Annual Report 2012 - National Savings Bank

268GLOSSARYAccounting PoliciesThe specific principles, bases, conventions,rules and practices adopted by an entityin preparing and presenting FinancialStatements.Accrual BasisRecognising the effects of transactionsand other events when they occur withoutwaiting for receipt or payment of cash or itsequivalent.AmortisationThe systematic allocation of the depreciableamount of an intangible asset over its usefullife.Amortised CostAmount at which the financial asset orfinancial liability is measured at initialrecognition, minus principal repayments,plus or minus the cumulative amortizationusing the effective interest method of anydifference between that initial amountand the maturity amount and minusany reduction for impairment or uncollectability.Available for Sale Financial AssetsAvailable for sale financial Assets are thosenon derivative financial assets that aredesignated as available for sale or are notclassified as loans and receivables, held tomaturity investments or financial assets atfair value through profit or loss.Bills Sent for CollectionA bill of exchange drawn by an exporterusually at a term, on an importer overseasand brought by the exporter to his bank witha request to collect the proceeds.Capital Adequacy RatiosThe relationship between capital and riskweightedassets as defined in the frameworkdeveloped by the Bank for InternationalSettlements (BIS) and as modified by theCentral Bank of Sri Lanka to suit localrequirements.Capital ExpenditureTotal of additions to property andequipment.Capital ReservesReserves identified for specific purposes andconsidered not available for distribution.Cash EquivalentsHigh liquid investments which are readilyconvertible to cash with no significant lossin value.Collective AgreementA tripartite agreement entered into amongthe NSB, Ministry of Finance and TradeUnions.Collectively Assessed loanimpairment ProvisionsAlso known as portfolio provisions,Impairment assessment on a collective basisfor homogeneous groups of loans that arenot considered individually significant and tocover losses that has been incurred but hasnot yet been identified at the reporting date.Loans and advances are assessed on portfolio basis.Commercial PaperShort-term instrument issued in the openmarket by creditworthy entities with thestandby credit facility.CommitmentsCredit facilities approved but not yet utilisedby the clients as at the Balance Sheet date.Compounded Annual Growth Rate(CAGR)The rate at which it would have grown if itgrew at an even rate compounded annually.ContingenciesA condition or situation existing at BalanceSheet date where the outcome will beconfirmed only by occurrence or nonoccurrenceof one or more future events.Contractual MaturityContractual maturity refers to the finalpayment date of a loan or other financialinstrument , at which point all the remainingoutstanding principal will be re paid andinterest is due to be paid.Corporate GovernanceThe process by which corporate entitiesare governed. It is concerned with theway in which power is exercised overthe management and direction of entity,the supervision of executive actions andaccountability to owners and others.Correspondent BankA bank in a foreign country that offersbanking facilities to the customers of a bankin another country.Cost/Income RatioOperating expenses excluding loan lossprovision and provisioning for fall in valuein dealing securities as a percentage of netincome.NATIONAL SAVINGS BANK . ANNUAL REPORT 2012