14 N Basic Banking Guide A to Z

14 N Basic Banking Guide A to Z

N

National bank of Pakistan
National Bank of Pakistan is the largest commercial bank operating in Pakistan. The Banks services are available to individuals, corporate entities and government. The bank acts as trustee of public funds and as the agent to the State Bank of Pakistan in places where SBP does not have a presence.

National debt
The total borrowing of a federal government including bonds and securities and treasury bills, federal investment bonds etc.

National investment trust (NIT)
The NIT constituted under the Trust Deed dated 12th November 1962, executed between National Investment Trust Ltd (NITL) as Management Company and National Bank of Pakistan as Trustee. This is Pakistan�s largest and oldest Mutual Fund. As on June 30, 2009, NIUT had funds under management of around Rs. 28 billion invested in over 430 listed companies and had approximately 56,000 unit holders. NITLs distribution network comprises of 19 NIT branches, various Authorized bank branches all over Pakistan and Arab Emirates Investment Bank (AEIB) in Dubai (UAE).

Nationalization
A government takeover of a private business, assumption of control or ownership of  private property by the state.

National saving centers
National Savings Organization in subcontinent was established in the year 1873 when the Government Savings Bank Act, 1873 was promulgated. Latter on a National Savings Bureau was established in 1943- 44 as an attached department of the Ministry of Finance of the undivided Government of India. It was the central agency mainly concerned with the policy and planning matters of the Savings Schemes
In 1947 an organization with the name of Pakistan savings Central Bureau was created. In 1953, the Pakistan Savings Control Bureau was re-named as Central Directorate of National Saving. In early 1972, the scope of its activities was enlarged as the Central Directorate started selling Rupee Prize Bonds, and subsequently engaged in the operations of other national savings schemes. This new change resulted in considerable expansion of the National Savings Organization and at present National saving centers are functioning in all over Pakistan including small cities with total portfolio has increased Rs.240 billions.

National saving schemes
Govt of Pakistan has issued different certificates which can be purchased from National saving centers post offices & authorized branches of commercial banks. some of the prominent schemes are Defance Saving certificates (DSC), Special saving certificates (SSC), Regular income certificates (RIC) & Bahbood saving certificates (BSC)

Near money
Highly liquid investment which can be very easily converted into cash bank deposits, treasury bills, prize bonds and saving certificates etc.

Negative cash flow
It refers to a situation where the cash payment/ outflow during a period are higher than the cash receipt / inflows during the same period.

Negative interest
Any interest rate that falls below zero. This situation arises when currency of a country is very strong and it attracts huge deposits.ifv these deposits can not be utilized, they become burden. in order to discourage these deposits, interest is charged for keeping deposit.

Negative pledge
It refers to case where, a bank has provided un-secured financinghttp://www.businessdictionary.com/definition/unsecured-loan.html .In that case there can be a provision in the agreement that prevents the borrower from obtaining any secured loan without the consent of the bank who has provided un-secured financing.

Negative watch list
It is a list which is issued by regulatory authorities and it contains names of persons/ organizations who purport to be involved in anti social activities and terrorism.

Negligence
Breach of duty which results in loss to the person or entity for whom the duty was performed or to be performed . The aggrieved person or entity is entitled to claim damages in a court.

Negotiable instrument
It refers to a promissory note, bill of exchange, cheque & a draft, which are transferable in trading as substitude of money.

Negotiation
It refers to the accepting or trading of negotiable instrument. In case of export of goods, the exporter prepares export documents for the importer and bill of exchange/ draft is generally drowned on importers bank. In ordinary course o collection it will take considerable time. On the request of the exporter if bank agrees to buy the documents on commission/ discount it is called negotiation.

Negotiation commission
This is the fee charged by the bank for negotiating the document

Negotiation credit
Documentary credit where the issuer expressly indicates the credit is available by negotiation on a bank / country. This happened in case of negotiation of credit in a third country.

Net, net
It refers to a value arrived after all deductions

Net asset  (net worth)
This refers to the owners equity in the firm/ company

Net cash flow
It refers to the total cash receipt minus total cash payment

Net income
it refers to the total revenue receipt and to be receipt in an accounting period less all expenses during the same period

Net price
Final price after deducting  discounts / rebates

Net revenue from funds (NRFF)
It refers to the total profit / markup earned on all type of financing minus total profit paid on all type of deposits.

Netting
Netting means to allow a positive value and a negative value to set-off and get the net result. Since 2007 NIFT collects nets from all automated centers and provides country wide net position of debit or credit to banks current account maintained with SBP in Karachi.

