Saturday, December 31, 2011

24. (Y & Z) Basic Banking Guide A to Z



Yearly tenancy


Yield gap



Zero budgeting

Zero coupon Bond

Zero rating



Zoological certificate

23. (W) Basic Banking Guide A to Z


Wire transfer
A transfer of funds from one point to another by wire or network such as online transfer . in this mode of transfer funds are transferred on real-time bases.


Wage drift

Wage freeze






war risk insurance

wasting assets


white paper


wholesale banking

wholesale cost


wind bill



withholding tax

without prejudice

without recourse

with particular average

with recourse


working capital

working day


world bank

writ of attachment

writ of execution

writ of possession

writ of summons

write down

write off


22. (V) Basic Banking Guide A to Z


Vacant possession
Property not occupied, or with no tenant in possession.

An agreement, document authorized by law or otherwise having legal effect or force.

To make any document, instrument, legally effective. In banking a cheque becomes state after six months of its issuance, after that it requires validation.

The period for which an agreement, negotiable instrument, bid, offer ,claim, document, letter of credit, guarantee etc remains in force.

It refers to the monetary worth of an asset, business entity, goods sold or service rendered, or liability or obligation acquired.

Value added cost
It refers to the resources consumed in enhancing the value of a goods or services.

Value added tax (VAT)
This is a consumption tax which is levied at each stage of production based on the value added to the product at that stage.

Value date
The date on which an account holder can use the funds from deposited cheques that have passed through the bank's clearing cycle, the date on which a deposit starts to earn profit.

Variable cost
This is the cost which varies, more or less, with the increase/ decrease in production or the sales revenue of a company, e.g.  raw material, energy usage, labor (wages), distribution costs, etc.

Variable rate
Any interest/ profit  rate or dividend that changes on a periodic basis.

Difference between an expected and actual result, such as between a budget and actual expenditure.

An area, in a bank or  financial institution, which is a safe and secure place for storing items of value. Bank vaults must meet a series of safety regulations, required under their own policy as well as regulators. Vaults are generally used to keep cash, as well as customers' safe deposit lockers.

This refers to the manufacturer, producer, or seller who are in the approved list of a company to provide certain items.

This refers to any thing guaranteed as a benefit, privilege, or right, immediately or in future.

Vested interest
It refers to the personal stake, or expectation of personal gain, that underlies a strong commitment to maintain or influence an action

Veterinary certificate
A certificate issued by competent authority, which is required to indicate that livestock is free from specified diseases

This refer to any thing according to the requirement, or practical, For example, a company is looking for a substitute of a manufacturing item, it will consider viable alternative that would provide a similar benefit at a reasonable cost.

This is a certificate issued or a stamp marked on the applicant's passport by the immigration authorities of a country to indicate that the applicant's credentials have been verified and he or she has been granted permission to enter the country for a temporary stay within a specified period. This permission, however, is provisional and subject to the approval of the immigration officer at the entry point

Agreement which is absolutely null, without legal force and legal effect, such as an agreement for an immoral consideration.

This is the agreement which is capable of being set aside by a court or rescinded at the option of one of the involved parties. For example agreement caused by coercion, undue influence, misrepresentation

Vostro accounts
This is a local currency account maintained by a local bank for a foreign (correspondent) bank. For the foreign bank it is a nostro account.

This is a written instrument that confirm for some fact such as a transaction. It indicates that goods have been bought or services have been rendered, authorizes payment, and indicates the ledger account(s) in which these transactions have to be recorded.

21. (U) Basic Banking Guide A to Z


Ullage certificate
This is a certificate issued for removal of liquid (oil etc) from the tanker. For example palm oil is imported by three parties and on port it is stored in one tanker and oil is released through measurement.

Ultimate balance
Balance arrive after combining all accounts.

Uncleared effects

It refers to in or of the month preceding the current one, such as on the 15th ultimo.

Ultra vires
It refers to some thing beyond the legal power or authority of a company association or officer, etc.

Ultra violet
The purplish-blue light which highlights un-visible fields .It also refers to, producing, or utilizing light having such wavelengths such as an ultraviolet lamp that are used to detect fake currencies etc.

Unauthorized signature
Forged signatures, or signature on behalf of any person company, firm  or association etc  without any lawful authority.

Unbanked area
Under develop areas where banking facilities are not available. As per SBP policy banks must open atleast 20% of new branches in unbanked areas.

Unclaimed deposits/ bills
All banks and DFIs operating in Pakistan are required to surrender to SBP all deposits including foreign currency deposits, inoperative bills payable out-standing in the books of banks and DFIs for 10 years and more and where no transaction has taken place, no statement of account has been requested or acknowledged, shall be classified as unclaimed deposit / instrument except deposits / instruments in the name of, Government Accounts, Minor Accounts, Court of Law.

Uncleared effect
These are the cheques, pay order, drafts and similar instruments, that have been deposited by a bank's customer but have not completed the bank's clearing cycle or the proceeds have not been credited to the customer's account
Uncollected funds: A portion of a deposit balance that has not yet been collected by the depository bank.

Undated cheque
This is refers to a cheque which is without date. Date is the material part of the cheque, and the drawee bank will not honor an undated cheque

Under capitalization
It refers to a situation where a business does not have sufficient,  funds for its size of operations. An undercapitalized firm does not have enough cash to carryout its functions and as such does not qualify for  loans due to its high loan-to-equity ratio.

Under custom bond
If for some reason, the importer does not pay the duty, he/she may keep imported goods under custom bond with the BOND COMPANY. The importer can release goods after payment of duty and bond company’s charges.

Under ground economy
Unrecorded business dealings (without payment of taxes) that are not reflected in a country's gross domestic product (GDP) computations. Though it is illegal and even criminal methods, it is a survival practice in suppressive tax regimens or where legitimate business activity is made unnecessarily difficult by difficult/ unpractical regulations.

Under reserve
It refers to a situation in which a bank credits the amount of a cheque or draft to the depositor's account before it is cleared. If dishonored, an 'under reserve' item's amount is debited from depositor's account.

Under stock
It refers to stock which is less than the desirable number or quantity

It can be termed as a guarantee, promise, or clause in a contract that creates an obligation.

Under the counter
Any thing done, sold, given, secretly in an unlawful or unethical way. Under-the-counter payments are a form of bribery and extortion. Also called under the table.

Underwater loan
It refers to a loan that has gone under its book value e.g. it is non-performing,  its interest rate is below the current market rate,  the market value of its collateral has decreased to less than the amount of the outstanding loan balance.

This is an entity who  is in the business of evaluating and taking over other people's risk for a fee /commission, interest, premium, or underwriting spread,

Un-discharged bankrupt
This is a bankrupt person who is not granted an 'order of discharge' by a court or  the person whose loan is written off due to the non payment. An undercharged bankrupt is, in general, disqualified from holding certain public  offices such as member of national, provincial assemblies’ senate or of a director in a company.

Undue influence
It refers to mental, moral, or physical domination that deprives a person of independent judgment and substitutes another person's objectives in place of his or her own. Exercise of undue influence is exercised  by excessive insistence, or pressure applied due to authority, position, or relationship in relation to the strength of the person submitting to it. Consent obtained for a contract, relationship, or transaction is voidable if it can be shown that an unfair advantage has been taken of an involved party.

Unearned income
It refers to the income received before a good is sold or a service is provided. Unearned income is classified as a current liability on the balance sheet until it is recognized as earned income during the accounting cycle.

This means the total number of men and women of working age looking for paid work. Unemployment statistics vary according to how unemployment is defined and who is deemed to be part of the workforce. Generally it is determined by taking sample sizing.

It refers to the asset or property that is free from debt, and clear of any legal defect in its title and, therefore, can be easily sold or mortgaged.

Uniform custom s and practice (UCP)
The Uniform Customs and Practice for Documentary Credits is a set of rules on the issuance and use of the documentary credit. It is utilized by banks / financial institutions, as well as traders, in more than 175 countries world wide. This practice has been standardized by the ICC by publishing the very first UCP in 1933 and subsequently updating it throughout the years. The UCP 600 is the revised version of the Uniform Customs and Practice for Documentary Credits The UCP rules were first promulgated by the International Chamber of Commerce 76 years back and today they have attained almost universal acceptance by practitioners in countries worldwide

Uniform Gift to Minors Account (UGMA)
This is an American law that provides a child under the age of 18 (a minor) a way to his / her own investments. The money is in the minor's name, but the custodian (generally the parent) has the responsibility to handle the money in a prudent manner for the minor's benefit. The parent cannot withdraw the money to use for his or her own needs.

