PayOff--A statement prepared by a lender showing the remaining terms on a mortgage or other loan.

The
payoff statement shows the remaining loan balance and number of payments and the rate of interest. It
also states the amount of interest that will be rebated due to prepayment by the borrower.

The discounted payoff is the repayment of a loan in an amount that is less than the principal balance
outstanding. A discounted payoff (DPO) is one of the alternatives available for resolving a problem debt
situation in commercial real estate. Such problem debt occurs when a real estate asset has declined
significantly in value, resulting in the outstanding loan amount being greater than the amount that can be
refinanced. Since writing off part of a loan results in a financial hit to the lender, the lender will only
consider a discounted payoff if all other avenues for recovery of the full amount of the outstanding
principalhavebeenexhausted.

Net Payoff The profit (or loss) from the sale of an item after the costs of selling it and any accounting losses
have been subtracted. This term is commonly used in describing real estate and investment transactions.
When considering the sale of an asset, the seller should take into consideration not just the sale price, but
how much she will actually receive at the end of the transaction – the net payoff. For example, if Amy sells
her house for $250,000, she will need to subtract her mortgage payoff amount, real estate agent's
commission and any settlement fees from $250,000 to determine her net payoff.
 Compound interest is the basis of long-term growth of the stock market. It forms the basis of personal savings plans. Compound interest also
affects inflation.
• Types of Compound Interest
There are generally two types of compound interest used.
Periodic Compounding - Under this method, the interest rate is applied at intervals and generated. This interest is added to the principal.
Periods here would mean annually, bi-annually, monthly, or weekly.
Continuous Compounding - This method uses a natural log-based formula and calculates interest at the smallest possible interval. This interest
is added back to the principal. This can be equalled to the constant rate of growth for all natural growth.
Benefits of compound interest
. The benefits of compound interest can be listed as follows:
• Reinvestment - The interest earned will be reinvested into the same deposit.
• Higher value of the deposit - Compound interest leads to a higher value of the deposit. Upon maturity, your deposit will be more than a deposit
with simple interest.
• Long-term savings - Compound interest deposits encourage long-term savings as the return on investment is much higher after 10 years or more.
• Increased Earnings - Options of compounding monthly, quarterly, and half-yearly increase the interest earned.
• Financial platforms where compound interest is applicable
• Compound interest is used for both debit and credit aspects of the financial world. Listed below are some of the investments and credit options
that use compound interest.
• Investments
• Savings Accounts
• Fixed Deposits
• Recurring Deposits
• Other Certificates of Deposits
• Reinvested Dividend Stocks
• Retirement Funds
• Debt
• Loans
• Credit Cards
• Mortgages
• Insolvency
• Insolvency is essentially the state of being that prompts one to file for bankruptcy. An entity – a
person, family, or company – becomes insolvent when it cannot pay its lenders back on time. In
general, this occurs when the entity’s cash flow in falls below its cash flow out. For individual
debtors, this means that their incomes are too low for them to pay off their debts. For companies,
this means that the money flow into the business plus and its assets are less than its liabilities.
Typically, those who become insolvent will take certain steps toward a resolution. One of the
most common solutions for insolvency is bankruptcy.
• Bankruptcy
Bankruptcy is a legal declaration of one’s inability to pay off debts. When one files for
bankruptcy, one obliges to pay off what is owed with help from the government. In general, there
are two main forms of bankruptcy – reorganization and liquidation bankruptcy. Under
reorganization bankruptcy (Chapter 13), debtors restructure their repayment plans to make them
more easily met. Under liquidation bankruptcy (Chapter 7), debtors sell certain assets in order to
make money they can use to pay off their creditors.
Liquidation
• Liquidation is the process of winding up a company’s business: selling its assets, investigating its
affairs, recovering any legal claims, and distributing the funds received to creditors and/or
shareholders.
• A liquidator, registered with the Australian Securities & Investments Commission (ASIC), will be
appointed to the company to carry out the liquidation.
 TYPES OF BANKS
• Retail banks are probably the banks you’re most familiar with: Your checking and savings accounts are held at a retail bank, which focuses on consumers (or the general
public) as customers. These banks give you credit cards, offer loans, and they’re the ones with numerous branch locations in populated areas. Learn more about retail
banks.

