Consumer Protection

 Banking Glossary:

Glossary of Some Banking Terminologies
This endeavor aims to help consumers in understanding some important banking terminologies. These definitions explain the meaning of words and terms used in day to day banking transactions and these are not precise legal or t¬echnical definitions.

Accumulated interest:
The cumulative interest that is due and not yet paid and booked as an expense along with a corresponding liability for the unpaid amount.
Annual Percentage Rate (APR)
The term Annual Percentage Rate describe the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc. The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.

Altered Cheque
A cheque or another negotiable instrument that has been materially and maliciously altered to affect a fraud. Usually either the name of the payee or the amount of cheque is changed.

Account Holder
One who maintains a deposit account with the bank to make deposits and withdrawal by cheques or cash as per agreed terms and condition; a person, a firm, or a company maintaining accounts with banks for deposits and withdrawals as per agreed terms and conditions.

A general term embracing various categories of lending by the banks; in business, advance may also means payment made before receipt of goods and services.

Automated Teller Machine (ATM)
Machines installed by banks to dispenses cash withdrawal to the account holders like a bank teller; computerized machines linked with the database of the bank, enabling customers to draw down cash without the need to line up at the bank counter, by using magnetically encoded bank card that verifies the customers through specific identification numbers, checks available account balance or line of credit on an account, and dispenses cash withdrawal; specially useful to customers in non banking hours

Bad Debt
A debt for which repayments of principles or interest are long overdue and is unrecoverable because of worthless collateral, or insolvency or effective bankruptcy of the borrower; the loan may have to be removed from the bank portfolio and charged to loan loss reserves if any, or written off by the lender and charged to profits, retained earnings or bank’s capital

Balance Transfer
A balance transfer is an option offered by many credit card issuers which enables the card holder to use their available credit from one card to pay off the balances due on one or more other cards. Usually the interest rate on the amount borrowed is lower than the rate of the cards that are being paid off by the balance transfer.

Balance-Transfer Fee
A balance transfer fee is charged when you make a balance transfer. That is, when you transfer the balance from one credit card to another. Balance transfer fees are typically expressed in percentage terms of the balance being transferred, but there may also be a flat fee or a minimum balance transfer fee.

Balloon Payment
A large payment due at the maturity of the loan; the principle amount and interest on a loan repaid in one lump sum; interest payment may be withheld until the end of the loan period, when both interest and principal repaid together.

Bank Cheque
A cheque issued by an account holder on his account maintained with the bank; it is payable on demand and does not require acceptance of drawee bank.

Bank Draft
A type of instrument where the payment is guaranteed to be available by issuing bank. Typically, bank will review the bank draft requester's account to see if sufficient funds are available for the cheque to clear. Once it has been confirmed that sufficient funds are available, the bank effectively sets aside the funds from the person's account to be given out when the bank draft is used.

Banker’s General Lien
A right of the bank to retain any goods or securities of the debtor against any debt due, which comes to its lawful possession in the ordinary course of business, in the absence of an agreement in contrary. Such a right is also called implied pledge and gives the banker the power to sell the goods or securities with reasonable notice to the debtor.

Benchmark Rate
The benchmark interest rate is the lowest interest rate that an investor will accept for a non-treasury investment. The benchmark interest rate is also known as the base interest rate or the threshold interest rate since the benchmark interest rate is the threshold below which investors refuse to invest funds. The benchmark interest rate is tied to the interest rate offered on the most recently-issued (on-the-run) Treasury security. Often investors demand that the benchmark interest rate carries a premium over the most recently-issued Treasury security. Since it is generally possible for investors to find investments paying a greater rate than the benchmark interest rate, one of the hallmarks of an investment which pays the benchmark interest rate is safety. The benchmark interest rate is often associated with conservative and safe investments.

Blocked Funds
Funds that cannot be withdrawn or transacted from an account due to prior claim, liability, a dispute, a court injunction or a directive of the authorities concerned.