Uniform rules for collection (URC)
These are standards of cheques draft, bills collection practices proposed by the International Chamber Of Commerce (ICC) for the financial institutions. Provisions of URC are not legal requirement but serve to establish common understanding of the collections terminology and expectations.

It refers to some thing which is one sided.

Unilateral change
Any change made in the provisions of a contract without the consent of the all parties involved.

Unilateral contract
It is a type of contract in which only one of the contracting parties is under an enforceable obligation. For example, under an insurance contract, only the insurer makes a promise

It refers to the definitive quantity adopted as a standard of measurement and exchange.

Unit cost
It refers to the expenditure incurred in producing one unit of a goods or service, computed usually as average cost. Total cost/ number of units= unit cost

United Bank Limited (UBL)
United Bank Limited came into existence on 7th November 1959. It is the second largest private commercial bank in Pakistan with over 1100 branches and has an international presence in 10 countries. It has assets of over Rs. 550 billion and a solid track record of fifty years - in addition to the convenience of over 1112 branches serving you throughout the country and also at several overseas locations.

Unlimited company
These are those companies ,where there is No limitation to the liability of the owners/ share holders, for the debts/ liabilities of the company e.g. proprietorship, partnership

Unlimited liability
Unlimited extent of liability to pay a company's debts or obligations, extending beyond the investments of the company's owners to their personal assets. This extent of liability is assumed in an unlimited liability company such as a sole-proprietorship or a  partnership.

Unlimited risk
This refers to an  investment where loss  potential is unlimited. Examples include short selling (satta) and futures trading. This is opposite of limited risk.

Unlisted securities
Ordinary shares or other securities of a company not listed (traded) on any official stock exchange. In the Pakistan, unlisted securities are traded informally in the trade circles on personal contact basis, in the UK they are traded on the Alternative Investment Market. These securities are issued by smaller or new enterprises who cannot or do not wish to comply with the listing requirements of an official Stock exchange.

Unquoted shares
Refer unlisted securities

Unsecured creditors
Debtors who have no specific security, they can have claim against general assets of the debtors/ company.

Unsecured facility
Facility not secured by collaterals but allowed only against integrity of the borrower.

The actions to bring/adding in a book, figures, or in any document, any  information with the purpose  to date, or making corrections.

Upset price
This is the lowest price at which a person is permitted to bid for something being sold at auction.

This is the length of time allowed in a trading transaction for payment of a foreign bill for example Usance letter of credit where documents drawn under L/C are delivered against acceptance and payment is made after predetermined period (generally from 30 to 360 days).

This is the practice of lending money and charging the borrower with profit/ interest, at an exorbitant or illegally high rate. Generally private money lenders, charge interest/ profit.

Usury rates
The maximum rate of interest lenders may charge from the borrowers. The usury rate is generally set by the regulators

To put in circulation, e.g. to utter  forged notes into circulation

20. (T) Basic Banking Guide A to Z


The term is generally used for travelling allowance which is paid by the organization for official trips.

Tangible assets
This refers to the assets such as cash, , machinery, equipment,  plant, property anything that has physical existence or is acquired for use in the operations of the business and not for sale to customers.  Tangible assets, unlike intangible assets, can be destroyed by fire , disasters or accidents. However, they can be used as collateral to raising  loans, and can be readily sold to raise cash in case of emergencies.

It refer to the objective or goal of an individual, persons or organization

It is a published list of fares, freight charges, prices, rates, duties etc. e.g. import tariff, custom tariff etc.

It is the compulsory monetary contribution to the state's revenue, assessed and imposed by a government on the activities, enjoyment, expenditure, income, occupation, privilege, property, etc., of individuals and organizations.

Taxable income
It refers to the  income from which standard deductions and permissible allowances have been subtracted. this is the income on which taxis paid by the tax payer.

Tex return
This is the standard form provided by the tax authorities on which a taxpayer reports taxable income with permitted deductions and exemptions, and computes his or her tax liability & file on or before due date.

Tax year
It refers to the standard 12 month period (such as a calendar year or a fiscal year) used for computing a tax payer's liability. In Pakistan Tax year starts from 1st July and ends on next  30th June.

Telegraphic transfer
It is a method of transferring funds through a telegraph or telex link. Also called wire transfer, it has now become obsolete, and has been replaced by secure cable and wireless telecommunications networks.

This is a form of wire transfer of message through telex machine . In banks these messages used to be authenticated by the use of code (test key) numbers.

This is an employee of a bank, or an institution, whose job includes the responsibilities of helping the bank customers with their banking needs, such as depositing a cheque or making a withdrawal.

Temporary overdraft
This is a clean overdraft allowed by the branch management on single transaction bases against customers request, which should be adjusted within three days.

This refers to sealed bid or offer submitted in response to a request for tenders and containing detailed information on requirements and terms associated with a potential contract.

Description of the payment terms of a bill of exchange, such as 'Due when presented’ (payment at sight) or Due on date ...  (Usance).

Term deposit
Refer Time deposit

Term loan
This is a short-term (generally for one to five years) loan payable in a fixed number of equal installments over the term of the loan.

The period of time and the interest rate arranged between creditor and debtor to repay a loan.

This is the criminal act of dishonest assumption of the rights of the true owner of a tangible or intangible property by treating it as one's own, whether or not taking it away with the intent of depriving the true owner of it.

Third party
This is the party other than the principals directly involved in a transaction or agreement . It is someone who may be indirectly involved but is not a principal party to an arrangement, contract, deal, lawsuit, or transaction.

Through bill of lading
This is the B/L issued for containerized door-to-door shipments that have to use different ships and/or different means of transportation from origin to destination.

Time deposit
A time deposit (also known as a term deposit) is a money deposit at a bank that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn, or it can be held for another term. The longer the term, the better shall be rate of return on the money. Generally, there are significant penalties for early withdrawal.

The legal rights of ownership, possession, and custody, evidenced by a legal document such as a  sale deed, or title deed. A legal title empowers its holder to control and dispose of the property and serves as a link between the title holder and the property itself.

Title deed
This is the legal document (instrument) executed and acknowledged under the seal and in the presence of a registrar of property, evidencing the right of ownership to a property described therein.

This is a piece of metal or other composition used as a substitute for currency in canteens, or in banks as an acknowledgement of receipt of cheque for cash payment.

Token money
This refers to the coins of regular issue whose face value is greater than their production cost.

Token payment
This refers to the small payment binding an agreement or acknowledging a debt.

the act or process of buying, selling, or exchanging commodities, at either wholesale or retail, within a country or between countries

Trade cycle
This is recurring fluctuations in economic activity consisting of recession and recovery and growth and decline.

Trade discount
This is a discount, from the list price of goods, granted by a manufacturer or wholesaler to a retailer.

Trade gap
This is the difference in value over a period of time of a country's imports and exports of merchandise; "a nation's balance of trade is favorable when its exports exceed its imports"

Trade mark
This refers to any name, symbol, figure, word, or mark adopted and used by a manufacturer or trader in order to designate his or her goods and to distinguish them from others. It is a proprietary term that is usually registered with the Patent and Trademark Office to assure its exclusive use by its owner.

Trade union
A labor union of craftspeople or workers in related crafts, as distinguished from general workers or a union including all workers in an industry.

Trading account
Trading accounts are traditionally thought to hold only stocks, but a trading account can hold cash, foreign cash, securities and a number of other types of investments .This is an account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer, on behalf of the investor.

It refers to an act, process, or instance of transacting, an action or activity involving two parties or things that reciprocally affect or influence each other. Transaction can be financial or non financial. Financial transactions are those where fund movement is involved, non financial transactions are those where funds transfer is not directly involved, such as issuance of cheque book, ATM card etc

Transferable credit
This is L/C with two (only two) successive beneficiaries. In this arrangement, the first can assign part or whole of the L/C amount to a second beneficiary To be transferable, the L/C must be so marked by the issuing bank on the instructions of the buyer or importer. On the instructions of the first beneficiary the advising bank can transfer it to the second beneficiary but not any further.

Transfer deed
This is the document (instrument) by which ownership of a registered property (such as land building or  shares/securities) is conveyed from its seller to its buyer.