• Commercial banks focus on business customers. Businesses need checking and savings accounts just like individuals do. But they also need more complex services, and the
dollar amounts (or the number of transactions) can be much larger. They might need to accept payments from customers, rely heavily on lines of credit to manage cash
flow, and they might use letters of credit to do business overseas. Learn more about commercial banking.

• Investment banks help businesses work in financial markets. If a business wants to go public or sell debt to investors, they’ll often use an investment bank. Learn more
about investment banks.

• Central banks manage the monetary system for a government. For example, the Federal Reserve Bank is the US central bank responsible for managing economic activity and
supervising banks. Learn more about central banks.

• Credit unions are similar to banks, but they are not-for-profit organizations owned by their customers (most banks are owned by investors). Credit unions offer products and
services more or less identical to most retail and commercial banks. The main difference is that credit union members share some characteristic in common (where they
live, their occupation, or organizations they belong to, for example). Learn more about credit unions.,

• Online banks operate entirely online – there are no physical branch locations available to visit with a teller or personal banker. Many brick-and-mortar banks also offer
online services, such as the ability to view accounts and pay bills online but internet-only banks are different: they often offer competitive rates on savings accounts and
they’re especially likely to offer free checking. Learn more about internet-only banking

• Mutual banks are similar to credit unions because they are owned by members (or customers) instead of outside investors.

• Savings and loans are less prevalent than they used to be, but they are still important. This type of bank was important in making home ownership mainstream, using
deposits from customers to fund home loans. The name savings and loan refers to the core activity they perform: take savings from one customer and make loans to
another. Learn more about savings and loans.

• Non-Bank Lenders
• Non-bank lenders are increasingly popular sources for loans. Technically, they’re not banks, but your experience as a borrower might be similar: you’d apply for a loan and
repay as if you were working with a bank.
• These institutions specialize in lending, and they are not interested in all of the other activities and regulations that apply to traditional banks. Sometimes known as
marketplace lenders, non-bank lenders get funding from investors (both individual investors and larger organizations).
• For consumers shopping for loans, non-bank lenders are often attractive – they may use different approval criteria than traditional banks, and rates are often competitive.
 Recapitalization
Since the Government is the majority shareholder in the public sector banks, it has to provide equity capital, if the banks are struggling. This
injection of capital is also known as the recapitalisation of banks.
• The recapitalisation is aimed at tackling the twin balance sheet problem in India and also to revive growth and investment

• The Non-Performing Assets (NPAs) in the banking sector have been rising. As of June 2017, the NPAs of the banking system were as high as 10.2 %
of the loans advanced by the banks. This high NPA has limited the capacity of banks to lend. The bank credit growth in the year 2016-17 was 5.1
%, which is the lowest since 1951. (1) Hence, a massive recapitalisation was deemed as necessary to clean up the balance sheet of the banks.
• The recapitalisation of banks worth 2.11 lakh crores has been proposed to be done in three ways:
• Budgetary allocations: 18000 crore
• Raised from the market through the issue of equity shares by banks: 58000 crore
• Issue of Recapitalisation bonds by the Government: 1.35 lakh crore
• Budgetary allocations
• In this year’s budget, the Government had already allocated Rs.70000 crore for recapitalisation until 2019. Out of this, Rs.50000 crore has been
provided to the banks. In his budget speech, the finance minister, Arun Jaitley had stated – “additional allocations will be provided as may be
required”.
• As per the recent announcement, Rs.18000 crore will be released out of the present allocations.
• Issue of equity shares by banks
• Banks were already expected to raise Rs. 1.1 lakh crore from the market through the issue of equity shares, under the Indradhanush scheme. But,
banks have raised only 21000 crores till now. As per the recent announcement, additional 58000 crores will be raised from the market.
• Some analysts have questioned the ability of the banks to raise funds from the market, given the fact that they have raised only a fraction of the
amount expected by the existing Indradhanush scheme.
• Recapitalisation bond
• The Government will issue recapitalisation bonds worth Rs.1.35 lakh crores. The structure of the bonds has not been worked out by the finance
ministry yet. But, it is expected that the bonds will be bought by the banks themselves.
• After demonetisation, the banking sector is flush with liquidity. It will use this excess liquidity to buy recapitalisation bonds from the Government.
The Government will then use the money raised through issue of bonds, to buy equity shares in the banks.
• In effect, the recapitalisation bonds will be exchanged for equity shares.
• Life Insurance
• Life Insurance is a contract providing for payment of a sum of money to the person assured or, following him to the person entitled to receive the same, on the happening of a certain
event. It is a good method to protect your family financially, in case of death, by providing funds for the loss of income.

