IMPORTANT BANKING TERMS-ABBREVIATION PART-IV
IMPORTANT BANKING TERMS-ABBREVIATION PART-IV
- WMA
Ways and means advances (WMA) is a mechanism used by Reserve Bank of India (RBI) under its credit policy by which to provide to States banking with it to help them to tide over temporary mismatches in the cash flow of their receipts and payments. This is guided under Section 17(5) of RBI Act, 1934, and repayable in each case not later than three months from the date of making that advance’.
There are two types of WMA – normal and special. While Normal WMA are clean advances, Special WMA are secured advances provided against the pledge of government of India–dated securities. The operative limit for special WMA for a state is subject to its holdings of central government dated securities up to a maximum of limit sanctioned. In addition, the RBI has determined limits for normal and special WMA for each state as multiples of the prescribed minimum balance required to be maintained with the RBI by that state. These limits have been revised periodically.
- IBRD
The International Bank for Reconstruction and Development (IBRD) is a global development cooperative owned by 189 member countries. As the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges.
- Headquarters: Washington, D.C., United States
- Membership: 189 countries
- President of the World Bank: Jim Yong Kim
- CBS
Core banking is a banking service provided by a group of networked bank branches where customers may access their bank account and perform basic transactions from any of the member branch offices.
Core banking is often associated with retail banking and many banks treat the retail customers as their core banking customers. Businesses are usually managed via the corporate banking division of the institution. Core banking covers basic depositing and lending of money.
Core banking functions will include transaction accounts, loans, mortgages and payments. Banks make these services available across multiple channels like automated teller machines, Internet banking, mobile banking and branches.
- CARE
CARE undertakes rating exercise based on information provided by the company, in-house database and data from other sources that CARE considers reliable. The primary focus of the rating exercise is to assess future cash generation capability and their adequacy to meet debt obligations as per the repayment terms. The analysis therefore attempts to determine the fundamentals of the business and the industry and the probabilities of change in these fundamentals, which could affect the creditworthiness of the borrower. The analytical framework of CARE’s rating methodology is divided into two interdependent segments. The first deals with the operational characteristics and the second with the financial characteristics.
- CAR
The capital adequacy ratio (CAR) is a measure of a bank’s capital. It is expressed as a percentage of a bank’s risk weighted credit exposures. Also known as capital-to-risk weighted assets ratio (CRAR), it is used to protect depositors and promote the stability and efficiency of financial systems around the world. Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.
- CDR
Corporate Debt Restructuring (“CDR”) mechanism is a voluntary non statutory mechanism under which financial institutions and banks come together to restructure the debt of companies facing financial difficulties due to internal or external factors, in order to provide timely support to such companies.
- BCBSI
The Banking Codes and Standards Board of India (BCSBI) is an independent banking industry watchdog that protects consumers of banking services in India. The board oversee compliance with the “Code of Bank’s Commitment to Customers”. It is not a compensation mechanism and looks into an individual complaint only to the extent it points to any systemic compliance failure. It is an independent and autonomous body, registered as a separate society under the Societies Registration Act, 1860 on February 18, 2006. The Reserve Bank of India extended financial support to the Board, meeting its expenses for the first five years.
- FPI
Foreign portfolio investment (FPI) consists of securities and other financial assets passively held by foreign investors. It does not provide the investor with direct ownership of financial assets and is relatively liquid depending on the volatility of the market. Foreign portfolio investment differs from foreign direct investment (FDI), in which a domestic company runs a foreign firm, because although FDI allows a company to maintain better control over the firm held abroad, it may face more difficulty selling the firm at a premium price in the future.
- NBFC
A Non Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds hire-purchase insurance business or chit business but does not include any institution whose principal business includes agriculture, industrial activity or the sale, purchase or construction of immovable property.
The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the [Reserve Bank of India Act, 1934] (Chapter III-B) and the directions issued by it. On November 9, 2017, Reserve Bank of India (RBI) issued a notification outlining norms for outsourcing of functions/services by Non-Bank Financial Institution (NBFCs) .As per the new norms, NBFCs cannot outsource core management functions like internal audit, and management of investment portfolio, strategic and compliance functions for know your customer (KYC) norms and sanction of loans.
- NAV
Net asset value (NAV) is the value of an entity’s assets minus the value of its liabilities, often in relation to open-end or mutual funds, since shares of such funds registered with the U.S. Securities and Exchange Commission are redeemed at their net asset value. This may also be the same as the book value or the equity value of a business. Net asset value may represent the value of the total equity, or it may be divided by the number of shares outstanding held by investors, thereby representing the net asset value per share.
- NIM
Net interest margin is a performance metric that examines how successful a firm’s investment decisions are compared to its debt situations. A negative value denotes that the firm did not make an optimal decision, because interest expenses were greater than the amount of returns generated by investments.
- WPI
The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries (like the Philippines) use WPI changes as a central measure of inflation. But now India has adopted new CPI to measure inflation.
- CPI
A consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by households.
The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Sub-indices and sub-sub-indices are computed for different categories and sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index.
- GDP
Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time. Nominal GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons.
- LAF
A liquidity adjustment facility (LAF) is a tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financial markets.
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IMPORTANT BANKING TERMS-ABBREVIATION PART-I
IMPORTANT BANKING TERMS-ABBREVIATION PART-II
IMPORTANT BANKING TERMS-ABBREVIATION PART-III
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