Transit trade
The act or process of causing to pass or transit of the goods through a country. e.g. Afghan Transit Trade (ATT). Pakistan signed an agreement 37 years ago with Afghanistan to facilitate foreign trade of its land-locked neighbor. The agreement has been extremely abused by the dishonest elements.

Travel agent
This is a person who owns, operates, or works for a travel agency.

Travel cheque
This is a preprinted, fixed-amount cheque designed to allow the person signing it, to either receive value him / her selves or make payment to someone else as a result of having paid the issuer the value. It can be replaced if lost or stolen, provided the owner still has the receipt issued with the purchase of the cheque. American Express was the first company to develop a large-scale traveler' cheque system in 1891 and is still the largest issuer of traveler's cheques today by volume.

This is the person responsible for running the treasury of an organization. He/she is responsible for liquidity management, cash management, matters related with foreign exchange (inflow/outflow_ and interest rate risk hedging, management such as Purchase, repurchase (Repo) of securities.

Treasury bill
This is a short-term redeemable financial security issued by the State Bank of Pakistan. Treasury bills (TB) are issued for three months, Six months & 12 months maturity  period, and are sold at a discount to par, and do not carry interest. They are generally bought by banks, DFIs and large companies in competitive tenders. These TB can be resold in the discount market, generally to commercial banks or DFIs. These bills can also be discounted with SBPs for overnight for meeting immediate liquidity requirement.

Trial balance
This is a statement of all the open debit and credit items, made preliminary to balancing a double-entry ledger. If the entries in the general ledger were correctly posted, the total of all the debit balance should be equal to all the credit balance; otherwise some error has occurred some where in the entry posting process.

This refers to the requirement of three identical copies.

It refers to the, reliance on the integrity, strength, ability, surety, etc., of a person/ company.

Trust account
A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies.

Trust administrator
A person or institution that manages trust accounts.

Trust deed
It is a formal document which outlines the terms of a trust agreement

This is an individual who holds or manages assets / affairs of the trust as per by laws of the trust deed.

Trust estate
All real or personal assets owned by the trust or transferred to the trustee(s) under a trust agreement as object of the trust are called estates of the trust.

Trust receipt
This is a method of financing where a bank allows an importer to take delivery of imported goods under trust with the arrangement  that importer shall sell goods and will pay off the outstanding financing against trust within specified period.

Truth in Lending
The Truth in Lending Act is a American Federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on, what credit will cost the borrowers, when charges will be imposed, and what are the borrower's rights as a customer. SBP has also issued similar type of instructions to the banks & DFIs to declare in clear wording all Terms & conditions rules and regulations declared and hidden costs to the borrower.

Turn key contract
This is a type of project that is constructed by a developer and sold to a buyer in a ready-to-use condition.This also refers to the contract in which the project is ready to produce cash flow upon completion.

In banking it refers to the amount of business transacted during a given period of time.

19. (S) Basic Banking Guide A to Z


Safe deposit vault
A type of small boxes usually located inside a bank vault (locker room) and rented to customers for their use in storing valuable items.

Safe custody
Article of value deposited in bank for safe keeping, bank can not exercise right of lien on the items deposited for safe custody, except recovery of charges.

A service provided by banks where securities and valuables are protected in the vaults of the bank for customers.

Safe deposit locker
These are storage containers maintained in the vault area of a bank and rented to bank customers for safekeeping of valuables. These boxes are covered by the insurance policy where risk is covered according to the size of locker, provided customer is agreed to pay the premium. Access to individual locker is through two different keys, one kept by the customer, the other by the bank as master key which is common for all lockers.

It refers to the value of a property that has value in excess of its value as a scrap.

Same day clearing
NIFT is providing special clearing facility for the branches situated within five miles radius of clearing house. Cheques of Rs 500(K) and above in Karachi & Lahore & Rs 200 (K) & above in other cities received up to cut time in the morning are eligible to be lodged in same day clearing against charges. The proceeds of these cheque are credited in customers account by 3 PM.

Item given or sold to a buyer that represents all such items pertaining to a deal, or transaction. A sample establishes a standard of quality by which the rest of the items are judged.

In banking it refers to the formal approval or authorization.

Satisfaction of mortgage
A document issued by a mortgagee (the lender) when a mortgage is paid in full.

saving account
It is an account from where withdrawals can be made, (2) profit accrues on the account balance, (3) does not have any maturity date, and (4) zakat is deducted as per law if zakat declaration is not submitted.

saving certificate
Refer national saving schemes

schedule of bank charges (SOC)
It is a small document issued by the banks on six monthly bases wherein product wise charges of all domestic and international banking are given. As per SBP instructions banks are required to display a copy of the same on notice board.

It is a metal stamp that makes it impossible to remove (raised) impression on paper, lead, or sealing wax and is used as a security device and as a mark of authenticity on legal documents.

Search certificate
It is a certificate issued by the registrar for verifying clear title of the property offered by the mortgager to the banker/ lender. the certificate indicates existing charges over the property offered

Secondary market
A market on which an investor purchases an asset from another investor rather than an issuing corporation. All stock exchanges are part of the secondary market, as investors buy securities from other investors instead of an issuing company.

Second mortgage
Loan secured by the property that is already mortgaged. Second mortgages are subordinate / secondary to the first mortgage and, in case of a foreclosure sale, the bank holding second mortgage shall be paid out only after the full satisfaction of the first mortgage.

This is One of the conditions of the relationship between a bank and its customers  that the customers' dealings and financial affairs will be treated as confidential. This rule, however, does not apply to the customers' credit information which is shared among banks. Due to certain laws of Pakistan such as anti-terrorist and anti drug-trade and tax evasion, banks must release specific information to help government to fight terrorism and illegal trade, and prevent tax-evasion and money laundering.

Secured creditor
Banks who holds legally enforceable claim on a borrower's asset(s). Secured creditors are entitled to receive the proceeds of the foreclosure sale of the pledged asset(s) and, in case of a bankruptcy, must be satisfied before the unsecured creditor(s).

Secured debenture
These debentures are secured by a specific asset of the issuing company.

These are investment instruments bought and sold in financial markets, such as bonds, debentures, notes, shares and warrants.

Security & Exchange commission of Pakistan (SECP)
This is a government agency whose purpose is to develop a modern and efficient corporate sector and a capital based on sound regulatory principles, in order to foster economic growth and prosperity in Pakistan. It is an attached department of Ministry of Finance

Sellers market
This is a situation where demand is high in comparison to the supply, therefore sellers can dictate prices to take full advantage of the market conditions. This is just opposite of buyers' market.

Intangible products that are not goods tangible products, such as accounting, banking, cleaning, consultancy, education, insurance, medical treatment, transportation. No transfer of possession or ownership takes place when services are sold, and they (a) cannot be stored or transported, (b) are instantly perishable, and (c) come into existence at the time they are bought and consumed.

Service charge
A charge assessed by a bank or DFI for processing transactions and maintaining accounts.

Settlement day
A specified day(generally falls after two weeks) in the stock exchange on which accounts of previous accounting periods are settled.

Several liability
This is a liability which is separate from the liability of others. In case of a dispute, a plaintiff may start legal proceeding only against a particular defendant, without involving other party or parties.

Shadow cost
This is the cost / price that bank management is willing to pay for utilizing surplus resources of a branch. This is the Contribution  that could be earned by the branch. This amount so paid is called shadow cost. A shadow cost is, in a way, an opportunity cost which is paid to the branches having surplus funds and recovered from branches who utilized these surplus funds.

This is an evidence of ownership that represents an equal proportion of a company's capital. It entitles its shareholder to an equal claim on the company's profits and an equal obligation for the company's debts and losses.

Share capital
This is invested money that is not repaid to the investors in the normal course of business. It represents paid up capital generated through purchase of the company's ordinary shares. Its value is computed by estimating the current market value of everything owned by the company from which the total of all liabilities is subtracted. This is also called equity financing .

Share certificate
This is a legal document issued as proof of ownership in a company. In the modern stock markets, the 'paper' share is now being replaced by the 'electronic' share.

These are Individuals, group, or organization that holds one or more shares in a company, and in whose name the share certificate is issued.

Share premium
This represents excess amount received by a company over the par value of its shares. This amount forms a part of the reserves which usually can be used only for purposes specified under corporate legislation.

