Banking Terminology Dictionary – A

A Practical A–Z Banking Terms Reference for JAIBB, AIBB, Bankers & Banking Exam Preparation.

Banking terminology can seem difficult when you encounter unfamiliar terms in banking operations, accounting, credit, treasury, risk management, and financial reporting. This Banking Terminology Dictionary – Letter A brings together commonly used banking terms beginning with the letter A in one easy-to-understand reference.

This dictionary is designed especially for bankers, banking professionals, JAIBB and AIBB candidates, students, and anyone interested in learning banking concepts.

A – Banking Terms at a Glance

Detailed Banking Terminology – A

1. Account

An account is a financial record maintained by a bank to record transactions relating to a customer, business, organization, or another financial relationship.

A bank account records activities such as deposits, withdrawals, transfers, payments, interest, charges, and other transactions.

Common Types of Bank Accounts

• Savings Account
• Current Account
• Fixed Deposit Account
• Recurring Deposit Account
• Loan Account
• Foreign Currency Account
• Non-Resident Account

Example:
If a customer deposits BDT 50,000 into a savings account, the transaction is recorded in that account.

2. Account Balance

Account balance means the amount recorded in a bank account at a particular point in time.

The balance may represent the customer’s credit balance, outstanding liability, or another financial position depending on the type of account.

Example:
If a customer’s account has BDT 100,000 after all posted transactions, the account balance is BDT 100,000.

3. Account Holder

An account holder is the individual, company, organization, or other legal entity in whose name a bank account is maintained.

An account may have:

• Single account holder
• Joint account holders
• Individual account holder
• Corporate/institutional account holder

The account holder is normally responsible for complying with the bank’s account-opening and transaction requirements.

4. Account Opening

Account opening is the process through which a bank establishes a new account for a customer after completing the required documentation, identification, verification, and approval procedures.

The process may include:

1. Customer application
2. Collection of required documents
3. Customer identification
4. KYC/CDD procedures
5. Verification
6. Risk assessment
7. Account approval
8. Account creation
9. Activation

Account opening is an important part of a bank’s Know Your Customer (KYC) and customer due diligence framework.

5. Account Payee

Account Payee is a crossing instruction commonly written on a cheque indicating that the cheque amount should be credited to the account of the named payee rather than being paid as ordinary cash.

For example:

A/C Payee Only

This provides additional control over the payment of the cheque.

6. Accrued Interest

Accrued interest is interest that has been earned or incurred over a period but has not yet been received or paid.

It may arise in both lending and deposit transactions.

Example

A bank has earned interest on a loan for several days, but the customer will pay the interest at a later date. The interest earned during that period may be recognized as accrued interest, subject to applicable accounting and regulatory treatment.

7. Accrued Income

Accrued income is income that has been earned but has not yet been received in cash.

Example

A bank earns interest during a month, but the contractual payment date is later. The earned amount may be treated as accrued income according to the applicable accounting rules.

8. Accrued Expense

An accrued expense is an expense that has already been incurred but has not yet been paid.

Example

A bank’s electricity service has been used during September, but the bill will be paid in October. The September expense may be recognized as an accrued expense.

9. Acquisition

Acquisition refers to obtaining ownership or control of another company, business, asset, or operation.

In banking and corporate finance, an acquisition may involve:

• Purchase of another company
• Purchase of a business unit
• Purchase of financial assets
• Obtaining controlling interest in another entity

An acquisition is different from an ordinary transaction because it generally involves obtaining control or ownership.

10. Active Account

An active account is an account that is currently operational and is being used for normal banking transactions.

Depending on applicable banking rules, an account may be considered inactive or dormant if there has been no qualifying customer activity for a specified period.

Examples of account activity

• Cash deposit
• Cash withdrawal
• Fund transfer
• Cheque transaction
• Other qualifying customer-initiated transactions

11. Additional Capital

Additional capital means extra funds or capital introduced into a business or financial institution in addition to its existing capital.

It may be provided by:

• Existing shareholders
• New investors
• Owners
• Parent organizations

Additional capital can strengthen the financial position and support business expansion.

