Banking Glossary (C)

Canceled Cheque
	A cheque that has been not paid and cancelled by the drawer - Account holder.
Capital Adequacy Ratio
	Capital Adequacy Ratio is the capital to assets ratio which banks are required to maintain against risks. It is also known as Capital to Risk (Weighted) Assets Ratio (CRAR).
Capital Funds
	Equity contribution of owners. The basic approach of capital adequacy framework is that a bank should have sufficient capital to provide a stable resource to absorb any losses arising from the risks in its business. Capital is divided into different tiers according to the characteristics / qualities of each qualifying instrument. For supervisory purposes capital is split into two categories : Tier I and Tier II.
	Tier I Capital
	>	A term used to refer to one of the components of regulatory capital. It consists mainly of share capital and disclosed reserves (minus goodwill, if any). Tier I items are deemed to be of the highest quality because they are fully available to cover losses Hence it is also termed as core capital.
	Tier II Capital
	>	Refers to one of the components of regulatory capital. Also known as supplementary capital, it consists of certain reserves and certain types of subordinated debt. Tier II items qualify as regulatory capital to the extent that they can be used to absorb losses arising from a bank's activities. Tier II's capital loss absorption capacity is lower than that of Tier I capital.
Capital Reserves
	That portion of a company's profits not paid out as dividends to shareholders. They are also known as undistributable reserves and are ploughed back into the business.
Card Holder
	Cardholder is a person who owns a debit or credit card issued by a credit card company, financial institution or bank.
Card Issuer
	A bank, financial institution, credit union, or agency that issues a credit card to public or its members is called a card issuer.
Card member Agreement
	The issuer's  terms and conditions relating to your credit card account. The Card member Agreement is between the customer and the card issuing company and is a legal document. (When you sign up for a credit card understand the terms and Conditions).
Carpet Area
	The area inside the walls of a room, measured from wall to wall including the door jams. In simple terms it is the area usable as floor level inside a room.
CASA Deposit
	Deposit in bank in current and Savings account.
Cash Advance (Credit Card)
	Applies to an advance taken against a credit card account. The advance may be through a cash withdrawal at an automated teller machine, bank teller or by use of a convenience check. This cash is an instant loan from your credit card account. The credit card company will apply finance charges from the day you take the advance until the day you pay it off. A transaction fee may also be charged based on the amount of your withdrawal.
Cash Advance Fee
	A one-time fee for cash advances in addition to normal finance charges. This fee is usually a percentage of the advance amount.
Cash Back Credit Card
	It is a special type of reward credit card, which pays back in cash. Whenever you use your cash back credit card to make purchases, a percentage of it is returned back to you. The cash back rewards can be redeemed as gift vouchers, or hard cash.
Cash Reserve Ratio (CRR)
	Cash Reserve Ratio is the amount of mandatory funds that commercial banks have to keep with RBI. It is always fixed as a percentage of total demand and time liabilites.
Certificate of Title (Title Deed)
	An official document, showing the ownership or title of the property in question is called the certificate of title / title deeds. It describes various details about the property such as the area, location, registered owner and other factors and charges related to the property.
Certificate of Deposit (CD)
	A time deposit that is payable at the end of a specified term. CDs generally pay a fixed interest rate and generally offer a different interest rate than other types of deposit accounts. If an early withdrawal from the CD prior to the end of the term is permitted, a penalty is usually assessed. CD is sold at discount value and being a money market instrument, can be transferred to other person through negotiaion.
Certified Cheque
	A cheque for which the bank guarantees payment. Banks in India do not generally, certify cheques.
Charge Back
	A credit card transaction, which is returned or not honored, is called a charge back. Usually done by the credit card holder in response to faulty products, credit card fraud, a dispute or non-compliance with the rules and regulations, charge back restores the funds back with the credit card.
Charge back Period
	It is the time period from a particular credit card transaction within which, the credit card holder must initiate a charge back.
Charge Card
	A card that requires full payment of the balance before the end of the billing period. It is not a line of credit and no interest is charged.
Cheque for Collection
	An instrument drawn on another Bank or Branch tendered by a customer of a Bank or by his representative, at the branch or in the drop box provided for the purpose for collecting the amount of the cheque.
Cheque Purchase
	Bank may, at its sole discretion, purchase local / outstation cheque tendered for collection at the specific request of the customer or as per prior arrangement subject to levy of service charges.
