Glossary of Banking Terms

Access method - means any method we make available to users to give us authority to act on instructions when using electronic equipment to debit or credit an account. An access method comprises one or more components including (but not limited to) cards, PINs or a combination of these but does not include a method requiring the user’s manual signature where the comparison of the appearance of the manual signature with the written specimen signature is the principal means of authenticating a user’s authority to give us an instruction.

Account - means the account or accounts we establish in your name or in your name jointly with another person or persons.

Account number - a unique number that the bank allocates to your account.

Account balance - the amount of money in your bank account.

Accruals basis - transactions that are recorded when there has been an actual exchange of goods or services.

Accrued interest - interest that is owed, but isn't yet due to be charged or paid.

Acquisitions - includes items an individual buys, such as goods, services or equipment, for their enterprise.

Additional repayments - any money paid into a loan in addition to the prescribed minimum repayments.

Administration fee - a monthly fee that is charged by a bank for providing services and managing an account.

Advice - a statement of opinion or recommendation that may influence a person in making a decision.

Amount due - the amount of money that has to be paid on an outstanding account.

Annuity - a regular payment over a set period of time during the life of an individual.

Application fee - a fee charged for setting up a loan.

Appraised value - the estimated value of a property used as security for a loan.

APR (Annual Percentage Rate) - also known as APY (Annual Percentage Yield), the rate at which interest is charged on money that is owed over a one year period. Interest is usually calculated daily and may be charged monthly, quarterly or annually.

Arrears - the amount of money that has not been paid by its due date.

Asset (Secured) - an asset that has been provided by you to secure a loan.

Assets - any property, money or goods you own from which a benefit can derive.

At call - money which is "at call" can be withdrawn from an account immediately.

Additional cardholder - means a person who is authorized by you to access and operate your account with a card.

ATM - means an Automated Teller Machine owned by us or someone else.

Authorized user - means you or any person authorized by you to operate your account and includes, without limitation, an additional cardholder.

Automatic transfer - means an authority and request by you to us to debit a specified amount from your account and to credit that amount to another account held by you or someone else, either with us or with another financial institution.

Biller - means an organization that issues bills to you which can be paid at your choice.

Business day - means a day we are open for business, but does not include Saturday, Sunday or any public holiday in Nepal.

Balance (Final/Closing) - the amount of money in a bank account at the end of a certain period of time.

Balance (Prior/Opening) - the amount of money in your account at the beginning of a certain period of time.

Balance sheet - an enterprise's statement of its assets, liabilities and net equity.

Balance transfer - the transfer of whole or part of the outstanding balance from your account from one financial institution to your account or someone else’s account at that financial institution or another.

Balloon payment-a large repayment, usually made at the end of an agreement to pay off a loan.

Bank – a financial institution authorized under the Banking and Financial Act 2063, offering a variety of financial products and services

Bank cheque - a cheque that is drawn by a bank rather than by a customer and can be purchased for cash and a small fee.

Bank draft - similar to a bank cheque but usually drawn in a foreign currency for an overseas payment.

Bank fees - charges made by a bank in return for their products and services.

Bankruptcy - a legal process affecting individuals who are unable to pay their debts. A bankrupt person gives control of most of the debts and assets to a bankruptcy trustee who then decides which assets (if any) can be sold to pay off the debt

Basic variable home loan - a home loan at a variable rate lower than standard variable loan but generally with fewer features.

Basis points - one basis point equals 0.01% interest. For example, 25 basis points equals to 0.25%.

Beneficiary - an individual or organization that is entitled to receive the benefits generated by an asset which is legally registered in the name of another party, such as a trustee.

Bill of sale - a written agreement where the original owner retains possession of goods but ownership is transferred. Used as security for a debt.

Blue chip stock - shares in a well established company that is highly regarded in financial circles.

Bond - a document recording a loan for a fixed period of time at a fixed rate if interest.

Borrower - also called a debtor, a person who has borrowed money from a bank or other lender.

Branch - a place of business where a bank's products and services are provided to their customers during normal business hours.

Break costs - charges for paying off a (generally fixed interest) loan before the end of its term.

Card - means any Debit card issued by us for your account.

Communication network - means the network through which we make a service available to you from time to time.

Capital - the value of assets such as a house, property and business.

