Unit Three
Depositing Money with a Bank
| active account accrue (v) balance (v) cancel a cheque (v) compound interest credit (v) debit (v) deposit fund genuine insurance insure against (v) interest on bank credits joint account ledger liquid outstanding | активный депозитный счет накапливаться сальдировать, подводить итог, закрывать счета аннулировать чек сложные проценты кредитовать дебетовать вклад, депозит, задаток запас, резерв подлинный, неподдельный страхование страховать(ся) процент по банковскому кредиту совместный счет бухгалтерская книга ликвидный 1) выпущенный в обращение 2) не предъявленный к платежу, задолженный | notice maturity overdraft overdraw (v) passbook per annum principal posting rate of interest reconcile (v) commission, service charge (US) term time certificate transferable | срок платежа извещение, уведомление овердрафт, превышение кредитного лимита допускать овердрафт, превышать кредитный лимит банковская расчетная книжка, депозитная книжка, сберегательная книжка ежегодно 1) номинал векселя 2) капитал 3) основной должник проводка процентная ставка выверять счет комиссионный счет срок выполнения обязательств! срочный сертификат переводной |
Dialogue
Read thе dialogue.
Cashier: Now this is the checking account ledger. Each page is a record of a customer's deposits and withdrawals.
Student: And you give a copy of this to the customer.
C.: That's right. That's his statement, which he receives with all his cancelled checks. Then he reconciles it
with his own records.
S.: This one is a joint account, isn't it? And pretty active. '
C.: Yes, it is.
S.: What's this debit?
C.: That's our service charge. I notice an overdraft here in April. I'm afraid we've had to remind this
customer and his wife several times that they must keep a sufficient balance to cover all on outstanding
checks.
S.: Will I have to learn to recognize all our customers’ signatures?
C.: Yes, you will. Any check we cash must have a genuine signature. But we keep a file of them that you
can refer to.
S.: Will I be doing any posting of this ledger?
C.: No, I'm afraid. Not till you are employed in our bank.
S.: Well, suppose one has some funds on hand, I'm wondering whether he ought to put them in a
savings account.
C.: It's a good idea, if he wants to keep his investment fairly liquid. And he might also think of a time
deposit.
S.: What's the difference?
C.: Well, first of all, his time deposit is for a specified term, but he can make withdrawals from his
savings account at any time, although as much as thirty days' notice of withdrawal may be required.
S.: Do they draw the same rate of interest?
C.: The bank pays the maximum 4% per annum al maturity on a one year time certificate. Interest on a
savings account accrues at the rate of 3%.
S.: How do you figure the interest on a savings account?
C.: It's compounded and credited to the account semi-annually.
S.: You mean added to the principal?
C.: Yes. And we issue each customer a passbook on his savings account in which each deposit and
withdrawal is entered.
S.: Is either type of account transferable?
C.: Only time certificates.
S.: Are these deposits insured?
C.: Yes. We're a member of the Federal Deposit Insurance Corporation.
Questions on the dialogue:
1. What is a checking account ledger?
2. Why does the bank send a copy of the statement with all checks cancelled to every customer?
3. Are service charges debited or credited to an account?
4. What happens when a cashier notices an overdraft on somebody's account?
5. What does a teller have to do before he cashes a check?
6. What advice would you offer to a customer who has some funds on hand?
7. Why is it profitable to deposit your funds for a specific term?
8. How is the interest on a savings account figured?
9. Which type of account is transferable?
10. How are customer's deposits protected?
Text
There are two general reasons for using a bank account. The first and most common is the convenience and safety provided by a current account at a bank. The second is that small and perhaps regular surpluses are available to be saved, and for this purpose a bank provides deposit accounts.
A deposit account will not offer a high rate of interest and would not be the best way to save large sums of money for any long period of time, but it is designed to make saving simple, convenient and safe. It is especially appropriate for those who may save small amounts from time to time without any planned regularity or for those who wish to save for a particular purpose in the immediate future, for example for annual holidays or for the purchase of a major item such as a car.
