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Glossary

Banking terms made easy to understand

Glossary

A

Add-on Card

Extend the benefits of your primary credit card to your family. Get an additional card for their use that is linked to your primary credit card.

Advisory Services

We provide you with recommendations and advice that will help you make better decisions.

AML

Anti-Money Laundering (AML) is a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions.

AOD / AOF

Account opening documents (AOD) are a set of documents that you must submit along with an account opening form (AOF) when you want to open a new account. These documents usually comprise identity and address proof.

AQB

The average balance that must be maintained over a quarter.

Arbitrage Funds

Funds that take advantage of price discrepancies in the same asset across different markets.

Assay Certification

Certifies the purity of gold. The gold bars that have Assay Certification are the finest you can get.

Assessee

A person liable to pay tax.

B

Balanced funds

A fund that combines stocks, bonds and sometimes money market instruments in a single portfolio.

Bullion market

A place where precious metals such as gold, silver, platinum and palladium can be traded 24 hours a day.

C

CDMA Mobile

CDMA stands for Code Division Multiple Access and is a channel access communication technology.

Certicard

CertiCard is used for the packaging of gold bars and precious stones. It is a tamper-proof security case with two levels of protection or seals. It is a means to guarantee the authenticity of the product it holds.

Challan Identification Number

The Challan Identification Number (CIN) is an 18-digit number. It is a cyber receipt or acknowledgement of your tax payment. You must quote your CIN in your tax returns as a proof of payment.

Chip

This is a small microchip embedded in your debit card. It is encrypted so your debit card transactions are more secure.

Collateral

Collateral is security or guarantee that a borrower must provide to a lender to get a loan. Property, gold, investment securities are common examples of a collateral.

Collecting Bank

A bank into which a person has deposited a cheque, and must collect the money from the account of the writer of the cheque.

Compound Interest

Compound interest is the accumulation of interest that is generated on the interest of a principal amount, over time.

Cumulative interest

Interest calculated on the initial principal and the accumulated interest of prior periods.

Cut-off time

In the forex market, a point in time specified by a forex dealer to stand as the end of the current trading day and the beginning of a new trading day is known as the daily cut-off time.

CVV

The CVV (Card Verification Value) on credit or debit cards is a 3-digit code at the back of VISA, MasterCard and Discover branded credit and debit cards, and a 4 digit code on American Express credit and debit cards.

D

Debt funds

Debt funds are an investment pool, such as a mutual fund or exchange-traded fund, in which core holdings are fixed income investments. A debt fund may invest in short-term or long-term bonds, securitised products, money market instruments or floating rate debt.

Debt Markets

The debt market is the market for trading debt securities. Participants buy and sell corporate bonds, government bonds, municipal bonds, negotiable certificates of deposit, and other money market investments.

Disbursement-removed

Disbursement of loan means the delivery of the loan funds by the bank to the applicant of the loan.

E

E-com

E-com is short for of electronic commerce or ecommerce. Ecommerce is an umbrella term that covers the buying and selling of goods online through shopping portals and a variety of other channels. You can use your HDFC Bank credit and debit cards to purchase goods online.

ECS

Stands for Electronic Clearing Service. It is a mode by which funds are automatically debited to your account every month to pay recurring bills or fees. ECS is activated by giving standing instructions to the bank.

EDC Machine

EDC is short for Electronic Draft Capture machine. It is a computerised system that collects data when you swipe your Debit or Credit Card. This is how money is either debited from your account or added to your credit card statement after you have used your cards.

ELSS

ELSS are equity-linked saving schemes. ELSS funds have a lock-in of 3 years; the lock-in period prevents ad-hoc withdrawals and helps your money grow over time. This allows you to ride the short-term slumps and stay invested for a longer period.

Entry load

Entry load is the commission that an investor has to pay while purchasing units of a mutual fund. Mutual funds no longer charge entry loads.

EPFO

EPFO is the Employees Provident Fund Organisation. It is a statutory body of the Government of India under the Ministry of Labour and Employment. It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and Insurance Scheme. It is one of the largest social security organisations in the world in terms of the number of covered beneficiaries and the volume of financial transactions undertaken.

F

FAMA model

The FAMA model expands the capital asset pricing model (CAPM) by adding size, value and market risk factors to CAPM. This model considers the fact that value and small cap stocks outperform markets regularly.

