Recap Daily Points – December 2025

 

                             The Banking Tutor                        Recap Daily Points  – December 2025

 

2269. Automated Teller Machine (ATM)

ATM is an electronic telecommunications device that enables customers of financial institutions  to perform financial transactions , such as cash withdrawals, deposits, transfer funds, or obtaining account information, at any time and without the need for direct interaction with bank staff.

 

2270. Bank Owned ATMs :

ATMs  set up and owned by the bank itself are called Bank Owned ATMs. Bank is responsible for their operation and maintenance. Banks are entitled with responsibility of cash loading, AMC, security of the ATMs.

 

2271. Brown Label ATMs :

ATMs owned by Service providers are known as Brown Label ATMS. The responsibility of identifying ATM site, lease agreement with landlord, power supply to ATM kiosk lies with the service provider. Thus, service provider takes the responsibility of maintenance of the ATM whereas sponsor bank takes the responsibility of cash management and provide connectivity to ATM to banking network. Logo of sponsor bank is displayed on brown label ATM kiosk premises.

 

2272. White Label ATMs :

ATMs owned and operated by Non Banking Financial Companies (NBFC) are called White Label ATMS. RBI has granted license or permission to non-banking entities to open such ATMs. Any non-banking entity with a minimum net worth of ₹ 100 crore can apply for white label ATM.

NBFCs rely on sponsor bank to settle all issues related to cash management, transaction settlement with other banks etc. Customers with debit card of any bank may withdraw cash from such ATMs but they will have to pay a fee for the services.

 

2273.  Onsite ATM

ATMs which are located at the premises of the bank branch are called On-site ATMs. In the real sense this ATM is connected with the CBS of the branch where it is placed.

 

2274. Offsite ATM

ATMs which are located at a location away from the bank premises are known as Offsite . They are generally setup at important places other than branch. These ATMs connect with CBS of the bank separately irrespective the branch.

 

2275. Economic cycle (Trade Cycle or Business Cycle) 

Economic Cycle is the circular movement of an economy as it moves from expansion to contraction and back again. Economic expansion is characterized by growth and contraction, including recession, a decline in economic activity that can last several months. Four stages characterize the economic cycle or business cycle. The business cycle depicts the rise and fall in output (production of goods and services), over time.

 

2276. Expansion (Trade Cycles)

Expansion is the upward trend in a trade cycle where economic indicators like output, employment, and income increase, driven by higher consumer and business confidence and spending. During this phase, businesses grow, wages rise, and debt is paid down, with investments flowing into the economy. The phase continues as long as economic conditions support growth, ending at the "peak" before the economy enters a contraction.

2277. Peak (Trade Cycles)

A peak in the trade cycle is the highest point of economic activity, where growth reaches its maximum before declining. At this stage, key economic indicators like GDP, employment, and inflation are at their highest, and prices reach their maximum before the economy begins to slow down and contract.

 

2278. Contraction (Trade Cycles)

A business cycle contraction is a period of decline in economic activity, characterized by a decrease in real Gross Domestic Product (GDP). It follows the peak of an expansion and precedes the trough, leading to lower employment, reduced consumer and business spending, and falling profits. This phase can lead to a recession if the decline is significant or prolonged, with two consecutive quarters of negative GDP growth being a common indicator.

 

2279. Trough (Trade Cycles)

A trough is the lowest point in a business cycle, marking the end of a recession and the beginning of an economic recovery. At this point, economic activity, such as GDP, employment, and consumer spending, bottoms out before starting to increase again. Key characteristics of a trough include high unemployment and low demand, but it signifies the turning point from decline to growth.

 

2280. Share

A share represents a unit of equity ownership in a company. Shareholders are entitled to any profits that the company may earn in the form of dividends. They are also the bearers of any losses that the company may face. In simple words, if you are a shareholder of a company, you hold a percentage of ownership of the issuing company in proportion to the shares you have bought.

 

2281. Equity Shares

Equity are also known as ordinary shares and comprise the bulk of the shares being issued by a particular company. Equity shares are transferable and are traded actively by investors in stock markets. As an equity shareholder, you are not only entitled to voting rights on company issues but also have the right to receive dividends.

 

2282. Authorised Share Capital

Authorised share capital is the maximum amount of share capital that a company is legally permitted to issue to shareholders, as stated in its constitutional documents like the Memorandum of Association. This limit is set at the company's incorporation and can only be increased with shareholder approval and regulatory filings. It acts as an upper ceiling for the company's equity financing and indicates its potential for future growth.

 

2283. Issued Share Capital

Issued share capital is the total value of shares a company has actually sold to investors, which must be less than or equal to its authorized capital. This capital is raised to fund operations, and the issued shares are the portions of the company's authorized capital that have been offered for sale and are held by shareholders.

 

2284. Subscribed Share Capital

Subscribed Share Capital is the portion of a company's issued shares that investors have agreed to buy. It represents the shares that have been committed to by shareholders, even if the full payment hasn't been made yet. For example, if a company issues 100,000 shares but investors only agree to purchase 80,000, the subscribed capital would be 80,000 shares. 

 

2285. Paid-up capital

Paid-up capital is the total amount of money a company receives from its shareholders in exchange for shares. It represents the actual funds that the company has received and can use for its operations and growth, and it is a key indicator of a company's financial health and equity funding. This is distinct from authorized capital, which is the maximum amount of capital a company is legally allowed to issue.

