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HBL

HBL was the first commercial bank to be established in Pakistan in 1947 founded by Habib group. In 1973 it was nationalized with other banks of the country. The Government of Pakistan privatized HBL in 2004. HBLs majority shares are owned (51%) by the Aga Khan Fund for Economic Development, 42.5% of the shareholding is retained by the Government of Pakistan (GOP), whilst 7.5% is owned by the general public.

Half yearly closing

At the end of second quarter i.e. on 30th June, banks close their books for calculation f profit, preparation of returns for SBP and Taxation authorities

Hard currency

Money that is backed by gold reserves and is readily convertible into foreign currencies. These are the currencies, usually from a highly industrialized country, that is widely accepted around the world The U.S. Dollar and the British Pound are good examples of a hard currency.

Head office

Office that execute controls and coordination functions of the bank

Health certificate

Certificate issued by the health and sanitation authorities of an airport or seaport to the captain of a visiting vessel (aircraft or ship). A clean certifies that, no contagious disease was known to exist at the air/sea port when the certificate was issued, the vessel is free from all such diseases and, thus safe for carrying people and/or edible cargo. 

Hedging

This is a strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or  shares/securities 

Heir

Who by law succeed other, a person who inherits property of a deceased person, as by relationship, will, or legal process.

Heir ship certificate

A Heirship Certificate is issued by a Tahsildar/ Asst. commissioner or a magistrate. This certificate is useful for, very limited purposes, such as mutation of revenue records and release of very limited amount from the banks Heirship Certificate can be used only where there is no dispute regarding the persons entitled to succeed to the estate of a deceased person, wherever there is a dispute, a Succession Certificate shall be required. 

Hire purchase

This is a system of payment for goods in regular installments while using it. This is very common in Islamic mode o financing

Hire purchase agreement

This , is a contract, of sale of  goods, on credit in regular installments while purchaser using it. The duration of the contract can be for considerably for longer time. Under the agreement the seller may be able to recover the goods at any time on non-payment of number of installments mentioned in the contract. 

Holder

The “Holder” of a promissory note bill of exchange or a cheque means the payee or the endorsee that is in possession of it or a bearer of the instrument. If an instrument is lost and not found again, or is destroyed, the person in possession of it, at the time of loss or destruction shall be treated to continue to be its holder.

Holder for value

A holder to whom a negotiable instrument is issued or transferred in exchange for something of value. If bank is holder for value, it can not claim protection available to the collecting banker under section 131 of the Negotiable instrument Act 1881.

Holder in due course

Holder in due course means the claimer of a cheque / negotiable instrument, who has lawful title free from any defect. Title shall be treated as defective, if possession of the instrument / cheque has been taken by means of any offence, fraud or any unlawful consideration.

The conditions of holder in due course are:-

The holder has taken the instrument before it became overdue, without notice that it was previously dishonored, Instrument was taken in good faith against value, without knowledge that the person who has given the instrument (Negotiated) was having a defective title.Negotiable instruments Act 1881 section (9) defines holder in due course

as under:

“Holder in due course” means any person who for consideration becomes the possessor of a promissory note, bill of exchange or a cheque, if payable to bearer, or payee or endorsee thereof if payable to order, before it became overdue, without notice that the title of the person from  whom he derived, his own title was defective.

Holding company

Holding company is that which controls other companies through stock ownership but that usually does not involve directly in their operations. Since it holds controlling shares, it can effect into management and policy making of the other company.

Honorarium

A payment given to a person for rendering services for which fees or salary is not traditionally paid.

Hot card

Bank card that cannot be honored for payment, due to the card has been reported lost or stolen, or has been cancelled by the issuer. Hot cards are listed in the combined Visa and MasterCard hot cards list

Hot money

It is the money that is moved quickly from one form of investment to another by its owner/investor, just to take advantage of exchange rates or gain high short-term returns on investment.

House bill of lading

Bill of lading issued by a freight forwarder as a receipt for the goods being shipped with other cargo as one consignment. It is not a complete document of title, a forwarders B/L has a legal standing similar to that of a normal B/L. If not specifically prohibited under the terms of the L/C, it is capable of being negotiated and of acceptance by the importers bank for payment under a letter of credit

Hypothecation

It is a kind of security where lender only possesses equitable charge on the goods. It is a kind of security  arrangement in which neither the possession nor the title but only the right to sell an asset passes on to the banker or lender. to

Key

This is a device used to open a lock, a piece of information that controls the operation.

Key currency

One of the strong currencies (dollar, euro, yen, etc.) or IMFs special drawing rights (SDR) used by a country to hold its foreign currency reserves and gold for settling international trade transactions and other obligations. 

Key man

The Person vital for the organization that runs the show, the major player in your sales team

Key man insurance

This is a insurance policy taken by an employer on the life or health of any employee whose knowledge, work, or overall contribution is considered very valuable to the company. The purpose is to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy.

Key money

It refers to the amount paid by a lessee as deposit on a leased property.

Key performance indicator

It refers to the key business statistics such as number of new orders, cash collection efficiency, and return on investment , which measure a companys performance in different areas.

Key tasted telex

This refers to old form of wire transfer of funds which used telex machine and telex messages were authenticated by the use of code (key) numbers

Kiting

Issuance of a cheque that will overdraw the account but making up the deficiency by depositing another cheque drown on another bank, to cover the cheque.

Kitty

A pool or reserve of money collected from a number of persons or sources and designated for a particular purpose specified by the contributors. For example money collected by the government through different tax channels (kitty) and distributed between different departments of central government and Provinces. 

Vacant possession
Property not occupied, or with no tenant in possession.

Valid
An agreement, document authorized by law or otherwise having legal effect or force.

Validate
To make any document, instrument, legally effective. In banking a cheque becomes state after six months of its issuance, after that it requires validation.

Validity
The period for which an agreement, negotiable instrument, bid, offer ,claim, document, letter of credit, guarantee etc remains in force.

Value
It refers to the monetary worth of an asset, business entity, goods sold or service rendered, or liability or obligation acquired.

