Exchange control

The restrictions imposed by the government of a country on conversion of its currency for another, with the purpose to improve its balance of payments position is called exchange control.

Exchange position

Foreign exchange position is the balances of bank foreign exchange assets and liabilities that generate the risk of obtaining additional revenues or expenditures upon the modification of exchange rates.

Foreign Exchange

Any currency other than the local currency which is used in settling international transactions can be termed as foreign exchange. This includes, instruments, such as, draft, cheques etc. and paper currency, used to make payments between countries.

Foreign exchange contract

It is a commitment to buy or sell a specified amount of foreign currency on a fixed date and rate of exchange. Such contracts are used by the importers as a hedge against exchange rate fluctuations.

Foreign exchange earning

It includes, proceeds from the export of goods and services of a country, and the returns from foreign investments, denominated in convertible currencies.

Foreign Exchange Market

The foreign exchange market deals in trading currencies. The purpose of the foreign exchange market is to help international trade and investment. It helps businesses convert one currency to another. For example, it permits a Pakistani businessman to import European goods and pay Euros, even though the businesss income is in Pak rupees. 

The foreign exchange market is the largest and most liquid financial market in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover is over US$3.00 trillion. Central banks 

play an important role in the foreign exchange markets.

Foreign exchange rate

This is the conversion rate of one currency into another. This rate depends on the local demand for foreign currencies and their local supply, countrys trade balance, strength of its economy, and other such factors. Exchange rates can be fixed or floating.

Fixed rates is the system in which the value of a countrys currency, in relation to the value of other currencies, is maintained at a fixed conversion rate through government intervention.

Floating rate is a system in which a currencys value is determined by the interchange of the market forces of demand and supply, instead of by government intervention. However, all central banks  try to control these rates within a certain range by buying or selling their countrys currency as the situation warrants.

Terms used in money market

Annualized

Extrapolates the behavior of an element (such as volatility) from a certain time period to a full year.

Ask

The price at which sellers offer currencies to buyers.

Base currency

Usually the currency of the home market in which a trader or investor is buying or selling.

Bid

The price at which buyer offers to buy currencies from sellers.

Currency pair

Exchange rate relationship between two currencies, where one currency is expressed in terms of the other. For example, USD-EUR (US dollar against Euro) is a currency pair.

Dollar rate

The exchange rate of a foreign currency as quoted against the US dollar (USD). Some currencies are typically only quoted against the US dollar, such as the Arab Emirates Dirham (AED) Pak Rupees (PKR). The exchange rate of the Arab Emirates dirham and PKR will be thus computed from AED-USD and PKR-USD.

Exchange rate

The number of one currency needed to buy another.

Exchange rate risk

The potential loss that could be incurred from a movement in bid/ask prices, or exchange rates. For traders, risk is measured by the open currency position.

Exposure

The risk which an investor accepts when buying and selling in foreign currency-hedged financial instruments.

Filtering data

Some data may be "bad," stemming from such causes as a market maker incorrectly typing a price, or entering the correct price but in the wrong format. All data used by OANDA is filtered using its own sophisticated algorithms.

Financial institution

An organization primarily established to offer and perform financial services. 

Examples of financial institutions include brokerages and banks.

Forecast

A statistical analysis of the markets whereby a percentage chance is assigned to a given price movement occurring. A forecast of the foreign exchange markets is similar to a weather report in that both assign a 

probability to the occurrence of an identified market or climatic change. 

FX or Forex

An abbreviation for foreign exchange.

Hedging

A transaction strategy used by traders and investors in foreign exchange to protect an investment or portfolio against currency price fluctuations. A current sale or purchase is offset by contracting to purchase or sell at a specified future date in order to defer a profit or loss on the current sale 

or purchase. In this way risk is offset due to currency price fluction.

Interbank prices

Currency prices that reflect market rates among financial institutions for transactions typically over US $1 million. Interbank prices are different from retail prices.

ISO

The International Standards Organization, a worldwide standard-setting 

body. We use ISO 4217 currency codes in all of our services.

Long position

A market position where a trader has bought a currency he previously did not own. A long position is normally expressed in terms of the base currency.

Market maker

A financial institution or individual making consistent buy and sell quotations

in selected currencies. A market maker must hold or have ready access to the amounts quoted, that is carry an inventory.

Overbought

Situation where price movement has risen 150% faster or stronger than normal, rising too far in response to net buying. A price movement that becomes overbought is expected to soon make a corrective move. In other 

words, the price of the currency pair is expected to fall soon.

Oversold

Situation where price movement has fallen 150% faster or stronger than normal, declining too far in response to net selling. A price movement that becomes oversold is expected to soon make a corrective move. In other 

words, the price of the currency pair is expected to soon rise.