Blocked Account
A bank account which cannot be used, usually because a government has forbidden its use.

A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor's assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

Bounced Cheque
A word for a cheque that cannot be processed because the drawer has insufficient funds. A bounced cheque will often be returned to the drawer along with a penalty fee for non-sufficient funds. Passing bad cheques is illegal, and the crime can range from a misdemeanor to a felony, depending on the amounts involved.

A general term for any card that can be used to access electronic banking services such as:


(i) Credit Cards - Card that allows customers to buy on credit and/or to obtain cash advance as bank grants a certain line of credit to the consumer. Customer receives monthly statements from the bank and may pay the balance in full or in part. There is usually a specified minimum payment and annual charge. Mark up is charged on the amount of any balance you still owe.

(ii) Debit Cards - Card that can be used to access your account to obtain cash or make a payment at a point of sale. The money is transferred electronically, usually within three days. Customers ‘accounts are debited electronically for these transactions.

(iii) ATM/ Cash Cards - this card is for making cash withdrawals from ATMs. It also provides many additional functions such as account information and mobile phone top-ups.

Card Holder
A card holder is a person in whose name card has been issued who is authorized to use it.

A cash advance is an amount of cash borrowed against your credit card limit. You can take out a cash advance by using your PIN at ATM. Cash advances don't have a grace period, meaning interest begins accruing on the balance as soon as you borrow it.

Cash Advance Fee
Cash advances come with fees and typically have higher interest rates than the interest rate for purchases. The cash advance fee can be charged as a percentage of the cash advance. Some card issuers charge a flat fee regardless of the amount of your cash advance. You'll always pay a finance charge on a cash advance even if you pay it in full when your billing statement comes. To reduce the amount of interest you pay on a cash advance, pay it as soon as possible, even before you are billed for it.

Certificate of Deposits (CDs)
A deposit Instrument; receipt issued by a bank as an evidence of deposit specifying the amount, the period of deposit and rate of interest. There are several types of deposit certificates issued in domestic or foreign currency; since CDs are negotiable instruments; these are freely traded in secondary money market.

Checking Accounts
A transactional deposit account held at a bank or financial institution that allows for withdrawals and deposits. Money held in a checking account is very liquid, and can be withdrawn using cheque, automated cash machines and electronic debits, among other methods.

The collection of funds which a cheque is drawn on, and the payment of those funds to the bearer. This also refers as exchanging of cheques and other instruments, etc. and balancing of accounts between the banks.

Clearing Cheque
Clearing a cheque means processing it so that funds are deducted from the payer's account and put into the payee's account.

Clearing bank
A commercial bank that is part of a network of banks that can clear cheques for its clients regardless of whether or not the cheque originates from the same commercial bank.

Clearing House
A nationwide electronic funds transfer network which enables participating banks/financial institutions to distribute electronic credit and debit entries to bank accounts and to settle such entries.

The fee charged for banking services by a bank or financial institution.

A term synonymous to security for a loan; a security tendered to obtain a loan; an asset pledged for borrowing funds; the backing provided for securing a credit; cash, financial assets or valuable assigned as security for a debt, loan or credit; the guarantee offered by borrower, or the backer of the loan, and acceptable to the lender as a viable collateral.

Credit Agreement
A legal contract in which a bank arranges to loan a customer a certain amount of money for a specified period of time. The credit agreement outlines all the rules and regulations associated with the contract. This includes the interest that must be paid on the loan. A credit agreement can be a lengthy and detailed document that explains all the terms of the contract. For the most part, all types of loans (ranging from credit cards to mortgages) have some sort of credit agreement, which must be signed and agreed upon by both the bank or lender and the customer - the contract does not come into effect until the document has been signed by both parties.

Credit Application
A request for grant of credit in written form. The request must follow the lender's request procedures in order to be valid. The application must legally contain all pertinent information relating to the cost of the credit, including the annual percentage yield (APY) and all associated fees.