Value added cost
It refers to the resources consumed in enhancing the value of a goods or services.

Value added tax (VAT)
This is a consumption tax which is levied at each stage of production based on the value added to the product at that stage.

Value date
The date on which an account holder can use the funds from deposited cheques that have passed through the banks clearing cycle, the date on which a deposit starts to earn profit.

Variable cost
This is the cost which varies, more or less, with the increase/ decrease in production or the sales revenue of a company, e.g.  raw material, energy usage, labor (wages), distribution costs, etc.

Variable rate
Any interest/ profit  rate or dividend that changes on a periodic basis.

Variance
Difference between an expected and actual result, such as between a budget and actual expenditure.

Vault
An area, in a bank or  financial institution, which is a safe and secure place for storing items of value. Bank vaults must meet a series of safety regulations, required under their own policy as well as regulators. Vaults are generally used to keep cash, as well as customers safe deposit lockers.

Vendor
This refers to the manufacturer, producer, or seller who are in the approved list of a company to provide certain items.

Vested
This refers to any thing guaranteed as a benefit, privilege, or right, immediately or in future.

Vested interest
It refers to the personal stake, or expectation of personal gain, that underlies a strong commitment to maintain or influence an action

Veterinary certificate
A certificate issued by competent authority, which is required to indicate that livestock is free from specified diseases

Viable
This refer to any thing according to the requirement, or practical, For example, a company is looking for a substitute of a manufacturing item, it will consider viable alternative that would provide a similar benefit at a reasonable cost.

Visa
This is a certificate issued or a stamp marked on the applicants passport by the immigration authorities of a country to indicate that the applicants credentials have been verified and he or she has been granted permission to enter the country for a temporary stay within a specified period. This permission, however, is provisional and subject to the approval of the immigration officer at the entry point

Void
Agreement which is absolutely null, without legal force and legal effect, such as an agreement for an immoral consideration.

Voidable
This is the agreement which is capable of being set aside by a court or rescinded at the option of one of the involved parties. For example agreement caused by coercion, undue influence, misrepresentation

Vostro accounts
This is a local currency account maintained by a local bank for a foreign (correspondent) bank. For the foreign bank it is a nostro account.

Voucher
This is a written instrument that confirm for some fact such as a transaction. It indicates that goods have been bought or services have been rendered, authorizes payment, and indicates the ledger account(s) in which these transactions have to be recorded.

Job

The tasks allocated and performed by an employee in an exchange for pay, a job consists of duties, responsibilities, and tasks that are defined and specific, can be, quantified, measured, and rated. 

Job analysis

The examination of the tasks and employee role, conditions under which they are performed, what the job requires in terms of achievement, behavior, knowledge, skills, and the physical condition of the employee. Job analysis begins with the study of the organization e.g. its purpose, design and structure, and resource constraints.

Job card

This is a card in which details of the task to be undertaken and of the  details of the time spent in performing the job are recorded. 

Joint account

Account in the name of two or more individuals who jointly share its rights and liabilities and regarded as joint owner. Any action against them pertaining to that account is made against jointly and not individually /severally. Two types of joint accounts are 1) account jointly operated  whose operation is stopped on the death of any joint owner and 2) Either or survivor,  in which either owner may individually exercise full rights to make deposits or withdrawals on his or her signatures. In case of either owners death, the survivor automatically takes the sole control of account assets without probate

Joint and several liability

This term is used in loan agreements involving two or more borrowers. In joint and several agreements, the liability in case of default is enforceable against all of the signatories as a group or against any one of them as an individual at the choice of the enforcing party. The claimant may recover all the damages from any of the defendants regardless of their individual share of the liability

Joint liability

Joint liability is that Where two or more persons are liable in respect of the same liability. Partnership agreement is the best example of joint liability. In a partnership agreement, all partners are jointly liable. One partner can bind other partner and any action pertaining to the partnership is taken jointly against all partners, and not against one or two. 

Joint stock company

It is a type of association of individuals in a business enterprise. Certificates of ownership are called share certificates, which are issued by the company in return for each financial contribution routed through an account. The shareholders are free to transfer their shares at any time by selling their stockholding to others. A shareholder is not liable for any of the companys debt beyond the face value of their shareholding

Joint venture

It is a business enterprise in which two or more companies enter a temporary partnership Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects.  It is a good way to access to new markets and distribution networks, increased capacity, sharing of risks and costs with a partner, including specialised staff, technology and finance.

Judgment by default

This is a binding judgment in favor of the plaintiff when the defendant does not respond to summons or has failed to appear before a court of law, and if opponent admits the entire claim. A defendant can have a default judgment, vacated, or set aside by filing a motion, after the judgment is entered, by showing of a proper excuse.

Judgment creditor

The winning plaintiff in a lawsuit to whom the court decides that the defendant have to pay money is known as a judgment creditor until the award is paid. A judgment creditor is legally entitled to enforce the debt with the assistance of the court.

Judgment debtor

The term describes a party against which a court has made a monetary award (the losing part). This is just reverse of judgment creditor.  The losing party must satisfy the amount of the award, which is called the judgment debt.

Jurisdiction

The power or authority to interpret and apply the law, the right to exercise authority, the limits or territory within which authority may be exercised.

Railway receipt
Railway receipt is issued against receipt of goods consigned & also against payment. The persons claiming the delivery is required to produce the receipt granted to the sender at the forwarding station and the same should be taken back from him before delivery of goods. Goods are not to be delivered to any person other than the invoiced or endorsed consignee.

Rate
It refers to the amount of a charge or payment with reference to some basis of calculation for example interest/profit rate.

Rate of exchange
It refers to the ratio at which a unit of the currency of one country can be exchanged for that of another country.

Rate of interest
It refers to the rate of profit which is charged or paid for the use of money. An interest rate is generally expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal.

Rate of return
It refers to the rate of profit on an investment, which is usually expressed as a percentage of the total amount invested. Rate of return is generally, but not always, calculated annual basis.