Capital guarantee - an investment where your money is guaranteed, usually by a bank, government body or life insurance Company.

Capitalizing (or capitalized) interest - where interest owed is accrued and added to the total debt rather than being paid on a regular basis.

Capped loan - has an interest rate that can't exceed a set level for a set period, but can drop.

Card issuer - the bank or other financial institution which provides your credit or debit cards.

Cash - money in the form of notes and coins.

Cash basis - an accounting method in which transactions are recorded only once a payment or receipt of cash is made.

Caveat - Latin for 'beware' - usually seen in a contract clause that outlines a particular requirement or as an instrument recording a claim against title of land.

Caveat emptor - Latin for 'buyers beware'.

Cheque - a written direction from one person (the drawer) to a bank to pay a sum of money to the person or organization named on the cheque (the payee). If crossed 'Not Negotiable' or ‘Account Payee’, the cheque can only be deposited into the bank account of the person named on the cheque.

Cheque account - an account which offers access to your money by writing cheques. If you do not have enough money in your account the cheque may not be paid and you may be charged fees.

Cleared funds - the amount of money in an account that is available for you to access. Cheques deposited into your account may take up to five working days to clear - until then they are called un-cleared funds.

Co-borrower - an individual who borrows money jointly with you. Each individual is jointly and separately responsible for the repayment of the loan. Therefore, if one person does not pay the other person will be required to pay the full amount of the loan.

Collared rate - a variable rate with a fixed upper and lower limit.

Combination loan - see split loan.

Commission - an incentive-based reward or sum of money paid to a salesperson.

Common property - part of a land or building in a strata plan which does not form part of any unit and is used by everyone, not just one individual, for example, stairways, driveways and car park.

Company title - a form of title which involves ownership of shares in a company which owns the land and building.

Comparison rate - helps you identify the true cost of a loan. It takes into account the interest rate, loan set-up costs, the term of the loan, and any other up-front or ongoing fees associated with a loan.

Compound interest - interest that is paid on both the accumulated interest as well as on the original principal.

Conditional pre-approval - also known as Approval in Principle, a process which provides an initial estimate of how much can be borrowed based on information supplied to the bank.

Construction loan - a loan used to fund the building of a new property.

Consumer - an individual who buys or uses products or services.

Contract - a legally enforceable agreement.

Contract of sale - outlines the terms and conditions for the purchase or sale of a property.

Conveyance - the legal process of transferring ownership of property from the seller to the buyer.

Covenant - terms and conditions defining how a block of land or the buildings on it must be used.

CPI (Consumer Price Index) - a method of periodically measuring the prices of a group of everyday goods and services like bread, milk and bus fares. This monitors the relative cost of living over time and can also be used to measure inflation.

Credit - money that a lender gives a borrower based upon a promise to pay it back in the future. A person taking either secured or unsecured credit usually has to pay interest on the borrowed money plus fees and charges in addition to the principal payment.

Credit file - a file that is kept by a credit agency which shows your credit history. If you have failed to meet your repayment obligations in the past and defaulted on a loan or credit card, your credit file may show a 'default'. Defaults may make it difficult for you to borrow money from lenders.

Credit history - see credit file.

Credit limit - means the credit limit applicable to any Credit Facility Agreement you have with us.

Credit rating - a 'credit rating' is a popular misconception. Rather than a rating, an individual's credit file shows their credit history including any defaults. Depending on a lender's finance approval criteria; one or more defaults may result in refusal to lend money.

Credit Reference - a report by an authorized credit reporting agency which details your credit history. A lender needs permission from you to obtain a credit report.

Creditor - someone who is owed money.

Creditor (Secured) - a creditor who holds an asset belonging to the borrower/debtor as security for the repayment of a loan.

Creditor (Unsecured) - a creditor who has provided a loan to a debtor and there is no security, such as a bank providing a credit card.

Credit Facility - means the overdraft facility provided to you under any Credit Facility Agreement you have with us.

Dormant account - means an account that we declare dormant in accordance with our regulations as amended from time to time. Without limiting our power to declare an account dormant, an account may be declared dormant if no transactions have been initiated on the account by you in the previous 2 years.

Daily limit - means the daily withdrawal or transfer limit.

Date of issue - the date a bill or account was created.

Debit - most commonly a withdrawal from a bank account.

Debit card - permits direct access to a bank account through ATMs and POS machine.