Most customers of a bank who have opened a deposit account will also have a current account and this makes the transfer of amounts of money from one to the other an easy matter. Regular payments into a deposit account can be made through a standing order to the bank that will automatically transfer the agreed amount according to your instructions. Other payments are made on standard forms but it is most convenient and provides a useful record if the depositor uses a paying in book. Interest is calculated every six months and added to the account. The rate of interest varies from time to time and is publicly advertised in any bank. Because the bank uses money deposited with them to lend to others it normally requires about seven days notice of intention to withdraw money from a deposit account, but unless there is a heavy demand for money they are not likely to insist on this and cash is often immediately available to those who wish to withdraw it. There is an assumption that such notice was given and you would lose seven day's interest on the money.
The increasing need for security and the use of computers in wage payments have combined to make it more common to have a bank account than to be without one. This kind of account is a current one and its most common use is a single regular payment in either a weekly wage or a monthly salary and regular payments out to meet the normal everyday expenses. Most payments are still made by cheque although the use, of the standing order or the direct debit is becoming very common. II is normally expected that a current account will remain in balance and customers who regularly maintain an agreed minimum balance are often given the services of the bank without charge. In general, however, charges are made which vary with the size of the balance, the amount of use of the bank's services and the number of transactions. If the account is overdrawn a further charge, which is interest on the overdrawn amount, is also made.
Overdrafts are not permitted automatically and anything other than a small temporary overdraft would have to beby agreement with the bank manager. Such a facility is often useful particularly when there is a short term disbalance between income and expenditure. On the other hand, since money in a current account does not attract interest, it is not a good idea to maintain large cash balances, these would be belter transferred to a deposit account or to an alternative form of saving.
Questions on the text:
1. What are the two main reasons for opening a bank account?
2. Which type of account is used by those who wish to save?
3. What kind of saving is this type of account most suited to?
4. What is a standing order?
5. Why does a bank sometimes need notice of intention to withdraw money from saving accounts?
6. What is the most common use of current accounts?
7. Why are some customers not charged for the facility of a current account?
8. Why is it not a good idea to retain large balance in a current account?
Vocabulary Exercises
1. Find proper definitions:
| Terms | Definitions |
| 1. Debit 2. Balance 3. Overdraft 4. Compound 5. Maturity 6. Principal 7. Charge 8. Rate of interest | a) the unpaid balance or portion of a loan or investment on which the interest is figured b) an amount by which withdrawals are greater than the balance in an account c) the point at which a loan or investment is due d) the amount which has to be paid for the use of a bank's services by a current account holder e) a figure in the ledger indicating a withdrawal or a change f) the amount remaining in an account g) figure interest on the principal plus any accrued interest h) the amount per hundred pounds which is added to the balance of a deposit account |
2. Using the words in brackets as a guide, explain the meaning of the following terms:
1. deposit (put into, an account)
2. withdrawal (an account, remove from)
3. standing order (transfer, automatic, bank, customer, instructions)
4. joint account (two or more people, owned by)
5. statement (a customer's deposits and withdrawals, a record)
6. overdraft (current account, balance)
7. interest (the use of money, pay for)
8. notice (one's intentions, an announcement of)
9. insurance (loss, protection against, government agency or another specializing in)
3. Choose the right answer:
1. "a current account" is:
a) one which is available for the time being,
b) one in which savings are held,
с) one which is used all the time for day-to-day transactions.
2. "a canceled cheque" means:
a) worthless cheque,
b) stamped to indicate that payment has been made,
c) crossed cheque.
3. "a genuine signature" is:
a) a person's name written by himself,
b) a person's name written correctly,
c) legible signature.
4. "an outstanding cheque" means:
a) unpaid cheque,
b) written but not yet presented for payment,
c) overdue cheque.,
5. "a deposit account" is:
a) one from which regular payments are made,
b) one in which savings are held,
c) one from which withdrawals can be made by cheque.
6. "rate of interest" is:
a) the percentage of each unit of money paid for its use,
b) rate of profitability,
c) portion of an investment on which the interest is calculated.