This represents cargo transported under the terms of a single bill of lading or air waybill, irrespective of the quantity or number of containers, packages, or pieces. This is also called consignment.

Shipped bill of lading
This is a B/L which certifies that the specified goods have been received in apparent good order and condition from the named shipper /consignor, and have been taken on board in the named ship on the stated date.

Shipping agency
This is a company who arranges shipment of goods, and guide about whole process of shipment such as how a customer can ship his/her excess baggage quickly and at the lowest price to chosen destination against payment of nominal fee

Short term asset
In general, it refers to an asset whose lifespan is estimated five years or less.

Short form bill of lading
This is a B/L which is without the terms and conditions of carriage printed on its back. Otherwise, in size, it is not different from the long form B/L. The shipper and the carrier are bound by the conditions of carriage whether printed on the B/L or not.

Short position
It refers to a situation were projected outflows of a currency exceed its projected inflows.

Short selling
This refers to “bear” tendency where, profiting is made  from an anticipated drop in the price of a commodity, financial instrument, or shares / securities.  The seller counts on buying the item at a cheaper price to return or deliver it with a higher price.

Short term investment
Investment that matures in, or is held for, 12 months or less.

Short term liabilities
It refers to the liabilities which are required to be repaid between one to five years.

Short term policy
Insurance policy which covers risk of short period.

Sight bill
Bill of exchange payable on the day it is presented to the drawee. Also called at sight or sight draft.

Sight credit
It is a type of letter of credit whose payment becomes due on the day its documents are lodged by the L/C opening bank. Also called at sight L/C

Sight deposit
Alternate term of demand deposit.

Signature card
A card signed by each depositor and customer of a bank which may be used as a means of identification. The signature card represents a contract between the bank and the depositor.

Single entry accounting
An accounting method in which transactions are recorded as a single entry, rather than as both a debit and a credit as in double-entry bookkeeping. When using single entry bookkeeping, taxable income is just the difference between cash expenses and cash receipts over the relevant time period.

Sinking funds
Reserved created by periodically setting aside certain sums in a special account  for future replacement of an asset or repayment of a liability.

Sleeping partner
It is a partner who shares risks and rewards of an enterprise are with other partners, but does not take part in its day-to-day management. He is also called silent partner.

Please refer depression

Society for worldwide interbank telecommunication (SWIFT)
Society for Worldwide Interbank Financial Telecommunications. it is a  global communication network that facilitates 24-hour secure international exchange of payment instructions between banks, central banks, multinational corporations, and major securities firms. A member owned cooperative organized in 1977 under Belgium law, it now includes over 6,500 participating members from more than 180 countries which together process in excess of 300 million messages every day.

Soft currency
It refers to the currency belonging to small, weak, or wildly fluctuating economies which are not attractive for foreign exchange dealing.

It consists of carefully-organized instructions and codes, that programmers write in a language that hardware can understand and act upon. Software is divided commonly into two main categories: (1) System software. (2) Application software

Sole proprietorship
It is the simplest, oldest, and most common form of business ownership in which only one individual acquires all the benefits and risks of running an enterprise.

Sorting (cash)
Separation of currency notes into issuable and not issuable portion. As per SBP cash monitoring policy only issuable notes can be pushed back for circulation. Non issuable notes are those which are very old, soiled or torn.

Special crossing
When a cheque bears across its face an addition of the name of the bank, either with or without two parallel lines is called special crossing. Where a cheque is crossed specially, the banker on whom it is drawn shall pay it to the banker to whom it is crossed or his agent for collection

Special drawing rights
SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries' governments

Special Indorsement
Endorsement that names the endorsee to whose order a negotiable instrument is payable. For example "Pay to the order of ABC & company."

Special resolution
It is a resolution which is adopted for some very important decision such as for altering the terms of the articles of association or the memorandum of association, or making some other major or fundamental changes in an organization of the company. A special resolution  requires (1) 21 days notice to the members,  share holders of the intention to propose the resolution, (2) not less than three-fourth of the votes of the members present in person or by proxy for approval, and (3) to be filed with the competent authority (such as the registrar of companies in Pakistan), within 15 days of being approved.

Specific reserve
This reserve is created for settlement of definite liability, such as tax, dividend etc

This is calculated assumption of above average short-term risk of financial loss, in expectation of above average gain from an anticipated change in prices.

Spot price
This refers to the cash price of goods traded on a spot market and available for almost immediate delivery.

Spot rate
This is foreign exchange market price at which a currency will be delivered on the spot date. Spot rate is the starting point for all foreign exchange transactions.

This is the difference between the buying and selling price of the same commodity.

Stale cheque
A cheque is said be stale when it has not been presented by the payee within the stipulated time set aside by the financial institution. The period are usually 6- 12months of issue. But it all depends on the country. in Pakistan period is six months, after this period cheque require revalidation.

Standards and poor
Standard & Poor's is the world's leading provider of independent credit ratings. They provide risk evaluation, investment research, and data. They supply investors with the independent benchmarks they need to feel more confident about their investment and financial decisions.

Standby letter of credit
Standby letter of credit is basically a guarantee of payment, which is used as a substitute for the commonly used performance bonds. This type of letter of credit may be issued to cover non-trade transactions and to guarantee performance of a contractor as supplier. It is a guarantee of payment issued by a bank on behalf of a client, that is used as "payment of last resort" if the client fail to fulfill a contractual commitment.

Standing instructions
This is a type of pre-authorized payment under which an account holder authorizes a bank to pay a fixed amount such as mortgage payment or rent or variable amounts such as those called for in bills or invoices, directly to a landlord, bank, supplier or utility company at regular intervals.

Standing order
Refer standing instructions.

State bank
 A bank that is organized under the laws of a State and chartered by that State to conduct the business of banking.

State bank of Pakistan
Before 14 August 1947, the Reserve Bank of India was the central bank for un-divided India. On 30 December 1948 the British Government's commission distributed the Bank of India's reserves between Pakistan and India  with ratio of 30 percent for Pakistan and 70 percent for India. In May, 1948 Government of Pakistan took steps to establish the State Bank of Pakistan and as such it commenced operation on July 1, 1948. State Bank of Pakistan operates as the Central Bank of Pakistan under the State Bank of Pakistan Act 1956.

Statement of Account
This is summary of all transactions with a customer or a supplier that occurred over the previous month, quarter, etc., and their effect on an open-account balance.

Statement of affairs
It refers to the written record in the form of an statement regarding, the current condition, position, or status of a branch, area, region or bank as a whole. It contains balances of all General ledgers (GL) including contra items. The sum total of both debit and credit side should be equal.
This is a branch of mathematics, which is concerned with collection, classification, analysis, and interpretation of numerical facts, for drawing inferences on the basis of their quantifiable likelihood (probability). It is subdivided into descriptive statistics and inferential statistics.

Statutory obligation
Obligation that does not arise from a contractual relationship but is created under the law of the land.

Statutory requirement
Legally mandated requirement that must be complied with by the party to which it applies such as approval, license, permit, etc., required for performing  certain activity

Short name for the UK currency Pound Sterling (£) as distinct from other currencies named 'pound.'

A source of funds that is provided to an individual, such as through a scholarship, which allows the individual to pursue a particular interest, such as an internship.

It represents proportional part of a company's equity as capital raised by fully paid up shares.

Stock broker
This is a person who serves as an agent or intermediary in commercial negotiations or transactions in stock exchange. They are licensed professionals in their fields. Their rate of compensation called brokerage  is determined generally, higher the value, lower the percentage.

Stock exchange
This is an organized and regulated financial market where securities bonds and  shares are bought and sold at prices governed by the forces of demand and supply. Stock exchanges basically serve as (1) primary markets where corporations, governments, and other incorporated bodies can raise capital by channeling savings of the investors into productive ventures; and (2) secondary markets where investors can sell their securities to other investors for cash, thus reducing the risk of investment and maintaining liquidity in the system.

Stock in trade
This is the value of materials and goods held by a company/ firm for sale or customer service such as merchandise, finished goods. It is often the largest item in the current assets category, and must be accurately counted and valued at the end of each accounting period to determine a company's profit or loss.

Stock taking
It refers to the physical verification of the quantities and condition of items held in an inventory.