Debt - an obligation by an individual or organization to pay a specific amount of money to another individual or organization. Debt may also mean Liability or money that is owed.

Debt to equity ratio - the amount of the loan compared to the value of the property or asset purchased, expressed as a percentage.

Debtor - someone who owes money.

Deed - a legal document detailing an agreement or obligation regarding a property.

Default - occurs when a person fails to meet the terms or requirements of a signed contract, such as not making scheduled repayments on a loan.

Default rate - the interest rate used when payments are not made or the facility goes above its limit.

Deferred annuity - an annuity where income payments are deferred until a specified date in the future.

Dependant - a person who relies on another especially for financial support, for example a child or non working spouse.

Deposit - money that is used to secure the purchase of an item or an amount of money put into a bank account.

Deposit bonds - guarantees that the buyer of a property will pay the full deposit by an agreed date.

Deposit guarantee - a substitute for a cash deposit which can assist when purchasing a property. The buyer is required to pay the full purchase price at settlement.

Depreciation - the writing-down of the cost of an asset over its estimated life.

Direct debit - an electronic payment that is made directly from a bank account, usually at a specified time on a pre-requested date through a standing instruction.

Diversification - the degree to which an investment portfolio is spread across options such as property, shares and bonds.

Dividend - when the profits of a publicly listed company are distributed to shareholders.

Demand Draft - is a written order for making payments. The person making payments is called drawee and the recipient is called payee. The bank providing the service is called drawer.

Drawdown - occurs when the approved loan funds are provided by a lender.

Drawdown date - the date a drawdown occurs.

Early termination charges - fees incurred by paying off a loan early.

Electronic banking - allows withdrawals, deposits and transfers to be completed and account information to be obtained electronically using internet banking, ATMs or POS.

Encumbrance - an outstanding liability or charge on a property.

Enterprise - covers commercial activities undertaken for financial reward or profit. Enterprise does not include hobbies or interests.

Equity - the difference between an asset's current market value and any debt or claim against it, i.e. the value of an investment less any loan amount outstanding.

Equity loan - a loan secured by the part of the value of an asset (usually a house) which you own.

Equity mortgage - a loan secured by the part of the value of an asset (usually a house) which you own.

ERIC - Effective Rate of Interest plus Costs.

ETIA - Early Termination Interest Adjustments.

Exit fees - see break costs.

Expenses - your everyday expenditure, such as food, transport, housing, clothing and entertainment.

Electronic equipment - includes electronic terminal, computer, television and telephone.

Fees and charges - includes government charges.

Financial Institution Cheque - means a cheque which is issued by us and drawn by us.

Foreign ATM - means Automatic Teller Machines owned by someone other than us or in another country.

Facility agreement – also known as loan agreement- a formal contract between a borrower and a lender which sets out the terms and conditions of the loan. Also known as a Facility Agreement.

Finance company - provides loans and deposit facilities to customers, usually at higher interest rates than banks, with higher risk discernment.

Financial Services Guide - provides you with information to assist you in making an informed decision on whether you want to use the products or services of a financial services provider.

Fittings - any items that can be removed from a property without causing damage.

Fixed interest - an interest rate that is set for an agreed term.

Fixed term deposit - money placed with a bank or other financial institution for a fixed period at a pre-agreed rate of interest.

Fixed term loan - a loan that you must repay within a certain time.

Fixtures - any items that would cause damage to a property if removed. These can only be removed if agreed in the Contract of Sale, and any damage must be repaired by the seller.

Foreign exchange - changes one currency into another. This can be in cash, cheques or as part of a payment.

Formal loan approval - when the lender provides confirmation that a loan is formally approved and all conditions of the Loan Offer have been satisfied.

Frequent flyer program - offered by many airlines to reward customer loyalty. Traditionally, the further you fly and the more money you spend, the more points you earn.

Funds transfer - moving funds between bank accounts.

Government Charges - means fees and charges payable under a law of the Government of Nepal.

Gearing - the ratio of your own money versus borrowed money in an investment. A 'highly geared' property has a high ratio of borrowed funds to owner's funds.

General insurance - any insurance that is not life insurance, such as home and contents or car insurance.

Guarantee - a legal contract accepting responsibility for discharging another's liabilities, such as the payment of a debt.