7. "an overdraft" is:
a) an amount by which the balance in a current account exceeds the value-of a cheque drawn from it, j
b) an amount by which the value of a cheque exceeds the balance in the current account,
c) an excessive balance in a current account.
4. Say what is true and what is false. Correct the sentences:
1. The teller has to learn to recognize all customers' signatures.
2. If you want to keep your investment fairly liquid, put it in a deposit account.
3. You cannot make withdrawals from your deposit account.
4. Interest is paid by the bank on both current accounts and deposit accounts.
5. Withdrawals are made from a deposit account by cheque or standing order.
6. Money is easily transferable from a current account to a deposit account.
7. The rate of interest on deposit accounts is fixed.
8. It is easier to get money out of a deposit account than it is from a current account.
5. Give verbs which correspond to the following nouns:
Assumption Deposit Notice Statement
Debit Maturity Overdraft Withdrawal
6. Find synonyms: to debit, to deposit, to reconcile, to sign, to accrue, to maintain, to credit, to permit, to cancel, to pay in.
7. Collocations. 3
1. Find the nouns which are qualified in the text by the suitable adjectives and write one noun to each adjective:
general regular especially
most short-term minimum
2. Combine the words listed below into meaningful two or three word expressions:
Interest, certificate, charge, cheque, deposit, account, overdraft, balance, withdraw, service, savings.
8. For each of the following phrases find the expression in the text or in the dialogue that explains it:
1. to record figures in a ledger
2. to compare one's own records with the bank's statement and make them agree
3. money paid for the use of someone's money
4. to increase in quantity
5. the date when a loan or investment is due
6. a specified period of time
7. to protect against loss or damage
8. at the rate of 5% each year
9. an instruction to a banker to make a payment at regular intervals
10. an instruction to a banker to make a single payment to a specified person
11. the amount on which the money paid for its use is calculated
12. on my deposit account this payment for the use of my money builds up at the rate of 3%
13. another type of account into which my salary is paid every month
14. the amount which I have to pay the bank for the use of their services
15. the amount by which my current account holding is greater than nothing
16. my statement shows me that I owe the bank money
9. Fill in the blanks:
Mr. Collins and his wife have a current account in both their names. They have a …. They both work and put money into the account. They both make …. Sometimes they get mixed up about the amounts of money they have removed from their account. They get confused about their …. Once or twice the amount remaining in their account has become too low. They have had too small a …. The next cheque they wrote was for more money than they had in their account. They had an …. The only way they could restore the balance was to get a record of their deposits and withdrawals from the bank. So they asked for a …. They also had the cheques which had been stamped to indicate that payment had been made. They had their … cheques. Then they added up the cheques that had been written but had not been paid by the bank yet.
They totalled their … cheques. They also subtracted from their balance the bank charges and interest on the …. Finally they managed to make their records agree with the bank's statement. They … their account.
10. Demonstrate the meaning of the following expressions in sentences of your own:
1. to reconcile a statement with one's own records
2. to have a joint account
3. to have an overdraft
4. to cover an outstanding cheque
5. to send your banker a standing order
6. to make a withdrawal
7. to calculate interest on
8. to pay interest
Unit Four
Applications for Loans
| amortize (v) repaid by annual installments appraise (v) assets fixed assets current assets balance sheet chattel chattel mortgage (US) clear collateral security collateral debt deed trust trust deed (US) | 1) погашать долг в рассрочку 2) обеспечивать постепенную выплату займа выплаченный в рассрочку оценивать, определять стоимость имущество, достояние, средства; активы; фонды; капитал основные средства, основные фонды текущие активы балансовый отчет движимое мущество ипотечный кредит осуществлять клиринг векселей, чеков; выплачивать по чеку клиента имущественное обеспечение, обеспечение ценными бумагами обеспечение; залог; дополнительное обеспечение долг, задолженность, обязательство документ, скрепленный подписью и печатью 1) траст, доверительный фонд 2) кредит / давать в кредит акт учреждения доверительной собственности | discount (v) encumbrance equity estate estimate (v) holding holdings indebtedness installment legal charge liabilities liquidate (v) mortgage net value, net worth (US) obligation pledge (v) property real estate (US) retire (v) securities title | 1) дисконт, учет векселей 2) процент скидки, ставка учета| закладная, долг, обязательство 1) маржа 2) доля акционера в капитале 3) обыкновенная акция имущество, состояние 1) оценивать 2) подсчитывать 3) составлять смету 1) владение акциями 2) пакет акций вклады, авуары задолженность 1) очередной взнос 2) частичный платеж законная плата денежные обязательства ликвидировать, погашать ипотека; залог; закладная чистая стоимость компании; собственный капитал долговое обязательство; облигация закладывать 1) собственность 2) имущество недвижимость погашать долговое обязательство ценные бумаги, фонды право собственности |
Dialogue
Read thе dialogues.