Stop payment instructions
This is a notice by an accountholder to a bank not to honor a specified cheque drawn on his or her account balance. Banks  require a written instruction following an verbal request and, in case of a cashier cheque , pay order or a demand draft, bank require a clearance from beneficiary.

Straight bill of lading
This is a B/L used where the goods have been paid for or do not require payment. Under this B/L, the shipping company delivers the shipment to its consignee on presentation of identification.

Straight line method of depreciation
This is the method of computing depreciation in which the depreciable cost  of a tangible  asset is reduced by an equal amount in each accounting period over the asset's estimated useful life.

Student loan:
Loans made, insured, or guaranteed under any program authorized by the regulators or any other competent authority authorized by the govt. Loan funds are used by the borrower for education purposes.

Sub branch
A sub branch is a conduit of a branch to which it is affiliated. Banks can not convert an existing branch into a sub branch. However a booth can be converted into a sub branch, a sub branch into a full branch under their ABEP after approval from SBP.A sub branch is not empowered to open an account including allotment of account number. Completion of Know Your Customers (KYC) and exercise of due diligence, before account opening, is also to be performed by the controlling branch.

Lease from one lessee to another is called sub-lessee. The agreement between the allotment authority (the Lessor) and the first lessee remains in force and governs the terms of the sublease. A sub lease can be registrar.

Subordinated debt
Subordinated debt generally refers to debt that has a secondary or lesser claim priority to the issuer's assets than more senior debt, in case the issuer default on its obligations. There are also levels of subordinated debt, with senior subordinated debt having a higher claim to repayment than junior subordinated debt.

Subscribed capital
It refers to the individual subscribed share value and liability of the total share capital of a company.

Subsidiary company
This is a company whose controlling interest is owned by another company.

This is a grant made by a government to some individual or business or on certain goods  in order to maintain an acceptable standard of living or to encourage economic growth.

This refers to the call to appear at a specified place, esp. before a court.

Sum payable
This is the amount that a borrower, debtor or purchaser must pay to satisfy an obligation.

Sundry creditors
This is an account where miscellaneous small receipts are credited. In other words this is an account where individual receipts are not assigned individual ledger accounts but are classified as a group. Bank must maintain entry wise record of this account.

Sundry debtors
This is similar to the sundry creditors bur in this accounts debits transactions are recorded

This refers to the age of retirement. Companies make retirement plans for the benefit of its employees. These types of plans use funds deposited by the company or by the employee  or by both with the purpose that funds will grow in value until the employee retires.

Suppliers credit
This refers to the goods or services received on deferred payment terms.

It refers to the amount added on to a usual charge for a specific product, purpose, or service .

This is a person or company (such as a bank) that agrees to be primarily liable for the conduct, obligation, or performance of another.

Surety bond
This is a formal, contract between a first party (the principal debtor), a second party (the customer creditor), and a third party (the surety, such as a bank) where the surety guarantees payment of a specified maximum amount, the  against damage or loss caused by the actions or a failure to perform of the creditor. Generally surety bond is issued for a specified period

It refers to the leftovers of an appropriation account after all expenditures.

It refers to voluntary giving up of a legal claim, interest, or right.

Surrender value
This is the amount which the holder of a life insurance policy is entitled to receive, on its surrender/ cancellation before the death of the insured or before the policy matures. This sum is based on the insurance premium paid up to the surrender date less surrender fee. It may be used as a collateral for borrowing from the insurance company or from a bank.

Suspense account
This is a temporary parking account created to record, disbursements  related with unconcluded transactions until their ending, or discrepancies between totals of other accounts until their rectification or correct classification. This is also called other Assets account. According to the PR O-3 all entries parked in suspense accounts must be settled within 30 days from the date of origination.

It refers to exchange of one type of asset, for another. Common types of swap include,(a) Currency swap, simultaneous buying and selling of a currency. (b) Debt swap, exchange of a loan between banks. (c). Debt to debt swap, exchange of an existing liability into a new loan, usually with an extended payback period.

It refers to the moving of money from one mutual fund to another or fron one investment scheme to another.

This is a temporary association of two or more banks to finance  some specific venture or project such as large scale real estate development or large scale project. The purpose of syndication is to share the risk involved.

System analyses
It refers to the use of investigational approach in understanding the behavior of a business, product, economy, market, or even an event where mathematical analysis techniques are inadequate or unfeasible

18. (R) Basic Banking Guide A to Z


Railway receipt
Railway receipt is issued against receipt of goods consigned & also against payment. The persons claiming the delivery is required to produce the receipt granted to the sender at the forwarding station and the same should be taken back from him before delivery of goods. Goods are not to be delivered to any person other than the invoiced or endorsed consignee.

It refers to the amount of a charge or payment with reference to some basis of calculation for example interest/profit rate.

Rate of exchange
It refers to the ratio at which a unit of the currency of one country can be exchanged for that of another country.

Rate of interest
It refers to the rate of profit which is charged or paid for the use of money. An interest rate is generally expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal.

Rate of return
It refers to the rate of profit on an investment, which is usually expressed as a percentage of the total amount invested. Rate of return is generally, but not always, calculated annual basis.

Acceptance or confirmation of an act or agreement that was signed (executed) by the authorized party itself. For example, a treaty, is not enforceable or valid until the ratification process is complete.

It refers to the result of one number or quantity divided by another and provides meaningful comparison.

It refers to remove unreasonable elements for improving, production, trade and profitability.

Raw material
Material before being processed or manufactured into a final form.

Ready money
Liquid cash, money that is in hand or may be obtained quickly or easily.

Real cost
It refers to the cost of producing goods or services, including the cost of all resources used and the cost of not employing those resources in alternative uses.

Real estate
It refers to the Land, including all the natural resources and permanent buildings on it.

Real income
It refers to the income of an individual or group after taking into consideration the effects of inflation on purchasing power. For example, if a person received a 5% salary rise over the previous year and inflation for the year was 8%, then his real income would have shrunk by 3%. wages".

Real investment
It refers the purchase of assets such as land, real estate, plant and machinery as opposite to the acquisition of shares and securities.

Realizable value
This is a method of determining what an asset would be worth (its present value) if its present owner sold it in the current market or at a near future date. This is considered assuming that the loan against the asset became past due what will be realizable value of the asset. Also refer forced sale value FSV.

Realization account
This is an account which is opened when a business is winding up, for example dissolution of Partnership.

Realized profit
Realized profit is profit that comes from a completed trade transactions. Realized profit Realized profit is included in the account balance in trading account statements. Unrealized profit is profit that comes from a currently active trade at a future date.  Unrealized profit will change with each price change, so it can be reduced to zero or loss.

Real property
Land and all the things that are attached to it are real property. Anything that is not real property is personal property. A house is real property, but a bed room set is not Real property. It is of a permanent and immovable nature and rights are transferred through execution of deed.

Real time
This is a computer term which refers that the data in the computer is up dated instantly. For example online transfer of money is a system by which money is transferred on real time basis.

It refers to the deduction or return (an amount) from a payment or bill.

It is a written acknowledgement that a specified article or sum of money has been received as an exchange for goods or services.

Receive for shipment bill of lading
This document serves only as a receipt for goods accepted for shipment on a named ship. This is issued  where the goods arrive at the port of departure before the arrival of ship. This type of B/L is not considered a complete B/L and is replaced by a shipped on board bill of lading when the goods do go onboard.

This is an independent and  impartial party appointed by a court to receive, manage, and preserve  a disputed property which is the subject matter of a court case, pending final disposition of the case.

It refers to the period of general economic decline which result into high unemployment, stagnant wages, and fall in retail sales. a recession generally does not last longer than one year and is much milder than a depression. Although recessions are considered a normal part of a capitalist economy, there is no unanimity of economists on its causes.

The process of analyzing two related records and, if differences exist between them, finding the cause and bringing the two records into agreement. Example: Comparing an up-to-date cheque book with a monthly statement from the financial institution holding the account.

It refers to the legal right of a bank to seek repayment of the loan from the borrower's and/or the guarantor's unpledged personal property, in addition to the property pledged to the banker as collateral.

It refers to the correction of  mistake already committed, or express of the true intention of the parties in a case it differs with the expression which was not expressed in the original version.

Red clause
This is  special provision in documentary credit where the beneficiary( seller) is authorized to obtain an advance from the bank on an unsecured basis. The liability for default is assumed by the buyer through the issuing bank. This clause is generally written in red ink, hence it is called Red clause.