Cheque Return fee / EMI return fee
	This is a 'service charge' that would be levied in the account due to return of cheque sent for collection / EMI cheque. Usually, both the collecting bank and paying bank leavy cheque return charges on their customers.
Clear Title
	When the property in question is free from any doubt, is not disputed and is not having any encumbrances it is said to have a clear title.
Co-borrower
	A person who applies for any loan with the primary borrower and takes on the responsibility for repayment of the debt. This is done to improve the eligibility for loan and simultaneously mitigating the risk of banks who can exercise the option of recovery from both parties- jointly as well as severally.
Co-Branded Card
	It is a special type of credit card which is sponsored by both the credit card issuing company and the participating retail company or vendor. Co-branded credit card carries special deals and savings from the participating merchants.
Collateral
	An asset pledged to a lender to guarantee repayment. Collateral could include savings, bonds, insurance policies, jewelry, property or other items that are pledged to pay off a loan if payments are not made according to the contract. Collateral is not required for unsecured credit card accounts.
Collected Balance
	The balance in a deposit account, not including deposited items that have not yet been paid, or collected. See also Glossary term, "account balance." It is also known as cleared balance.
Combined Balance
	Any combination of balances from linked accounts, such as savings, current and CDs. Can be used to meet the balance required to waive the monthly fee on some accounts.
Commercial Real Estate
	Commercial real estate is defined as "fund based and non-fund based exposures secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction etc.)"
Commitment Fee
	It is an interest, which is charged on a loan applicant if he doesn't withdraw the sanctioned loan within a stipulated time period.
Common Areas
	Areas such as staircase, lifts, sanitation ducts, electricity ducts, air-conditioning ducts etc. kept aside for common use by the property owners. This area is generally divided proportionately in relation to the size of property and charged accordingly.
Compound Interest
	Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. The more frequently interest is compounded, the higher the effective rate. In India interest on loans and advances is compounded on monthly basis as per RBI order.
Consolidation Loan
	If you owe money to several creditors, you can combine your payments and balances into a single account with one creditor. This can be done in several ways. For example, you can transfer several high interest credit card balances onto one card with a lower rate. If you own a home, you can consolidate your debt with a low-interest home equity loan. Or, you can get a loan specifically designed for this purpose.
Contact Point Verification
	This refers to contact by bank staff on the phone numbers / address provided by the customer to establish correctness of the contact points. CPV is an important parameter in banks and a negative verification can lead to decline of the banking facilities sought.
Contract
	A written, oral, partly written partly oral or behavioral agreement between two or more parties or people, which is legally binding, can be termed as a contract.
Convexity
	This represents the rate of change of duration. It is the difference between actual price of a bond and the price estimated by modified duration.
Conveyance
	It is the process of legally transferring the ownership of interest in land.
Co-sign
	To sign a credit agreement with someone and agree to share the debt with that person or assume the debt if the other person defaults and doesn't pay.
Co-signer (Co-obligant)
	A co-signer is a person who signs a loan or credit card with the primary applicant, pledging to be responsible for repaying the loan or debt in the event the applicant is unable.
Cost Income Ratio (Efficiency Ratio)
	The cost income ratio reflects the extent to which non-interest expenses of a bank make a charge on the net total income (total income - interest expense). The lower the ratio, the more efficient is the bank. (Formula : Non interest expenditure / Net Total Income x 100)
Coverage Ratio
	Equity minus net NPA divided by total assets minus intangible assets.
CRAR (Capital to Risk Weighted Assets Ratio)
	Capital to risk weighted assets ratio is arrived at by dividing the capital of the bank with aggregated risk weighted assets for credit risk, market risk and operational risk. The higher the CRAR of a bank the better capitalized it is.
Credit Appraisal
	This is the process for evaluating credit worthiness of any loan proposal. This helps establish the risks involved in the proposal and debt servicing capacity of the borrower. A wide range of criteria viz. age of borrower, credit score, existing loan obligations, nature / sources / stability of income etc. are taken into account. Credit History of the person is an important criteria for sanction of credit.
Credit Available
	The amount of unused credit that is available. Your credit available is your outstanding balance subtracted from your total credit line. For example, if your credit line is  Rs.50,000  and you have an outstanding balance of Rs.40,000, your credit available is Rs.10,000, which means that you have Rs.10,000 of credit left that you can use to make purchases with your credit card.
