ards and !nternational *ards are considered plastic money as lie money they can enable us to get goods and services. %ledge: A bailment of goods as security for payment of a debt or performance of a promise, e.g pledge of stoc by a borrower to a baner for a credit limit. <ledge can be made in movable goods only. %ost-*ated )$eque: A *he"ue which bears the date which is subse"uent to the date when it is drawn. :or e$ample, a che"ue drawn on Dth of :ebruary, ?@@A bears the date of =?th :ebruary, ?@@A. %o#er o0 Attorney: !t is a document e$ecuted by one person - 5onor or <rincipal, in favour of another person, 5onee or Agent - to act on behalf of the former, strictly as per authority given in the document. %ort0olio: A collection of investment vehicles assembled to meet one or more investment goals. %re0erence S$ares: A corporate security that pays a f$ed dividend each period. !t is senior to ordinary shares but 1unior to bonds in its claims on corporate income and assets in case of banruptcy. %remium (6arrants): The di,erence of the maret price of a warrant over its intrinsic value. %remium Bond: (ond selling above par. %resent 1alue: The amount to which a future deposit will discount bac to present when it is depreciated in an account paying compound interest. %resent 1alue o0 an Annuity: The amount to which a stream of e"ual cash 'ows that occur in e"ual intervals will discount bac to present when it is depreciated in an account paying compound interest. %rice9!arnings Ratio (%9!): The measure to determine how the maret is pricing the companyHs common stoc. The price;earnings %<;E& ratio relates the companyHs earnings per share %E<6& to the maret price of its stoc. %rivati"ation: The sale of government- owned e"uity in nationalized industry or other commercial enterprises to private investors. %ros'ectus: A detailed report published by the !nitial <ublic +,ering company, which includes all terms and conditions, application procedures, !<+ prices etc, for the !<+ %ut +'tion: The right to sell the underlying securities at a specifed e$ercise price on of before a specifed e$piration date. %remature 6it$dra#als: Term deposits lie :i$ed 5eposits, *all 5eposits, 6hort 5eposits and 0ecurring 5eposits have to mature on a particular day. -hen these deposits are sought to be withdrawn before maturity , it is premature withdrawal. %rime -ending Rate (%-R): The rate at which bans lend to their best %prime& customers. %riority Sector Advances : consist of loans and advances to Agriculture, 6mall 6cale !ndustry, 6mall 0oad and -ater Transport +perators, 0etail Trade, 6mall (usiness with limits on investment in e"uipments, professional and self employed persons, state sponsored organisations for lending to 6*;6T, Educational Goans, /ousing :inance up to certain limits, self-help groups and consumption loans. %romissory ote: <romissory 8ote is a promise ; undertaing given by one person in writing to another person, to pay to that person , a certain sum of money on demand or on a future day. %rovisioning: <rovisioning is made for the liely loss in the proft and loss account while fnalizing accounts of bans. All bans are supposed to mae assets classifcation and mae appropriate provisions for liely losses in their balance sheets. %ublic Sector Bank: A ban fully or partly owned by the Iovernment. Rate o0 Return: A percentage showing the amount of investment gain or loss against the initial investment. Real .nterest Rate: The net interest rate over the in'ation rate. The growth rate of purchasing power derived from an investment. Redem'tion 1alue: The value of a bond when redeemed. Reinvestment 1alue: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security. Relative Strengt$ .nde7 (RS.): A stocHs price that changes over a period of time relative to that of a maret inde$ such as the 6tandard F <oorHs 4@@, usually measured on a scale from = to =@@, = being the worst and =@@ being the best. Re'urc$ase Agreement: An arrangement in which a security is sold and later bought bac at an agreed price and time. Resistance -evel: A price at which sellers consistently outnumber buyers, preventing further price rises. 0eturn# Amount of investment gain or loss. Resc$eduling o0 %ayment: 0earranging the repayment of a debt over a longer period than originally agreed upon due to fnancial di9culties of the borrower. Restrictive !ndorsement: -here endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as J<ay to Asho onlyJ. 8ow Asho cannot negotiate the instrument further. Rig$t o0 A''ro'riation: As per 6ection 4> of the !ndian *ontract Act, =>A? while maing the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. !f the debtor does not do so, the baner can appropriate the payment to any debt of his customer. Rig$t o0 Set-+: : -hen a baner combines two accounts in the name of the same customer and ad1usts the debit balance in one account with the credit balance in other account, it is called right of set-o,. :or e$ample, debit balance of 0s.4@,@@@;- in overdraft account can be set o, against credit balance of 0s.A4,@@@;- in the 6avings (an Account of the same customer, leaving a balance of 0s.?4,@@@;- credit in the savings account. Rig$ts .ssue: An o,er by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their e$isting holdings. Risk-Averse= Risk-eutral= Risk-(aking: 0is-averse describes an investor who re"uires greater return in e$change for greater ris. 0is-neutral describes an investor who does not re"uire greater return in e$change for greater ris. 0is-taing describes an investor who will accept a lower return in e$change for greater ris. Sa0e )ustody: -hen articles of value lie 1ewellery, bo$es, shares, debentures, Iovernment bonds, -ills or other documents or articles are given to a ban for safe eeping in its safe vault, it is called safe custody.. (an charges a fee from its clients for such safe custody. Savings Bank Account: All bans in !ndia are having the facility of opening savings ban account with a nominal balance. This account is used for personal purposes and not for business purpose and there are certain restrictions on withdrawals from this type of account. Account holder gets nominal interest in this account. Senior Bond: A bond that has priority over other bonds in claiming assets and dividends. Settlement: *onclusion of a securities transaction when a customer pays a broer;dealer for securities purchased or delivered, securities sold, and receive from the broer the proceeds of a sale. S$ort Hedge: A transaction that protects the value of an asset held by taing a short position in a futures contract. S$ort %osition: !nvestors sell securities in the hope that they will decrease in value and can be bought at a later date for proft. S$ort Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender. S'eculation: The process of buying investment vehicles in which the future value and level of e$pected earnings are highly uncertain. Stock S'lits: -holesale changes in the number of shares. :or e$ample, a two for one split doubles the number of shares but does not change the share capital. Subordinated Bond: An issue that rans after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. +wners of this ind of bond stand last in line among creditors, but before e"uity holders, when an issuer fails fnancially. Substantial S$are$older: A person ac"uires an interest in relevant share capital e"ual to, or e$ceeding, =@E of the share capital. Su''ort -evel: A price at which buyers consistently outnumber sellers, preventing further price falls. (eller : Teller is a sta, member of a ban who accepts deposits, cashes che"ues and performs other baning services for the public. (ec$nical Analysis: A method of evaluating securities by relying on the assumption that maret data, such as charts of price, volume, and open interest, can help predict future %usually short-term& maret trends. *ontrasted with fundamental analysis which involves the study of fnancial accounts and other information about the company. %!t is an attempt to predict movements in security prices from their trading volume history.