Ratification
Acceptance or confirmation of an act or agreement that was signed (executed) by the authorized party itself. For example, a treaty, is not enforceable or valid until the ratification process is complete.

Ratio
It refers to the result of one number or quantity divided by another and provides meaningful comparison.

Rationalization
It refers to remove unreasonable elements for improving, production, trade and profitability.

Raw material
Material before being processed or manufactured into a final form.

Ready money
Liquid cash, money that is in hand or may be obtained quickly or easily.

Real cost
It refers to the cost of producing goods or services, including the cost of all resources used and the cost of not employing those resources in alternative uses.

Real estate
It refers to the Land, including all the natural resources and permanent buildings on it.

Real income
It refers to the income of an individual or group after taking into consideration the effects of inflation on purchasing power. For example, if a person received a 5% salary rise over the previous year and inflation for the year was 8%, then his real income would have shrunk by 3%. wages".

Real investment
It refers the purchase of assets such as land, real estate, plant and machinery as opposite to the acquisition of shares and securities.

Realizable value
This is a method of determining what an asset would be worth (its present value) if its present owner sold it in the current market or at a near future date. This is considered assuming that the loan against the asset became past due what will be realizable value of the asset. Also refer forced sale value FSV.

Realization account
This is an account which is opened when a business is winding up, for example dissolution of Partnership.

Realized profit
Realized profit is profit that comes from a completed trade transactions. Realized profit Realized profit is included in the account balance in trading account statements. Unrealized profit is profit that comes from a currently active trade at a future date.  Unrealized profit will change with each price change, so it can be reduced to zero or loss.

Real property
Land and all the things that are attached to it are real property. Anything that is not real property is personal property. A house is real property, but a bed room set is not Real property. It is of a permanent and immovable nature and rights are transferred through execution of deed.

Real time
This is a computer term which refers that the data in the computer is up dated instantly. For example online transfer of money is a system by which money is transferred on real time basis.

Rebate
It refers to the deduction or return (an amount) from a payment or bill.

Receipt
It is a written acknowledgement that a specified article or sum of money has been received as an exchange for goods or services.

Receive for shipment bill of lading
This document serves only as a receipt for goods accepted for shipment on a named ship. This is issued  where the goods arrive at the port of departure before the arrival of ship. This type of B/L is not considered a complete B/L and is replaced by a shipped on board bill of lading when the goods do go onboard.

Receiver
This is an independent and  impartial party appointed by a court to receive, manage, and preserve  a disputed property which is the subject matter of a court case, pending final disposition of the case.

Recession
It refers to the period of general economic decline which result into high unemployment, stagnant wages, and fall in retail sales. a recession generally does not last longer than one year and is much milder than a depression. Although recessions are considered a normal part of a capitalist economy, there is no unanimity of economists on its causes.

Reconciliation
The process of analyzing two related records and, if differences exist between them, finding the cause and bringing the two records into agreement. Example: Comparing an up-to-date cheque book with a monthly statement from the financial institution holding the account.

Recourse
It refers to the legal right of a bank to seek repayment of the loan from the borrowers and/or the guarantors unpledged personal property, in addition to the property pledged to the banker as collateral.

Rectification
It refers to the correction of  mistake already committed, or express of the true intention of the parties in a case it differs with the expression which was not expressed in the original version.

Red clause
This is  special provision in documentary credit where the beneficiary( seller) is authorized to obtain an advance from the bank on an unsecured basis. The liability for default is assumed by the buyer through the issuing bank. This clause is generally written in red ink, hence it is called Red clause.

Redeemable debenture
These debentures are issued under an agreement in which a company issuing debenture agrees to repay the borrowed sum on a specified date or after a specified period of notice.

Redeemable preference shares
This is a type of shares that is liable to be bought back by the issuing company on a specified date or after a specified period of notice.

Re-export
It refers to the imported good exported by the importing country.

Refer to drawer
This is one of the reasons used by the bankers to return cheques due to the lack of funds. The inspectors  State bank of Pakistan do not accept this reason as valid (ambiguous) because ordinary customers do not understand meaning of this reason.

Refinance
It refers to finance again. In order to support genuine exporters, SBP has introduced certain export refinance schemes. Export refinance scheme is divided in to Part-I and Part-II. SBP Banking Services Corporation (BSC) manages all operational matters of EFS. Banks and DFIs are required to first provide finance to the exporter and after financing, file claims with SBP BSC for refinance. The financing facility is provided to direct exporters up to 180 days and to indirect exporters for up to 120 days.

Refund
An amount paid back because of an overpayment or because of the return of an item previously sold.

Registered capital
This is alternate term of authorized capital which refers to the maximum value of shares that a company can legally issue. This number is specified in the memorandum of association when a company is incorporated, but can be changed later with shareholders approval.

Registered charge
Charge which is registered with the registrar of the property & in case of limited company,its registeration with the registrar of the company.

Registered post
If you need proof that your Letter-post item arrived at its destination, purchase an Advice of Receipt card at the time of mailing for an extra fee. The Advice of Receipt card is attached to your Registered Mail item. Your recipient signs and dates the card, and returns it to you in the mail. This card is your proof that the recipient received your Registered Mail

Registrar
Government official appointed officer to maintain a register in which transactions of a specific nature are recorded for public knowledge.

Registrar of companies
Under the Pakistani corporate law, the registrar is responsible for recording and maintaining certain details of the new and existing companies within his or her jurisdiction. He or she also controls the formation of new companies, and renewal of or changes in the existing ones.

Registration
It refers to the entering information relating to assignments, deeds, contracts of sale, judgments, mortgages, new securities, automobiles etc., in a public record book.

Registration of charge
In case of limited companies in addition to the completion of documentation formalities, banks and DFIs are required to get registered charge with the registrar of the companies in relation to the credit facilities allowed.

Regulator
It refers to an independent body that determines and maintains the operating parameters of a system, generally within certain prescribed or preset regulations. For Example State bank of Pakistan is the regulator of banking industry.

Reimbursement clause
It is a clause which relates to the amount to be refunded or paid for costs incurred or expenses paid or payment of the bill drawn against letter of credit by the correspondent bank.

