Banking

Definition: The Open-End Fund is the type of mutual fund, that has no restriction on the number of units the fund issues. In other words, an investor can issue and redeem its shares continuously, as there is no limit on the number of units the open-end fund will issue. The Open-End Fund is convenient for the investors since it issues as many shares as required by them and … [Read more...] about Open-End Fund

Definition: The Line of Credit is the agreement between the financial institution (bank) and the individual (company or government) with respect to the maximum loan amount that an individual can borrow from a bank any time he wants, provided the loan amount does not exceed the set limit in the agreement. In other words, Line of credit is the credit limit of customer, i.e. … [Read more...] about Line of Credit

Definition: The Amortization Schedule is the tabular representation of the periodic payments (principal + interest) made against the loan or mortgage. This schedule clearly differentiates the portion of payment that belongs to the interest amount and the portion that relates to the principal amount and helps to know the principal balance left after each payment. The term … [Read more...] about Amortization Schedule

Definition: The Co-Branded Credit Cards are the credit cards issued by the banks in joint sponsorship with the retail merchants. In other words, a card issued jointly by two parties, wherein one is the lending institution (bank), and the other is a non-financial group (retail merchant). Co-Branded Credit Cards are often used by hotels, airlines, big retail chains with the … [Read more...] about Co-Branded Credit Cards

Definition: The Net Demand and Time Liabilities or NDTL shows the difference between the sum of demand and time liabilities (deposits) of a bank (with the public or the other bank) and the deposits in the form of assets held by the other bank. In other words, the net demand and time liabilities of a bank can be calculated by using the following formula: Bank’s NDTL = … [Read more...] about Net Demand and Time Liabilities

Definition: The Liquidity Adjustment Facility or LAF is the principal operating monetary policy tool that allows banks to borrow money through repurchase agreements. This means, in order to meet short-term cash needs, bank, borrow money against government approved securities with an agreement to repurchase the same at a predetermined rate and date. The liquidity adjustment … [Read more...] about Liquidity Adjustment Facility

Definition: The Marginal Standing Facility (MSF) is the rate at which the scheduled commercial banks borrow funds fortnight from the Reserve Bank of India against the government approved securities. Now the question arises, why to use the marginal standing facility when banks can borrow funds through a Repo Rate? The need for MSF arises, to meet the short-term emergency … [Read more...] about Marginal Standing Facility

Definition: The Wholesale Banking refers to the provisions of banking services offered to the industrial and business entities which are rich in resources and have sound income statements. These institutes are generally the mortgage brokers, corporate houses, multinationals, government agencies, real estate investors, other banks and financial institutions. The wholesale … [Read more...] about Wholesale Banking

Definition: A Bridge Loan is a temporary short term loan usually used by a person to finance a new house before the sale of the existing or the old one. Simply, a loan is taken till the permanent financing is arranged. It is also called as Interim Financing or Gap Financing or Swing Financing. A bridge loan is generally raised to bridge the gap between the times the finance … [Read more...] about Bridge Loan

Definition: The Mezzanine Financing is a quick way to raise loans for the expansion of current business operations, from the investors or the financial institution such as a bank, without keeping any collateral security against it. But however, the lender has the right to convert the debt capital to ownership or equity interest in the company, in case the borrower defaults in … [Read more...] about Mezzanine Financing