& (ime Hori"on: The duration of time an investment is intended for. (rading Rules: 6tipulation of parameters for opening and intra-day "uotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security. (rust *eed: A formal document that creates a trust. !t states the purpose and terms of the name of the trustees and benefciaries. >nder#riting : is an agreement by the underwriter to buy on a f$ed date and at a f$ed rate, the unsubscribed portion of shares or debentures or other issues. )nderwriter gets commission for this agreement. >nderlying Security: The security sub1ect to being purchased or sold upon e$ercise of the option contract. >niversal Banking : -hen (ans and :inancial !nstitutions are allowed to undertae all types of activities related to baning lie acceptance of deposits, granting of advances, investment, issue of credit cards, pro1ect fnance, venture capital fnance, foreign e$change business, insurance etc. it is called )niversal (aning. 1aluation: <rocess by which an investor determines the worth of a security using ris and return concept. 1irtual Banking: Oirtual baning is also called internet baning, through which fnancial and baning services are accessed via internet's -orld -ide -eb. !t is called virtual baning because an internet ban has no boundaries of bric and mortar and it e$ists only on the internet. 6arrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stoc in company at a specifed price for a specifed period of time. 6$olesale Banking: -holesale baning is di,erent from 0etail (aning as its focus is on providing for fnancial needs of industry and institutional clients. 6indo# *ressing: :inancial ad1ustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts. &ield (.nternal rate o0 Return): The compound annual rate of return earned by an investment &ield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investorHs capital gain or loss on the security are taen into account. ?ero )ou'on Bond: A bond with no coupon that is sold at a deep discount from par value. 0ead more# http#;;www.banersadda.com;?@=?;@?;ban ing-terms.htmlPi$zz2CzQz<o6T +'en Market o'erations(+M+):The buying and selling of government securities in the open maret in order to e$pand or contract the amount of money in the baning system by 0(!. +pen maret operations are the principal tools of monetary policy. Micro )redit:!t is a term used to e$tend small loans to very poor people for self-employment pro1ects that generate income, allowing them to care for themselves and their families. R(3S:The acronym R0TI6H stands for 0eal Time Iross 6ettlement. 0TI6 system is a funds transfer mechanism where transfer of money taes place from one ban to another on a Rreal timeH and onRgrossH basis. This is the fastest possible money transfer system through the baning channel.6ettlement in Rreal timeH means payment transaction is not sub1ected to any waiting period.The transactions are settled as soon as they are processed. RIross settlementH means the transaction is settled on one to one basis without bunching with any other transaction. 6$olesale %rice .nde7(6%.):The -holesale <rice !nde$ %-<!& is the inde$ used to measure the changes in the average price level of goods traded in wholesale maret. A total of C24 commodity prices mae up the inde$. !t is available on a weely basis. !t is generally taen as an indicator of the in'ation rate in the !ndian economy. The !ndian -holesale <rice !nde$ %-<!& was frst published in =>@?, and was used by policy maers until it was replaced by the <roducer <rice !nde$ %<<!& in =>AD. )onsumer 'rice .nde7()%.):!t is a measure estimating the average price of consumer goods and services purchased by households. 1enture )a'ital#Oenture capital is money provided by an outside investor to fnance a new, growing, or troubled business. The venture capitalist provides the funding nowing that thereHs a signifcant ris associated with the companyHs future profts and cash 'ow. *apital is invested in e$change for an e"uity stae in the business rather than given as a loan, and the investor hopes the investment will yield a better-than-average return. (reasury Bills:Treasury (ills %T-(ills& are short term, 0upee denominated obligations issued by the 0eserve (an of !ndia %0(!& on behalf of the Iovernment of !ndia. They are thus useful in managing short-term li"uidity. At present, the Iovernment of !ndia issues three types of treasury bills through auctions, namely, >=-day, =D?-day and 23C-day. There are no treasury bills issued by 6tate Iovernments. Banking +mbudsmen Sc$eme:The (aning +mbudsman 6cheme enables an e$peditious and ine$pensive forum to ban customers for resolution of complaints relating to certain services rendered by bans. The (aning +mbudsman is a senior o9cial appointed by the 0eserve (an of !ndia to redress customer complaints against defciency in certain baning services. The (aning +mbudsman 6cheme was frst introduced in !ndia in =>>4, and was revised in ?@@?. The current scheme became operative from the = Banuary ?@@3, and replaced and superseded the baning +mbudsman 6cheme ?@@?. Subsidy:A subsidy is a form of fnancial assistance paid to a business or economic sector. .ost subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or to encourage it to hire more labor. *ebenture: A debenture is basically an unsecured loan to a corporation. A type of debt instrument that is not secured by physical asset. 5ebentures are baced only by the general creditworthiness and reputation of the issuer. i&*onvertible 5ebentures# Any type of debenture that can be converted into some other security or it can be converted into stoc.. ii&8on-*onvertibility 5ebentures%8*(&# 8on *onvertible 5ebentures are those that cannot be converted into e"uity shares of the issuing company, as opposed to *onvertible debentures. 8onconvertible debentures normally earn a higher interest rate than convertible debentures do. Hedge 0und:/edge means to reduce fnancial ris. A hedge fund is an investment fund open to a limited range of investors and re"uires a very large initial minimum investment. !t is important to note that hedging is actually the practice of attempting to reduce ris, but the goal of most hedge funds is to ma$imize return on investment. 2))B:A :oreign *urrency *onvertible (ond %:**(& is a type of convertible bond issued in a currency di,erent than the issuerHs domestic currency. !n other words, the money being raised by the issuing company is in the form of a foreign currency. A company may issue an :**( if it intends to mae a large investment in a country using that foreign currency. )a'ital Account )onvertibility()A)): !t is the freedom to convert local fnancial assets into foreign fnancial assets and vice versa at maret determined rates of e$change. This means that capital account convertibility allows anyone to freely move from local currency into foreign currency and bac. The 0eserve (an of !ndia has appointed a committee to set out the framewor for fuller *apital Account *onvertibility. *apital account convertibility is considered to be one of the ma1or features of a developed economy. !t helps attract foreign investment. capital account convertibility maes it easier for domestic companies to tap foreign marets. )urrent Account )onvertibility:!t defnes at one can import and e$port goods or receive or mae payments for services rendered. /owever, investments and borrowings are restricted. Arbitrage:The opportunity to buy an asset at a low price then immediately selling it on a di,erent maret for a higher price. )a'italism#*apitalism as an economy is based on a democratic political ideology and produces a free maret economy, where businesses are privately owned and operated for proftL in capitalism, all