Network
It refers to a system containing combination of computers, computer terminals, printers, audio or visual display devices, or telephones interconnected by equipment or cables used to transmit/receive information. It also refers to the branches, offices etc of an intuition. over a large area or throughout a country or the region.

Net worth
Total assets of a business minus its total liabilities

Net yield
It refers to the rate of return of an investment after deducting cost of purchase, all expenses and taxes.

Next of kin
It refers to a person or persons most closely related by blood/ nearest degree of relationship to another person.

NIFT
SBP has allowed NIFT (National Institutional Facilitation Technologies) to handle clearing processes in big cities. It is a private body, which is providing clearing house facilities to all member banks since 1996. Their services are now extended to over 140 cities covering more than 5000 branches of the country. Its responsibility on behalf of SBP is to supervise functions of clearing house in major cities and to coordinate with Clearing Member Banks & SBP in settlement of their claims. The services provided by NIFT cover functions pertaining to the main overnight clearing, same day clearing, intercity clearing & US $ clearing.

Nominal
It refers to measurement in an amount rather than in real value.

Nominal accounts
Nominal accounts are income statement accounts and are also called temporary accounts because they start with zero and close with zero at the end of accounting period. In contrast  to this balance sheet account such as asset, liability, and owners equity  which are called permanent accounts or real accounts.

Nominal capital
This term is used as alternate of authorized capital.

Nominal damages
It refers to a small amount of money awarded by the court to a plaintiff just to show that he/she was right but has not suffered considerable loss.

Nominal partner
It refers to a person who has neither contributed in firms capital nor actively participates in its affairs but just allow lends his name for the credibility and recognition to the firm. Nominal partners are generally paid a fee for this service. They are also called limited partner or ostensible partner.

Nominal price
It refers to very small price of an item that may bear little or no relation to its market price.

Nominal rate
Estimated rate subject to adjustment.

Nominal value
Alternate term of par value

Nominal wages
Amount of wage/ salary paid in cash, other than related benefits in services.

Nominee
An individual or entity named or appointed by another to act on its behalf in a specific matter.

Nominee Director
It refers to a person nominated on the board of a bank/DFI by sponsor(s), persons, company, institution etc. by virtue of his/their shareholding in a bank/DFI.

NBFC (Non-Banking Finance Company)
Non-Banking Finance Company and includes a Modarba, Leasing Company, Housing Finance Company, Investment Bank, Discount House, Asset Management Company and a Venture Capital Company.

Non-business day
Public holiday, or weekend on which normal business is not transacted. Term Deposits other contracts falling due and payable on a non-business day are payable on the succeeding business day. Non-business days are excluded also in computing days of checking L/C documents as per UCP 600.

Non-claim
It refers to the failure to claim or pursue a right within the legally prescribed period.

Non commercial agreement
In banking it refers to the agreement related to consumer�s credit.

Non funds based liability
Please refer contingent liability

Non marketable securities
It refers to the securities not listed in stock exchange or restricted shares / stock

Non-resident
Accounts of individuals, firms or companies resident in countries outside Pakistan are designated as Non-resident accounts. All Pakistani nationals except persons holding office in service of Pakistan, who go out of the country for any purpose i.e. employment, study, business tour, pleasure trip etc are treated as non-resident for so long as they remain outside Pakistan.

Nostro accounts
A bank�s Foreign Exchange account with his correspondent bank abroad, in the local currency of that country. For the local bank where account is maintained it is a Vostro account.

Notary public
A Notary Public is a public officer constituted by law to serve the public in matters concerned with deeds, powers-of-attorney, and to administer oaths and affirmations, take affidavits and statutory declarations, witness and authenticate the execution of certain classes of documents,

Notice
A written or formal information, notification,  required to be made in law,  operation of law or under an agreement.

Notice deposit
A time deposit on which the account holder is required to give a notice of withdrawal a specified number of days before making the withdrawal to avoid penalties.

Notice of dishonor
This is a notice given by the holder of a bill of exchange or promissory note, to a drawer or endorser on the same, that it has been dishonored, either by not being accepted in the case of a bill, or paid in due of an accepted bill or note. There is no precise form of words necessary in giving notice of dishonor but it can be given by the holder his representative or by the Indorser.

National income
National income is defined as the total value of all the goods and services produced within a country plus income coming from abroad within a period of time. The time period selected is one year as this allows comparing economic performance against previous year.

Not negotiable
A cheque may be made non-negotiable merely by crossing it with the words "Not Negotiable" written on its face. Any transferee of such a cheque cannot have better right of ownership than the transferor the previous holder.

Null and void
A deal or agreement which is no longer valid or enforceable.