 

2286. Rights Share

A Right Share is an offer to existing shareholders to buy additional shares at a discounted price, allowing the company to raise capital without diluting the ownership stake of its current investors. These shares are offered in a specific ratio (e.g., one new share for every five you own) and shareholders have the choice to accept, reject, or sell their rights entitlement.

 

2287. Voting Shares

Voting shares are a type of stock that gives shareholders the right to vote on key corporate decisions, such as electing the board of directors and approving major changes like mergers or acquisitions. Most common stocks are voting shares, with one vote typically per share, and they represent an ownership stake in the company.

 

2288. Non-voting Share

Non-voting shares are a type of stock that allows the holder to participate in a company's profits through dividends and capital appreciation but does not grant any voting rights on corporate matters like electing directors. Companies issue them to raise capital without diluting the control of existing shareholders, while investors gain potential financial benefits without the responsibility of decision-making.

 

2289. Dividend Stocks

Dividend stocks represent shares in financially stable, mature companies that regularly share a portion of their profits with investors in the form of dividends, typically on a quarterly or annual basis. These firms are known for consistent earnings and strong balance sheets.

Dividends are a percentage of a company's earnings paid to its shareholders as their share of the profits. Dividends are generally paid quarterly, with the amount decided by the board of directors based on the company's most recent earnings. Dividends may be paid in cash or additional shares.

 

2290. Cumulative Preference Shares

Cumulative Preference Shares include all of the benefits such as the right to greater dividend distributions, preference in dividend payment, and preference in payment over equity shares upon the company's liquidation.

In this type of preference share, dividends were paid also for those years in which no profit is earned. Whenever, the company declares profits, the cumulative preference shares are paid dividend for all the previous years in which dividend could not be declared.

 

2291. Non-Cumulative Preference Shares

Non-cumulative preference shares are a type of stock where dividends are paid only from a company's current year's profits and do not accumulate. If a company fails to pay a dividend in a given year, shareholders forfeit their right to that unpaid dividend, and it is not carried over to future years. 

 

2292. Participating Preferred Shares

Participating preference shares are often referred to as "preferred stock." Preferred shareholders have a priority claim on company earnings. They receive dividends before common shareholders. Participating Preferred Stock provides holders with a fixed dividend like traditional preferred stock, plus a share in the company's remaining profits after common stockholders have received their dividend. This means investors receive both a stable, priority payment and the potential for additional gains if the company is successful.

 

2293. Non-Participating Preference Shares

Non-participating preference shares give shareholders a fixed dividend and priority in liquidation, but they do not allow holders to share in the company's surplus profits or assets beyond the agreed-upon fixed amount. These shares act as a hybrid between debt and equity, offering downside protection and stable income but limiting the potential for upside gains compared to common stock or participating preference shares.

 

2294. Convertible Preference Shares

Convertible preference shares are a type of stock that can be converted into a company's common stock after a specific period or upon meeting certain conditions, giving holders both fixed dividend payments and the potential for capital gains if the company's share price increases. They offer a hybrid investment that provides the stability of a fixed income with the upside potential of equity.

 

2295. Non-Convertible Preference Shares

Non-convertible preference shares are a type of preference share that cannot be converted into common stock, meaning shareholders only receive fixed dividends and do not have the potential for capital appreciation through conversion. They are a hybrid security, offering more stability than common equity but less potential for growth, and shareholders typically do not have voting rights.

 

2296. Redeemable Preference Share

Redeemable preference shares are a type of stock that a company can buy back from shareholders after a specific period and at a predetermined price. These shares are like a hybrid of debt and equity, offering fixed dividends to investors but also the potential for the company to repurchase them to manage its capital structure and avoid permanent dilution.

 

2297. Irredeemable Preference Shares

Irredeemable preference shares, also known as perpetual preference shares, are shares that a company cannot buy back during its normal operations. These shares have no fixed redemption date and are only repurchased when the company is liquidated or ceases to exist. They form a permanent part of the company's capital structure, and shareholders receive a fixed dividend payment.

 

2298. Class A Shares

Class A shares are also called common shares as they are the first and foremost available shares within a company.  When compared to most other classes of shares that the company might hold, class A has the greatest number of voting rights among the company shareholders. 

2299. Class B Shares

Class B shares are more commonly known as preferred stock or preferred shares. This name comes from a lot more advantage of class B shares even if the purchase amount might be lower. Class B share comes with a very small voting power given to its shareholders. Sometimes the votes might be as low as one voter per shareholder for each of the shares they hold.

Due to a low number of voting, a class B shareholder holds very little power in the decision-making of the company.  Their opinions might even go unnoticed if the votes gained on a particular matter are considerably low.

Class B shares are rarely present in a company from the start. This is because only after class A shares are completely sold, would the company think about diluting their power. 

It’s not always that a class B shareholder holds bare minimum voting rights. Sometimes they may hold votes equal to or greater than that of Class A shareholders.

 

2300. Class A shares Vs. Class B shares

The difference between class A and class B shares is that the voting power given to shareholders of each class is different. In most companies, the greater voting power lies in the hands of class A shareholders, and along with the greater voting rights, they also gain more access to most of the company’s decisions and can voice their opinions without fearing subjugation. But class B shareholders hold barely any advantage in the company’s running as they have just a single vote per shareholder per share.

Sekhar Pariti

01-01-2026                                                                                +91 94406 41014