Appreciation:
Also called capital appreciation. Refers to the increase in the price of a share, which all shareholders look forward to and appreciate.

Basic qualifier:
The lender usually spells out the eligibility criteria, which is known as the basic qualifier.

Bonus Shares:
Shares issued free of cost to the shareholders of a company, by capitalizing a part of the company's reserves. Following a bonus issue, though the number of total shares increase, the proportional ownership of shareholders does not change.

Clear Title:
Encumbrances = hassles, which any bank keeps at a barge pole distance. So, a clear title (a title that is free from all encumbrances) is welcomed by them.

Custodial fee:
It is the fee charged to you by your depository participant (DP) for the service rendered for storing your demat shares.

Collateral:
It is used to provide a guarantee for a loan. Basically, a standby for banks to collar you with if you default in any way on repayment of interest or principle or such other obligations. It includes negotiable instruments, shares or goods that acts as a guarantee for a loan.

Dematerialisation:
It is a process by which an investor gets physical certificates converted into electronic balances maintained in his account with the DP.

Depository Participant (DP):
A DP is a representative of the depository in the system. The DP maintains the client's securities account balances and intimates him about the status of holdings. According to SEBI regulations, financial institutions (FIs), banks, custodians, stockbrokers, etc can become DPs.

Documentation:
The papers that are needed to process your loan application.

Drawing power valuation:
Volatility in stock markets affects your drawing power and hence your loan taking ability as it is reviewed from time to time as per the applicable market value adopted by the bank.

Effective interest rates:
The compounded interest rate calculated based on the actual inflows and outflows of cash

EMI :
Music to the ears of the lender and noise for the borrower — Equated monthly Installment (s) have to be paid by the borrower in lieu of the loan taken.

Exposure:
Not of the ‘Indecent Exposure’ variety but banks of wary of reaching such limits. Refers to the loan amount as against the value of the asset/product.

Face Value:
The nominal value of a security.

Flat rate of interest:
Percentage representation of the amount of annual interest on the total loan amount

Floating rate of interest:
The interest rate to be adjustable with the change of interest rates in future over the loan period

Guarantor:
A person who promises to pay your debts if you are unable to pay them yourself

Hypothecation:
Pledging assets against a loan using properties such as securities as collateral for a loan, but not transferring legal ownership to the lender. God help you, if you default on your repayments! The asset may be sold to realize its value

IRR:
Internal Rate of Return is the rate at which the lender accounts for interest

Lot:
A fixed minimum number in which shares are bought and sold. Trading lots can comprise 5, 10, 50 or 100 shares depending on the face value of shares. Such numbers make round lots, anything less makes odd lots.

Margin:
The difference in the value of shares pledged and the loan amount sanctioned. The margin for physical shares is 50 per cent. This means if one wants to borrow Rs 100, then it will have to pledge shares worth Rs 200.The margin for demat shares is 35 per cent. Margins are at the sole discretion of the bank and may even vary from scrip to scrip.

Market lots:
The minimum trading lot on a stock exchange. On compulsorily dematerialised shares for all classes of investors, the market lot is just one share.

Minimum no of co’s accepted:
The minimum number of companies, whose shares have to be offered as security for obtaining loans. For e.g in case of IDBI Bank the shares to be offered as security should be of at least 2 companies.

Mortage:
Security to be provided against loan

Overdraft:
The word overdraft means the act of overdrawing from a Bank account. In other words, the account holder withdraws more money from a Bank Account than has been deposited in it

Par Value:
The face value, or the price of a share, debenture, or bond that is written on the certificate. It is not the market price

Pledge:
To deposit securities with a lender as security for money borrowed.

Power of attorney :
Legal document which gives someone the right to act on someone's behalf in legal matters.

Pyramiding:
Akin to building the famous pyramids at Egypt. It involves pledging shares with a banker or broker to raise a loan to buy more shares of the same company, pushing up their prices. These shares are pledged again to secure a further loan to buy additional shares of the same company in a self-feeding cycle, which is called pyramiding. In a bullish market this causes the price to rise further and increase the operator's profit. In a bear market this causes margin calls and substantial losses.

Security swapping:
One has to pledge one’s shares when he avails of ‘Loan against shares’. Later on the person may withdraw some shares and pledge new ones to replace the shares he has withdrawn. This is popularly called security swapping.

Term loan:
Term Loans are the counter parts of Fixed Deposits in the Bank. Banks lend money in this mode when the repayment is sought to be made in fixed, pre-determined installments. This type of loan is normally given to the borrowers for acquiring long term assets i.e. assets which will benefit the borrower over a long period (exceeding at least one year).

Tenure:
Period from the date of disbursement of loan to the date of closure of loan.

Title:
Ownership of a property including the power to dispose of it and the right and duty to protect it

Title deeds:
Documents showing the owner of a property.

Warrants:
Documents identifying a person’s has a right to a specified number of shares in a company.