of the capital investments and decisions about production, distribution, and the prices of goods, services, and labor, are determined in the free maret and a,ected by the forces of supply and demand. Socialism:6ocialism as an economy is based on a collectivist type of political ideology and involves the running of businesses to beneft the common good of a vast ma1ority of people rather than of a small upper class segment of society. )or'orate governance: The way in which a company is governed and how it deals with the various interests of its customers, shareholders, employees and society at large. *orporate governance is the set of processes, customs, policies, laws, and institutions a,ecting the way a corporation %or company& is directed, administered or controlled.!s defned as the general set of customs, regulations, habits, and laws that determine to what end a frm should be run. 2unctions o0 RB.: The 0eserve (an of !ndia is the central ban of !ndia, was established on April =, =>24 in accordance with the provisions of the 0eserve (an of !ndia Act, =>2C. The 0eserve (an of !ndia was set up on the recommendations of the /ilton Soung *ommission. The commission submitted its report in the year =>?3, though the ban was not set up for nine years.To regulate the issue of (an 8otes and eeping of reserves with a view to securing monetary stability in !ndia and generally to operate the currency and credit system of the country to its advantage. (aner to the Iovernment# performs merchant baning function for the central and the state governmentsL also acts as their baner.(aner to bans# maintains baning accounts of all scheduled bans. Monetary 'olicy:A .onetary policy is the process by which the government, central ban, of a country controls %i& the supply of money, %ii& availability of money, and %iii& cost of money or rate of interest, in order to attain a set of ob1ectives oriented towards the growth and stability of the economy. 2iscal %olicy::iscal policy is the use of government spending and revenue collection to in'uence the economy. These policies a,ect ta$ rates, interest rates and government spending, in an e,ort to control the economy. :iscal policy is an additional method to determine public revenue and public e$penditure. )ore Banking Solutions:*ore baning is a general term used to describe the services provided by a group of networed ban branches. (an customers may access their funds and other simple transactions from any of the member branch o9ces. !t will cut down time, woring simultaneously on di,erent issues and increasing e9ciency. The platform where communication technology and information technology are merged to suit core needs of baning is nown as *ore (aning 6olutions !-3overnance: E-Iovernance is the public sectorHs use of information and communication technologies with the aim of improving information and service delivery, encouraging citizen participation in the decision-maing process and maing government more accountable,transparent and e,ective. Rig$t to in0ormation Act: The 0ight to !nformation act is a law enacted by the <arliament of !ndia giving citizens of !ndia access to records of the *entral Iovernment and 6tate overnments.The Act applies to all 6tates and )nion Territories of !ndia, e$cept the 6tate of Bammu and Mashmir 7 which is covered under a 6tate- level law. This law was passed by <arliament on =4 Bune ?@@4 and came fully into force on =2 +ctober ?@@4. )redit Rating Agencies:The credit rating agencies in !ndia mainly include !*0A and *0!6!G. !*0A wasformerly referred to the !nvestment !nformation and *redit 0ating Agency of !ndia Gimited. Their main function is to grade the di,erent sector and companies in terms of performance and o,er solutions for up gradation. The credit rating agencies in !ndia mainly include !*0A and *0!6!G%*redit 0ating !nformation 6ervices of !ndia Gimited& )$eque:*he"ue is a negotiable instrument instructing a (an to pay a specifc amount from a specifed account held in the maer;depositorHs name with that (an.A bill of e$change drawn on a specifed baner and payable on demand.T-ritten order directing a ban to pay moneyK. *emand *ra0t:A demand draft is an instrument used for e,ecting transfer of money. !t is a 8egotiable !nstrument. *he"ue and 5emand-5raft both are used for Transfer of money. Sou can =@@E trust a 55. !t is a banerHs chec. A chec may be dishonored for lac of funds a 55 can not. *he"ue is written by an individual and 5emand draft is issued by a ban. <eople believe bans more than individuals. B2): A non-baning fnancial company %8(:*& is a company registered under the *ompanies Act, =>43 and is engaged in the business of loans and advances, ac"uisition of shares;stoc;bonds;debentures;securities issued by government, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale;purchase;construction of immovable property. 8(:*s are doing functions ain to that of bansL however there are a few di,erences# %i&A 8(:* cannot accept demand deposits %demand deposits are funds deposited at a depository institution that are payable on demand U immediately or within a very short period U lie your current or savings accounts.& %ii& it is not a part of the payment and settlement system and as such cannot issue che"ues to its customersL and %iii& 5eposit insurance facility of 5!*I* is not available for 8(:* depositors unlie in case of bans. ASS)+M:The 8ational Association of 6oftware and 6ervices *ompanies %8A66*+.&, the !ndian chamber of commerce is a consortium that serves as an interface to the !ndian software industry and !ndian (<+ industry. .aintaining close interaction with the Iovernment of !ndia in formulating 8ational !T policies with specifc focus on !T software and services maintaining a state of the art information database of !T software and services related activities for use of both the software developers as well as interested companies overseas. S.*B.: The 6mall !ndustries 5evelopment (an of !ndia is a state-run ban aimed to aid the growth and development of micro, small and medium scale industries in !ndia. 6et up in =>>@ through an act of parliament, it was incorporated initially as a wholly owned subsidiary of !ndustrial 5evelopment (an of !ndia. S!S!8 and .2(&:6E86EQ is the short term for the words T6ensitive !nde$K and is associated with the (ombay %.umbai& 6toc E$change %(6E&. The 6E86EQ was frst formed on =-=-=>D3 and used the maret capitalization of the 2@ most traded stocs of (6E. -here as 86E has 4@ most traded stocs of 86E.6E86EQ !6 T/E !85EQ +: (6E. A85 8!:TS !6 T/E !85EQ +: 86E.(+T/ -!GG 6/+- 5A!GS T0A5!8I .A0M6. 6ense$ and 8ifty both are an Tinde$K. An inde$ is basically an indicator it indicates whether most of the stocs have gone up or most of the stocs have gone down. S!B.: 6E(! is the regulator for the 6ecurities .aret in !ndia. +riginally set up by the Iovernment of !ndia in =>DD, it ac"uired statutory form in =>>? with 6E(! Act =>>? being passed by the !ndian <arliament. *haired by * ( (have. ASS+)HAM: The Associated *hambers of *ommerce and !ndustry of !ndia %A66+*/A.&, !ndiaHs premier ape$ chamber covers a membership of over ? lah companies and professionals across the country. !t was established in =>?@ by promoter chambers, representing all regions of !ndia. As an ape$ industry body, A66+*/A. represents the interests of industry and trade, interfaces with Iovernment on policy issues and interacts with counterpart international organizations to promote bilateral economic issues. <resident-6wati <iramal ABAR*:8A(A05 was established by an act of <arliament on =? Buly =>D? to implement the 8ational (an for Agriculture and 0ural 5evelopment Act =>D=. !t replaced the Agricultural *redit 5epartment %A*5& and 0ural <lanning and *redit *ell %0<**& of 0eserve (an of !ndia, and Agricultural 0efnance and 5evelopment *orporation %A05*&. !t is one of the premiere agency to provide credit in rural areas. 