Redeemable debenture
These debentures are issued under an agreement in which a company issuing debenture agrees to repay the borrowed sum on a specified date or after a specified period of notice.

Redeemable preference shares
This is a type of shares that is liable to be bought back by the issuing company on a specified date or after a specified period of notice.

It refers to the imported good exported by the importing country.

Refer to drawer
This is one of the reasons used by the bankers to return cheques due to the lack of funds. The inspectors  State bank of Pakistan do not accept this reason as valid (ambiguous) because ordinary customers do not understand meaning of this reason.

It refers to finance again. In order to support genuine exporters, SBP has introduced certain export refinance schemes. Export refinance scheme is divided in to Part-I and Part-II. SBP Banking Services Corporation (BSC) manages all operational matters of EFS. Banks and DFIs are required to first provide finance to the exporter and after financing, file claims with SBP BSC for refinance. The financing facility is provided to direct exporters up to 180 days and to indirect exporters for up to 120 days.

An amount paid back because of an overpayment or because of the return of an item previously sold.

Registered capital
This is alternate term of authorized capital which refers to the maximum value of shares that a company can legally issue. This number is specified in the memorandum of association when a company is incorporated, but can be changed later with shareholders' approval.

Registered charge
Charge which is registered with the registrar of the property & in case of limited company,its registeration with the registrar of the company.

Registered post
If you need proof that your Letter-post item arrived at its destination, purchase an Advice of Receipt card at the time of mailing for an extra fee. The Advice of Receipt card is attached to your Registered Mail item. Your recipient signs and dates the card, and returns it to you in the mail. This card is your proof that the recipient received your Registered Mail

Government official appointed officer to maintain a register in which transactions of a specific nature are recorded for public knowledge.

Registrar of companies
Under the Pakistani corporate law, the registrar is responsible for recording and maintaining certain details of the new and existing companies within his or her jurisdiction. He or she also controls the formation of new companies, and renewal of or changes in the existing ones.

It refers to the entering information relating to assignments, deeds, contracts of sale, judgments, mortgages, new securities, automobiles etc., in a public record book.

Registration of charge
In case of limited companies in addition to the completion of documentation formalities, banks and DFIs are required to get registered charge with the registrar of the companies in relation to the credit facilities allowed.

It refers to an independent body that determines and maintains the operating parameters of a system, generally within certain prescribed or preset regulations. For Example State bank of Pakistan is the regulator of banking industry.

Reimbursement clause
It is a clause which relates to the amount to be refunded or paid for costs incurred or expenses paid or payment of the bill drawn against letter of credit by the correspondent bank.

Release of lien
 To free a piece of real estate from a mortgage.

Transfer of funds,  from one place to another, for example  by a buyer to a distant seller, through some instrument of transfer such as a cheque, draft, Telegraphic transfer bankers cheque or through online transfer. Funds so transferred are called remittance.

It refers to the service available to the client computers over a network.

It refers to the Reward of employment as pay, salary, or wage, including allowances, benefits such as company car, medical plan, pension plan, bonuses, cash incentives, and monetary value of the non-cash incentives.

The act or process of renewing such as, renewal of credit facilities, renewal of term deposit renewal of the copyright, renewal of lease agreement. In banking it refers to a form of extending an unpaid loan in which the borrower's remaining unpaid loan balance is carried over (renewed) into a new loan at the beginning of the next financing period.

It refers to the  payment made periodically by a tenant to a landlord in return for the use of land, a building, an apartment, an office, or other property.

It refers to the income arising from rents received.

It refers to present again e.g. paying banker of a cheque may ask collecting banker to represent cheque.

Authorized to act as an official delegate or agent, standing or acting for another through delegated authority in official capacity.

Repurchase agreement (repos)
This is a contract between a buyer and a seller whereby the seller agrees to repurchase the item sold on a designated date, for which the investor/ buyer receives a fixed return.

Rescheduling of debt
It refers to the extending the repayment period of an existing loan.

Reserve currency
One of the national currencies or IMF's special drawing rights (SDR) used by a country to hold its foreign currency reserves and gold for settling international trade transactions and other obligations.

Reserve fund
This is a fund seta side from profit of the company to meet some extra ordinary expenses.

Reserve price
It refers to the minimum price set by the seller below which no offer is accepted.

Residual interest
Interest that continues to accrue on your credit card balance from the statement cycle date until the bank receives your payment. For example, if your statement cycle date was January 10 and the bank received your payment on January 20, there were ten days for which interest accrued. This amount will be posted on your next statement.

Residual value
It refers to the estimated scrap value of an asset at the end of its economic or useful life.

This is a proposition put before a meeting of shareholders directors or members of a company or association for discussion, approval or adoption. Resolutions are generally of four types: (1) Elective, (2) Extraordinary (3) Ordinary and (4) Special.

Resolution to borrow
This is an authority granted to the officers of a company, through a resolution passed by the shareholders, to obtain financing fund based or non fund based. In order to protect institutional interest it is advisable that banks / DFIs should provide a Performa resolution which the borrower completes and signs.

It refers to the  defendant against whom a petition or complaint is filed in a court.

Restrictive Indorsement
Indorsement which limits further negotiability of a negotiable instrument. For example, the words 'accounts payee Only' on the face (in the Pakistan, India & UK) or 'For deposit only' on the back in the US of a cheque block its cashing over the counter

Retail banking
Retail banking is a banking service that is meant primarily towards individual consumers. It focuses consumer markets a wide range of personal banking services, including offering savings and checking accounts, bill paying services, as well as debit and credit cards. In Pakistan, many retail banking products are also extending to small and medium sized businesses. All branches except corporate branches falls under the ambit of retail banking. It is the biggest funds generating unit and its excessive funds are utilized by corporate banking .

Retention money
Generally this is money that is held back that would otherwise be paid, until the other party performs some service or task. Take example, of the construction business, where it is common that a series of payments are made over time, with the requirement that for example 10% of the payments is withheld until the job is complete. This way, the contractor can be paid his costs during construction, but obviously doesn't get the entire amount until the job is done.

Return cheque
Cheque / instrument which is returned by the paying bank either presented on counter or in clearing.

Return item
A negotiable instrument—principally a cheque—that has been sent to one bank for collection and payment and is returned unpaid by the sending bank.

It refers to the adjustment in the value of currency with respect to another currencies or a benchmark rate of exchange. It also refers to the readjustment of assets or liabilities in foreign currency according to the latest market value in local currency.

It refers to the amount generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of the company before any costs or expenses are deducted.

Revocable credit
It is an L/C that may be amended or canceled any time by the buyer (the account party) without the approval of the seller (the beneficiary). Since it does not provide any protection to the seller, it is rarely used.

Revolving credit
A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. Also called a open-end credit.

Revolving letter of credit
This is an L/C which contains a clause that credit will again be available to the seller after reimbursement of the credit availed. There is no limit of turnover, but value of the bill drawn under the L/C is clearly defined.

Right of setoff
Bank's legal right to seize a borrower's any accounts credit balance except a sub-account balance in the same bank to apply it towards the borrower's any over due loan . In some countries this right is not applicable to consumer and credit card payments.

17. (Q) Basic Banking Guide A to Z


It refers to a person or organization, having the qualities, required by law or by custom for getting, or exercising a right, holding an office, etc.

Qualified Audit Report
This is a report in which auditors are unable to certify that financial statements submitted reflects true state and affairs of the company. The circumstances which can give rise to a qualification are as follows:
* Limitation upon the scope of the auditors works or doubts which in relation to some unresolved matters.
* Unsuitable accounting policies, inadequate or misleading disclosures given in the financial statements or failure to comply with an accounting standard or legislation.
An adverse opinion indicating that the financial statements do not give a true and fair view and/or do not comply with the Companies Ordinance 1984 will be given when the matter concerned gives rise to a fundamental disagreement such as client has failed to provide a provision which would turn a reported profit into a loss and which would fundamentally change the net asset position if it were recognized. Such qualifications are relatively rare.

Quality Certificate
A certificate issued by third party, indicating that the goods are of required standard.

Quality control
It is also called quality assurance (QA) process, which consist on the  standard used in detection and measurement of possible problems to the production system, and also includes corrective responses for such type of problems.

