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Lesson 15 (Common business terminology)
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Discussion on common banking terminology.

Chandan Poddar
Teacher, Author and consultant. Presently teaching at

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  1. Guarantor A guarantor is a creator of trust who takes the responsibility of the repayment of a loan, and is also, in some cases, liable and equally responsible for the repayment of the loan. ICAI Installment Contract An installment contract is a contract where the borrower, who is also the purchaser, pays a series of installments that includes the interest of the principal amount.

  2. Interest Interest Rate Interest is a charge that is paid by any borrower or debtor for the use of money, which is calculated on the basis of the rate of interest, time period of the debt and the principal amount that was borrowed Interest is, sometimes, also titled as the cost of credit'. Interest rate is the percentage of principal amount that is paid as an interest for the use of money

  3. Internet Banking Internet banking is a system wherein customers can conduct their transactions through the Internet. This kind of banking is also known as e- banking or online banking.

  4. Letter of Credit A document issued by a bank (on behalf of the buyer or the importer), stating its commitment to pay a third party (seller or the exporter), a specific amount, for the purchase of goods by its customer, who is the buyer. The seller has to meet the conditions given in the document and submit the relevant documents, in order to receive the payment.

  5. Letters of credit are mainly used in international trade transactions of huge amounts, wherein the customer and the supplier live in different countries Lock-in Period A guarantee given by the lender that there will be no change in the quoted mortgage rates for a specified period of time, which is called the lock-in period.