FEDERAL COMMERCE GLOSSARY FOR MCOM MBA for G.D. pl remit rs.200 gpay 900...

Capital Funds	Equity contribution of owners. The basic approach of capital adequacy
	framework is that a bank should have sufficient capital to provide a
	stable resource to absorb any losses arising from the risks in its
	business. Capital is divided into different tiers according to the
	characteristics / qualities of each qualifying instrument.
Revaluation	Revaluation reserves are a part of Tier-II capital. These reserves arise
reserves	from revaluation of assets that are undervalued on the bank's books,
	typically bank premises and marketable securities. The extent to which
	the revaluation reserves can be relied upon as a cushion for
	unexpected losses depends mainly upon the level of certainty that can
	be placed on estimates of the market values of the relevant assets and
	the subsequent deterioration in values under difficult market conditions
	or in a forced sale.
Leverage	Ratio of assets to capital.
Capital reserves	That portion of a company's profits not paid out as dividends to
	shareholders. They are also known as undistributable reserves and are
	ploughed back into the business.
BASEL Committee	The BASEL Committee is a committee of bank supervisors consisting of
on Banking	members from each of the G10 countries. The Committee is a forum for
Supervision	discussion on the handling of specific supervisory problems. It
	coordinates the sharing of supervisory responsibilities among national
	authorities in respect of banks' foreign establishments with the aim of
	ensuring effective supervision of banks' activities worldwide.
Risk Weighted	The notional amount of the asset is multiplied by the risk weight
Asset	assigned to the asset to arrive at the risk weighted asset number. Risk
	weight for different assets vary e.g. 0% on a Government Dated
	Security and 20% on a AAA rated foreign bank etc.
CRAR(Capital to	Capital to risk weighted assets ratio is arrived at by dividing the capital
Risk Weighted	of the bank with aggregated risk weighted assets for credit risk, market
Assets Ratio)	risk and operational risk. The higher the CRAR of a bank the better
	capitalized it is.
Non Performing	An asset, including a leased asset, becomes non performing when it
Assets (NPA)	ceases to generate income for the bank.
Total income	Sum of interest/discount earned, commission, exchange, brokerage and
	other operating income.
Net operating profit	Operating profit before provision minus provision for loan losses,
	depreciation in investments, write off and other provisions.
Average Yield	(Interest expended on deposits and borrowings/Average interest
	bearing liabilities)*100

Free e-book

 

 

 

 

 

Return on Asset	Return on Assets (ROA) is a profitability ratio which indicates the net
(ROA)- After Tax	profit (net income) generated on total assets. It is computed by dividing
	net income by average total assets. Formula- (Profit after tax/Av. Total
	assets)*100
Net Interest Income	The NII is the difference between the interest income and the interest
( NII)	expenses.
CASA Deposit	Deposit in bank in current and Savings account.
Liquid Assets	Liquid assets consists of: cash, balances with RBI, balances in current
	accounts with banks, money at call and short notice, inter-bank
	placements due within 30 days and securities under "held for trading"
	and "available for sale" categories excluding securities that do not have
	ready market.
Venture Capital	A fund set up for the purpose of investing in startup businesses that is
Fund	perceived to have excellent growth prospects but does not have access
	to capital markets.
Held Till	The securities acquired by the banks with the intention to hold them up
Maturity(HTM)	to maturity.
Yield to maturity	The Yield to maturity (YTM) is the yield promised to the bondholder on
(YTM) or Yield	the assumption that the bond will be held to maturity and coupon
	payments will be reinvested at the YTM. It is a measure of the return of
	the bond.
CRR	Cash reserve ratio is the cash parked by the banks in their specified
	current account maintained with RBI.
SLR	Statutory liquidity ratio is in the form of cash (book value), gold (current
	market value) and balances in unencumbered approved securities.