Credit Insurance
Credit Insurance is an insurance policy associated with a specific loan or line of credit which pays back some or all of any money owed if certain things happen to the borrower, such as death, disability, or unemployment, due to which the borrower is unable to pay his loan. The costs (called a "premium") for this are usually charged monthly, depending on the balance owed.

Credit Limit
The amount of credit that a bank or financial institution extends to a client. Credit limit also refers to the maximum amount a credit card issuer will allow someone to borrow on a single card.

Credit-Limit-Increase Fee
A fee charged if you ask for and receive an increase in your credit limit.

Compound interest:
Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.

Consumer Credit Information Report:
All individuals and sole proprietors are categorized under the category of consumer borrowers in Electronic Credit Information Bureau (eCIB) database. Consumer Credit Information Report (CCIR) represents the summary of accumulated credit obligation of a particular individual from all banks and financial institutions in Pakistan. CCIR contains credit details with limits, outstanding financial obligations, status of overdue loan and credit history of last twelve months.

Corporate Credit Information Report:
All partnerships and corporate entities (Private Limited/Public Limited) are categorized under corporate borrower’s category in eCIB database. The CCIR contains aggregate information related to outstanding financial obligations (Fund/non-fund based), amount in number of days overdue (past due 90 and 365 days) and other material information related to write-off and restructuring of loan and amount under litigation.

Credit History
A history of a consumer borrower's payment behavior kept by credit bureau against its record. eCIB database reports reflect consumer borrower credit history of past twelve months. The very purpose of sharing credit history of consumer borrowers is to provide a mechanism of risk management to all its member financial institutions. This helps to evaluate the credit worthiness of existing and prospective borrowers and to make critical lending decisions to most vulnerable segment of borrower.

Credit Transfer
This is an order from the account holder to the bank to transfer a sum of money to another account. It can be made on paper, by telephone (using call center services) or by online banking.

Crossed Cheque
Any cheque that is crossed with two parallel lines, through the top left hand corner of the cheque with or without the words 'not negotiable' or ‘A/c payee’ between them. A crossed cheque must be paid into payee’s bank account only. It cannot be cashed over the counter and provides protection against its fraudulent payment.

Days Past Due
A loan payment that has not been made as of its due date. A borrower who is past due may be subject to late fees, unless the borrower is still within a grace period. Failure to repay a loan on time could have negative implications for the borrower's credit status or cause the loan terms to be permanently adjusted.

The amount of money borrowed from the lender for a period of time at a rate of interest and at terms of repayment as agreed between the borrower and lender, backed by a collateral or a loan security; as an obligation, the term debt is synonymous to loan, credit and borrowing.

Debit Card
A card issued to a client for making payments for goods or services, and such payments are then debited to the card holder’s account with the seller; it is a similar to credit card and issued in a similar way to account holders.

Debt Rescheduling
A practice that involves restructuring the terms of an existing loan in order to extend the repayment period. Debt rescheduling may mean a delay in the due date(s) of required payments or reducing payment amounts by extending the payment period and increasing the number of payments.

Debt Restructuring
Adjustment or realignment of debt structure reflecting concessions granted by creditors, to give the debtor a more practical arrangement for meeting financial obligations. Restructuring is needed when the debtor has severe financial problems. The agreement to restructure may result from legal action or simply be an agreement to which parties consent.

The failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or are unwilling to honor the debt.

Delinquency on a Loan
Failure to pay an obligation when due. Consumer loans are normally considered delinquent if two consecutive payments are missed; such as a bank credit card, is often treated as a delinquent account if a payment is not received within the allowed 15- to 25-days grace period. A delinquent loan payment is subject to a late charge penalty and can be noted on the borrower's credit report as a past due payment. Loans with more than two missing payments (60 to 90 days past due) are regarded as seriously delinquent and debt collection efforts are initiated to recover the amount due.