•
• . TERM LIFE INSURANCE : Under a Term Life contract, the insurance company pays a specific lump sum to the designated beneficiary in case of the death of the insured. These policies are
usually for 5, 10, 15, 20 or 30 years.
• Term life insurance are the most popular in advance countries but were not so popular in India. However, after the entry of the private operators and aggressive marketing by few players
this kind of policies are becoming popular. The premium on such type of policies is comparatively quite low when compared with other types of life insurance policies, mainly due to the
fact that these policies do not carry cash value.

• PLUS OF TERM LIFE INSURANCE The premium payable on these policies is low as they do not carry any cash value. - One can afford for quite high value insurance policies

• MINUSES OF TERM LIFE INSURANCE- - If one survives the period of the policy, he / she does not get any money at the end of the policy. The premium on such policies keeps on increasing
with age mainly because the risk of death of older people is more. Over the page of 60, these policies become difficult to afford.
•
• A2. PERMANENT LIFE INSURANCE : In a Permanent Life contract, a portion of the money paid as premiums is invested in a fund that earns interest on a tax-deferred basis. Thus, over a
period of time, this policy will accumulate certain "cash value" which you will be able to get back either during the period of the policy or at the end of the policy.
• Your need for life insurance can change over a lifetime. At any age, you should consider your individual circumstances and the standard of living you wish to maintain for your dependents.
In most cases, you need life insurance only if someone depends on you for support. Your life insurance premium is based on the type of insurance you buy, the amount you buy and your
chance of death while the policy is in effect. This type of policy not only provides protection for your dependents by paying a death benefit to your designated beneficiary upon your death,
but it also allows you to use some part of the money while you are alive or at the end of the policy. Some examples of such policies are :- Whole Life, Universal Life and Variable-Universal
Life.

• ENDOWMENT POLICIES
• These policies provide for period payment of premiums and a lump sum amount either in the event of death of the insured or on the date of expiry of the policy, whichever occurs earlier.

• MONEY BACK POLICIES

• These policies provide for periodic payments of partial survival benefits during the term of the policy itself. A unique feature associated with this type of policies is that in the event of
death of the insured during the policy term, the designated beneficiary will get the full sum assured without deducting any of the survival benefit amounts, which have already been paid as
money-back components. Moreover, the bonus on such policies is also calculated on the full sum assured.

• ANNUITY / PENSION POLICIES / FUNDS

• This policies / funds require the insured to pay the premium as a single lump sum or through installments paid over a certain number of years. The insured in return will receive back a
specific sum periodically from a specified date onwards (the returns can can be monthly, half yearly or annually), either for life or for a fixed number of years. In case of the death of the
insured, or after the fixed annuity period expires for annuity payments, the invested annuity fund is refunded, usually with some additional amounts as per the terms of the policy.
• Annuities / Pension funds are different from from all other forms of life insurance as an annuity policy / fund does not provide any life insurance cover but merely offers a guaranteed
income either for life or a certain period. Therefore, this type of insurance is taken so as to get income after the retirement.