Saturday, February 2, 2013


What do you mean by Network?::
It is simply a group of two or more personal computers linked together for communicating the data or any other mode of communication.

What do you mean by networking?:
It is the practice of linking two or more computing devices together for the purpose of sharing data. They are built with a mix of computer hardware and computer software.

What do you mean by winding up ?:
It means the life of the company is put to an end. It is a mode by which the dissolution of the company is brought about and its assets realized and applied in payment of its debts and after satisfaction of the debts, the balance, if any, is paid back to the members in proportion to the contribution made by them to the capital of the company.

What do you mean by secured creditor?
It  means the creditor in whose favour the company has created charge on the properties/assets of the company for due repayment of the loans/advances availed from him.

What do you mean by contributory?
 Every person, such as shareholders, directors, debtors etc. of the company, who are liable to contribute to the assets of the company at the time of its winding up is called contributory.

What do you mean by receiver?
Receivers appointed by the court for keeping the property involved in the suit in safe custody or for management of the same is called court receiver. Usually advocates are being appointed as receivers, however, in some cases depending on the gravity of the issue may appoint the High Court judges, Civil Court Judges, District Collector etc also as Receivers to take over the control of and manage the property in issue.
What do you mean by credit scoring?:
It is a technique which is being increasingly utilized by banks for assessing informationally opaque borrowers. In developing economies, banks have started using the credit scoring technique in a big way, especially for retail lending including housing loans and credit cards. It is essentially a statistical number that indicates the level of risk associated with the borrowers. Higher/lower credit score reflects lower/higher level of risks of borrowers.
What do you mean by outsourcing?
: It can be defined as use of a third party to perform activities on a continuing basis that would normally be undertaken by the bank itself. Third party or service provider refers to the entity that is undertaking the outsourced activity on behalf of the bank.

What do you mean by six sigma?
 It is a rigorous methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and eliminating "defects" thereby eliminating the cost of defects. Six Sigma practitioners focus on systematically eliminating the defects so that they can get as close to "zero defect" as possible.

What do you mean by bank rate?
 It is the rate at which RBI allows finance to commercial banks. Bank Rate is a tool used by RBI for short term purposes. Any revision in Bank Rate is a signal to banks to revise deposit rates as well as Prime Lending rate.

What do you mean by tier two capital?
It is also known as supplementary capital and it comprises of property revaluation reserve, undisclosed reserves, hybrid capital, subordinated term debt and general provisions.

Wht do you mean by intermediary agencies?
 The category comprises of state sponsored organisations' lending to weaker sections. RBI also considers the distributors of agricultural inputs and implements and agencies involved in assisting the decentralized sector as intermediary agencies.

What do you mean by statutory liquidity ratio?
 Under section 24(b) of the Banking Regulation Act, 1949, every bank is required to maintain at the close of the business every day, a minimum proportion of their net demand and time liabilities as liquid assets in the form of cash, gold and unencumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as SLR. Present SLR is 25% and RBI is empowered to increase SLR upto 40%.

What do you mean by immunization?
The construction of an asset and a liability that are subject to offsetting changes in value.

What do you mean by indenture?
It is a formal agreement establishing the terms of a bond issue

What do you mean by indexed fund?
Bonds whose payments are linked to an index such as a consumer price index.

What do you mean by index fund?
Investment fund designed to match the returns on a stock market index.

What do you mean by bounce protection?
California has introduced "bounce protection" a kind of short term, high-interest credit, for its local banks. Banks can attach it to current accounts without authorization. The customer may be charged a fee of as much as $5 each day, if the account is overdrawn or may have to pay interest on the amount of insufficient funds

What do you mean by real effective exchange rate?
It is an indicator to grasp a country's international competitiveness in terms of its foreign exchange rate, as this cannot be known by examining individual exchange rates between the domestic and other currencies. It is the product of nominal bilateral exchange rate between countries and their relative price differentials. It is a trade-weighted index which gives an indication of a country's export competitiveness vis-à-vis the rest of the world taking into account the effect of its exchange rate as well as price differentials vis-à-vis its trading partners.

What do you mean by internal rate of return?
 It is the discount rate at which net present value of cash inflows and cash outflows is zero. In case of debt instruments, it is the rate at which instrument's future cash flows, discounted back to today, equals its price. In a project evaluation IRR should be equal to the cost of capital or threshold rate of return.

What do you mean by asset liability management system?
it is a system to manage the assets and liabilities of a bank. It aims at achieving maximum returns while maintaining adequate liquidity at all times. ALM involves assessment of various types of risks and altering the asset liability mix-portfolio in a dynamic way in order to manage risks.

What do you mean by samurai bonds?
They are offered in the Japanese domestic market by a non-Japanese entity. Lower incidence of withholding tax is a major attraction for raising funds in the Japanese markets. Although there is only a small quantum of saving between the interest charges of a straight Libor-linked borrowing and Yen-borrowing linked to a Dollar swap, the withholding tax factor is what makes a significant difference.

What do you mean by liquidity policy?
 It is a monetary tool used by RBI to modulate the very short term liquidity(daily) in the system. It does so through repo(repurchase agreement) and reverse repo transactions. RBI uses repo operations in the LAF window to inject liquidity into the system by buying government securities from banks. RBI uses the reverse repo to suck out liquidity from the system by selling government securities to banks. LAF has emerged as the primary tool for monetary control, interest rate signaling and sterilization operations, among others.

What do you mean by demutualization?
 It is a process that changes a mutual or a cooperative association into a public company by converting the interests of the members into shareholdings. These holdings can then be traded like the shares of a company. The objective of such an exercise is to change the structure of exchanges that were originally formed as trusts. Demutualisation allows such associations to conduct commercial business, to make profits like any other corporate entity.

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