Release of lien
 To free a piece of real estate from a mortgage.

Remittance
Transfer of funds,  from one place to another, for example  by a buyer to a distant seller, through some instrument of transfer such as a cheque, draft, Telegraphic transfer bankers cheque or through online transfer. Funds so transferred are called remittance.

Remote
It refers to the service available to the client computers over a network.

Remuneration
It refers to the Reward of employment as pay, salary, or wage, including allowances, benefits such as company car, medical plan, pension plan, bonuses, cash incentives, and monetary value of the non-cash incentives.

Renewal
The act or process of renewing such as, renewal of credit facilities, renewal of term deposit renewal of the copyright, renewal of lease agreement. In banking it refers to a form of extending an unpaid loan in which the borrowers remaining unpaid loan balance is carried over (renewed) into a new loan at the beginning of the next financing period.

Rent
It refers to the  payment made periodically by a tenant to a landlord in return for the use of land, a building, an apartment, an office, or other property.

Rental
It refers to the income arising from rents received.

Represent
It refers to present again e.g. paying banker of a cheque may ask collecting banker to represent cheque.

Representative
Authorized to act as an official delegate or agent, standing or acting for another through delegated authority in official capacity.

Repurchase agreement (repos)
This is a contract between a buyer and a seller whereby the seller agrees to repurchase the item sold on a designated date, for which the investor/ buyer receives a fixed return.

Rescheduling of debt
It refers to the extending the repayment period of an existing loan.

Reserve currency
One of the national currencies or IMFs special drawing rights (SDR) used by a country to hold its foreign currency reserves and gold for settling international trade transactions and other obligations.

Reserve fund
This is a fund seta side from profit of the company to meet some extra ordinary expenses.

Reserve price
It refers to the minimum price set by the seller below which no offer is accepted.

Residual interest
Interest that continues to accrue on your credit card balance from the statement cycle date until the bank receives your payment. For example, if your statement cycle date was January 10 and the bank received your payment on January 20, there were ten days for which interest accrued. This amount will be posted on your next statement.

Residual value
It refers to the estimated scrap value of an asset at the end of its economic or useful life.

Resolution
This is a proposition put before a meeting of shareholders directors or members of a company or association for discussion, approval or adoption. Resolutions are generally of four types: (1) Elective, (2) Extraordinary (3) Ordinary and (4) Special.

Resolution to borrow
This is an authority granted to the officers of a company, through a resolution passed by the shareholders, to obtain financing fund based or non fund based. In order to protect institutional interest it is advisable that banks / DFIs should provide a Performa resolution which the borrower completes and signs.

Respondent
It refers to the  defendant against whom a petition or complaint is filed in a court.

Restrictive Indorsement
Indorsement which limits further negotiability of a negotiable instrument. For example, the words accounts payee Only on the face (in the Pakistan, India & UK) or For deposit only on the back in the US of a cheque block its cashing over the counter

Retail banking
Retail banking is a banking service that is meant primarily towards individual consumers. It focuses consumer markets a wide range of personal banking services, including offering savings and checking accounts, bill paying services, as well as debit and credit cards. In Pakistan, many retail banking products are also extending to small and medium sized businesses. All branches except corporate branches falls under the ambit of retail banking. It is the biggest funds generating unit and its excessive funds are utilized by corporate banking .

Retention money
Generally this is money that is held back that would otherwise be paid, until the other party performs some service or task. Take example, of the construction business, where it is common that a series of payments are made over time, with the requirement that for example 10% of the payments is withheld until the job is complete. This way, the contractor can be paid his costs during construction, but obviously doesnt get the entire amount until the job is done.

Return cheque
Cheque / instrument which is returned by the paying bank either presented on counter or in clearing.

Return item
A negotiable instrument—principally a cheque—that has been sent to one bank for collection and payment and is returned unpaid by the sending bank.

Revaluation
It refers to the adjustment in the value of currency with respect to another currencies or a benchmark rate of exchange. It also refers to the readjustment of assets or liabilities in foreign currency according to the latest market value in local currency.

Revenue
It refers to the amount generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of the company before any costs or expenses are deducted.

Revocable credit
It is an L/C that may be amended or canceled any time by the buyer (the account party) without the approval of the seller (the beneficiary). Since it does not provide any protection to the seller, it is rarely used.

Revolving credit
A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. Also called a open-end credit.

Revolving letter of credit
This is an L/C which contains a clause that credit will again be available to the seller after reimbursement of the credit availed. There is no limit of turnover, but value of the bill drawn under the L/C is clearly defined.

Right of setoff
Banks legal right to seize a borrowers any accounts credit balance except a sub-account balance in the same bank to apply it towards the borrowers any over due loan . In some countries this right is not applicable to consumer and credit card payments.

Ullage certificate
This is a certificate issued for removal of liquid (oil etc) from the tanker. For example palm oil is imported by three parties and on port it is stored in one tanker and oil is released through measurement.

Ultimate balance
Balance arrive after combining all accounts.

Uncleared effects

Ultimo
It refers to in or of the month preceding the current one, such as on the 15th ultimo.

Ultra vires
It refers to some thing beyond the legal power or authority of a company association or officer, etc.

Ultra violet
The purplish-blue light which highlights un-visible fields .It also refers to, producing, or utilizing light having such wavelengths such as an ultraviolet lamp that are used to detect fake currencies etc.

Unauthorized signature
Forged signatures, or signature on behalf of any person company, firm  or association etc  without any lawful authority.

Unbanked area
Under develop areas where banking facilities are not available. As per SBP policy banks must open atleast 20% of new branches in unbanked areas.

Unclaimed deposits/ bills
All banks and DFIs operating in Pakistan are required to surrender to SBP all deposits including foreign currency deposits, inoperative bills payable out-standing in the books of banks and DFIs for 10 years and more and where no transaction has taken place, no statement of account has been requested or acknowledged, shall be classified as unclaimed deposit / instrument except deposits / instruments in the name of, Government Accounts, Minor Accounts, Court of Law.