Guarantor - a party who has legally agreed to be responsible for the payment of another party's debts.

Home financing - money borrowed from the bank to purchase a home including interest on borrowed money, account fees, and other costs associated such as government fees and charges.

Home loan - a loan to finance the purchase of property or real estate to be used for your home.

Internet Banking - means our Internet Banking service also called ‘Clean Banking,’ which you can access when you enter via the website at http://www.cedbl.com using any appropriate Internet connection.

Inclusions - items sold with a property, e.g. lights, stove, fridge.

Income - the total amount of money you earn, including wages, rental income, interest and government allowances. For a business or a company, income is revenue less expenses.

Inflation - the process where the price of goods and services rises over time.

Interest - the amount a lender charges a borrower for the use of the lender's money, or the amount earned through depositing funds with a financial institution in an interest bearing facility.

Interest adjustment - an adjustment sometimes made by banks or other financial institutions, which arises when a customer seeks to break a fixed term contract (either for a loan or a term deposit).

Interest only loan - a loan where your repayments go towards repaying the interest for a specified period, rather than repaying the principal amount of the loan.

Interest only period - is the time during which the borrower only pays the interest on the loan.

Interest rate – the rate (usually in percentage) at which interest is paid or received.

Introductory Loan rate - a low interest rate offered at the start of a loan for a specified period of time. At the end of the period the interest rate converts to a standard variable rate.

Inventory - a complete list of items included with a property.

Investment loan - a loan used specifically for investment purposes, such as the purchase of an investment property.

Investor - someone who lends money or buys assets with the intention of making a profit over time.

Invoice - a bill that needs to be paid for products or services received.

Joint debt - when two or more people borrow money or incur a debt together. Unless the contract limits the amount each party must pay, the lender can recover payment of the whole amount from either party.

Joint income - the gross income of the borrowers in a joint mortgage.

Joint tenants - hold property equally between two or more people. If one party dies, their share passes to the survivor/s.

Land Ownership Certificate - ownership of a property, detailing land dimensions, ownership details and any encumbrances. This is required for the owner to lease, sell or dispose of a property.

Land tax - Government tax paid by owners of investment property over a certain value and owner-occupiers with properties valued above a higher threshold.

Land transfer fee - State Government tax based on the selling price of a property

Lease - an agreement where a party is granted a legal right to use or occupy a property belonging to another party for a specified period in return for payment.

Legal entity - an individual or organization that has the capacity to be held legally accountable such as an individual person, a corporate body or an incorporated body.

Liability - an obligation by an individual or organization to pay a specific amount of money to another individual or organization. Liability may also mean Debt or money that is owed.

Lien - the right to use property as security for a debt or loan.

Line of credit - a flexible ongoing loan arrangement with a specified limit.

Liquidity - the measurement of how quickly and easily an asset can be converted into cash with no or minimal loss.

LMI (Lenders Mortgage Insurance) - insurance taken out by a lender to protect itself from default by a borrower.

Loan - money that is lent to a person for an agreed term. At the end of the term the money must be repaid, usually with added interest.

Loan agreement - a formal contract between a borrower and a lender which sets out the terms and conditions of the loan. Also known as a Facility Agreement.

Loan offer - an offer of finance which sets out the full terms and conditions of the credit contract, including any special conditions you must satisfy before a lender will advance you credit.

Loan repayment - regular loan payment installments as per contract, extra loan payments within contract terms and conditions, or final loan repayment in full.

Loan term - is the period of time over which you have to repay the loan.

Low documentation loan - a loan generally for self-employed people who may not have the financial documents normally required to obtain a loan.

Lump sum payment - a single, usually large payment towards a loan in addition to your regular scheduled repayments.

Margin - the difference between the lender's interest indicator rate and the rate the borrower pays.

Market value - an estimate of the highest price a buyer would pay for a property.

Maturity - the date a debt or investment must be paid in full.

Minimum repayment - the minimum amount required to be paid on an invoice or a loan.

Money order - an order for the payment of a specified amount of money, usually issued and payable at a bank or authorized body

Mortgage - the charge or assignment of property to secure the payment of a debt and where the property is redeemable upon payment.

Mortgage insurance - used by lenders to cover themselves against loss caused by borrowers defaulting on their mortgage, which the lender is unable to recover by selling the property.

