Essential Banking Term-Part 1

1.      Financial Institution =A financial institution established under the prevailing laws with the objectives of providing loans for agricultural cooperative, industrial or any other specific economic purpose or of collecting deposits from the general public .

2.      Money = It means all types of currency notes, postal orders, postal notes, money orders, cheques, drafts, traveller’s cheques, letters of credit, bills of exchange, promissory notes and credit cards and this expression also includes similar types of monetary

3.      Currency Note = It means the bank note in circulation in the form of cash and this expression also includes coin.

4.      Foreign Currency = It means the currency other than the Nepalese currency and this expression includes the special drawing rights on the International Monetary Fund, the Asian Currency Units, the European Currency Units and other instruments as the Central Bank may prescribe.

5.       Foreign Exchange = It means foreign currency, all types of deposits, credits, stocks, foreign securities payable in foreign currencies and the cheques, drafts, traveller’s cheques, electronic fund transfer, credit cards, letters of credit, bills of exchange, promissory notes in international circulation payable in foreign currencies.

6.      Foreign Exchange Transaction = It means the acts of purchase and sale of foreign exchange or the acts of borrowing, giving credits, and of accepting or providing foreign exchange in any manner whatsoever, and this expression also includes the act of granting approval for foreign exchange by the Central Bank

7.       Letter of credit = It means an instrument issued by a bank to another bank instructing to accept Cheque, draft, hundi or bill of exchange drawn by specified person up to the limit of specified amount.

8.      Negotiate = It means the act of transferring an instrument to any person having the right to hold negotiable instruments enabling him/her to become a bearer.

9.       Negotiable Bill of Exchange= It means letter of credit, bill of exchange or cheques.

10.  Bill of Exchange= It means an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person or to bearer.

11.  Promissory note= It  means an instrument signed by a person with an undertaking to pay, without any condition, a fixed amount to any particular person referred to in such instrument or to the person ordered by such person or to the bearer of such instrument on a fixed date or on demand.

12.  Cheque= It means a bill of exchange drawn on any bank ordering it to make payment on demand.

13.  Credit = It means a direct or indirect promise to invest money and the right to recover such amount of investment in return and the interest of such credit or payment of other charges, the refinance given against the security of credit or investment restructuring and renewal of credit, the guarantee made for repayment of credit or any other promise for such repayment, and this expression also includes any type of debt.

14.   Credit security = It means any bill of exchange of indebtedness and any other instrument equivalent to such instruments of indebtedness, whether in certified or in book entry form.

15.  Licensed Institution= It means a bank or financial institution which has obtained a license pursuant to this Act for carrying out banking or financial transaction.

16.  Net worth= It means any amount that remains after deducting the external liabilities from the grand total of the assets to be maintained in the balance-sheet of a bank or financial institution.

17.  Current account= It means an account of funds deposited with a bank or financial institution by a costumer that may be withdrawn at any time on demand.

18.  Paid-up Capital= It means the portion of the capital paid up on behalf of shareholders out of the issued capital of a bank or financial institution.

19.   Risk-weight asset (RWA) = It  means the total assets calculated by multiplying the amounts coming under each heading of on-balance sheet and off-balance sheet operations of a bank or financial institution by the risk-weight in the format as prescribed by the Nepal Rastra Bank.

20.  Liquid assets = It means the cash balance of a bank or financial institution, the balance remained in the current account, the balance maintained in the Rastra Bank and such assets of a bank or financial institution specified as liquid assets by the Rastra Bank from time to time.

21.   Articles of Association (AOA) =It means the Articles of Association of a bank or financial institution framed pursuant to the prevailing laws relating to companies.

22.   Memorandum of Association (MOA) = It means the Memorandum of Association of a bank or financial institution framed pursuant to the prevailing companies’ law.

23.   Deposits= It means and includes amounts deposited in current, savings or fixed accounts of a bank or financial institution through costumers with or without.

24.  Capital= It means the authorized capital, issued capital and paid up capital of a bank or financial institution.

25.   Capital Fund= It means and includes the total sum of primary capital and supplementary capital of a bank or financial institution as specified by the Nepal Rastra Bank and also any other fund or amount as specified by the Nepal Rastra Bank from time to time.

26.   Primary Capital= It means and includes the funds of a bank or financial institution listed under such headings as the paid-up capital, share premium, non-redeemable preference shares, general reserve fund and accumulated profit and loss.

27.  Savings Account= It means accounts containing details of the amounts deposited by any customer for savings in a bank or financial institution.

28.   Liquidator= It means and includes a person appointed for carrying out the functions of liquidation of bank or financial institution according to an order of a court or a resolution adopted by a meeting of the creditors and as well as an office carrying out the function of a liquidator.

29.  Off-balance-sheet transaction = It means and includes letters of credit, letters of guarantee, letters of acceptance, commitments, swaps, options and transaction in advance concerning foreign exchange having, the potential of bearing liabilities by a bank.

30.  Electronic transaction = It means and includes the business of accepting deposits, making payments and transferring funds through telephone, telex, computers or magnetic tapes or other electronic equipment of a similar nature and transactions to be carried out through terminal, automated teller machines and cash dispensing machines, as well as those to be carried out through charge cards, debit or credit cards.

31.  Creditor= It means and includes a person or a body corporate to whom/which a bank or financial institution has to pay and also a depositor and debenture-holder for the purpose of liquidation process.

32.  Hypothecation Loan = It means a loan disbursed having entered into an agreement between a bank or financial institution and a Borrower against the collateral security of the stock having retained such stock under possession of the borrower concerned.

33.  Doubtful Transactions= It means transactions appearing improbable economically, commercially or by business in general situation.

 





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