Credit Bureau (Credit Information Company)
	A credit bureau is a company that collects and shares information about how you manage your credit. Many banks and credit issuers regularly update the credit bureaus about your payment habits and how much money you owe. Potential creditors may check your credit report when you apply for a loan or a credit card. Reporting to at least one Credit Bureau is mandatory in India.
Credit Card Debt
	The total unpaid balances on all of your credit cards (not to be confused with the minimum amount you owe each month).
Credit Criteria
	Factors used by lenders to rate the credit worthiness or ability to repay debt. They may include the following : income, amount of personal debt carried, number of accounts from other credit sources and credit history. A lender is free to use any credit-related information in approving or denying a credit application
Credit Enhancement
	These are the facilities offered to an SPV to cover the probable losses from the pool of securitized assets. It is a credit risk cover given by the originator or a third party and meant for the investors in any securitization process.
Credit History
	A financial profile of any person created by credit rating agencies based on how he repays his bills, clears his debt and the amount a person owes to various credit card companies and other lenders.
Credit Limit
	It is the maximum amount of money one can draw on his account based on prior sanction or approval from the bank. Borrowing or drawing limit fixed by a bank for a customer depending on his credit history, repaying capacity and relationship with bank.
Credit Management
	The way you handle the money you borrow from banks or credit issuers. A good credit management will ensure optimum utilization of borrowed funds and meet repayment obligations on time.
Credit Report
	A credit report is a record of all of the information that credit bureau have collected about the way you've managed your finances over the last 5 years. It is the official record of how you pay the money you owe to your creditors.  The information on your report can either qualify or disqualify you from obtaining credit cards, mortgages, loans etc. An individual can obtain credit report on himself from the credit bureau on payment of a fee.
Credit Risk
	The risk that a party to a contractual agreement or transaction will be unable to meet its obligations or will default on commitments. Credit risk can be associated with almost any financial transaction. BASEL-II provides two options for measurement of capital charge for credit risk :
	1.	Standardised Approach (SA) : Under the SA, the banks use a risk-weighting schedule for measuring the credit risk of its assets by assigning risk weights based on the rating assigned by the external credit rating agencies.
	2.	Internal rating based approach (IRB) : The IRB approach, on the other hand, allows banks to use their own internal ratings of counterparties and exposures, which permit a finer differentiation of risk for various exposures and hence delivers capital requirements that are better aligned to the degree of risks. The IRB approaches are of two types :
		a)	Foundation IRB (FIRB) : The bank estimates the Probability of Default (PD) associated with each borrower, and the supervisor supplies other inputs such as Loss Given Default (LGD) and Exposure At Default (EAD).
		b)	Advanced IRB (AIRB) : In addition to Probability of Default (PD), the bank estimates other inputs such as EAD and LGD. The requirements for this approach are more exacting. The adoption of advanced approaches would require the banks to meet minimum requirements relating to internal ratings at the outset and on an ongoing basis such as those relating to the design of the rating system, operations, controls, corporate governance, and estimation and validation of credit risk components, viz., PD for both FIRB and AIRB and LGD and EAD for AIRB. The banks should have, at the minimum, PD data for five years and LGD and EAD data for seven years. In India, banks have been advised to compute capital requirements for credit risk adopting the SA.
Credit Risk Mitigation
	Techniques used to mitigate the credit risks through exposure being collateralised in whole or in part with cash or securities or guaranteed by a third party.
CRR
	Cash reserve ratio is the cash parked by the banks in their specified current account maintained with RBI.
Credit-worthy
	You are judged to be qualified to have credit.
Current Account
	An account used for commercial purpose. It attracts no rate of interest and is generally charged by the bank with maintenance charges. There is no limit to the number of transactions in this type of account.
Current Exposure Method
	The credit equivalent amount of a market related off-balance sheet transaction is calculated using the current exposure method by adding the current credit exposure to the potential future credit exposure of these contracts. Current credit exposure is defined as the sum of the positive mark to market value of a contract. The Current Exposure Method requires periodical calculation of the current credit exposure by marking the contracts to market, thus capturing the current credit exposure. Potential future credit exposure is determined by multiplying the notional principal amount of each of these contracts irrespective of whether the contract has a zero, positive or negative mark-to-market value by the relevant add-on factor prescribed by RBI, according to the nature and residual maturity of the instrument.
Custodian
	An entity, usually a bank that actually holds the receivables as agent and bailee of the trustee.
Custodial Account
	An account created for the benefit of a minor with an adult as the custodian.