Application for Credit
Banker: Our discount committee is still discussing your application for credit. I wonder if you'd mind giving us some more information about certain items shown on your balance sheet.
Customer: Not at all.
B.: Is the mortgage on your fixed assets being amortized?
C.: Yes. We're making semi-annual payments on this obligation.
B.: Your balance sheet shows some indebtedness. Are any of your assets pledged as security?
C.: No. That's just an open note.
B.: Would your company be willing to pledge part of its current assets as collateral security to our loan?
C.: We wouldn't object to that. Part of this money will be used to retire present debts and part to expand our
operations. Then we can immediately begin to liquidate this new liability.
B.: I think we'd better prefer that arrangement.
Granting the Loan on an Open Note
Builder: I received your notice that my note is due. I can pay it off now, but there is a piece of land right next to
my property that I'd like to buy.
Banker: I don't remember your situation exactly. Are your present holdings free of encumbrance?
Bu.: My real estate is clear. But there's a chattel mortgage on my construction equipment.
Ва.: Has this land you want to buy been appraised?
Bu.: Yes. It belongs to an estate and was appraised by order of the court. They estimated its value all
$20,000. *1
Ва.: Can it be bought for that figure!
Bu.: I think so. I'd like to make them that offer.
Ва.: Would you consider giving us a trust deed to secure your present note plus the additional funds
you'll need?
Bu.: I might. But I'd thought that my net worth is high enough that I could borrow the amount on my open
note. j
Ва.: Well, in that case, would your wife agree to be a co-signer? \
Bu.: I'm sure she would, because title to the property will be in both our names.
Ва.: Well, it seems to me that you have enough equity in your property for us to make the loan on an ореn
note.
Questions on the dialogues:
1.
1. What is the customer applying for?
2. Has the banker decided whether to grant the credit yet or not?
3. What sort of information is the banker interested in?
4. How does the banker want to secure the bank's credit?
5. How is the company going to use its current assets?
2.
1. Why is the builder asking for the extension of his note?
2. What is his present financial standing?
3. Has the land he wants to buy been appraised?
4. What sort of guarantee does the banker insist on to secure the funds the builder will need?
5. What made the builder think that he could borrow the amount on an open note?
6. Who will hold the title to the property purchased?
7. Why has the banker agreed to grant the loan on an open note?
Text
Banks make their profits by lending the money which customers deposit with them to others who need it for personal or business reasons. Most people need more money than they have currently available at some time in their lives.
To be a borrower you must be a customer of the bank because the money will be lent to you through a bank account. There are two ways in which you may borrow. The first, and easy, is to spend more money than you have in your current account — to overdraw. The second, and the normal way of borrowing larger amounts for a long period of time is the loan.
If a manager permits an overdraft on current account he is likely to set a limit to the size of the overdraft and may stipulate a date by which the account is back in credit. Businesses whose payments and receipts are often irregular will frequently need to use overdraft facilities and they are often granted to private customers as well particularly when the manager knows that regular payments are made directly into the account.
If a loan is granted it will be a fixed sum immediately available for a fixed period of time. The principal and the interest on it may all become due for payment at the end of that period but for personal loans it is common to arrange that the loan and interest are repaid in equal regular installment over the period of the loan. A separate account is opened to record the repayments as they are made.