To place cash, cheques, drafts for credit to a bank account.

Direct Credit
Arrangements by which payments, such as salaries, are directly credited to customers’ bank accounts.

Direct Debit

When a customer authorizes the bank to make payments directly from his account. Direct debits are typically used to make regular payments for debts or paying bills such as credit cards, utility bills and insurance payments. The amounts can be fixed or variable.

Dormant Account
When there has been no financial activity for a long period of time, other than posting of interest, an account can be classified as dormant. Statute of limitations usually does not apply to dormant accounts, and funds can be claimed by the owner or beneficiary at any time.

Electronic Credit Information Bureau (eCIB)
eCIB is a database which collects and collates borrowers’ credit information of all banks and member financial institutions (FIs). eCIB shares consolidated credit information online with its member financial institutions for assessing the credit worthiness of the existing and prospective borrowers. eCIB data also facilitates the banks/FIs in the process of credit risk management and making prudent and informed lending decisions.

Early Repayment Penalty
Banks and financial institutions impose a financial penalty on customers who pay off their loans and advances. This may be a percentage of the total advance, the sum repaid or the balance outstanding.

Effective Date
The date a contractual agreement is in effect; the commencement date; the date a loan is available for disbursement; the date a payment or a financial transaction can be conducted

Expiration date
The date when a contract, or transaction, a financial obligation or instrument, a benefit, a guarantee, or a commitment ceases to be valid.

Fixed Rate
Where the markup rate is set at the start for the duration of the loan. The rate will not change whether market rates rise or fall. The advantage is that you know the exact amount of each repayment in advance. The disadvantage is that the loan may prove expensive if interest rates fall and there may be a penalty charge for early repayment.

Financial Instrument
Financial papers and documents acknowledging financial commitment or obligation; contractual agreements specifying legally enforceable financial liabilities; paper facilitating financial transaction, transfers, payments and settlements.

Financial Services
A range of services which directly or indirectly facilitate financial intermediation; include a variety of banking services, and services of investment and finance institutions such as investment finances, factoring, forfeiting and bill discounting; insurance and reinsurance; facilitation of trading in securities market and currency markets; financial consultancy, and financial advisory services.

Floating Interest Rate
A variable rate of interest which is based on combination of a fixed premium over a fluctuating benchmark market interest.

A major risk in business, finance and banking, requiring sophisticated anti fraud protection procedures, safeguards, cross checques, layered approval processes and installation of expensive monitoring devices; a major cost item for financial institution; several types of frauds depending on line of activity and target institution concerned.

Fund Transfer
A remittance or transfer of funds from one person to another or in case of a bank, from one account to another which may be in the same branch of the bank or with another branch or bank in the same city, country, or abroad.

To accept responsibility for an obligation if the entity with primary responsibility for the obligation does not meet it. It’s a guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

One who issues a guarantee and undertake that debt, obligation and commitments of the guaranteed party will be paid or fulfilled by the guarantor in case there is a default.

Grace Period
Specified time period allowed to the borrower by the lender as a moratorium on repayments due; a period when no repayment of principle or interest is due on the loan to enable the borrower to generate cash flow or income through the use of loan proceeds and consolidate his financial position; a breathing space offered by the creditor before repayment demand on a loan.

An entity or a person who holds or has possession in the context of a financial instrument, it mean payee or endorsee in possession of a bill of exchange or a promissory note who is entitled to receive payment on the instrument or to endorse at further if the transfer has not been restricted.

A fixed periodic repayment of the principle, less than the whole amount due, paid by a debtor at successive periods, in partial liquidation of debt, as stipulated in the loan agreement.

It is the user’s charge for borrowed money. It is a fixed amount of money, predetermined in ex-ante manner, payable by the user for a specified amount of funds borrowed as a loan or credit, the principle, for a specified period of time. It is expressed as a rate, a percentage, typically for a year.