Fastrack a loan

A loan application that gets processed quicker than normal without too many actions from the applicant.

FC Charges

FC or Foreclosure charges are to be paid when a loan is closed before the tenure is completed. The bank will levy a certain percentage on outstanding loan amount as the penalty for foreclosing the loans. These penalty rates vary from bank to bank.

First In, First Out

This means that fund transfer requests received after 10 PM on one banking day will be dealt with on the next banking day based on the time they are received. The first request after 10 PM will be dealt with first and so on till the last request received is dealt with.

Fixed Rate

An interest rate that remains at a predetermined rate for the entire term of the loan.

Floating rate

An interest rate that moves up or down with the rest of the market or an index.

FMP

A Fixed Maturity Plan is a type of mutual fund which has a set maturity date and can have an indicative return on your investment. FMPs are generally used by companies and large investors as a substitute to bank FDs. FMPs are close ended funds. This means that you can enter only when it is launched and exit when the term is over.

Foreclosure charges

Foreclosure charges are to be paid when a loan is closed before the tenure is completed. The bank will levy a certain percentage on outstanding loan amount as the penalty for foreclosing the loans. This rate varies from bank to bank.

Franking Charges

The fees to be paid for applying an identification mark on documents to quality them to be postally serviced are called Franking Charges.

G

Gold ETF

An ETF is an Exchange Traded Fund, which means that it is traded on the stock exchange. Through a Gold ETF, you can purchase a large amount of gold in the form of shares, maintaining the physical metal in storage. Gold ETF is a way of removing logistical hassles of purchasing gold physically, such as insurance, storage, moving, and reselling.

Guaranteed Surrender Period

The amount of time an investor must wait until he or she can withdraw money from the plan without facing a penalty. Withdrawing money before the agreed-upon holding period can result in a surrender charge.

Guarantor

A guarantor is a person who guarantees payment by another. The guarantor becomes a co-endorser and assumes liability in event of default.

H

Half Yearly Payable interest

Interest that is payable every six months.

Hindu Undivided Families

HUF, or Hindu Undivided Family, is a legal term related to the Hindu Marriage Act. HUF refers to a joint family descended from a common ancestor.

Home Location

Includes all Branches in the same city (Clearing End Points)

Hotlisting

You can hotlist your credit or debit card if it has been stolen by informing your bank. Hotlisting means that the bank will cancel your card and no one else can use it.

I

IDV

The Insured Declared Value is the maximum 'Sum Insured' fixed by the insurer, which is the Insurer’s Maximum Liability in the event of a claim. It is the current market value of the vehicle which is calculated as per the manufacturer’s listed selling price less the depreciation. Registration and insurance costs are excluded from IDV.

Incidental Charges

Expenses that are not budgeted or specified but are incurred by the bank on behalf of the customer.

Initial Pay-in

Initial Pay-in is the first amount that you need to deposit while opening an account.

Inter Branch Banking

Banking between different branches of the same bank.

IPIN

IPIN is the Internet Personal Identification Number. It is a code or password that the customer sets to access NetBanking.

ISIN

Stands for International Securities Identification Number (ISIN). It is a unique 12-character alpha-numerical code for securities such as bonds, commercial paper, equities and warrants.

IVR

Interactive Voice Response (IVR) is a technology that allows a computer to interact with humans through voice and keypad inputs.

K

KYC

Know Your Customer (KYC) is a form and a process by which a bank gets to know its customers better – and seeks details such as a customer’s address and financial and occupational status.

L

Letter of Credit (LC)

A Letter of Credit is a payment term used for international sales transactions. It is a documentary evidence that allows importers/buyers to offer secure terms of payment to exporters/sellers in which a bank (or more than one bank) gets involved.

Liquid Funds

These are investments in short-term vehicles that mature in less than one year. You can access your money in liquid funds any time you need it with no penalty.

Loan Reschedulment

Loan Reschedulement refers to the revised timetable for loan repayments, usually granting longer repayment periods.

M

Money Laundering

Money Laundering is the process of converting black money, accumulated through criminal activities, into white money.

Moratorium Period

In an education loan, a repayment moratorium (also called a repayment holiday) is the period when a borrower does not have to make any repayments. This is usually the course period + 1 year or 6 months after the student gets a job or starts earning, whichever is earlier.

N

NAV

Net Asset Value (NAV) is a mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share rupee amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of shares outstanding.