Uncleared effect
These are the cheques, pay order, drafts and similar instruments, that have been deposited by a banks customer but have not completed the banks clearing cycle or the proceeds have not been credited to the customers account
Uncollected funds: A portion of a deposit balance that has not yet been collected by the depository bank.

Undated cheque
This is refers to a cheque which is without date. Date is the material part of the cheque, and the drawee bank will not honor an undated cheque

Under capitalization
It refers to a situation where a business does not have sufficient,  funds for its size of operations. An undercapitalized firm does not have enough cash to carryout its functions and as such does not qualify for  loans due to its high loan-to-equity ratio.

Under custom bond
If for some reason, the importer does not pay the duty, he/she may keep imported goods under custom bond with the BOND COMPANY. The importer can release goods after payment of duty and bond company’s charges.

Under ground economy
Unrecorded business dealings (without payment of taxes) that are not reflected in a countrys gross domestic product (GDP) computations. Though it is illegal and even criminal methods, it is a survival practice in suppressive tax regimens or where legitimate business activity is made unnecessarily difficult by difficult/ unpractical regulations.

Under reserve
It refers to a situation in which a bank credits the amount of a cheque or draft to the depositors account before it is cleared. If dishonored, an under reserve items amount is debited from depositors account.

Under stock
It refers to stock which is less than the desirable number or quantity

Undertaking
It can be termed as a guarantee, promise, or clause in a contract that creates an obligation.

Under the counter
Any thing done, sold, given, secretly in an unlawful or unethical way. Under-the-counter payments are a form of bribery and extortion. Also called under the table.

Underwater loan
It refers to a loan that has gone under its book value e.g. it is non-performing,  its interest rate is below the current market rate,  the market value of its collateral has decreased to less than the amount of the outstanding loan balance.

Underwriter
This is an entity who  is in the business of evaluating and taking over other peoples risk for a fee /commission, interest, premium, or underwriting spread,

Un-discharged bankrupt
This is a bankrupt person who is not granted an order of discharge by a court or  the person whose loan is written off due to the non payment. An undercharged bankrupt is, in general, disqualified from holding certain public  offices such as member of national, provincial assemblies’ senate or of a director in a company.

Undue influence
It refers to mental, moral, or physical domination that deprives a person of independent judgment and substitutes another persons objectives in place of his or her own. Exercise of undue influence is exercised  by excessive insistence, or pressure applied due to authority, position, or relationship in relation to the strength of the person submitting to it. Consent obtained for a contract, relationship, or transaction is voidable if it can be shown that an unfair advantage has been taken of an involved party.

Unearned income
It refers to the income received before a good is sold or a service is provided. Unearned income is classified as a current liability on the balance sheet until it is recognized as earned income during the accounting cycle.

Unemployment
This means the total number of men and women of working age looking for paid work. Unemployment statistics vary according to how unemployment is defined and who is deemed to be part of the workforce. Generally it is determined by taking sample sizing.

Unencumbered
It refers to the asset or property that is free from debt, and clear of any legal defect in its title and, therefore, can be easily sold or mortgaged.

Uniform custom s and practice (UCP)
The Uniform Customs and Practice for Documentary Credits is a set of rules on the issuance and use of the documentary credit. It is utilized by banks / financial institutions, as well as traders, in more than 175 countries world wide. This practice has been standardized by the ICC by publishing the very first UCP in 1933 and subsequently updating it throughout the years. The UCP 600 is the revised version of the Uniform Customs and Practice for Documentary Credits The UCP rules were first promulgated by the International Chamber of Commerce 76 years back and today they have attained almost universal acceptance by practitioners in countries worldwide

Uniform Gift to Minors Account (UGMA)
This is an American law that provides a child under the age of 18 (a minor) a way to his / her own investments. The money is in the minors name, but the custodian (generally the parent) has the responsibility to handle the money in a prudent manner for the minors benefit. The parent cannot withdraw the money to use for his or her own needs.

Uniform rules for collection (URC)
These are standards of cheques draft, bills collection practices proposed by the International Chamber Of Commerce (ICC) for the financial institutions. Provisions of URC are not legal requirement but serve to establish common understanding of the collections terminology and expectations.

Unilateral
It refers to some thing which is one sided.

Unilateral change
Any change made in the provisions of a contract without the consent of the all parties involved.

Unilateral contract
It is a type of contract in which only one of the contracting parties is under an enforceable obligation. For example, under an insurance contract, only the insurer makes a promise

Unit
It refers to the definitive quantity adopted as a standard of measurement and exchange.

Unit cost
It refers to the expenditure incurred in producing one unit of a goods or service, computed usually as average cost. Total cost/ number of units= unit cost

United Bank Limited (UBL)
United Bank Limited came into existence on 7th November 1959. It is the second largest private commercial bank in Pakistan with over 1100 branches and has an international presence in 10 countries. It has assets of over Rs. 550 billion and a solid track record of fifty years - in addition to the convenience of over 1112 branches serving you throughout the country and also at several overseas locations.

Unlimited company
These are those companies ,where there is No limitation to the liability of the owners/ share holders, for the debts/ liabilities of the company e.g. proprietorship, partnership

Unlimited liability
Unlimited extent of liability to pay a companys debts or obligations, extending beyond the investments of the companys owners to their personal assets. This extent of liability is assumed in an unlimited liability company such as a sole-proprietorship or a  partnership.

Unlimited risk
This refers to an  investment where loss  potential is unlimited. Examples include short selling (satta) and futures trading. This is opposite of limited risk.

Unlisted securities
Ordinary shares or other securities of a company not listed (traded) on any official stock exchange. In the Pakistan, unlisted securities are traded informally in the trade circles on personal contact basis, in the UK they are traded on the Alternative Investment Market. These securities are issued by smaller or new enterprises who cannot or do not wish to comply with the listing requirements of an official Stock exchange.

Unquoted shares
Refer unlisted securities

Unsecured creditors
Debtors who have no specific security, they can have claim against general assets of the debtors/ company.