12. Advance

An advance generally refers to money or financial accommodation provided by a bank to a customer, particularly in the context of lending and credit.

Bank advances may include various forms of financing such as:

• Term loans
• Working capital facilities
• Cash credit
• Overdraft
• Bills purchased or discounted
• Other credit facilities

Example:
A bank provides BDT 10 million to a company for working capital. This financing may be recorded as an advance/credit facility according to the bank’s accounting and regulatory classification.

13. Advance Against Documents (AAD)

Advance Against Documents (AAD) refers to a banking facility where financing is provided against specified documents, commonly in connection with trade transactions.

The bank provides funds to the customer based on documents representing goods, shipments, or commercial transactions, subject to the bank’s credit assessment and applicable rules.

AAD is particularly relevant to trade finance and import/export transactions.

14. Adverse Classification

Adverse classification refers to a credit classification indicating deterioration in the quality or repayment status of a credit facility.

When a borrower experiences repayment difficulties, the facility may move into a more adverse classification category under the applicable regulatory framework.

Banks monitor classified or deteriorating loans because they can affect:

• Asset quality
• Provision requirements
• Profitability
• Capital adequacy
• Credit risk

15. Agent Banking

Agent banking is a banking service delivery model where authorized agents provide specified banking services on behalf of a bank.

It allows customers to access basic banking services without necessarily visiting a traditional bank branch.

Examples of agent banking services

• Cash deposit
• Cash withdrawal
• Fund transfer
• Bill payment
• Remittance-related services
• Account-related services, where permitted

Continue your Banking Terminology Dictionary with the next letter to build a complete A–Z banking reference on BPE Assistant.

Agent banking can help expand financial inclusion, particularly in areas where conventional branches are less accessible.

16. Aggregate Demand

Aggregate demand is the total demand for goods and services in an economy at a given overall price level and during a particular period.

A simplified representation is:

AD = C + I + G + (X − M)

Where:

• C = Consumption
• I = Investment
• G = Government expenditure
• X = Exports
• M = Imports

Aggregate demand is an important concept in macroeconomics and monetary policy.

17. ALCO

ALCO stands for Asset-Liability Committee.

It is a management committee responsible for monitoring and managing the relationship between a bank’s assets and liabilities.

ALCO commonly considers:

• Liquidity
• Interest-rate risk
• Funding structure
• Asset-liability maturity
• Investment decisions
• Deposit pricing
• Loan pricing
• Market conditions

The objective is to maintain an appropriate balance between risk, liquidity, profitability, and funding requirements.

18. ALM

ALM stands for Asset-Liability Management.

It is the process of managing a financial institution’s assets and liabilities to control financial risks and maintain liquidity and profitability.

Important areas of ALM include:

• Liquidity risk
• Interest-rate risk
• Maturity mismatch
• Funding risk
• Balance-sheet structure

Simple Example

If a bank funds long-term loans mainly with very short-term deposits, it may face a maturity mismatch. ALM helps the bank identify and manage such risks.

19. Amortization

Amortization refers to the gradual reduction or allocation of an amount over a specified period.

In lending, amortization commonly refers to the repayment of a loan through scheduled installments.

For example, a borrower may repay a loan every month through installments containing:

• Principal
• Interest

Amortization may also refer to the systematic allocation of certain intangible assets or other applicable amounts under accounting standards.

20. Annual Percentage Rate (APR)

Annual Percentage Rate (APR) represents the annualized cost of borrowing, generally expressed as a percentage.

APR can provide borrowers with a more useful basis for comparing credit products because it may reflect interest and certain applicable borrowing costs, depending on the regulatory and calculation framework.

Example:
Two loans may have similar stated interest rates but different fees and charges. Their APRs may therefore differ.

21. Anti-Money Laundering (AML)

Anti-Money Laundering (AML) refers to the laws, regulations, policies, procedures, controls, and systems designed to prevent and detect money laundering and related financial crimes.

Banks play a major role in AML compliance.

