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Thursday, November 16, 2017

What do you mean by the financial position of any bank?




01. FINANCIAL POSITION: Financial Position gives a picture of the position of the bank in terms of income, profits, assets and liabilities for the last five years. It gives a detailed picture as to the trend in the performance of the bank

02. INTANGIBLE ASSETS: These assets do not have any definite physical existence but often have a material impact on the profit-earning capacity of business. Like, trademarks, copyrights, goodwill, miscellaneous expenditure, preliminary expenses etc

03. FUNDBASED INCOME: Fund based income is the income from asset-based financing. It includes income from security trading, dividend income, interest income, income from leasing and hire purchase activities, income from bill discounting and income from forex operations

04. FEE BASED INCOME: Fee based income is income derived from the services provided by the bank as opposed to income from asset-based financing

05 COST PER RUPEE OF OPERATING INCOME: Cost per rupee of operating income indicates the various costs incurred by the bank as a percentage of a rupee of the operating income. This clearly brings out the costs incurred by the bank on various heads. The industry figures allow comparison of the bank’s performance as against the industry

06.KEY RATIOS: Key ratios are important ratios that help in analyzing the performance and the prospects of a bank. Ratios pertaining to various areas such as operations, profitability and per branch efficiency are presented for the last five years

07.CREDIT DEPOSIT RATIO: Credit deposit ratio is the ratio of advances to deposits

08.UNSECURED ADVANCES:Unsecured advances are the outstanding advances that are not backed by the assets with collateral security

09.PRIORITY SECTOR ADVANCES: Advances lent to industry sectors defined as priority sectors by the banking regulations such as agriculture, small scale industry etc

10.WORKING FUNDS: Working funds is the sum of equity capital, reserves and average deposits

11.NETWORTH: Net worth includes the equity capital, preference capital, reseves less revaluation reserves and miscellaneous expenses not written off

12.INTEREST SPREAD: Interest spread is the net of the total interest earned less total interest expended

13.CAPITAL ADEQUACY RATIO: A measure of the amount of bank’s capital expressed as a percentage of its risk weighted credit exposures

14. INTERST SPREAD: Interest spread is the net of the total interest earned less total interest expended

15.MARKET CAPITALISATION: Market capitalization is the product of the closing price and the number of outstanding shares on any given date.

16.BOOK VALUE PER SHARE: Ratio of equity capital plus reserves to the number of equity shares

17. NET PROFIT: Profit after tax but before investment allowance reserves

18.OPERATING PROFIT MARGIN: The ratio indicates the operating efficiency of the company. The value is calculated as{Operating income – operating expenses/(Operating income)}

19.EARNINGS PER SHARE: Ratio of net profit less preference dividend to the number of equity shares (annualized)

20.PROMOTER HOLDING: Indicates the percentage of equity holdings with the promoter of the company

21.INSTITUTIONAL HOLDING: Institutional holding in the company means UTI, MF, FIIs stake in the company. It does not include private corporate bodies

22.YEAR TO DATE NET PROFIT CHANGE(%): Indicates the summation of net profit of the company from the beginning from the beginning of the accounting year till the latest quarterly net profit in comparison with the previous corresponding period

23.YEAR TO DATE PERIOD: Indicates the quarter upto which the unaudited results have been taken for calculation

24. SCHEDULED BANK means a bank included in the second schedule to the RBI act 1934

25. BRANCH BANKING system is one under which a large bank carries on banking business through a large network of branches spread all over the country where the bank’s huge financial resources enable it carry on its activities on a large scale throughout the country
26. UNIT BANKING SYSTEM is that system where an individual bank undertakes the banking business through a single office or through a few branches operating within a limited area

27.ULTRA VIRES In relation to a company, means an action outside the memorandum of association of the company

28. SYNDICATED CREDIT is an agreement between two and more lending institutions to provide a borrower a credit facility using common loan documentation.

29. SPOT TRANSACTION is one where the conversion or exchange of foreign currency is done on the same day

30. CONCURRENT AUDIT is an examination which is contemporaneous with the occurrence of transaction or is carried out as near thereto as possible and it attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation and aims at substantive checking in key areas rather than test checking.

31. RED HERRING – a preliminary prospectus issued to test the market for a new issue; does not include a firm price

32. LONDON CLUB –an association of international commercial banks with the purpose of negoatiating in common the terms and conditions of sovereign loans

33. WHITE KNIGHT – a company subject to an unwelcome or hostile bid (corporate raider) may invite a second bid from a friendly company as an alternative to succumbing to a takeover. The company is called white knight

34. COMMERCIAL BANKING SYSTEM in our country consists of scheduled and non scheduled banks.

35. FOREIGN BANK is one which is incorporated outside India

36. RURAL BRANCH is one which is opened in a place having population upto 9999

37. LOCAL AREA BANKS have been mooted with a view to providing an institutional mechanism for promoting rural and semi urban savings as well as for the provision of credit for viable economic activities in local areas

38. INDUSTRIAL BANK accepts from the public only long term deposits

39. MUTUAL FUND refers to the business of acquisition, holding, management, trading or disposal of securities, participation certificates or any other instruments, income or growth participation business and Unit Trust schemes

40. OPEN ENDED FUND – the fund exists for perpetuity. There are no ceiling on the amount to be raised and unitholders are assured of dividends, capital appreciation and safety. A repurchase facility close to Net Asset Value (NAV) makes it better than close-ended fund.

41. CLOSED ENDED FUND – the corpus is of fixed size with a redemption period. The stocks are listed on the stock exchanges, thus, offering easy liquidity. The market price is always below Net Asset Value.

42. PORTFOLIO MANAGEMENT SERVICES – provided by banks to their clients in the nature of investment consultancy/management, for a fee; entirely at the customer’s risk, without guaranteeing, either directly or indirectly, a predetermined return.

43. BANK RECEIPT – acknowledges that the selling bank holds the securities on behalf of the purchasing banker.

44. SUBSIDIARY GENERAL LEDGER is an account maintained at Public Debt Office of RBI by the banks loan-wise through which their transactions pertaining to Central/State Government securities are put through.

45. TALWAR COMMITTEE which submitted its report in the year-1977 was appointed by the Government of India to submit recommendations on customer service in banks

46. PENDHARKAR working group was appointed to review the system of inspection of banks by Reserve Bank of India.

47. P R NAYAK COMMITTEE was appointed by RBI in December, 1991 to examine the adequacy of institutional credit to SSI sector and related aspects.

48. JANAKIRAMAN COMMITTEE was set up by Reserve Bank of India on 30.4.1992 to investigate into the possible irregularities in funds management by commercial banks and financial institutions, and in particular, in relation to their dealings in government securities, public sector bonds and similar instruments.

49. GHOSH COMMITTEE was set up by RBI in October, 1991 to enquire into various aspects of frauds and malpractices in banks

50. DERIVATIVE USANCE PROMISSORY NOTES refer to usance promissory notes raised by banks in convenient lots and maturities on the strength of genuine trade bills discounted by their branches

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