Quantity rebate
Reduction in price on purchase of large quantity of goods

Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, relationship with the price level. The theory can be expressed simply by the equation of exchange. M.V = P.Q In this version of the equation, the velocity of money (V) and real expenditures (Q) are fixed, so any change in money supply (M) has a roughly proportional impact on price level (P). in other words Quantity theory of money is the economics concept that the money supply significantly affects economic activity and inflation rate and price level.

Quarterly returns
different statements required to be submitted by the banks and financial institutions to SBP, i.e. March, June, September & December. These returns are used for financial review, information about credit control, deposits and saving, foreign exchange inflow and outflow and preparation of statistical data.

Not actually but apparently, in some degree or sense, resembling, nearly

Quasi contract
Court's determination of an obligation of one party to another where no actual contract exists. It is based on the parties' conduct, mutual relationship. In strict legal terms a quasi contract does not constitute a formal contract, but is a legal remedy that allows a plaintiff to recover an award or benefit conferred on the defendant.

Quasi money
A term used for instruments used in place of bank notes, such as, cheques, travelers cheques, Pay orders, postal orders demand drafts, cashiers cheque etc

Quasi negotiable instruments
Instruments which posses some of the qualities of Negotiable instrument, but in fact these are not negotiable instrument, such as Bill of lading etc.

Quasi partner
Refer nominal partner

Quasi rent
It is the rent accruing to any factor of production other than land. It refers to the temporary return to the factor of production whose supply cannot be adjusted to demand in the short-run with the increase in the factor of production, the quasi rent disappears. For example at the time of migration of refugees from Afghanistan to Pakistan, the demand for houses increased due to the increase in population. Quasi-rent arises in the case durable goods like houses, machine and in case of a particular  kind of skill. It arises  due to a temporary  scarcity of a particular durable goods or skill which can be increased  only if enough time is give.

It refers to the minimal number of officials and members of a committee or organization, usually, who must be present for valid transaction of business.

It refers to the share or proportional part of a total that is required from, or is due or belongs to, a particular district, province, person, group, etc.

It refers to the bid price such as  the highest bid price currently available for a commodity and the lowest ask price currently available for the same commodity.

To repeat or copy the words of (another), usually with acknowledgment of the source

16. (P) Basic Banking Guide A to Z


PA (per annum)
For each year, annually. For example profit interest rates are  given on per annum basis.

Packing list
This is an Item wise list of articles prepared by the exporter/ shipper which  gives details about total number of  package, description of goods / items, and their weight etc.

PBA (Pakistan banks association)
This is an institution which represents the Pakistan Banking Industry. Established in 1953, its main objective is to coordinate the efforts of the banking industry, and to share a common vision of progress and development with its members.  Currently there are 48 members, categorized into 6 groups. Its governing body is an Executive Committee (EC) comprising of 14 members. PBA has 10 functional Sub Committees, each chaired by a member of the Executive Committee. Over the years the role of PBA has broadened considerably. It is now referred to by the State Bank of Pakistan in formulation of regulations for the banking industry.

Paid cheque
A paid cheque is that against which payment has been made by marking cancellation on the face of it by the paying bank

Paid-up capital
Money collected from share holders in exchange of the shares issued.

Paid-up policy
Insurance policy against which total premium is paid.

Paper currency
Bank notes issued by the government and accepted as medium of exchange.

Paper profit
Profit on investment /securities which is not yet realized by selling it.

On face value, The purchase of shares of any business at the original price.

Parallel market
The parallel market, also known as the gray market, that develops in goods sold outside of their authorized channels of trade. The reason that the parallel market exists is price difference in parallel markets. Due to the price differential businessman purchase goods from one market to be resold in the more expensive market at a profit.

Parallel rate
This refers to unofficial rate or black market rate. Black market rats are created due to the government restrictions on free trading of foreign currencies.

It refers to some quantity of goods wrapped or packed up in small package / bundle.

Pari passu
It refers to rights equal in all respects, at the same pace or rate, enjoying the same rights without any preference. Pari passu charge is created generally in syndicated/ consortium financing where all the participating banks have equal rights in security offered.

Partial loss
Damage less than the total loss. In insurance, it refers to damage that neither completely destroys the insured goods  nor renders it useless for consumption purpose.

Partial payment
Payment amount that is less than the due amount.

Participating loan
It refers to the consortium or syndicate loan where more than one bank provide their part of loan

Particular average
Marine insurance provision under which damages or expenses shall be born by a exporter whose cargo is exposed to a danger because this is independent to the insurance cover bought for the cargo.

Particular lien
It refers to claim that requires payment of a debt only in respect to the goods or property in possession of a lien holder. For example, a mechanic has a lien on the repaired machine only up to the extent of the amount of the repair bill.

It refers to a person who joins with other individuals in a business (partnership) where profit and losses, are shared among the partners.

It refers to a type of business in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement.

Part payment
Any payment that is less than the entire due amount.

Par value
It refers to the apparent worth or the nominal value mentioned on face' or 'head' side of currency note, security certificate, share, bond, or other type of financial instrument.

A book in ledger form in which all deposits, withdrawals, and earnings of a customer's savings account are recorded.

It is a Document issued in book form by a government to allow its citizens to travel abroad, and request other governments to facilitate their passage on a reciprocal basis.

Past due
Any note or other time instrument that has not been paid on the due date.

The person who accept goods as security for a loan

The person who pledges the goods

To honor a credit obligation

Pa as you earn (PAYE)
This is a tax payment method in which an employer is required by law to deduct income tax from an employee's taxable salary. This amount is deposited in the account of government within 14 days after collection.

Pay day
The day that an individual receives a paycheck. Paydays are typically either weekly, bi-weekly, or monthly.

The person or entity to whom a cheque, draft, or note is made payable.

Paying banker
A bank upon which a cheque is drawn and that pays a cheque or other draft

Paying-in slip
Deposits slip of the cash and other funds that a customer presents to the bank for credit to his or her account.

Discharge of obligation in the form of money

Payment due date
The date on which a loan or installment payment is due. Any payment received after this date is considered late; fees and penalties can be applied.

Payment in due course
Payment in accordance to the apparent tenor of the instrument in good faith and without negligence to the holder without knowledge or notice that his or her title to the instrument is defective.

Payment of cheque
When payment for goods or services is made by cheque, it is a conditional payment. The condition is that the cheque will be paid on presentation. There are some practical advantages in paying by cheque. If the goods are defective, the buyer can stop the payment of the cheque and then return the goods, rather than trying to argue for a refund.

Payment on account
In assets products it used for payment of previous periods liability. In liability products it if often used for payment on behalf of, for example a call deposit for earnest money is purchased by XYZ Co in favor of Pak PWD. Now call deposit will be prepared in the name of Pak PWD & on account of XYZ & co.

Pay off
The complete repayment of a loan, including principal, interest, and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments.

Punishment for a specified sum imposed for wrongdoing or not fulfilling term of the contract.

Penalty clause
This is a provision in a contract which narrates that a specified sum of money on the defaulting  party will b imposed for  specified defaults.

Pending action
It refers to a temporary action, before receipt of decision.

Periodical payment of retirement benefits

Pension funds
Pooled-contributions from pension plans set up by employers, or other organizations (EOBI) to provide for the employees' or members' retirement benefits.

Each year or annually for example locker rent is recovered on per annum basis

Per head or per person. It is derived by dividing national income by total population

In contras, effecting both side of ledger

Continuing or any thing which have no expiry date.

Any thing belonging to an individual

Personal account
Ledger accounts that record transactions with individuals as debtors or creditors.

Personal guarantee
It is an agreement that make one liable for his/her own or a third party's debts or obligations. A personal guarantee signifies that the lender can file claim against guarantor’s assets, in case of the borrower default

Personal identification number(PIN)
This refers to Code used by an individual for getting access to his/her bank account at an ATM

Personal liability
Liability of an individual which is to be satisfied out of his or her assets

Personal loan
Consumer loan is granted for meeting personal requirement such as, purchase of air conditioner, computer, refrigerator, etc. or for meeting  expenses related to education vacation etc. and not for business or commercial use. Repayment is generally through fixed amount installments over a fixed term.

Personal property
It refers to properties whose ownership belongs to the individual.

Personal representative
It refers to an individual authorized to act on behalf of another such as an agent, advocate proxy etc

Personal security
This is an alternative term of personal guarantee used in case of third party advance.

