Banking & NBE
Banking, credit and National Bank of Ethiopia policy.
- Acquiring BankThe bank or payment firm that signs up merchants, accepts their card transactions, and settles funds into the merchant account.
- ActuaryA professional who uses maths and statistics to price risk, set reserves and test whether insurers and pension funds stay solvent.
- AnnuityA contract that turns a lump sum into a stream of payments, often for life, used to fund retirement income.
- Basis PointbpOne hundredth of one percent; used to describe small moves in rates and yields.
- BudgetA plan that matches your expected income to planned spending and saving over a week, month or year.
- Card IssuerThe bank or licensed firm that gives you a debit, credit, or prepaid card and stands behind the payments you make with it.
- CoinsuranceA shared risk arrangement where you and the insurer, or several insurers, each carry a set percentage of a loss.
- CollateralAn asset pledged to a lender that can be seized if the borrower fails to repay.
- Compound InterestInterest calculated on both the original sum and on interest already added in earlier periods.
- Concessional LoanA loan offered on softer terms than the market, usually with below-market interest, long grace periods, or extended repayment horizons.
- Core Banking SystemCBSThe central software a bank uses to hold customer accounts, post deposits and loans, and keep a single books-of-record view across branches.
- Correspondent BankingAn arrangement where one bank holds accounts and provides payment services for another bank, especially to reach foreign currencies and overseas markets.
- Credit RatingAn independent score of how likely a borrower is to meet debt payments on time.
- CurrencyThe official money of a country, used to price goods, wages, and financial contracts.
- DebtMoney borrowed that must be repaid, usually with interest, on agreed terms.
- Debt to Income RatioDTIYour recurring debt payments as a share of your income; lenders use it to judge how stretched you are.
- DeductibleThe first slice of a loss that you pay yourself before the insurer pays the rest of a covered claim.
- DefaultFailure to meet a debt obligation, such as missing an interest or principal payment.
- Defined BenefitDBA pension design where your retirement income is calculated by a formula, often using salary and years of service.
- Defined ContributionDCA pension design where only the contributions are fixed; your benefit depends on how the pot grows and how you draw it.
- Deposit MobilisationThe effort by banks and microfinance firms to attract and grow customer savings and current-account balances as a stable funding base.
- Development Finance InstitutionDFIA public or policy-backed lender that funds projects and firms for development goals, often where pure commercial banks will not go alone.
- Emergency FundCash set aside for true shocks such as job loss, medical bills or urgent repairs, kept separate from everyday spending.
- Endowment PolicyA life policy that mixes protection with a savings element, paying out on death or at a set maturity date.
- GuaranteeA promise by one party to cover another party's debt or obligation if that party fails to perform.
- GuarantorA guarantor is a person or firm that promises to repay a loan if the main borrower fails to pay.
- IjaraAn Islamic lease structure where the financier buys an asset and rents it to the client, sometimes with a path to ownership at the end.
- IndemnityThe principle that insurance should restore you financially after a loss, not leave you better off than before.
- InstalmentOne scheduled payment in a series that repays a loan or pays for a purchase over time.
- Insurance ClaimA formal request to an insurer for payment after a loss that your policy says is covered.
- Interest CoverInterest cover shows how many times a company's earnings can pay its interest bills, a check on debt risk.
- Interest Rateየወለድ ምጣኔThe cost of borrowing money, or the return paid on savings, expressed as a percentage.
- Junk BondA junk bond is a high-yield corporate bond with a low credit rating and a greater risk of default.
- LeverageLeverage is the use of borrowed money or similar debt to amplify potential gains and losses on an investment.
- LiabilityA liability is an obligation a person or company must settle in the future, such as a debt or unpaid bill.
- Life AssuranceInsurance that pays a benefit when the insured person dies, or sometimes at a set maturity date if they survive.
- LoanA loan is money borrowed that must be repaid on an agreed schedule, usually with interest.
- Loss RatioClaims costs as a share of earned premiums; a core measure of how expensive an insurance book has been.
- MaturityMaturity is the date when a bond, loan, or other debt instrument must be repaid in full.
- Merchant Discount RateMDRThe percentage fee a merchant pays on each card or electronic sale, covering the acquirer, card scheme, and related processing costs.
- MudarabahA profit-sharing deal where one side provides capital and the other manages the venture, splitting profits by agreed ratios.
- Net WorthWhat you own minus what you owe: assets less liabilities at a point in time.
- No Claims BonusNCBA premium discount you earn by not making claims, common on motor and some other general insurance policies.
- OverdraftA facility that lets your current account go below zero up to a limit, with interest on the amount you use.
- Payment GatewaySoftware that securely passes card or wallet payment details from a merchant site or app to the banks and networks that settle the charge.
- Point of Sale TerminalPOSA device or software at a merchant that accepts card, wallet, or contactless payments and sends them for authorisation.
- PolicyholderThe person or firm named on an insurance contract who owns the policy and pays the premium.
- Pre Shipment FinanceShort-term credit that funds raw materials, wages, or packaging after an export order is won but before the goods are shipped and paid for.
- PremiumThe regular price you pay an insurer to keep a policy active and stay covered for the risks named in the contract.
- Prepaid CardA payment card loaded with money in advance, so you can spend only what is already on the card rather than borrowing.
- Profit and Loss SharingPLSA financing approach where the provider and the entrepreneur share profits by agreed ratios and also share downside according to the contract type.
- Quantitative EasingQEA central bank policy of buying large amounts of assets to inject money into the financial system and lower longer-term rates.
- Savings RateThe share of income you keep rather than spend, a simple gauge of how fast your financial buffer can grow.
- Standing OrderAn instruction you give your bank to pay a fixed amount to a named recipient on a regular date.
- SukukIslamic finance certificates that give investors a share in ownership of an asset or project cash flows rather than a conventional interest-bearing bond.
- Sum AssuredThe fixed amount a life or related policy promises to pay on a covered event such as death or maturity.
- UnderwriterThe specialist who decides whether an insurer will accept a risk, on what terms, and at what premium.
- Write OffAn accounting step that removes an asset's remaining value from the books when it is judged uncollectable or worthless.
- Yield CurveA graph of interest rates for bonds of the same credit quality across different maturities, from short term to long term.