NEFT

National Electronic Funds Transfer (NEFT) is a system that facilitates an individual or company to electronically transfer funds from any bank branch to any individual or company having an account with any other bank branch in the country.

O

OTP

OTP is a one-time password that is valid for only one specific transaction and is used as an additional factor of authentication for online transactions.

Oversubscribed

When demand for shares outstrips supply of shares during a new stock issue or initial public offer (IPO).

P

PAP

PAP cheques can be encashed anywhere in India, irrespective of the city they were issued in. This also means you only have to pay the amount written on the cheque and not the service charges that might otherwise be charged to you, especially when you send a cheque to someone out of your city or country.

Personal Assurance Message

When you register for the Verified by Visa service, you are asked to create a Personal Assurance Message. When you pay online, always look for this Personal Assurance Message or Personal Message – it is your guarantee that you are being authenticated by HDFC Bank.

POS

POS is the short for Point of Sale, and usually refers to a retail outlet.

PPO

Stands for Pension Payment Order. The pension is authorised through a Pension Payment Order that consists of two booklets. One is meant for the disbursing authority and the other for the individual. The rate of monthly pension, amount commuted, reduced pension payable (i.e. after commutation) to a Government Servant and the rate of family pension payable to a spouse (where the spouse of the individual is alive) are mentioned in the Pension Payment Order.

R

Remittance

Remittance is any form of money transfer or payment done from one's working country to a home country. Remittance charges depend on the difference in currency rates and the amount of transfer.

Risk adjusted returns

It is a concept that refines an investment's return by measuring how much risk is involved in producing that return, which is generally expressed as a number or rating. Risk-adjusted returns are applied to individual securities and investment funds and portfolios.

RM or Relationship Manager

The person who manages your relationship with the bank.

Rolling Returns

It is the annualized average return for a period ending with the listed year. Rolling returns are useful for examining the behavior of returns for holding periods similar to those actually experienced by investors. It is also known as 'rolling period returns' or 'rolling time periods'.

RTGS

It stands for Real Time Gross Settlement. And is a way of instantly transferring large sums of money It means that funds transfers happen immediately, in real time. Instructions are processed at the time they are received rather than later. 'Gross Settlement' means the settlement of funds transfers occur on an instruction by instruction basis.

S

Secure Sockets Layer (SSL)

Secure Sockets Layer (SSL) is a commonly-used protocol for the security of messages transmitted on the Internet.

Stamp Duty

Stamp duty is a way of collecting tax on documents like receipts, licenses and transaction records.

Super Saver Facility

A Super Saver Facility allows you to link your Savings Account or Current Account to a Fixed Deposit and enjoy the rewards of an overdraft facility to supplement your household or business requirements.

Surety

An individual who agrees to be legally responsible for another person’s debts in the event of default.

Surrender Periods

The amount of time an investor must wait until he or she can withdraw money from the plan without facing a penalty. Withdrawing money before the agreed-upon holding period can result in surrender charges.

Sweep-in Facility

The Sweep-in facility allows you to enjoy the high interest rates that come with a Fixed Deposit and the liquidity of a Savings Account.

Sweep-out

The Sweep-out facility allows you to transfer money from your savings account into a fixed deposit or vice-versa. You can do this via a standing instruction, if the money in the account goes above or falls below a limit you have decided upon. You also enjoy the high interest rates that come with a Fixed Deposit, along with the liquidity of a Savings Account.

T

Tax Rebate

Tax rebates are reductions in tax available to tax payers who meet certain criteria (for example, senior citizens).

TDS

TDS is short for Tax Deducted at Source. TDS is certain percentage of payment that is collected by the entity making a payment and deposited with the tax authorities. For example, the tax you have to pay on your salary is already deducted by your company and the net amount is paid to you.

Telegraphic Transfer (T/T)

A Telegraphic Transfer also called a Telex Transfer is an electronic means of transferring funds overseas.

Third Part Cheque

Third party cheque is endorsed by its payee to another party who becomes the holder in due course.

V

Vakalatnama

A written consent given by a person to a lawyer to represent him or her, conduct proceedings and plead on their behalf in the court of law.

Volatility of Mutual Funds

Relative rate at which the price of a mutual fund moves. Volatility is found by calculating the annualised standard deviation of daily change in price. If the price of a mutual fund moves up and down rapidly over short periods, it has high volatility. If the price almost never changes, it has low volatility.
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