Portfolio

A selection of securities held by an investor or financial institution. Portfolios are designed primarily to spread investment risk.

Price / basis point, or pip

One basis point = one paisa (0.01)

Price movement

The change in the price of a currency over a specified time period.

Retail prices

Currency prices which reflect commissions and special charges that a bank or exchange agency demands to convert currencies for no corporate customers. These commissions and special charges vary among countries, banks, and exchange agencies. 

Risk

The potential loss that an investor accepts when he makes an investment. Risk can also be defined statistically as the annualized standard deviation of returns. See exchange rate risk.

Short position

A market position where a trader has sold a currency he does not previously own. A short position is normally expressed in terms of the base currency.

Spread

The difference between the bid and the asking price of a currency.

Stop-buy

A buy order for a currency price that is above the current "market," or current price, that becomes a market order when the specified price is reached. Stop-buys are used by traders to establish positions in markets which they perceive to be rising in value.

Stop-loss

A price specified by a trader at which he closes his position ,buys or sells currencies to exit the market, to ensure that in case of a loss he is able to keep his loss in line with his risk profile.

Time horizon 

The period of time over which a forecast of the foreign exchange markets is made. Traders generally look at forecasts over several time horizons before making a trading decision. Typical time horizons presently used in financial services are:

• one day (24 hours) 

• five days 

• three weeks 

• three months 

Vendor or supplier

An financial organization which collects, packages, and distributes up-to-

the-minute price quotes from banks and other financial institutions.

Volatility

A measure by which an exchange rate is expected to fluctuate or has fluctuated over a given period. Volatility figures are often expressed as a percentage per annum.

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.

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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.

Opening of Foreign Currency Accounts

Accounts other than Pak Rupees are Foreign Currency accounts. Foreign currency account can be opened only in those branches that have been permitted by SBP to deal in Foreign Exchange. Rules related to foreign currencies are given in SBP’s Foreign Exchange Manual chapter VI. Prudential regulation M-1 to M-5 and all CDD/KYC and AML rules and regulations applicable to Pak rupees accounts are also applicable to Foreign Currency accounts. Further procedure for opening the account and documentation required for different type of accounts are same, that a Pak rupee accounts.

For accounts opened against special permission, in addition to normal documentation SBP approval shall also be made part of documentation 

According to the SBP Foreign Exchange Manual, (chapter VI) following private foreign currency accounts can be opened without prior approval from SBP:

1. Pakistani national resident in or outside Pakistan, including those 

having dual nationality.

2. All foreign nationals residing abroad or in Pakistan.

3. Joint account with resident and non-resident

4. All diplomatic missions and their diplomatic officers.

5. All international organizations in Pakistan.

6. Companies established in Pakistan including foreign share holdings

Charity trust, foundations etc. which are exempted from Income Tax.

8. Branches of foreign firms and companies in Pakistan.

9. Non resident Exchange Companies even if owned by a bank or financial 

institution.

10. All foreign firms, corporations, other than the banks and financial 

institutions owned by the banks, incorporated and operating abroad, 

provided these are owned by persons who are otherwise eligible to 

open foreign currency accounts. 

Foreign Currency accounts whose general permission is given in above cases; should not be fed by:

1. Foreign Exchange borrowed under any general or specific permission 

given by SBP, unless permitted.

2. Any payment for goods exported from Pakistan.

3. Proceeds of securities issued or sold to non residents.

4. Any payment received for service rendered in or from Pakistan.

5. Earning of profit of the overseas offices or branches of Pakistani firms 

and companies including banks,

6. Investment of resident Pakistani abroad.

7. Any foreign exchange purchased from an authorized dealer in Pakistan

for any purpose.

Corporate or legal bodies can not generate funds from the kerb market for deposit in their foreign currency accounts. Foreign currency accounts can be fed by:

A. Remittance from abroad.

B. Travelers cheques issued outside Pakistan (whether in the name of 

foreign currency account holder or any other person).

C. Foreign currency notes.

D. Foreign exchange generated by encashment of securities issued by 

government of Pakistan.

The above accounts are freed from all foreign exchange restrictions except foreign currency account existing as on 28 May 1998 and restrictions were issued vide FE circular No12 of 1998. Accounts covered under FE 12 are transferable from one bank to other. The main points of FE  circular No12 of 1998 were:

I. Withdrawals in foreign currencies from the then existing foreign currency 

accounts – whether maintained by the resident or nonresidents were 

temporarily suspended.

II. Withdrawals were allowed in Pakistan rupees if so desired by the 

account-holders. Payments in such cases could be made at the rate 

of Rs. 46 per dollar and for other currencies, at the rate crossed with 

New Yorks closing mid-rate for the previous working day.