Mortgage protection insurance - protects a borrower's loan repayments if they can't pay them due to illness or redundancy, for example.

Mortgagee - the lender of funds to buy property secured by a mortgage.

Mortgagor - the person borrowing money with a mortgage.

Mutual fund - a professionally managed pool of money contributed by a group of individuals and invested in a range of securities.

Negative gearing - a potential tax advantage that occurs when the return from an investment property doesn't cover the maintenance costs and mortgage interest costs.

Net income - your income after taxes and deductions are subtracted from your gross income.

Net worth - simply put, this is the value of your assets less how much you owe on them.

Not Negotiable - these words are written on a cheque or bill of exchange to ensure that the proceeds are only paid to the person named.

Offer to purchase - a legal agreement specifying the price for the purchase of a property.

Offshore account opening - the process of opening a bank account outside Nepal.

Option to buy - a legally binding document giving someone the right to buy something - usually within a specific period - at a specific price.

Ordinary shares - the most common type of share that represents equity in a company.

Original documents - paperwork or documents that display original signatures and have not been reproduced, i.e. not photocopied or faxed.

Overdraft - an extension of credit created by drawing more funds from a bank account than the balance permits.

Overdrawn - when a sum of money is taken out of a bank account which exceeds the account balance or overdraft limit. Fees are usually charged for overdrawn accounts and any dishonored cheques.

Overdue - an amount of money that has not been paid by the due date and is still outstanding.

Over-the-counter - banking transactions that are done in a branch.

POS (Point of Sale machine) - a facility that lets you use your ATM card (debit card) to purchase goods, pay for services and withdraw cash at merchant terminals

Payment facility - means each of the following services offered by us:

PIN - means the Personal Identification Number issued by us or selected by you to use in conjunction with your card.

P.A. (Per Annum) - for the year, for example, if the interest rate on a term deposit is 6% p.a., the depositor will be paid 6% in interest on the outstanding balance each year.

Password - a code known only to the customer for accessing personal information and services such as Internet banking.

Payable - the money that needs to be paid on a loan account, including fees and expenses.

Personal loan - a type of loan that is used for purchases like a car, boat or a holiday. Money is lent to you for a fixed period, at a variable or fixed rate of interest and repayments are calculated at the start of the loan.

Portfolio / property portfolio - a group of investments which could include investments in financial and/or property markets.

Positive gearing - occurs when you borrow to invest in something that makes more money than it costs you in interest and fees.

PP (Periodical Payment) - a series of payments from an account made weekly, fortnightly, monthly, quarterly or annually.

Preference shares - shares that rank before ordinary shares in the event of liquidation of the issuing company. They usually receive a fixed rate of return.

Principal - the amount of capital deposited or borrowed, upon which interest is paid or charged.

Principal and interest loan - a loan where the principal and the interest are repaid together for the term of the loan.

Privilege banking - a service provided by most banks to customers with more specialized banking requirements.

Property value - the value of a property. When taken as security for a loan this value is determined by the lender.

Quarter - a period of three months.

Quick deposit - a service which allows you to simply drop your cheques off at a branch without having to wait to be served.

Reference number - means any number we issue to you in respect of transactions through various facilities.

Rate of return - the percentage change in the value of an investment in an asset (or portfolio of assets) over a specified time period.

Rebate - an amount of money that is returned or refunded.

Receipt - a record showing that a payment has been received or an invoice has been paid.

Records - financial documents and paperwork.

Redraw facility - allows access to additional repayments made on a loan.

Refinancing - replacing or adding to an existing mortgage to obtain a lower interest rate, consolidate debts or lengthen maturities etc.

Registered entity - an entity that is registered for PAN and VAT.

Render - to present a bill or invoice for payment.

Rental guarantee - a guaranteed level of return on an investment property specified by a developer.

Rental income - any payment a property owner receives for the use or occupation of their property.

Repayment - money paid by a borrower to a lender. Principal and interest repayments include both the interest due and a component of the principal amount borrowed.

Repayment frequency - refers to the regularity of loan repayments over a period of time which the borrower must make as indicated in their loan contract.

Repossession - occurs when a borrower cannot repay a loan and the lender takes possession of any assets or investments that have been provided as security.

Rights issue - an offer made to shareholders to buy new shares in the same company, usually below the existing market price.

Risk - exposure to the chance of loss when investing over time. Lower risks are normally associated with lower returns.