8A(A05 is set up as an ape$ 5evelopment (an with a mandate for facilitating credit 'ow for promotion and development of agriculture, small- scale industries, cottage and village industries, handicrafts and other rural crafts. Mutual 0unds: .utual funds are investment companies that pool money from investors at large and o,er to sell and buy bac its shares on a continuous basis and use the capital thus raised to invest in securities of di,erent companies. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually. Asset Management )om'anies: A company that invests its clientsH pooled fund into securities that match its declared fnancial ob1ectives. Asset management companies provide investors with more diversifcation and investing options than they would have by themselves. .utual funds, hedge funds and pension plans are all run by asset management companies. These companies earn income by charging service fees to their clients. on-'er0oming assets:8on- performing assets, also called non- performing loans, are loans,made by a ban or fnance company, on which repayments or interest payments are not being made on time. A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an e$tended period of time. The nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest payments. Active Market This is a term used by stoc e$change which specifes the particular stoc or share which deals in fre"uent and regular transactions. !t helps the buyers to obtain reasonably large amounts at any time. Administered %rice The administrative body e.g., the government a mareting board or a trading group determines this price. The competitive maret force are not entitled to determine this price. The government f$es a price in accordance with demand supply portion in the maret. Ad-valorem (a7Ad-valorem ta$ is a ind of indirect ta$ in which goods are ta$ed by their values. !n the case of ad-volorem ta$, the ta$ amount is calculated as the proportion of the price of the goods. Oalue added Ta$ %OAT& is an ad-volorem Ta$. Advanced )ountries Advanced countries are countries which are industrially advanced, having high national and per capita income and ensure high rate of capital formation. These countries possess highly developed infrastructure and apply most updated and advanced technical now-how in their productive activities. A strong and well organised fnancial structure is found in these advanced countries. Amalgamation !t means RmergerH. As and when necessity arises two or more companies are merged into a large organisation. This merger taes place in order to e,ect economies, reduce competition and capture maret. The old frms completely lose their identity when the merger taes place. A''reciation Appreciation means an increase in the value of something e.g., stoc of raw materials or manufactured goods. !t also includes an increase in the traded value of a currency. !t is the antonym of 5epreciation. -hen the prices rise due to in'ation, appreciation may occur. !t causes scarcity or increase in earning power. Arbitrage -hen a person performs functions of middle man and buys and sells goods at a particular time to cash the price di,erences of two marets, this action is termed as arbitrage. <urchases are made in the maret where price is low and at the same time, goods are sold in other maret where the price are high. Thus the middleman earns proft due to price di,erence in two marets. Arbitration -here there is an industrial dispute, the Arbitration comes to the force. The 1udgement is given by the Arbitrator. (oth the parties have to accept and honour the Arbitration. Arbitration is the settlement of labour disputes that taes place between employer and the employees. Auction -hen a commodity is sold by auction, the bids are made by the buyers. -hose ever maes the highest bid, gets the commodity which is being sold. The buyers mae the bid taing into consideration the "uality and "uantity of the commodity. Autarc$y !f a country is self-su9cient, it does not re"uire the imports for the country. Autarchy is an indicator of self-su9ciency. !t means that the country itself can satisfy the needs of its population without maing imports from other countries. Balanced Budget -hen the total revenue of the government e$actly e"uals the total e$penditure incurred by the government, the budget becomes a balanced budget. (ut it is a conservative view point. !n present days, the welfare government has to regulate a number of economic and social activities which increase the e$penditure burden on the government and results in defcit budget. Balance o0 %ayment (alance of payment of a country is a systematic record of all economic transactions completed between its residents and the residents of remaining world during a year. !n other words, the balance of payment shows the relationship between the one country's total payment to all other countries and its total receipts from them. (alance of payment is a comprehensive term which includes both visible and invisible items. (alance of payment not only include visible e$port and imports but also invisible trade lie shipping, baning, insurance, tourism, royalty, payments of interest on foreign debts. Balance o0 (rade (alance of trade refers to the total value of a country's e$port commodities and total value of imports commodities. Thus balance of trade includes only visible trade i.e., movement of goods %e$ports and imports of goods&. (alance of trade is a part of (alance of payment statement. Balance S$eet (alance sheet is a statement showing the assets and liabilities of a business at a certain date. (alance sheet helps in estimating the real fnancial situation of a frm. Bank (an is a fnancial institution. !t accepts funds on current and deposit accounts. !t also lends money. The ban pays the che"ues drawn by customers against current and deposits accounts. The ban is a trader that deals in money and credit. Bank *ra0t (aner's draft is a negotiable claim drawn upon a ban. 5rafts are as good as cash. The drafts cannot be returned and unpaid. 5raft is issued when a customer shows his unwillingness to accept che"ue in payment for his services or mercantile goods. (an 5raft is safer than a che"ue. Bank Rate (an 0ate is the rate of discount at which the central ban of the country discounts frst class bills. !t is the rate of interest at which the central ban lends money to the lower baning institutions. (an rate is a direct "uantitative method of credit control in the economy. Bilateralism !t implies an agreement between two countries to e$tend to each other specifc privileges in their international trade which are not e$tended to others. Birt$ Rate (irth 0ate %or *rude (irth 0ate& is number of the births per thousand of the population during a period, usually a year. +nly live births are included in the calculation of birth rate. Black Money !t is unaccounted money which is concealed from ta$ authorities. All illegal economic activities are dealt with this blac .oney. /awala maret has deep roots with this blac money. (lac money creates parallel economy. !t puts an adverse pressure on e"uitable distribution of wealth and income in the economy. Blue )$i' !t is concerned with such e"uity shares whose purchase is e$tremely safe. !t is a safe investment. !t does not involve any ris. Blue )ollar ;obs These Bobs are concerned with factory. <ersons who are unsilled and depend upon manual 1obs that re"uire physical strain on human muscle are said to be engaged in (lue *ollar Bobs. !n the age of machinery, such Bobs are on the decline these days. Brain-*rain !t means the drift of intellectuals of a country to another country. 