Whether you are seeking money for business or personal reasons there are a number of things that the manager will want to know before he is prepared to grant your request. The obvious facts will be the amount that you seek and the arrangements for repayment that you are able to suggest. You need to tell him something about the purpose of the loan, a business loan is likely to help you make profits out of which the loan can be repaid with interest and he will wish to judge for himself whether or not this is likely. Personal loans usually have to be repaid out of an income which will not get any bigger and the manager will be particularly anxious to ensure that you are not being too optimistic. In deciding this he will be considerably assisted by his knowledge of you and his estimate of your character.
Sometimes people do not ask for enough money because they are anxious about the burden of the repayments. The manager will be wise enough to try and ensure that you will have sufficient amount of money to do what you want to do. Finally he will consider whether or not you really will be able to repay and what kind of security you can offer against the possibility that you do not repay. In the ease of a business the manager may well want to see well prepared, relevant documents such as profit and loss accounts and balance sheets for the most recent years. He would also ask about the expected return from the use of the money and want to see some figures upon which you have based your calculations. For a business good security might be one or more of the assets of the business whilst personal loans are often secured by such things as life insurance policies on which the bank is making regular payment for you or the deeds of your house.
Questions on the text:
1. What two kinds of borrowings are possible?
2. In what circumstances an overdraft on current account is permissible?
3. How are personal loans usually repaid?
4. Will you pay back more than you borrowed? What will the difference be?
5. What information will the manager require for a personal loan?
6. What information will he require for a business loan?
7. What other things will he take into account?
8. What will he need from you to make the loan safer for him?
9. What does a businessman mean by his expected rate of return?
10. Why might this be important to the bank manager?
11. What kind of things might you offer as collateral for a personal loan?
Vocabulary Exercises
1. Find proper definitions:
| Terms | Definitions |
| 1. Mortgage 2. Collateral security 3. Asset 4. Open note 5. Current asset 6. To pledge 7. Fixed asset 8. Real estate 9. Chattel mortgage 10. Deed 11. Equity 12. Property 13. Principal 14. Installment 15. Loan 16. Repayments 17. Balance sheet 18. Profit and loss account 19. Real property | a) anything owned that has financial value b) an asset, such as real estate, which cannot be readily changed into money c) assets other than real estate which can be readily changed into money d) to promise as security e) some security in addition to the main security for money lent f) an agreement to give up collateral which has been pledged if a debt is not paid g) a note, the payment of which is not guar anteed by collateral security h) anything owned, especially real estate or land i) land including anything constructed on it j) a mortgage on any personal or movable possessions such as furniture or equipment k) a document which proves legal ownership of real estate 1) the value of the piece of property beyond any indebtedness held against it m) a statement of the assets and liabilities of a business which shows its position at a particular date n) a payment towards a larger sum usually made at regular intervals o) the amount of the loan itself before any interest is added p) a statement which shows the calculation of the results of doing business for a particular period of time r) a fixed sum of money borrowed for a fixed period of time s) land or buildings t) amounts of money which are given to a creditor in settlement of a debt or a loan |
2. Using the words in brackets, explain the meaning of the following terms and phrases:
1. the mortgage is being amortized (regular payments on, the principal, the interest, make)
2. obligation (must, indebtedness, repay)
3. to retire present debts (current, pay off)
4. to liquidate the liability (any official obligation, pay off)
5. the land has been appraised (estimate, its value)
6. an estate (a dead person, left by, the holdings and obligations)
7. trust (the legal responsibility, in financial mailers, given to one party, to act for another)
8. a trust deed (a deed lo, real estate, security for a loan, held as)
9. to make a loan on an open note (grant, the repayment, not guaranteed collateral security)
10. to stipulate (insist upon, state, particular date)
11. to repay (give back, pay off)
12. expected return (profits, earnings, income)
13. security (ensure repayment, deeds, insurance, policy, reduce risk)
3. Choose the right answer:
1. "application for loan" means:
a) granting loan,
b) asking to be granted loan,
c) refusal to grant loan.
2. "balance sheet" denotes:
a) total profit,
b) total revenues,
c) a document which shows the state of a business at a particular moment
3. "indebtedness" here means:
a) repayment,
b) owing thanks,
c) debt, borrowing.
