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
Amortization Schedule
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
Co-Branded Credit Cards
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
Net Demand and Time Liabilities
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
Liquidity Adjustment Facility
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
Marginal Standing 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
Autonomous Investment
Definition: The Autonomous Investment is the capital investment which is independent of the economy shifts. This means, any change in the cost of raw material or any change in the salary and wages of labor etc. has no effect on the autonomous investment. The autonomous investment is made for the welfare of the society and not for generating profits out of such investments. … [Read more...] about Autonomous Investment
Induced Investment
Definition: The Induced Investment is a capital investment that is influenced by the shifts in the economy. These investments are made with the intention to generate profit out of such investments. The change in the cost of raw material, change in the tastes and preferences of customers, increase in the lending or borrowing rates, etc., have a direct impact on the induced … [Read more...] about Induced Investment
Critical Path Method
Definition: The Critical Path Method or CPM is a network analysis technique concerned with planning and controlling of complex, but routine projects. Simply, Critical path method is generally used for the projects whose time duration is known with certainty and also the amount of resources required for the completion of the project is assumed to be known. First of all, the … [Read more...] about Critical Path Method
PERT (Program Evaluation Review Technique)
Definition: The PERT (Program Evaluation Review Technique) is a technique used in the planning and controlling of large scale projects. Simply, PERT is the statistical tool used to represent the set of activities (task), required to be performed for the completion of the project. PERT is a planning and controlling tool for the management that provides the complete roadmap of … [Read more...] about PERT (Program Evaluation Review Technique)