6cientists, doctors and technology e$perts generally go to other prominent countries of the world to better their lot and earn huge sums of money. This (rain-5rain deprives a country of its genius and capabilities. Bridge -oan A loan made by a ban for a short period to mae up for a temporary shortage of cash. +n the part of borrower, mostly the companies for e$ample, a business organization wants to install a new company with new e"uipments etc. while his present installed company ; e"uipments etc. are not yet disposed o,. (ridge loan covers this period between the buying the new and disposing of the old one. Budget !t is a document containing a preliminary approved plan of public revenue and public e$penditure. !t is a statement of the estimated receipt and e$penses during a f$ed period, it is a comparative table giving the accounts of the receipts to be realized and of the e$penses to be incurred. Budget *e4cit (udget may tae a shape of defcit when the public revenue falls short to public e$penditure. (udget defcit is the di,erence between the estimated public e$penditure and public revenue. The government meets this defcit by way of printing new currency or by borrowing. Bull (ull is that type of speculator who gains with the rise in prices of shares and stocs. /e buys share or commodities in anticipation of rising prices and sells them later at a proft. Bull Market !t is a maret where the speculators buy shares or commodities in anticipation of rising prices. This maret enables the speculators to resale such shares and mae a proft. Buoyancy -hen the government fails to chec in'ation, it raises income ta$ and the corporate ta$. 6uch a ta$ is called (uoyancy. !t concerns with the revenue from ta$ation in the period of in'ation. Business )ycle (usiness cycle %also nown as trade cycle& are species of 'uctuations in the economic activity of organised communities. !t is composed of period of good trade characterised by rising prices and low unemployment, alternating with period of bad trade characterised by falling prices and high unemployment. Every trade cycle have fve di,erent subphases7depression, recovery, full employment, prosperity %boom& and recession. )all Money *all money is in the form of loans and advances which are payable on demand or within the number of days specifed for the purpose. )a'ital Budgeting *apital budgeting represents the process of preparing budget for a period of a year or even for several years allocating capital outlays for the various investment pro1ects. !n other words, it is the process of budgeting capital e$penditure by means of an annual or longer period capital budget. )a'ital-labour Ratio Gatest models of machinery and e"uipment raise the labour e9ciency and the output is ma$imized. *apitallabour ratio is the amount of capital against the given labours that a frm employs. *apital-labour ratio is the ratio of capital to labour. )a'ital Market *apital maret is the maret which gives medium term and long term loans. !t is di,erent from money maret which deals only in short term loans. )a'italism *apitalism is an economic system in which all means of production are owned by private individuals 6elfproft motive is the guiding feature for all the economic activates under capitalism. )nder pure capitalism system economic conditions are regulated solely by free maret forces. This system is based on RGaissez-faire systemH i.e., no state intervention. 6overeignty of consumer prevails in this system. *onsumer behaves lie a ing under capitalism. )as$ Reserve Ratio ()RR) The commercial bans are re"uired to eep a certain amount of cash reserves at the central ban. This percentage amount is called *00. !t in'uences the commercial banHs volume of credit because variation in *00 a,ects the li"uidity position of the bans and hence their ability to lend. )ensus *ensus gives us estimates of population. *ensus is of great economic importance for the country. !t tells us the rate at which the total population is increasing among di,erent age groups. !n !ndia census is done after every =@ years. The latest census in !ndia has been done in ?@@=. )entral Bank *entral (an may be defned as the ape$ baring and monetary institution whose main function is to control, regulate and stabilize the baning and the monetary system of the country in the national interest. )$eque *he"ue is an order in writing issued by the drawer to a ban. !f the customer has su9cient amount in his account, the che"ue is paid by the ban. *he"ues are used in place of cash money. )learing Bank *learing ban is one which settles the debits and credits of the commercial bans. Even of the cash balances are lesser, clearing ban facilitates baning operation of the commercial ban. )learing House *learing house is an institution which helps to settle the mutual indebtedness that occurs among the members of its organisation. )losed !conomy *losed economy refers to the economy having no foreign trade %i.e., e$port and import&. 6uch economies depend e$clusively on their own internal domestic resources and have no dependence on outside world. )ollusion <roducers of an industry reduce competition among themselves to raise their profts. They f$ the price themselves with a clear understanding in this regard. This understanding among di,erent frms is called collusion. )oinage Art and practice of maing coins is called coinage. The metal is melted and moulded to shape into a coin. The coinage is a medium of e$change %money&. )ollectivism *ollectivism is a belief that nation's interest is superior to individual interest. This is the collective thining of the society and polity national leaders and also communist opine the theory of collection. )ommercial Bank *ommercial (an is an institution of fnance. !t deals with the baning services through its branches in whole of the country. +peration of current accounts, deposits, granting of loans to individuals and companies etc. are various functions of the commercial ban. )ommunism *ommunism is a political and economic system in which the state maes the ma1or economic decision 6tate owns the bul of capital assets. 0esponsibility for production and distribution lies with the state in this system. )ore SectorEconomy needs basic infrastructure for accelerating development. 5evelopment of infrastructure industries lie cement, iron and steel, petroleum, heavy machinery etc. can only ensure the development of the economy as a whole. 6uch industries are core sector industries. )or'oration (a7 !t is a ta$ on company's proft. !t is a direct ta$ which is calculated on profts after interest payments and allowance %i.e., *apital allowance& have been deducted but before dividends are allowed for. )ost-'us$ .n@ation!t arises due to an increase in production cost. 6uch type of in'ation is caused by three factors # %i& an increase in wages, %ii& an increase in the proft margin and %iii& imposition of heavy ta$ation. )redit Rationing*redit rationing taes place when the bans discriminates between the borrowers. *redit rationing empowers the ban to lend to some and to refuse to lend to others. !n this way credit rationing restricts lending on the part of ban. )redit Squee"e.onetary authorities restrict credit as and when re"uired. This credit restriction is called credit s"ueeze. .onetary authorities adopt the policy of credit s"ueeze to control in'ationary pressure in the economy. )ustom *uty*ustom duty is a duty that is imposed on the products received from e$porting nations of the world. !t is also called protective duty as it protects the home industries. )yclical >nem'loyment!t is that phase of unemployment which appears due to the occurrence of the downward phase of the trade cycle. 6uch an employment is reduced or eliminated when the business cycle turns up again. *ear Money 5ear money is that money which can only be borrowed at a high rate of interest. !n dear money policy, ban rate and other rates of interest are high and as a result borrowing becomes e$pensive. 5ear money policy is deliberate policy which is adopted by the monetary authorities to chec in'ation in the economy. *eat$ *uty !t is a direct ta$ which is imposed on the estate of deceased person. 