Important AML measures include

• KYC
• Customer Due Diligence (CDD)
• Enhanced Due Diligence (EDD)
• Transaction monitoring
• Suspicious transaction/activity reporting
• Sanctions screening
• Beneficial ownership identification
• Record keeping

AML is a major part of modern banking compliance and financial crime prevention.

22. Applicant

An applicant is a person or entity that applies for a banking product, service, credit facility, account, card, guarantee, or other financial service.

Examples

• Loan applicant
• Credit card applicant
• Account-opening applicant
• Letter of credit applicant

The applicant must normally provide information and documents required by the bank for assessment and verification.

23. Application Money

Application money is the amount of money paid by an applicant when applying for shares or securities.

For example, when a company issues new shares, an investor may be required to pay an application amount as part of the subscription process.

In corporate finance and accounting, application money may subsequently be:

• Allotted toward shares
• Refunded
• Adjusted against the amount payable

depending on the terms and applicable rules.

24. Appraisal

Appraisal is the systematic evaluation of a proposal, customer, project, asset, or investment before a decision is made.

In banking, credit appraisal is particularly important.

A bank may assess:

• Character of the borrower
• Financial position
• Repayment capacity
• Business performance
• Cash flow
• Collateral/security
• Industry risk
• Purpose of financing
• Existing liabilities

The objective is to determine whether the proposed financing is acceptable from a credit-risk and business perspective.

25. Arrears

Arrears means an amount that was due for payment but remains unpaid after its due date.

Arrears can occur in:

• Loan installments
• Interest payments
• Utility bills
• Rent
• Other financial obligations

Example

If a loan installment was due on 10 September but remains unpaid after the due date, that unpaid amount may be described as being in arrears.

26. Asset

An asset is a resource that has economic value and is owned or controlled by an individual, company, bank, or other entity.

Examples of assets of a bank

• Cash
• Balances with other banks
• Loans and advances
• Investments
• Government securities
• Property and equipment
• Other financial assets

Assets are important in evaluating the financial strength and financial position of a bank.

27. Asset Quality

Asset quality refers to the overall quality, performance, risk, and recoverability of an institution’s assets, particularly its loans and investments.

For banks, asset quality is strongly associated with credit quality.

Poor asset quality may result from:

• High levels of non-performing loans
• Weak credit appraisal
• Poor recovery
• Excessive concentration risk
• Deterioration in borrowers’ financial condition

Strong asset quality generally supports a healthier banking system.

28. Asset Management

Asset management refers to the professional management of financial or physical assets to achieve defined objectives.

In banking and finance, asset management may involve:

• Investment management
• Portfolio management
• Risk management
• Asset allocation
• Performance monitoring

The objective is generally to balance return, liquidity, risk, and investment objectives.

29. ATM (Automated Teller Machine)

ATM stands for Automated Teller Machine.

An ATM is an electronic banking terminal that allows customers to perform certain banking transactions without direct assistance from a bank employee.

Common ATM services

• Cash withdrawal
• Balance inquiry
• Cash deposit, where supported
• Fund transfer, where supported
• PIN change
• Mini statement
• Other card-based services

ATMs provide customers with convenient access to banking services beyond normal branch-counter hours.

30. Audit

An audit is a systematic examination of financial records, transactions, controls, systems, and related information to determine whether they comply with applicable standards, policies, laws, and requirements.

Banks may have:

• Internal audit
• External/statutory audit
• Information-system audit
• Compliance-related review

Auditing helps identify weaknesses, errors, control failures, and potential irregularities.

31. Audit Trail

An audit trail is a chronological record that allows transactions, activities, changes, or system actions to be traced.

For example, a banking system may maintain information showing:

• Who initiated a transaction
• When it was initiated
• What was changed
• Who authorized it
• When it was authorized

A strong audit trail improves accountability, transparency, internal control, and investigation capability.

32. Authorized Capital

Authorized capital is the maximum amount of share capital that a company is legally authorized to issue under its constitutional and applicable legal framework.

It is also commonly called nominal capital or registered capital, depending on the jurisdiction and terminology used.