The acquisition of financial, physical or technology based assets by an investor for their potential future income, returns, yield, profits, or capital gains, which, unlike interest rate cannot be predetermined or guaranteed in ex-ante manner, instead are determined or realized ex-post only if the venture, the business or the investment activity is successful and generates positive cash flows, income, return on profits; in the process, the investor accepts a variety of risk and a potential of loss associated with the investment being undertaken.

KIBOR (Karachi Interbank Offer Rate)
The Karachi Interbank Offer Rate, or KIBOR, is a benchmark average interest rate at which term deposits are offered between prime banks in the Pakistani wholesale money market or interbank market. The State Bank of Pakistan issues daily KIBOR rates for tenor of 1 and 2 week, 1-3-6 and 9 months and for 1-2& 3 years.

Letter of credit (L/C)
A binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be transferred to the seller. Basically, a letter of credit gives the seller reassurance that he will receive the payment for the goods. In order for the payment to occur, the seller has to present the bank with the necessary shipping documents confirming the shipment of goods within a given time frame. It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability.

It is a contract whereby the owner of an assets, the lessor, gives the hirer, the lessee, the right to use the asset for a specified period in exchange of rental payments. The ownership of the leased asset during the lease period remained with the lessor.

One who grants a lease; a party to a lease agreement granting lease of a property to another.

The tenant or user under lease agreement having a lease hold right; one to whom a lease of moveable or immoveable property is granted.

A bank, a financial institution, a company or an individual engaged in the business of lending money

Obligation to pay money, transfer assets or provide services in the present or future as result of the transaction or contractual commitment; the funds a bank owes to depositors and its lender; debt or pecuniary obligations owed to creditors; the amount a debtor is liable for; a liability may be actual, also called real, if it actually exist, although its amount may not be definite; or it may be contingent, which may or may not become due depending on the occurrence or non-occurrence of a specified event.

Loan-To-Value (LTV) Ratio
A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan will generally cost the borrower more to borrow or he or she will need to purchase mortgage insurance.

The length of time until the principal amount of a loan/fixed deposit/bond must be repaid. In other words, the maturity is the date the borrower must pay back the money he or she borrowed through the issue of a bond.

Minimum Balance Requirement
Lowest balance required by the bank that must be maintained in the account by the account holder to keep it operational. If the balance falls below prescribed level, additional service charges are levied by the bank.

Mobile Banking
Mobile banking is a new way to check your account balance, view your mini-statement, recharge mobile connections, and pay utility and other bills and transfer funds to other accounts

A financial instrument is considered negotiable on demand or at a future date if it can be endorsed or is marked as Negotiable; or is transferable; or is payable to the holder or bearer of the instrument under the terms of negotiability, if specified; or is acceptable in payments or transactions.

Negotiable Instrument:
A financial instrument such as bills of exchange, promissory notes and drafts, certificate of deposits, cheques, payment orders or payment instruments, if labeled as Negotiable, they are negotiable instruments through endorsement or delivery to the bearer, transferee or to the holder of instrument who then has unrestricted claims and legally recognized title to the instrument.

Negative confirmation/verification:
At times the statements of accounts sent by the banks to the customers has a verification or the confirmation clause; if the bank does not hear anything from the customer, it is assumed as entries recorded in the statement stand confirmed by the account holder; however, such a clause carries no legal validity.

A financial instrument is nonnegotiable if it cannot be transacted, or if it is marked or classified non-negotiable though it may still be transferrable.

When a loan, liability or a commitment is not paid on the due date, or when payment is demanded.

A promissory note or legal undertaking signed by borrowers to secure a loan, pledging collateral, and committing to perform as specified with regard to repayment of the loan.
Online Banking
The performance of banking activities via the internet. It is also known as "internet banking" or "web banking". A good online banking system offers just about every traditional service available through a local branch.

