Saturday, December 31, 2011

12. (L) Basic Banking Guide A to Z


A worker sells his labor and the employer buys it.

Labor day
This is an annual holiday celebrated all over the world that resulted from the labor union movement, to celebrate the economic and social achievements of workers. The majority of countries celebrate Labour Day on May 1, and it is popularly known as May Day and International Workers' Day, while some celebrate on the first Monday of September.

Labour movement
the development of a collective organization of working people

Labor union
An association of workers meant to maintain or improve conditions of employment

Labour relations
The study of the relationship between management and workers

In banking an area of ground with specific boundaries on which a house can be built. In contrasted with urban areas, in agriculture land refers to farming areas, in general, it refers to any part of the earth's surface that can be owned as property, and everything annexed to it.

To mark the boundary of land, a significant or historic event or achievement, etc

A land owner, a person or organization who owns and leases land, buildings, etc.

Last in first out (LIFO)
A method of maintaining inventory in which the most recently acquired items are assumed to be sold first. This is just reverse to FIFO method of inventory.

Late charge / Fee
The fee charged for delinquent payment on an installment loan, generally charged as a percentage of the loan installment or payment. This is also referred as, a penalty imposed by a credit card issuer against a cardholder's account for failing to make minimum payments.

Laundered money
Illegal money that has been remitted through any channel whether local or foreign, in an attempt to cover/hide its illegal origins. Money laundering is illegal, and in recent years there has been strict measures taken by regulators to stop money laundering.

Law of Limitation
This is a timeframe,  limitations period within which affected parties must take action to enforce their rights of recovery of loan or to seek redress after a damage . This period varies according to the nature of the case according to the applicable law of limitation.

Lead manager
This is the bank which is assigned responsibility for organizing a consortium credit  or shares/ bond issuance. This bank will act as lending organizations or underwriters to create the syndicate, negotiate terms with the issuer, and assess conditions. This bank is also called syndicate manager or lead underwriter.

Leads and lags
This represents, increase or decrease in the speed of payments received from foreign exchange The speed of payments increases if the exchange rates increase, and decrease if the exchange rates decrease. Accelerating the transaction is known as "leads", while slowing it down is known as "lags".

This is a contract by which an the Lessor of an  asset grants a lessee the right to its exclusive possession and use for a defined period and under defined conditions, against a periodic rental or lease payments. A long-term written lease called a lease deed creates leasehold. In Pakistan a 99 years lease is common which can be traded or mortgaged, and is shown as an  asset in the books of the companies.

This is an account book, in which business transactions are recorded.

A gift of property by will or an inheritance, genuine successor

Legal entity
An entity as a company or association having under the law rights and responsibilities as an intuition and have the capacity to sue and be sued.

Legal interest
An interest that is recognized in law

It refers to advance money on condition that it will be returned along with profit/ mark-up for its temporary use.

Lending Ceiling
This is a measure of controlling credit. Often Regulators impose Quantitative restrictions on banks and lending institutions about their maximum lending limit.

Lending ratio
Ratio is the result of one number or quantity divided by another. This is the comparison of money advance with money accepted as deposit.

The user or tenant of the leased asset or property.

The owner or the title holder of the leased asset or property.

Letter of administration
This is a court order authorizing a person to manage or distribute the property of a deceased who did without making a will.

Letter of allotment
A letter wherein details and confirms the amount or number of shares allotted to an applicant for a new issue or a rights issue.

Letter of comfort
This is an informal letter from a bank to the customer or intending customer, indicating its willingness to provide finance if and when required. It is not a letter of commitment.

Letter of credit
Letter of credit is a method of financing overseas trade, whereby the bank undertakes that the payment of the stated amount, under the credit, shall be made, provided the shipping documents submitted are in strict conformity with the terms and condition of the letter of credit. The undertaking in the letter of credit can be revocable or irrevocable. In Pakistan banks generally open irrevocable letter of credit. All letter of credits are opened in accordance with the International Chamber of Commerce publication “uniform custom and practice” for documentary credit latest publication is UCP 600.
The UCP 600 is the revised version of the Uniform Customs and Practice for Documentary Credits (UCP), the internationally recognised contractual rules governing letters of credit which aim to establish uniformity of practice for documentary credits. The UCP rules were first promulgated by the International Chamber of Commerce (ICC) in 1933 and today they have attained almost universal acceptance by practitioners in countries worldwide.

Letter of hypothecation
This is an agreement on stamp paper, which authorizes a bank or financial institution to repossess and sell the hypothecated  item in case of a default

Letter of introduction
This is a letter which is used to introduce one party to another party. There are types of introduction letters; business-to business, business-to-customer, and personal introduction letters. a business letter of introduction should have two parts, Introducing a person or company and Introducing a product, or service. How the new product, service, differs from already available. Such as it is less expensive, Easy to use etc

Letter of lien
This is an agreement through which a bank obtains a borrower's consent to adjust his or her deposit(s) in case of non-payment of a loan or to offset credit balance of one account with the debit balance of another.

Leverage is a situation where small amount of cost provide a relatively high level of returns.

This is the abbreviation of London interbank offer rate. It is Interest rate at which the London banks offer funds in the inter-bank market.

Refer credit limit

Limited company
A company in which shareholder responsibility for company debt is limited to the amount the shareholder has invested in the company. The abbreviated used is Ltd.

Line of credit
A pre-approved loan based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time as long as the total of borrowed funds does not exceed the credit limit.

Liner bill of lading
Bill of lading issued by shipping line operating between a predetermined route, that offers a regular, scheduled service between specified load and discharge ports, in some cases they have reserved berths.

Linked account
This is an arrangement under which a bank is allowed to withdraw funds from a customer's liability account to settle customers excess over the limit withdrawals from his or her borrowing account or credit card paymets.

Liquid assets
Cash,  account, accounts receivable, demand and time deposits, first class marketable  securities that can be converted into cash without loss in value are generally treated as liquid assets.

Liquidated damages
Generally it is sum of money written into a contract as the total amount of compensation an aggrieved party should get, if the other party breaches the contract. In banking, it is an amount owed to a plaintiff (Bank) in a lawsuit by the defendant (Borrower) that is determined by operation of law.

Ability of current assets to meet current liabilities.

Liquidity ratio
Demand deposit, cash and marketable securities verses current liabilities. The liquidity ratio measures the extent to which a company can quickly liquidate assets and cover short-term liabilities, this also called cash asset ratio.

Listed company
Companies whose shares are quoted on a stock exchange for public trading.

Local cheque
A cheque payable by, a bank in the same cheque processing region as the location of the branch of the depository bank.

Long term liabilities
A category of liabilities, that do not required to be repaid during the upcoming twelve months, but that instead need to be repaid in more than one year.

Lump sum
To be paid in single large amount and not in installments.


  1. eToro is the ultimate forex broker for newbie and pro traders.

  2. If you want your ex-girlfriend or ex-boyfriend to come crawling back to you on their knees (even if they're dating somebody else now) you got to watch this video
    right away...

    (VIDEO) Have your ex CRAWLING back to you...?