5eath duty or 5eath Ta$ is a form of personal ta$ on property which is levied when property passes from one person to other at the time of death of the former. *eat$ Rate 5eath rate signifes the number of deaths in a year per thousand of the population. !t is mostly nown as crude death rate. Gife e$pectancy is important determinant of death rate. A country having high life e$pectancy will have a high crude death rate. *ecentralisation5ecentralisation means the establishment of various unit of the same industry at di,erent places. Garge scale organisation or industry can not be run at one particular place or territory. !n order to increase the e9ciency of the industry, various units at di,erent places are located. *ebt Service ((otal) The sum of principal repayments and interest actually paid in foreign currency, goods and services on longterm debt %having maturity of more than one year&, interest paid on shortterm debt and repayments to !.:. *e4cit 2inancing !t is a practice resorted to by modern government of spending more money than it receives in revenue. !t is a policy of bridging a defcit between governments e$penditure and revenue. 5eliberately budgeting for a defcit is called defcit fnancing. This practice was popularised by <rof. B. .. Meynes to deal with the depression and unemployment situations and to stimulate economic activity. 5efcit fnancing, though having in'ationary e,ects, has now become a common practice in all countries. *e@ation 5e'ation is the reverse case of in'ation. 5e'ation is that state of falling prices which occurs at that time when the output of goods and services increases more rapidly than the volume of money in the economy. !n the de'ation the general price level falls and the value of money rises. *evaluation The loss of value of currency of a country relative to other foreign currency is nown as devaluation. 5evaluation is a process in which the government deliberately cheapens the e$change value of its own currency in terms of other currency by giving it a lower e$change value. 5evaluation is used for improving, the balance of payment situation in the country. *irect (a7 A ta$ is said to be a direct ta$ when it is not intended to be shifted to anybody else. The person who pays it in the frst instance is also e$cepted to bear it. Thus the impact and incidence of direct ta$ fall on the same person shifting of direct ta$ is not possible !ncome Ta$ is a e$ample of direct ta$. *isin@ation !t refers to a process of bringing down prices moderately from their high level without any adverse impact on production and employment. Thus, disin'ation is an anti-in'ationary measure. *issaving5issaving occurs when e$penditure e$ceeds income. 0aising of loans or utilization of past accumulated savings taes place in such eventuality. *ividend 5ividend is the amount which the company distributes to shareholders when the profts of the company are calculated by the board of directors. !conomic .ntegration Economic integration appears when two or more nations coordinate themselves and their economies are lined up. !t may e$hibit itself in the form of free trade area or a full economic union. EE* is an e$ample of economic integration. !ngel,s -a# This law was formulated by Ernst Engel. This law states that, with given taste and preference, the portion of income spend on food diminishes as income increases. According to this law, smaller a person's income, the greater the proportion of it that he will spend on food and vice versa. !state *uty!t is a ta$ which is levied on the estate of a decreased person. !t is also nown as death duty. The ownership of state changes hands only after the payments of the estate duty. !t is an progressive ta$ in nature. !7cise *uty !t is a ta$ which is imposed on certain indigenous production %e.g., petroleum products, cigarettes etc.& of the country. E$cise duty may be imposed either to raise revenue or to chec the consumption of the commodities on which they are imposed. E$cise duty is progressive in nature. 2ace 1alue!t refers to that normal value of coin at which the coin circulates and is accepted in the discharge of debit or obligation. (roadly speaing, the face value refers to domination stamped on a coin ; or documents when it is issued. !n securities, it refers to par value. 2ascism !t is a form of political system. !n it every economic consideration rests on one criterionUthe increase in the people's standard of living. !t also lays emphasis on military strength and prestige of the country. !t is the e$treme nationalism and the ultimate goal is self-su9ciency. 2ederal !conomy!t refers to a federation which is an association of two and more states. A federal state is a union of state in which authority is divided between the federal %or central& government and the state governments. !n a federal economy both the centre and the states are independent in the e$ercise of this authority. 2iduciary .ssueIenerally ban-note are baced by gold. (ut when they are not baced by gold and government securities replace gold, it is called fduciary issue. 6uch fduciary issue results in in'ation. 2ertility Rate The term fertility refers to the actual bearing of children or Roccurrence of birthsH. :ertility rate measures the average number of the live births per =@@@ women. This rate is one of the most important and useful aids to population pro1ection. !t helps in assessing population trends in the economy. 2iscal %olicy:iscal policy is that part of government economic policy which deals with ta$ation, e$penditure, borrowing, and the management of public debt in the economy. :iscal policy primarily concerns itself with the 'ow of funds in the economy. :iscal policy primarily concerns itself with the 'ow of funds in the economy. !t e$erts a very powerful in'uence on the woring of economy as a whole. 3!M IE. %Iender Empowerment .easure& is a composite inde$ measuring gender ine"uality in three basic dimensions of empowerment7economic participation and decision maing, political participation and decision maing, and power over economic resources. 3*. I5! %Iender 0elated 5evelopment !nde$& is a composite inde$ measuring average achievement in the three basic dimensions captured in the human development inde$7 a long and healthy life, nowledge and a decent standard of living7ad1usted to account for ine"ualities between men and women. 3ini-coeAcient!t represents the measurement of ine"uality derived from the RGorenz *urve,H with every increase in the degree of ine"uality, the curvature of the Gorenz *urve also increases and the area between the curve and C4V line becomes larger. The Iini-coe9cient is measured asU I WArea between Gorenz *urve F C4V Gine;Area above the C4V Gine 3iAn 3oods Ii9n goods have the positive relationship between price and "uantity demanded and as a result demand curve of Ii9n goods slopes upward from left to right. This phenomenon was frst observed by 6ir 0obert Ii9n in relation to the demand for bread by poor labours. 3res$am,s -a# T(ad money %if not limited in "uantity& drives good money out of circulationKUThis statement was given by 6ir Thomas Iresham, the economic Adviser of Nueen Elizabeth. This law states that people always want to hoard good money and spend bad money when two forms of money are in circulation at the same time. 3ross *omestic %roduct (3*%)!t is the money value of all fnal goods and services produced within the geographical boundaries of the country during a given period of time %usually a year&. I5< can be calculated both at current prices and at constant prices. !f we add net factor income from abroad to the I5<, we get RIross 8ational <roductH %I8<&. 3ross ational %roduct (3%) !t refers to the money value of total output or production of fnal goods and services produced by the nationals of a country during a given period of time, generally a year. 3ross ational %roduct *e@ator !t is a <rice !nde$ 8umber used to correct the money value of Iross 8ational <roduct %I8<& for price changes so as to isolate the changes which have taen place in the physical output of goods and services. 