Personnel management
It refers to the administrative discipline of hiring and developing employees so that they become more valuable to the organization. It includes, conducting job analyses, planning personnel needs, and recruitment, selecting the right people for the job,  orienting and training, determining and managing wages and salaries,  providing benefits and incentives,  appraising performance, communicating with all employees at all levels.

A formal written application to a court of law for recovery of dues or want of justice.

It refers to the earnings of the petroleum exporting countries in addition to their spending deposited in the Western banks.

Petty cash
Money set a side for meeting very small amount of expenditure

In peaces or parts

It refers to the principal, interest, taxes, and insurance—used when describing the charges on a mortgage loan.

P & L
Abbreviation of Profit & loss account

A statement of grievance made to a court for the purpose of asking redress.

A person who files suit in the count

Plastic money
It is the generic term for all types of bank cards, credit cards, debit cards, smart cards, etc.

Goods delivered as security for the payment of a liability. Goods are released against payment, and subject to forfeiture on failure to repay the liability.

Point of Sale (POS)
Super markets, stores or other retail outlet where an item is sold

A definite course of action adopted for accomplishment of job, standard operating procedure.

Politically expose persons ( PEP)
This is a term that describes a person who is or has held a position in the recent past. Such an individual must be tracked by banks and financial institutions as they pose potential reputational risk to regulated entities.

The total securities, of a financial institution or private investor held as security, the sum total of investments held by a private individual or an entity.

Portfolio management service
This is a service provided by the banks and financial institutions to the companies’ deals in securities. This includes safe keeping, collection of dividend, allocation of funds etc.

Postal order
This is a method of sending money by mail issued by one post office for payment at an other.

Writing of a date latter than today’s date.

Pond sterling
This is the name of the UK currency £ as unique from other currencies named 'pound.

Power of attorney
This is a written legal authority given by one party to another to act on the principal's behalf. In banks power of attorney is allotted to experienced bank officers. Decisions made and actions taken by an attorney older is legally binding on the principal

Preauthorized Electronic Funds Transfer
An electronic funds transfer, authorized in advance to recur at substantially regular intervals.

Preference share
This is a class of  shares who are paid a fixed and regular interest income, instead of a dividend.

Preferential creditors
When a person or company has been declared bankrupt, in that case preferred creditors, are paid in full, such as employees and the other creditors share the proceeds of remaining assets.

Preliminary expenses
The expenses incurred in the formation of a company, before the company can open its doors for business.

Amount charged or paid in excess of face value or over apparent worth.

Special  powers, privileges, and rights available to the holder of an office, or enjoyed by a person due to the age, relationship, sex.

The payment of a debt before it becomes due.

Prepayment clause
A clause in a mortgage allowing the mortgagor to pay off part or all of the unpaid debt before it becomes due.

Prepayment penalty
A penalty imposed on a borrower for repaying the loan before its due date

Presenting bank
Bank that presents a financial instrument cheque, draft, letter of credit, etc to the advising or paying bank to seek a payment.

Present value
Current value of stock, security etc.

Pre shipment credit
Financing made available before goods are shipped usually against a confirmed order or letter of credit to help an exporter fulfill an export order. This facility can be availed for the specific purpose such as procuring raw materials, purchasing, and manufacturing, processing, transporting, warehousing, packing and shipping the goods meant for export.

The exchange value, that is paid to purchase a definite quantity, weight, or other measure of a good or service.

Prima facie
It refers to some thing as it appears and is accepted as a fact, until a proof to the contrary is submitted.

Prime rate
The rate of interest at which banks provide credit to priority customers, such as multinational companies large corporations and those companies who have high credibility.

The actual sum borrowed or par value of a debt.

Principal balance
The outstanding balance on a loan, excluding interest and fees.

Private company
Business firm in the private sector controlled and operated by private individuals.

This refers to the sale or return of publicly owned enterprises to private ownership and control. This is just reverse of nationalization,

This refers to the legal process by which the assets of a deceased are distributed to the heirs through an executor named in the will, or according to the local law by a court appointed administrator.

This refers to the testing or unconfirmed period of a candidate before admission as full/ confirmed employee of a company.

It refers to the money received through a sale or by acquiring a loan. It also refers to the funds received on realization of cheques / instruments

Profit is the difference between the income of the business and all its costs/expenses. It is normally measured over a period of time. There are four types of profits, gross profit, net profit, profit after taxation and retained profit.

Profit and loss account
It is an  account which shows  the inflow of money from sale of goods or services and the costs and expenses incurred against it, over an accounting period.

Profit and loss appropriation account
This is an account which explains how a company's profit has been used to pay dividends, and to increase different reserves. It explains that what happens to the profit, instead of how it was earned.

Pro forma invoice
This is an estimated invoice  (quotation) sent by a seller to a buyer in advance of a sale / shipment or delivery of goods. It contain the kind and quantity of goods, their value, and other important information such as weight and transportation charges.

Project financing
This refers to the loan arrangement in which the repayment is derived from the project's cash flow on completion, and where the project's assets, rights, and interests are held as collateral.

Projected rate of Profit
Affairs of Islamic banking are carried out on Profit & loss (P&L) sharing basis. As such definite profit rate can not be given in advance. As such keeping in view previous history, market trends & T. bills profit rates approximate profit rates are given by Banks & DFIs.

Promissory note
This is a negotiable instrument, and in the form of  an unconditional order signed, by one party the maker or promisor to another the payee or promisee that  maker will pay a specified sum on demand, or on a fixed or a determinable future date. The legal definition of promissory note is given under section 4 of negotiable instrument Act 1881

Lodgment of a product, idea, or point of view through publicity and/or advertising such as demonstrations, discounts, exhibitions or trade shows, giveaways, point-of-sale displays and special offers, etc..

This refers to evidence that establishes existence or truth of a fact to the satisfaction of an authority such as a court or according to the accepted standards.

Any item, or thing owned with the rights of possession, use, and enjoyment, and which the owner can give as collateral/security, sell, or transfer.

Property tax
This is a tax levied on real or personal property.

A projected relationship with, other parts or shares of a whole divided according to a formula.

It refers to the submission of an idea by one party to another. It is different from an offer in the sense that, a proposal is not a promise, if accepted by the other party; the proposer can negotiate terms for the creation of a binding contract.

Single or sole owner of a company.

Allocation according to the rate.

This is a mandatory document published by every company offering its shares/securities to public for purchase. It must comply with strict legal requirements and is filed for approval with the country's securities inspectorate such as the Securities & Exchange Commission (SECP) of Pakistan, or Registrar of the company. A prospectus must disclose essential information such as company’s objectives, business, current financial position, offering price on the shares etc

Formal complaint by a party in a contract.

A sum of money set a side to meet current / future expenses such as provision for bed debts, provision for depreciation, provision for pension funds.

Provisional certificate
Temporary or tentative certificate used until the, definitive, or permanent certificate is issued by the competent authority.

A document authorizing by one person to act or vote for the  other

Prudential regulations
Regulation means authoritative direction and prudential means marked with prudence. As such prudential regulations stand for authoritative directions marked with prudence. Rules and regulations are essential for the running of any system which may be social, or economical / commercial in nature. State bank of Pakistan being regulator of banking industry, have issued prudential regulations, separately for agriculture financing, Corporate & commercial Banking, SME financing, consumer financing and Micro finance banks.

Any thing pertaining to the people as a whole.

Public limited company
It refers to a, limited liability company, whose shares are traded on  stock exchange and can be bought and sold by anyone. Public companies are strictly regulated, and are required by law to publish their financial position .

Public relations
It refers to the effort to maintain goodwill and good relations of an entity through making excellent liaison with the Customers and prospective customers by  publicity and other forms of communication. These may include support of charitable causes, education, sporting events, etc.

Public sector
It refers to that part of the economy which provides basic goods or services that are not provided by the private sector in full. It comprises of national and local governments, public corporations, Public sector is one of the largest sectors of any country.

Public utilities
Corporations or companies providing basic services such as electricity, water, gas, telephone and stock exchange who serves the peoples at large.

To buy goods or services against money consideration.

It refers to the Person or entity that is a recipient of a good or service provided by a seller under a purchase order or contract of sale

Purchasing power parity
It refers to the economics concept that exchange rates fluctuation effects positive or negative on the purchasing power of the public in domestic markets for some of the goods and services. But, now a day’s interest rates and oil trade position have more effect than the purchasing power of the currencies.