A line of credit pre approved by a bank to an account holder, up to a designated limit on short term interest rates; allowing cash draw downs or cheques in excess of credit balance on the account to provide a cover to cheques issued; to provide ready liquidity as and when needed.

The fulfillment of a promise to pay in discharge of an obligation, or a debt, or a liability, or a commitment.

Payment Order
Instructions to transfer funds sent via paper and/or electronic means to pay a specified sum of money to the order of a specified person. Usually issued by the bank on its own and against receipt of full money so cannot be returned due to insufficient funds.

An entity or a person who pays a bill of exchange, promissory note or a claim; payment could be for goods and services acquired or to satisfy a liability or an obligation or to satisfy a commitment.

An entity or a person in whose favor a bill of exchange, promissory note, or a cheque is made or drawn; to whom or to whose order a bill, note, or cheque is made payable; one to whom money is to be paid or one who is entitled to receive a payment.

Payable to Bearer
A payment due and payable to the bearer of the instrument; or payable to the order of the bearer if properly endorsed.

Payable to Oder
An instrument is payable to order when by its term or endorsement it is payable to the payee or to the order of another party specified in the payment order.

Financial penalty imposed by a bank, or by under law in court cases for violation of rules and regulation or failure in compliance.

Post-Dated Cheques
A cheque delivered prior to its date, but payable at sight or on presentation on or after date shown on the cheque.

Positive Confirmation
Any act or omission construed as a positive confirmation; for example, silence of an account holder to notify discrepancy in the advised account within a stated period would mean that entries in the account are correct and are acceptable to the account holder.

Premature Encashment Penalty
A penalty imposed by the bank on the depositors for withdrawal of their deposits prior to the agreed date. It is calculated on the principal amount at a penalty stipulated by the bank at the time of accepting the deposits. The penalty is calculated for the period from the date of withdrawal to the date previously agreed with the bank.

Revolving lines of credit
A line of credit which is available up to an agreed amount for a stated period, where the borrower may draw down, under the line, at any time or repay it in full without restriction or penalty.

Repayment Period
A period of time mutually agreed upon by the lender and borrower at the time of loan agreemtn concerning the repayment of loan; or a period of time extended by the lendor subsequently.

Repayment Schedule
A time based scheduled mutually agreed upon by the lender and borrower for repayment of a debt in installments of fixed of varying amounts with full and final adjustment by a certain date

Transfer a payment of money through various instruments.

Renewal of Credit
Extending a loan agreement or a credit facility for a further period with or without changes in the terms and conditions originally agreed upon.

Refinancing of liabilities such as raising funds by creating new liabilities in order to discharge maturing liabilities; the amount of finance obtained from or made available by an external source to replenish the outflow of finance; for example, if a bank finance exports and obtained refinance from the central bank, then the banks own lending funds are not involved in export financing.

Secured Loans
A loan which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender. The assets may be forfeited to the lender if the borrower fails to make the necessary payments

An asset pledged to guarantee the repayment of a loan, satisfaction of an obligation, or in compliance of an agreement. Security gives a lender a legal right of access to the pledged asset and to take their possession and title in case of default for a foreclosure sale.

Service Charges
A fee charged by bank to render certain services to its customers; such charges may be on flat rate or on a percentage basis tied to the value of the services provided.

Service Fee
Fee charges by a bank to provide certain banking services; these charges are of a general nature, for example, for correspondence with other banks to sort out customer’s problems or to provide services other than those for which fixed charges are prescribed such as fee on advances, commission on remittances, opening of L/C and guarantees.

In order to cover a loan in default, a bank has a legal right to seize funds of a guarantor or the debtor. A settlement of mutual debt between a creditor and a debtor through offsetting transaction claims is also known as setoff.

Stale Cheque
A stale cheque is a cheque that has been outstanding for an unreasonable time. A cheque may be outstanding for more than six months and a bank may under its discretion refuse to honor such a cheque. A bank is under no obligation to a customer to pay a cheque, other than a certified cheque, after more than six months of its date, but it can charge its customer's account for a payment made thereafter in good faith.