Unsecured facility
Facility not secured by collaterals but allowed only against integrity of the borrower.

Update
The actions to bring/adding in a book, figures, or in any document, any  information with the purpose  to date, or making corrections.

Upset price
This is the lowest price at which a person is permitted to bid for something being sold at auction.

Usance
This is the length of time allowed in a trading transaction for payment of a foreign bill for example Usance letter of credit where documents drawn under L/C are delivered against acceptance and payment is made after predetermined period (generally from 30 to 360 days).

Usury
This is the practice of lending money and charging the borrower with profit/ interest, at an exorbitant or illegally high rate. Generally private money lenders, charge interest/ profit.

Usury rates
The maximum rate of interest lenders may charge from the borrowers. The usury rate is generally set by the regulators

Utter
To put in circulation, e.g. to utter  forged notes into circulation

Grace Hopper led the team that developed the first large-scale computer for the American Navy in 1945.

After troubleshooting an unexplained problem for days, they finally found the cause to be a two-inch bug, a moth, that had gotten stuck in the relay system.

And that’s how the term bug was coined.

From then on, all unexplained computer problems were called bugs.

Back freight

Freight charges for the return of goods not accepted at the port of delivery mentioned in the bill of lading.

Back to back credit

Where a customer of a bank has received a letter of credit in his favor by foreign importer of the goods and on the strength / security of this credit his banker agrees to open another credit favoring actual supplier of the goods, the arrangement is called back to back credit.

It is very important to ensure that the document called for under the second credit should satisfy requirement of first credit. Only invoices are substituted for the ultimate buyers with the reason that he should not know that who actual seller of the goods is and there are chances that buyer can deal with the actual seller on subsequent occasions.

Bad debts

A debt account receivables, that is not likely to be paid by the debtors. Bad debts are treated as loss and finally written off.  A provision for bad debts is created, which have direct impact of the profitability of the bank. SBP being the regulator has given criteria for creating provisions for substandard, doubtful and bad loans.

Bai’ Bithaman Ajil

This is Islamic mode of financing of deferred payment sale

Bailee

A person to whom personal property is delivered in bailment. A banker being bailee has no has no lien on the property kept for safe custody, except charges recoverable for safe keeping.

Bailment

The act of delivering goods or personal property to another in trust for safe keeping and bailee is responsible for safe keeping of the goods. The services of providing Safe deposit lockers by the banks falls under bailment and locker application forms are designed considering clauses of bailment given in Contract Act .central bank (SBP) being regulator has instructed banks to provide insurance cover for the items kept in lockers. This insurance coverage is provided considering size of the locker.

Bailor

A person who delivers personal property (goods or money) in trust to the bailee in a bailment agreement.

Balance

In accounting term balance is the difference between the total credit entries ad total debit entries. Bank Account Balance contains an entry for each day’s bank account balance. If on any point of time sum total of debit increases with the credit entries balance will be in debit, it will be called “over draft” because account is over drawn and customer is using banks funds.

Balance certificate.

At the request of the customer, a certificate is issued wherein the balance of customers account is advised by the bank under signature and stamp.

Balance of payment

An accounting record of all transactions made by a country over a certain time period, comparing the amount of foreign currency taken in to the amount of domestic currency paid out.

In economics, the balance of payments, (BOP) measures the payments that flow between any individual country and all other countries. It is used to summarize all international economic transactions for that country during a specific time period, usually a year. The BOP is determined by the country’s exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits). Balance of payments is one of the major indicators of a country’s status in international trade.

Balance of trade

The balance of trade is the difference between the monetary value of exports and imports of a country over a certain period of time. It is the relationship between a nation’s imports and exports. A favorable balance of trade is known as a trade surplus and consists of exporting more than is imported; an unfavorable balance of trade is known as a trade deficit or, informally, a trade gap.

Balance sheet

In accounting, a balance sheet or statement of financial position is a summary of an organization’s balances. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. 

A balance sheet is described as a snapshot of a company’s financial condition. Out of the three basic financial statements, the balance sheet is the only statement which applies to a single point in time.

A balance sheet has three parts, assets, liabilities and ownership equity. The assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.

Bank

Bank can be define as  an institution which has been recognized by the central bank of its country, to accept deposits repayable on demand or otherwise & withdrawal by cheques draft , order or otherwise which includes specialized bank i.e. Agriculture bank, investment bank, SME Bank, Microfinance Bank and Post Office Saving Bank etc. An other definition of the bank is “A bank is a financial institution whose primary activity is to act as a payment agent for customers to borrow and lend.”

Banking Companies Ordinance 1962 Sub Section © Banking Company means any company which transacts the business of banking in Pakistan and includes their branches and subsidiaries functioning outside Pakistan of banking companies incorporated in Pakistan.

Bank Account

A bank account is an account with a banking institution, recording the financial transactions between the customer and the bank. Bank accounts may have a credit, or debit balance. Accounts opened with the purpose of holding credit balances are referred to as deposit accounts; while accounts opened with the purpose of holding debit balances are referred to as loan accounts/ overdraft (cash Finance) account.

Bank charge

The term Bank charge covers all charges made by banks to their customers. It may be service charges or mark-up / profit charge on any financial accommodation. SBP has instructed bank & financial institutions to properly display their schedule of charges on notice board and profit / mark-up to be charged or paid to their customers on all type of asset & liability products including consumer products. 

Bank credit

The borrowing facility provided to a customer by the bank in the form of credit or a loan.  

Bank Draft

Demand draft is an order to pay money drawn by one office of a bank upon another office of the bank or its correspondent, for sum of money, payable to order on demand. The drawee bank shall be discharged by payment in due course. Since this is an order instrument, it is transferred through negotiation. DDs are generally drawn on other cities as such these are purchased for making payment in other cities.

Bank inspection

Examination of a banks assets, liabilities, income, and expenses-as well as operations by representatives of the State bank of Pakistan as regulatory authority to ensure that the bank is solvent and is operating in conformity with banking laws and sound banking principles.

Bank reconciliation statement.