3uild Socialism This form of socialism accepts the leadership of artisans. The operation of the whole economy specially the management and control of industries lies in the hands of artisans 6ocialism established by artisans is termed a Iuild 6ocialism. H*. /5! %/uman 5evelopment !nde$& is a composite inde$ measuring average achievement in three basic dimensions of human life7a long and healthy life, nowledge and a decent standard of living. .m'ort *uty !mport duty is a ta$ on imports imposed on an ad-valorem basis i.e., f$ed in the form of a percentage on the value of the commodity imported. .ndirect (a7 !ndirect ta$ is that ta$ which is levied on goods or services produced or purchased. !ndirect ta$es are those which are demanded from one person in the e$pectation and intention that he shall indemnify himself at the e$pense to another. .n@ation A situation of a steady and sustained rise in general prices is usually nown as in'ation. !n'ation is a state in which the value of money is falling i.e., prices are rising. ;oint *emand Boint demand appears in case of complementary goods. -hen two commodities are complementary to one another and cannot be used separately, they have 1oint demand. (read and butter, sugar and tea, pen and in are a few e$amples of 1oint demand. !n 1oint demand a change in demand of one commodity bring about the proportionate change in demand for the other. ;oint Sector -hen a sector is 1ointly owned, managed and run by both public and private sector, it is called 1oint sector. This sector indicates the partnership between the two i.e., public and private sector. -abour >nion Gabour union represents that organisation of worers which wors for improving woring condition of labours and also for raising their wage by adopting Rcollective bargainingH measures with the management of the industry in particular. -a:er )urve This curve is given by American economist <rof. Arthur Ga,er. !t represents relationship between total ta$ revenue and corresponding ta$ rates. -aisse" 2aire !t is a :rench word meaning Rnon- interferenceH. This doctrine was popularised by classical economists who gave the view that government should interfere as little as possible in the economic activities of the individuals. -i0e !7'ectancy at Birt$ The number of years a newborn infant would live if prevailing pattern of age specifc mortality rates at the time of birth were to stay the same throughout the childHs life. -iquidation !t refers to the termination %or winding up& of a registered company. Gi"uidation taes place because of company's insolvency. !n li"uidation, assets are turned into cash for settling outstanding debts and for apportioning the balance, if any, amongst the owners. -iquidity Assets which can easily be converted into cash money are said to have li"uidity. Gand does not possess li"uidity at it taes longer time to get converted into cash. -iquidity Ratio The commercial bans under baning regulations have to maintain a certain specifed proportion of their total deposits of various categories in li"uid assets. This maintainable proportion is called li"uidity ratio. -ock-out Goc-out refers to such a situation when the management does not permit the worers to wor unless they agree to accept the employer's term. Goc-out is the closing of wor by the management for an uncertain period of time to put pressure on the labour union. !t is an action by the employer e"uivalent to a strie by employees. -orent" )urve This curve shows the degree of ine"ualities of a fre"uency distribution in a graphical manner. !t is a curve on a graph which shows the cumulative proportion of a statistical population against this cumulative share of some characteristic. This curve is commonly used to depict income distribution showing the cumulative percentage of people from the poorest up and their cumulative share of national income. -um' Sum (a7 Gump sum ta$ is a f$ed amount which has imperative nature irrespective of the income level. This ta$ is not e"uitable in nature. Merit 3oods .erit goods refer those goods that are very essential to the society as a whole and hence the government ensures their availability to all consumers, regardless of their ability to pay to reasonable price. Mi7ed !conomy!t refers to that economic system in which both private and public sector co-e$ists. !ndian economy is an e$ample of a mi$ed economy. Monetary %olicy .onetary policy comprises all measures applied by the monetary authorities with a view to produce a deliberate impact on the nature and volume of money so as to achieve the ob1ectives of general economic policy. !t aims at regulating the 'ow of currency, credit and other money substitutes in an economy with a view to a,ect the total stoc of such assets as well as to in'uence the demand of the community for such assets. Monetary Re0orms -hen a new currency is introduced in a country due to hyperin'ation or due to a deliberate policy measure %such as decimalization& it is termed as monetary reform. Mono'oly .onopoly refers to that maret structure where there is only one seller in the maret who controls the entire maret supply and no substitute of the product is available in the maret. Mono'sony .onopsony is that maret situation in which there is only one single buyer of the product in the maret. !n other word, Rbuyer's monopolyH is termed as monopsony. Multinational )om'any !t is a large scale company which has its production base in several countries and the bul of the production is produced in outside nations. This company produces more overseas than they do in its parent country. !ncreased trade and economies of scale have encouraged such type of companies in the recent years. ational .ncome !n the simplest way it can be defned as Rfactor income accruing to the national residents of a country.H !t is the sum of domestic factor income and net factor income earned from abroad. 8et national product at factor cost is called national income. et ational %roduct (%) -hen depreciation is deducted from I8< i.e., Iross 8ational <roduct, we get 8et 8ational <roduct %88<&. +ligo'oly +ligopoly is that form of imperfect competition in which there are only a few frms in the industry %or group& producing either homogeneous products or may be having product di,erentiation in a given line of production. +'en !conomy +pen economy is that economy which is left free and the government imposes no restrictions on trade with areas outside that economy. +kunBs -a# Arthur +un presented an empirical relationship between cyclical movements in I8< and unemployment. +un found that an annual ?X4E increase in the rate of real growth above the trend growth results in a =E decrease in the rate of unemployment. This relationship is nown as +unHs Gaw. %er0ect )om'etition <erfect competition is the maret in which there are many frms selling identical products with no frm large enough relative to the entire maret to be able to in'uence maret price. %overty -ine <overty line is a virtual line demarcating persons living below and above it. !n !ndia all those persons are treated living below poverty line who are not able to earn that much of income which is not su9cient to ac"uire food e"uivalent to ?