Banking terms beginning with D

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An ATM-cum-debit card allows an individual to purchase anything for the cash available in his/her account that is joined with the card e.g. if a person has ` 5000 in his/her bank account, he/she can use his card to the maximum limit of ` 5000 only. On the contrary, credit card helps the user to do shopping till the assigned credit limit on that particular card.


It helps in calculating the financial leverage of any bank or organization. To measure this, one needs to divide the total liabilities of the banks by stakeholders' equity. This in turn gives an idea of the ratio of equity and the debt used by the bank in financing the assets.


If a person wants to continue his/her credit account, he/she either needs to give equated monthly installments (EMIS) or pay the due amount on credit account each month within a fixed date. If the person fails to make payment before the specified date, it is considered as default. It can mar the credit record of that person.


When a bank asks the borrower to share a part of the credit risk and the payment that is received from him/her on this account, is referred to as downpayment/ margin money.


Also referred to as Electronic Clearing Facility (ECS), direct debit option proves beneficial in case of servicing of various lines of credit. This is a facility whereby the person empowers his/her bank to take off a particular amount from his/her account on a particular date every month. This facility enables a person to make his payments without visiting the lending institution or bank personally on a frequent basis. However, the person has to be aware of the fund availability in his account, as the bank is not responsible for intimating its customer when the amount is debited from his/her account.


The banks or lending institutions require certain documents from the person, who has applied for a loan, to look into his/ her creditworthiness. The lending institution levies some charges for this purpose. These charges are known as documentation charges. The documentation charges are separate from registration charge, stamp duty and lawyers fee.


If an individual has not made any transactions from his/her account for more than 2 years, a savings/current account is declared as inoperative or dormant.