A form that allows individuals to compare their personal bank account records to the bank’s records of the individual’s account balance in order to uncover any possible discrepancies.

A company’s general ledger account Cash contains a record of the transactions (checks written, receipts from customers, etc.) that involve its checking account. The bank maintains a record of the customer s checking account when it processes the customer’s cheques, deposits, service charges, and other items. Bank mails a statement to the customers on close interval. When the customer receives its bank statement, they should verify that the amounts on the bank statement are compatible with the amounts in the company’s Cash account in its general ledger and vice versa. This process of confirming the amounts is referred to as reconciling the bank statement or bank reconciliation, 

Banker

A banker is one who conducts the business of banking individually as employee, or as a member of a company. He she is also an individual who is responsible for the smooth daily operation of the financial institution. This individual must ensure that they comply with institution rules and regulations as well as pertinent laws.  A banker advises his clients with regard to financial matters such as savings, loans, taxes, investments. The banker will provide financial assistance to the client in accordance with their required needs as per policy of the bank and central bank being regulator.

Banker’s lien

An enforceable right of a bank to hold in its possession any money or property belonging to a customer and to apply it to the repayment of any outstanding debt owed to the bank, provided that, to the bank’s knowledge, such property is not part of a trust fund or is not already held against other debts. Bank under general lien have right to sale the property after giving reasonable notice to the customer. 

Banker’s opinion

Bankers exchange opinion about their existing as well as prospective customers regarding their financial position. For import and export bankers take opinion about buyer / seller abroad. The banker receive opinion should keep it secret. While replying enquires selection of words should be carefully made to convey right impression and in the last a disclaiming clause should be added. Such as “opinion is given at your request, without any responsibility of this bank or its official”  

Bank Holiday

A bank holiday is a  holiday on which banks are closed for public dealing but it is a full working day for bankers. 1st January and 1st July and First day of Ramzan are treated as bank holiday.  Bank holidays are often assumed to be so called because these are days upon which banks are shut from out side, but in fact the  bankers use to up date their books and record .

Banking channels

Banking channels are the specific, prescribed, or official course or means through which customers can enjoy facilities of banking. Such as branch premises, ATM, ordinary mail, telephone (Phone Banking),  internet (internet banking)

Banking Day

Any business day on which a bank is open to the public for carrying on to a large extent all of its banking functions. 

Banking ombudsman

Ombudsman means a commissioner appointed by the Government to investigate any complaints against the body concerned. In Pakistan, ombudsman is called Mohtasib. For banking sector government have appointed a separate Mohtasib whose appointment is for the period of three years and is not eligible for any extension. The office of the Banking Mohtasib (BM) was established under banking companies ordinance 1962 by inserting seven sections from 82-A to 82-G on 2nd June, 1997 and through the banking companies amendment Act 1997.The purpose of the establishment of Banking Mohtasib is to resolve any complaints from customers against the bank and schedule bank against other bank. This is a free service which covers all banking services. 

Banking policy & regulation department (BPRD)

A department of State bank responsible for making banking policies rules and regulations and their implementation, customer’s protection etc.

Bank Mark-up 

The profit charged by the banks on financial accommodations i.e. over draft, loans, financing of foreign trade etc.

Bank notes

A promissory note, payable on demand payable to bearer, issued by central bank of the country and intended to circulate as money (Currency, official medium of exchange). The State Bank of Pakistan (SBP) has the responsibility for the production and issue, reissue and cancellation of Pakistan’s currency notes. 

The SBP manages its note issue responsibilities through its Note Issue Department which arranges for Pak currency notes to be printed by Security Printing press a separately incorporated wholly owned government organization.

Bank rate

Bank rate referred to the discount rate, which a central Bank charges on the advances against eligible bills /securities (treasury bills) that it extends to commercial banks and other financial institutions. Changes in the bank rate are often used by central banks to control the money supply / inflation.

Bankrupt

A person who does not have means to pay off his liabilities / financial obligations. Bankruptcy can be of two types voluntary bankruptcy by debtors himself or involuntary bankruptcy filed by creditors, who believe the debtor has committed an act of bankruptcy by cheating or concealing assets the creditors. In both cases, the objective is a fair and equitable settlement of claims and distribution of assets. 

Bank statement

On half yearly basis, after 30th June and 31st December each year, the bank provides a statement of customer’s account. It shows all deposits made, all cheques paid, and other debits posted during the period as well as the current balance. The customers can also take statement, any time during the year against charges.

Bank sweep arrangement

Through this arrangement, customer instruct bank to create a link of  sweeping between two accounts , a demand deposit account and an profit bearing account or a borrowing account, where automatic transfers goes between the accounts.

Barren money

Idle money, money not invested.

Barter

Barter is a type of trade in which goods or services are directly exchanged for other goods and/or services, without the use of money. They used barter. It is the exchange of personal possessions of value for other goods that you want. This kind of exchange started about 1200 B.C. in China, cowry shells became the first medium of exchange, or money. The cowry has served as money throughout history even to the middle of 19th century in Asia and some parts of Africa.

Basel II

Basel II is the second of the Basel Accords, consist on the recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. The purpose of Basel II, , is to create an international standard that banking regulators should use when finalizing regulations about size of capital banks against the types of financial and operational risks banks face. Basel II attempts to accomplish this by setting up rigorous risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposures through its lending and investment. Generally speaking, these rules mean that the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.

The final version aims at:

1. Ensuring that capital allocation is more risk sensitive; 

2. Separating operational risk from credit risk, and quantifying both; 

3. Attempting to align economic and regulatory capital more closely to reduce the scope for regulatory arbitrage. 

Base rate 

Base rate is the minimum lending rate. In money market it is called prime rate or call rate. Base rate is determined by each bank considering their cost of funds. Deposit and lending rates are determined by taking into account base rate. 

Basic Banking Account (BBA)

Bank collect service charges from the customers, if they do not maintain a minimum balance in their account fixed by the bank in their policy document pertaining to the deposit product. BBA accounts were introduced by SBP vide BPD circular No 30 dated 29th November 2005 with    the purpose to facilitate low income people in Pakistan with following Special features. 