4. "security" in this sense is:
a) tends, share certificates and other titles to property,
b) safety,
c) a guarantee of payment.
5. "principal" here means:
a) the most important information,
b) the amount of the original loan,
c) the chief item or person.
6. "my loan is due for repayment" means:
a) my loan has reached maturity,
b) my loan has been paid off,
c) my loan has been extended.
7. "holdings free of encumbrance" means:
a) holdings heavily in debt,
b) the encumbrance isn't very large,
c) property or security clear of indebtedness.
8. "my net worth "means:
a) the value of one's holdings after all obligations have been paid,
b) any personal or movable possession,
c) net earnings.
9. "a co-signer" denotes:
a) a person who holds a deed to the properly,
b) a person who signs a document with another person and shares the obligation,
c) a lawyer who prepares a trust deed.
10. "title to property" is:
a) the record or proof of ownership of property,
b) the name of the person who owns the property,
c) a word indicating a high financial rank.
11. "my expected return" means:
a) when I expect to come back,
b) the amount of money I expect to have to repay,
c) the income I expect to receive from doing business.
12. "deeds" are:
a) actions,
b) documents showing how well my business is doing,
c) documents which prove that I own a particular piece of real property.
4. Say what is true and what is false. Correct the false, sentences:
1. When a bank's manager considers an application for a loan, he usually requires some information about the items shown on the applicant's balance sheet.
2. The manager is not concerned whether any of the applicant's assets have already been pledged as security.
3. The bank often asks the applicant to pledge part of his assets as collateral security to the bank's loan.
4. One cannot apply to a bank for an extension of a loan.
5. To grant a loan the bank must be sure that the applicant can repay it.
6. The bank will never wish to offer a larger loan than the applicant asks for.
5. Find synonyms for:
liability, collateral, repay debts, optimistic, security character, sufficient
6.1. Find the nouns which are qualified by these adjectives and write one noun to each adjective:
additional expected open private
collateral financial personal real
current most recent present semi-annual
6.2. Combine the words listed below into meaningful two or three word expressions:
asset discount equipment net
current documents fixed installment
deed committee loan worth
7. Explain the following:
1. to promise as security
2. to pay off debts
3. to grant a permission to borrow money
4. to make regular payments on the borrowed money
5. to judge the value of something
6. to guarantee the payment of the loan
7. to give a mortgage on one's furniture and other movable possessions
8. to give a deed to the properly as security for the loan
9. to sign with someone a document and share the obligation
10. valuable items handed over to reduce the risk of a loan
11. to fix a date by which something must be done
12. to take more money out of your account than you have in it
8. Fill in the blanks:
Last week Mr. Auger went to his bank lo apply for a … as he wishes to purchase a piece of land right to his own. He applied for a … and the bank asked him for a statement of his business affairs including a … account and a ….
The bank manager was happy to grant the loan but wanted some form of … from Mr. Auger and asked him if he would offer one or more of his fixed … as …. The bank was prepared to make the loan for ten years and expected Mr. Auger to pay off the annual … and some of … each year in two equal … every six months.
9. Demonstrate the meaning of the following expressions in sentences of your own:
1. to amortize the mortgage on
2. to pledge assets as
3. to extend credit to
4. to settle a liability _>
5. the installment is due on
6. to appraise the property
7. to hold the deed to property
8. to estimate net worth of the property
9. to give somebody collateral
10. to draw up a profit and loss account
Role Play
1. You are a bank manager and you were asked for a loan.
2. Consider the things you will worry about the loan and the questions you will want to be answered;
you should give particular consideration to:
—whether you will have sufficient funds to make this loan,
—whether you think the customer will be able to repay loan and interest,
—whether you would offer all or part of what is being asked,
— whether you need any further evidence of the creditworthiness of your customer and how you would get it,
— what sort of security you would accept,
— what kind of term you would offer.
3. Conduct the interview:
a) if you refuse the loan, write to the client selling out the reasons why you have done so;
b) if you grant the loan, write to the client selling out the precise terms of the loan.