Risk grade - calculated by a bank to assess how secure a loan or investment is likely to be. The higher the risk grade, the higher the annual percentage rate that is likely to be charged by the bank.

Rollover - the renewal of a loan or continuation of a deposit, usually including a revision of the interest rates.

Standing Instructions - take account of amendments to or activations of automatic transfers that have been originated under your signed authority.

System - means an electronic system, communications system or software controlled or provided by or on behalf of us to facilitate transactions.

Savings - money that is set aside for use at a later time.

Savings account - a day-to-day bank account which provides easy access to your savings.

Secondary cardholder - another individual who is provided with a debit card against a CEDB customer's account. The original customer remains liable for any transactions on their own card or the secondary card. Secondary card holders cannot be held liable for the account.

Security - an asset - usually the property purchased with the loan funds - that can be sold by a lender if the debt is not repaid in full.

Settlement - the transaction that completes the sale. Monies are handed over in exchange for relevant documents. The purchaser can then take legal ownership of the property.

Settlement date - the date when the new owner makes a final payment and takes possession of a property.

Settlement fee - a fee payable to a financier for their attendance/involvement in a settlement.

 Shareholder - someone who provides a portion of a company's capital and then receives a share of the company's profit in the form of dividends.

Simple interest - interest that is only paid on a set principal and not re-invested.

Split Loan - where various loans are used to fund the same property. May have a portion variable, fixed or even a portion as a line of credit.

Split rate - a loan where a portion of the balance is at a fixed interest rate and a portion is at a variable interest rate.  The split rate is applied to home loans to offer a balance of flexibility and security.

Standard variable rate loan - a home loan, usually with more comprehensive features than a basic variable loan. Fixed rate loans often revert to the standard variable rate at the end of their fixed term.

Statement - a written record which summarizes all the transactions that have occurred on your account, including fees charged and interest paid.

SWIFT - acronym for Society for Worldwide Interbank Financial Telecommunications, an international consortium of member banks operating a worldwide system for transfer of money and messages.

Switching - when a borrower changes from one loan type to another, e.g. from a Variable Rate Loan to a Fixed Rate Loan.

Terminal - means an electronic device (including an ATM, cash dispenser unit, point of sale terminal or any other electronic funds transfer device) in which a card may be used to operate on an account, but does not include Internet banking.

Terms and Conditions - details which outline specific obligations of each party with regards to a contract, transaction or product.

Transfer - can be a transfer between your Registered Accounts or a payment which is a transfer from one of your Registered Accounts to a non-Registered Account.

Tax audit - an examination of your tax affairs by the Nepalese Taxation Authority to ensure you have adhered to tax laws.

Taxable supplies - include most goods and services sold by an enterprise. However, GST-free or input taxed supplies are not taxable.

Telegraphic transfer - allows you to send money to any bank account worldwide. Transfers usually take two to five working days.

Teller - a staff member in a bank branch who helps you with your banking transactions.

Tenants in common - the holding of property by two or more people. If one dies, it is divided according to law.

Term - a period of time, such as the time in which a loan must be repaid.

Term deposit - a savings account that offers a guaranteed interest rate in return for committing funds for a set period.

Transactions - movements of money, such as deposits, withdrawals or transferring between bank accounts.

Trust - an entity created to hold assets for the benefit of certain individuals or groups and managed by a trustee.

User - means you and (where permitted by us) any person you authorize to be an additional
cardholder or authorized user of your account.

Underwriting - is the practice of an Underwriter accepting the risk of an insurance contract on behalf of the insurer, minimizing the insurer's exposure to loss.

Unencumbered - a property free of liabilities, encumbrances or restrictions.

Unsecured loan - a loan given by the lender on an unsecured basis, such as a credit card.

Utilities Company- a business generally under government regulation that provides an essential service, such as an electricity and water.

Valuation - a professional opinion of the property's value, written as report for the lender.

Variable interest rate - a rate that generally goes up and down according to the fluctuations in market rates.

Will - a legal document stating how you wish your possessions to be distributed after your death.

Withdrawal - to take money out of a bank account.

Yield - the annual return on an investment, expressed as a percentage.

You and Your - means the holder of the account subject to any other provisions of the Terms and Conditions or if there is more than one of you then all of you jointly and each of you severally.