Example

If a company is authorized to issue shares with a total nominal value of BDT 100 million, its authorized capital is BDT 100 million.

Authorized capital is different from paid-up capital, which represents the amount actually paid by shareholders for shares issued.

33. Available Balance

Available balance is the amount of money in an account that is currently available for withdrawal, transfer, or other permitted use.

The available balance may differ from the displayed or ledger balance because of:

• Pending transactions
• Holds
• Lien
• Unclear funds
• Card transactions
• Cheques awaiting collection
• Other restrictions

Example

An account may show a total balance of BDT 100,000, while BDT 20,000 is under a temporary hold. The available balance may therefore be BDT 80,000.

34. Average Balance

Average balance is the average amount maintained in an account during a specified period.

A simple calculation is:

Average Balance = Sum of Balances ÷ Number of Balance Observations

Depending on the banking product and calculation method, average balance may be calculated using daily, monthly, or other periodic balances.

Example

If the daily balances over three days are:

• BDT 10,000
• BDT 20,000
• BDT 30,000

Then:

Average Balance = (10,000 + 20,000 + 30,000) ÷ 3 = BDT 20,000

Why Learn Banking Terminology?

Understanding banking terminology is important for both professional banking work and banking examinations.

A strong vocabulary helps you understand:

• Banking operations
• Credit and loan documentation
• Accounting
• Treasury
• Risk management
• Compliance
• Financial statements
• Central banking concepts
• Banking laws and regulations
• JAIBB and AIBB study materials

For banking professionals, knowing the meaning of a term is only the first step. You should also understand where and how the term is used in practical banking.

Quick Revision – A Banking Terms

For quick exam revision, remember these important terms:

A/C Payee → Cheque payable to the named payee’s account

AAD → Advance Against Documents

ALCO → Asset-Liability Committee

ALM → Asset-Liability Management

AML → Anti-Money Laundering

APR → Annual Percentage Rate

ATM → Automated Teller Machine

Arrears → Amount overdue and unpaid

Asset Quality → Quality and risk condition of assets

Available Balance → Amount currently available for use

Average Balance → Average balance maintained over a period

Frequently Asked Questions

What is a bank account?

A bank account is a financial record maintained by a bank to record deposits, withdrawals, transfers, payments, and other transactions relating to a customer or entity.

What is the difference between account balance and available balance?

Account balance generally represents the balance recorded in the account, while available balance represents the amount that can currently be used or withdrawn after considering applicable holds, pending transactions, liens, or other restrictions.

What does ALCO mean in banking?

ALCO stands for Asset-Liability Committee. It is responsible for overseeing important balance-sheet risks and decisions involving assets, liabilities, liquidity, funding, and interest-rate risk.

What is ALM in banking?

ALM stands for Asset-Liability Management. It is the process of managing a bank’s assets and liabilities to control risks such as liquidity risk, interest-rate risk, and maturity mismatch.

What is AML?

AML stands for Anti-Money Laundering. It refers to the framework of laws, controls, procedures, and monitoring mechanisms used to prevent and detect money laundering and related financial crimes.

What is an advance in banking?

An advance generally refers to money or financial accommodation provided by a bank to a customer, particularly through lending or credit facilities.

What is an ATM?

ATM means Automated Teller Machine, an electronic terminal that allows customers to perform certain banking transactions, such as cash withdrawal and balance inquiry, without visiting a teller counter.

What is an audit trail?

An audit trail is a chronological record that allows transactions and system activities to be traced, including information about actions, users, dates, and authorizations.

What is asset quality?

Asset quality refers to the quality, performance, risk, and recoverability of an institution’s assets, particularly loans and investments.

What are arrears?

Arrears are amounts that became due for payment but remain unpaid after the applicable due date.

Conclusion

The letter A contains many fundamental terms used throughout banking, including Account, Advance, Asset, ALCO, ALM, AML, Audit, ATM, Arrears, Asset Quality, and Available Balance.

This dictionary-style approach makes it easier to learn banking terminology term by term, while also helping JAIBB and AIBB candidates build a strong foundation for banking concepts and professional examinations.