The facility of foreign currency account is NOT available to the following:

a. Airlines. Shipping companies operating in / through Pakistan or collecting 

passage, freight in Pakistan.

b. Investment banks.

c. Leasing companies/ Modarba companies including those which have 

been granted permission to deal in foreign exchange.

Special Foreign Currency (FC) Accounts for Private Power projects

Banks & DFIs can open special Foreign Currency accounts for private power projects in Pakistan against special permission from SBP. This special permission shall be available as per agreement entered by these companies with Private power and infrastructure board (PPIB) Government of Pakistan. The account will be allowed to maintained, during construction and operation of the project for the following purposes:

1. FC Account in or outside Pakistan for deposit of foreign equity and FC 

loan.

2. FC insurance account for payment of insurance premium and receiving 

insurance claims.

3. Offshore FC control account as per conditions of the agreement signed

with PPIB for operating the project.

4. Offshore FC operating account for meeting operation & maintenance 

of the project.

5. Offshore FC account for meeting disputed payments with the condition 

that the balance will be remitted to Pakistan once dispute is over.

6. Offshore FC account for debt service/ payment.

7. Offshore debt service reserve account, with the condition that the 

maximum balance in this account would not exceed next 12 months 

debt service payment.

8. Offshore FC account for maintenance of reserve, with the condition 

that, permission will expire with the expiry of the agreement and 

account will hold maximum US $ three millions at a time.

9. Offshore FC account for remittance of dividend.

Special permission for foreign currency accounts

SBP on request in writing may issue special permission for opening FC account to the following:

1. Foreign mineral/ oil exploration companies, foreign contractors and 

their sub contractors, subject o the condition that they will meet all 

their expenditure in Pakistan, including salaries of foreign nationals 

in pak rupees, even if it is received from their head office, an the 

conversion shall be on interbank market rates.

2. Firms and companies raising foreign equity or foreign currency loan, 

for receiving and retaining foreign funds. These funds can be used as 

per terms of SBPO FE Manual e.g. imports, consultancy and which 

are related to the business for which account is opened.

Authorized banks / DFIs must submit monthly statement in prescribed format (appendix V-5) along with related documents (import documents, invoices, agreement etc).

Surrender of Foreign Exchange

All citizens of Pakistan and other persons residing in Pakistan continuously for six months or more and posses’ foreign exchange whether in Pakistan or abroad are required to sell such foreign exchange to authorized banks within three months from the date of its acquisition except:

I. Foreign Exchange held abroad by Foreign Diplomats, foreign nationals 

employed by embassies, missions of foreign countries.

II. Foreign exchange held by Foreign National & foreign business houses 

except that foreign exchange which represents business conducted 

in Pakistan or services rendered while in Pakistan. 

III. Foreign exchange held by resident in Pakistan in countries other than 

India, Bangladesh, Afghanistan and Israel provided amount in these 

accounts does not exceed US dollar 1000 or equivalent in that currency.

IV. Afghan currency whether held in Pakistan or outside Pakistan.

V. Foreign national are not allowed to make payment on behalf of Pakistani 

or foreign national residing in Pakistan against pak rupees. This

includes foreign currency accounts maintained by foreign national in 

Pakistan.

Other important points

• Pakistani nationals resident in Pakistan are  allowed to open and 

maintain F C account outside Pakistan except in Afghanistan, India, 

Bangladesh and Israel, provided the balance maintained in these 

accounts should not exceed US $ 1000 or equivalent.

• Interest paid by the banks to the foreign currency account holders 

shall be reported as sale on the monthly exchange return

F.E. 25 Schemes

Amount of Foreign Exchange accepted out side SBP forward cover scheme i.e. under the provision of SBP F.E. Circular No.25 of 1998 Foreign Exchange is not required to be surrendered to SBP. The banks that accepted such deposits are free to lend, invest money in or outside Pakistan on the rates of currency not exceeding LIBOR (London Interbank Offer Rate) of such date. Main features of the scheme are:

Foreign currency deposits, mobilized under FE 25 Scheme, after netting-off deposits utilized to finance trade relate activities, such as financing against import and export, should not at any point exceed twenty percent (20%) of the local currency deposits of the bank / DFIs at the close of business of the last working day of the preceding quarter. In 2004 SBP has made certain changes in the policy of settlement of FE -25 Loans for Export vide FE circular No16 of 2004, which says that “FE-25 loans against intended exports shall only be settled through realization of export proceeds or remittance from abroad, of FE-25 Loans for Export maturing after Nov 2nd 2000.

Import financing against import bills under FE-25 Scheme can be allowed from the date of import payment by creating foreign currency loan against importer for a maximum period of six months. The repayment can be made by purchasing foreign currency from interbank market on prevailing rate on the date of repayment. The banks can purchase foreign currency from interbank market to cover interest amount and the same should be reported to SBP by submitting “M” form along with monthly foreign exchange returns.