Standing Order
A standing order is a standing instruction that a customer gives to his/her bank to pay a specified amount at regular intervals to another account. Usually, the amount is paid on a particular day of every month. The amount can be paid into any bank account, and need not belong to an organization vetted by the payer's bank. Standing orders are used typically for recurring, fixed-amount expenses such as insurance premiums, mortgage installments, and subscriptions. A standing order is not usually suitable for paying variable bills such as credit card, or gas and electricity bills. A standing order can be canceled at an account holder's option.

Stop Payment Instructions

An order to a bank not to honor the payment of a cheque after it has been delivered but before it has been cashed.

The amount of time left for the repayment of a loan or contract or the initial term length of a loan. Tenor can be expressed in years, months or days. For example, if a bank loan is initially extended with a five-year tenor, after three years, the loan will be said to have a tenor of two years. Tenor is sometimes used interchangeably with "maturity", although tenor is not often used to describe the terms of fixed-income instruments such as government bonds and corporate bonds. Instead, non-standardized contracts like insurance policies and bank loans tend to be described in terms of tenor.

Term Loan
A medium to long term loan with the maturity of more than one year; a long term loan. A term loan is granted for a specific purpose, for a fixed term and generally repaid monthly. The interest rate may be fixed or variable and differs from lender to lender.

Unsecured Loans
Loan extended only on the basis of the borrower's financial position, creditworthiness, credit history, and general reputation and is not connected to any specific piece of property. The borrower signs a promissory note but does not pledge any specific asset as collateral.

Unclaimed Deposit/instruments
A debt payable either in Pakistani currency or any other (foreign) currency is owing by a banking company by reason of a deposit (time/demand deposit, or any other kind of deposit) or a financial instrument (pay slips / pay orders / D.Ds / T.Ts / M.Ts, or any other financial instrument), not being recorded in the name of a minor or a government or a court of law, in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of ten years as reckoned under Sub section(1) of Section 31 of BCO 1962, will be classified as unclaimed deposit/instrument.

Variable Rate Loan
A loan advanced on variable interest rate based on a pre agreed formula such as KIBOR plus rate or SBP discount rate; in contrast to a fixed rate loan where the rate of interst is fixed for the maturity of loan.

Determination of value of assets through various methods and accepted procedures of valuation, assessment and appraisal; valuation of securities, companies and businesses, corporations and enterprises for sale, mergers, acquisition and liquidation; assessment of net worth

An internal accounting control document containing key information about a transaction authorizing payment and debit or credit entry to the specified account; certain documents, like paid cheques or remittance instruments, are normally treated as vouchers after due processing and authorization.

Waiver of a claim, a right, a covenant in an agreement, or an exemption clause, effectively alters the terms and condition as stipulated originally, depending on the type of the contractual agreement.

Willful Default
Deliberate default of a borrower on loan from the agreed terms of repayment; despite having a ability or the means to repay or perform according to the commitment made.

Draw down of funds from bank accounts; if substantial over a short period, it may create severe liquidity crises fro bank concerned

Withholding Tax
Withholding is an act of deduction or collection of tax at source, at the specified rate which has generally been in the nature of an advance tax payment.

Write-off is to reduce the book value of an asset fully or partially so as to reflect the amount of loss to be carried on the accounts; if the entire value is written-off it is also known as charged off against reserves or profit; if the book value is partially written off, it is the difference between the book value and the releasable value or market value of the asset. In banking, it means the amount of loan which is not recoverable, and is to be written off against the provision for loan losses maintained for classified non-performing loans.

Yield is the return on an invested amount, usually expressed as annualized percentage return.

Zero Interest Loan
A loan requiring no payment of principle on periodic basis or in installments; instead, a single payment is made on the due date including the interest accrued during the loan period and the original amount borrowed.

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