* Minimum Initial deposit Rs. 1000/-

* No profit is paid in BBA account.

* No limit for minimum balance.

* If account remains Nil for continuous Six months, account will be closed.

* No fee can be recovered for maintaining BBA account.

* Maximum Two deposit & two Cheque withdrawals are allowed free of charges in a month.

* Unlimited free of charges ATM withdrawals are allowed from banks own ATM.

* Incase of withdrawal from ATM of any other bank, that bank can recover charges.

* A regular banking account can be converted to BBA account on Customers request/ consent.

* A joint account can be opened as BBA.

B.E.

An abbreviation generally used for bill of exchange.

Bear

A speculator in stock market who sells stocks in falling market with the hope to buy more cheaply at a latter date. If the markets fall by more than 20% then we have entered a bear market. A bear market is a market showing a lack of confidence. 

Bearer

Bearer is the person who comes in the possession of a negotiable instrument payable to bearer. Bearer cheque means a cheque which is expressed to be payable to the bearer. Title of bearer cheque passes by simple delivery, with an intention to transfer the title.

Below par

The term below par is relating to a security that sells at less than face value or par value. For example, a Rs.1,000 par bond with a market price of Rs.950 is below par. In money market if future rate of purchase or sale of any currency is below than the spot rate, this is also called below par.

Beneficial owner

A person who enjoys the benefits of ownership even though title is in another name, actual owner.

Beneficiary

Beneficiary is a person company or association designated as the recipient of funds or other property under a will, trust, insurance policy bill of exchange, cheque  letter of credit etc.

Bid 

Bid is an offer or proposal of price. 

A statement of a sum of money which one will give for something to be received, or will take for something to be done or furnished.

An offer made by an investor, a trader or a dealer to buy a security etc.

Bid bond

The bid bond is designed to back up the commitment of the participants in the tender(s) and to restrict their withdrawal from the bid(s) prior to its Validity, or they do not easily refuse to accept the award of a contract in their favor. Each participant is required to submit such bond as a condition of being permitted to bid for the contract. The call mechanism is normally a demand letter to be presented by the beneficiary to the issuing bank within expiry date of the bid bond. Bid bonds therefore, secure payment of the guaranteed amount

Big five

This refer to the big five private sectors bank namely, Allied Bank of Pakistan limited, Habib bank limited, Muslim Commercial  Bank limited, National Bank of Pakistan & united Bank limited.

Bilateral contract

This is a reciprocal arrangement between two parties under which both parties promise to perform an act in exchange for the other partys act. Each is an obligor on its own promise, and an obligee on the other partys promise

Bilateral trade agreement (BTA)

A Bilateral trade agreement (BTA) is a trade agreement between any two countries, usually in order to reduce tariffs and quotas on items traded.

Bill

In banking word bill refers to bill of exchange. In ordinary course of business it generally refers to a statement of money owed for goods or services supplied, it also refers to a legislation presented in parliament for discussion.

Bill Broker

A bill broker is a money dealer who buys, sells, discounts, or negotiates treasury bills & other securities.

Bill for collection

A cheque down n a branch which is not member of same clearing house (drawn on other city) is sent for collection. At the time of lodgment of bill/ cheque a contra voucher’s passed for record keeping and on realization/ return contra is reversed.

Bill for negotiation

Negotiation of bill of refers to the purchase of bill of exchange and shipping documents, which the exporter has issued after shipment according to L/C, D/P. or D/A. Negotiation is not the bank’s obligation but decision of negotiation is based on a transaction agreement with the exporter and importer. In order to protect its claims, the bank prudently examines whether there is any discrepancies between L/C or contract terms and presented documents and if document presented are in conformity with L/C / contract bank may negotiate documents. Required documents for negotiation are

* An application for negotiation of shipping documents 

* L/C or the original copy of an export contract document 

* Documents required in L/C or an export contract document.

Billing cycle

The time interval between the dates on which periodic bills are issued.

Billing date

The date and month on which a periodic or monthly bill is generated. In consumers credit, it includes appropriate finance charges, minimum payment due, and new balance.

Bill of Exchange

A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.(bearer bill of exchange can be issued by the Government)

Bill of entry

Bill of entry is a statement of details of goods received at a customhouse as imports and amount of duties and other taxes paid duly signed by custom authorities. After submission of bill of entry by the importer to his bank and its reporting to the regulators, the transaction of import is treated as complete.

Bill of lading

A bill of lading (sometimes referred to as a BOL or B/L) is a document issued by a carries to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to consignee who is usually identified. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. B/L is also a document of transfer, being freely transferable but not a negotiable instrument in the legal sense, i.e. it governs all the legal aspects of physical carriage, and, like a cheque or other negotiable instruments, it may be endorsed affecting ownership of the goods actually being carried.

Bill of lading is normally issued in the sets of two or three and some copies are retained by the master of the ship or shipping company.

Bills payable (B/P)

In banking bills payable refers to the value received instruments (pay order, demand draft, cashier / bankers cheques etc) not yet presented for payment and outstanding in the books as bills payable. It also refers to the outstanding liability of an accepted bill such as acceptance under Usance L/C.

Black money

Fraudulently obtained money, money obtained as bribe or any other unfair means, money on which no tax is paid.

Blank cheque

A cheque that has no numerical value (amount) written in, but is already signed. Blank cheque can be extremely dangerous for their owner, because whoever obtains the cheque could write in any amount of money and would be able to cash it.

Blank endorsement

simple signature on the reverse of a negotiable instrument that does not name a transferee and that makes the instrument payable to bearer called also endorsement in blank

Blank transfer

Transfer share etc without writing the name of transferee. When financing is taken against the pledge of shares transfer deeds are signed as blank.

Blanket policy

Blanket Insurance is an insurance policy that covers more than one piece of property at a specific location or multiple items at multiple locations for a fixed time. For example banks obtain cash insurance cover for their branches and insurance company provides cover of say 20 million per branch.

Block account

This is a bank account from which funds cannot be withdrawn for any of a number