=@@ calories per person per day in urban areas and ?C@@ calories per person per day in rural areas. As per )85<, one )6 dollar %=>>2 <<< )6 Y& per person per day is treated as poverty line. %C-. <NG! is nown as <hysical Nuality of Gife !nde$ which is used to assess the level of social development. This inde$ was developed by Bim Irant for The +verseas 5evelopment *ouncil <NG! is calculated by using indices of %i& Adult literacy rate, %ii& !.0, %iii& Gife E$pectancy. %rice Mec$anism <rice mechanism signifes the woring of those maret forces which establishes e"uilibrium in the economy. Gaissez faire policy is the basis for theworing of price mechanism. %rice Ring !t is an uno9cial syndicate by which the prices are controlled with the prior understanding among the traders. These dealers under a price ring decide not to over-bid one another at the public auction to eep the prices low. This price ring may discourage outsiders from coming to the auctions. %rivate Sector <rivate 6ector is that part of the economy which is not owned by the government and is under the hands of private enterprise. !n other words, private sector is not under direct government control. <rivate sector includes the personal as well as the corporate sector. %rivatisation <rivatisation is the antithesis of nationalisation. -hen the government owned public industries are denationalised and the disinvestment process is initiated, it is called privatisation. %ublic *ebt <ublic debt represents borrowing by the state and public authorities. All loans taen by the public authorities constitute public debt. %ublic 3oods <ublic goods are those goods which belong to the entire community. 8one of the individual of the society can be made deprived of using these public goods. 8ational defence, <olice, 6treet lighting etc. are e$amples of public goods. %ublic Sector<ublic sector signifes those undertaings which are owned, managed and run by public authorities. <ublic sector includes direct government enterprise, the nationalized industries and public corporations. !n this sector of the economy the government acts itself as an entrepreneur. %eril %oint !t indicates that point beyond which tari, reductions would threaten the e$istence of domestic industry. Cuick Asset Those assets are "uic assets which are li"uid or nearly li"uid in nature and easily be turned into cash. Cuoted )om'any That company is called "uoted company whose share prices are "uoted on a stoc e$change. Re@ation !t signifes general increase in the level of business activity in the economy. 0e'ation generally involves greater government e$penditure and the easing of credit to encourage increased production. Regressive (a7 !t is a ta$ in which rate of ta$ation falls with an increase in income. !n regressive ta$ation incidence falls more on people having lower incomes than that of those having higher incomes. Re'ressed .n@ation !t is a state in which aggregate demand is greater than the total supply of goods and services in an economy, but prices are prevented from rising to eliminate e$cess demand. The holding down of price is sometimes done by government as a means of suppressing in'ation. Reserve Asset Ratio !t is the ratio of a banHs reserve assets to its eligible liabilities. Revolving )redit !t is a ban credit that is renewed automatically until notice of cancellation is received. 0evolving credits may be sanctioned for an unlimited amount in total but with a limit on the amount that may be drawn at any one time or within a specifed period, e.g., one month. Seasonal >nem'loyment!t is that unemployment which is caused by seasonal variation in demand for labour by various industries, such as agriculture, construction and tourism. 6easonal unemployment normally declines in spring as more outdoor wor can be undertaen. Security 6ecurity refers to a share, bond or government stoc that can be bought and sold, usually on the stoc e$change or on a secondary maret, and carries a right to some form of income, either in the form of a f$ed rate of interest or dividends. S$ado# %rice!t is an imputed value for a good based on the opportunity costs of the resources used to produce it such values are of particular signifcance in resolving problems of resource allocating with respect to the e,ect on welfare. S$are )a'ital !t is the amount of money raised by a company by issuing shares. The authorized share capital is the amount that a company is allowed to issue as laid down in its Articles of Association. The issued share capital is the amount actually issued i.e., the number of issued shares multiplied by their par value. :ully paid share capital is the amount raised by payment of the full par value of the issued shares. Single (a7 System !t is a system in which all ta$ revenues are raised from one form of ta$ation. Socialism The political doctrine that the means of production %machines, materials and output& should be owned by society and specifcally either by the state, as in the case of nationalized industries or by the worers directly, as in the case of producer co-operatives. Social Security<rovision by the state out of ta$ation of welfare assistance to those in need as a result of illness, unemployment, or old age compare national insurance refers to social security. So0t )urrencyA currency with limited convertibility into gold and other currencies, either because it is depreciating due to balance of payments di9culties or because controls have been placed on it to prevent the e$change rate falling. S'ecial *ra#ing Rig$ts (S*Rs) !t is a reserve asset %nown as R<aper IoldH& created within the framewor of the !nternational .onetary :und in an attempt to increase international li"uidity, and now forming a part of countries o9cial reserves along with gold, reserve positions in the !.: and convertible foreign currencies. S'ecial (a7 (>nit (a7) !t is a ta$ imposed per unit of a commodity rather than on the value of the commodity compare ad-valorem. Stabili"ation %olicy !t is Iovernment economic policy announced at reducing the cyclical and other 'uctuations that tae place in a maret economy. Stag@ation !t is a state of the economy in which economic activity is slowing down, but wages and prices continue to rise. The term is a blend of the words stagnation and in'ation. Sur'lus 1alue !t is the di,erence between the amount paid to a factor and the revenue earned by selling the output it produced. (ari: !t is a ta$ or a duty on imports, which can be levied either on physical units, e.g., per tonne %specifc&, or on value %ad-valorem&. Tari,s may be imposed for a variety of reasons includingL to raise government revenue, to protect domestic industry from subsidized or low-wage imports, to boost domestic employment, or to ease a defcit on the balance of payments. (rade 3a' !t signifes the size of the defcit %or surplus& in the balance of trade i.e., the di,erence in value between visible imports and e$ports. (rade >nion !t is an organisation of employees who 1oin together to further their interests. Trade )nions negotiate on behalf of their members in collective bargaining with employers, and in the event of a dispute may put pressure on employers by withdrawing labour %i.e. strie& or by some less drastic form of action %i.e. go-slow, woring to rule&. (rans0er %ayment!t is a payment made by public authority other than one made in e$change for goods or services produced. Transfer payments are not the part of 8ational !ncome. E$amples includes unemployment beneft and child benefts. 1ital Statistics Oital statistics refers to those data which are associated with vital events of masses lie birth, death, marriage divorce etc. 1A( (1alue Added (a7) OAT sees to ta$ the value added at every stage of manufacturing and sale, with a provision of refunding the amount of OAT already paid at the earlier stages to avoid double ta$ation. !n other words, the ta$ already paid can be claimed at the ne$t stage of value addition. 6ealt$ (a7 -ealth ta$ is that ta$ which is imposed on the value of total assets but the wealth upto a certain limit is e$empted from such ta$. 6el0are State !t refers to a nation that provides to all at least the minimum standards in respect of education, health, housing, pensions and other social benefts. 6$olesale %rice .nde7 -holesale <rice !nde$ is that inde$ which is calculated on the basis of wholesale prices. !t is calculated in a similar way to the 0etail <rice !nde$.