Definition: Bridge loan is a short-term financing facility provided by the financial institutions to the individuals or the company in case of immediate cash requirement before a long-term or regular loan is approved by the bank. However, whenever the regular loan gets approved, this bridge loan amount must be repaid to the bank along with the interest amount for the time it … [Read more...] about Bridge Loan
Banking
Commercial Bank
Definition: Commercial Bank is the banking platform for the general public and is described as an institution whose primary business is to act as an intermediary for the purpose of settlement, i.e., receiving deposits and giving loans. These banks in India are formed as joint-stock firms and recognized as banking firms. Content: Commercial Bank Classification of … [Read more...] about Commercial Bank
Retail Banking Vs Corporate Banking
Retail Banking and Corporate Banking both are the system of the banking service but are differentiated according to their customer base, i.e., In retail banking banks deal with the general public or individual person face to face; in contrast in corporate banking, the banks deals with large corporate bodies and not the individuals. However, the purpose of both banking system … [Read more...] about Retail Banking Vs Corporate Banking
Endorsement
Definition: Endorsement comes under the Negotiable Instrument Act, 1881. It is a process of affirming the negotiable instrument signed by the drawer (the endorser) for the reason of negotiation, and the receiver of the instrument is known as a drawer (endorsee). The instrument must be signed by the drawer either in front or backside, and if there is no remaining space in … [Read more...] about Endorsement
Micro Finance
Definition: Micro Finance is somehow like a banking facility that offers financial services to small scale businessmen’s or to unemployed individuals who are in need of funds, i.e., it is the provision of small scale financial services to low-income persons. The term generally signifies small loans given to the clients for self-employment. As in previous times, low-income … [Read more...] about Micro Finance
Cheque Truncation System (CTS)
Definition: Cheque truncation system is an arrangement which facilitates the electronic processing of a cheque with the use of Magnetic Ink Character Reader (MICR) data and the scanned image of the instrument without involving any physical exchange or movement of the financial instrument. Truncation, as we know, refers to the shortening of the process and therefore, CTS has … [Read more...] about Cheque Truncation System (CTS)
Wholesale Banking
Definition: Wholesale banking refers to the complete banking solution provided by the merchant banks to the large scale business organizations and the government agencies or institutions. To avail the facility of wholesale banking, the companies need to possess a strong financial statement and operate on a large scale. Usually, multinational companies are the clients of … [Read more...] about Wholesale Banking
CAMELS Rating System
Definition: CAMELS rating system is an internationally recognized supervisory tool which was developed in the US to measure the bank's or other financial institution's level of risk with the help of its financial statements. The parameters used for judgement comprises of capital adequacy, asset quality, management, earnings, liquidity and sensitivity. The CAMELS rating … [Read more...] about CAMELS Rating System
Non-Banking Financial Company (NBFC)
Definition: A non-banking financial company is that financial institution which provides the banking services to the customers without having a banking license. An NBFC needs to be compulsorily registered under the Companies Act 1956 however, it can be owned privately or by the government. Example Bajaj Finserv Ltd. is the NBFC belonging to Bajaj Finance Limited. It provides … [Read more...] about Non-Banking Financial Company (NBFC)
Line of Credit (LOC)
Definition: A line of credit can be seen as a revolving account opened with the bank or other financial institution. It allows the borrower (customer) to withdraw the required amount as a loan, partially or wholly, up to the given maximum limit mentioned in the agreement. The principal feature of a line of credit is that the interest is chargeable only on the sum withdrawn by … [Read more...] about Line of Credit (LOC)