Financial Glossary












Early Redemption Charge - A charge imposed by the Islamic banking institution on early payment of financing in full. The charge can either be a flat rate or 'x' months of profit.

Early Settlement - Settle in full the balance due under the hire purchase agreement earlier than the date originally agreed upon.

Early Settlement Penalty - A fee charged by banking institutions for early settlement of the loan in full. The fee charged is usually based on a percentage of the loan amount or 'x' number of months in interest.

Effects Not Cleared - Cheques and other items paid in by a customer for the credit of his/her account, of which the cheque is still pending clearance by the drawer's bank. Although these amounts will be shown in the customer's balance, it is still not cleared in the books of the bank. The bank is under no obligation to pay any cheques drawn against items not yet cleared.

Emergency Fund - A sum of money set aside to meet emergencies, unforeseen expenses or seasonal expenses (e.g. school fees, insurance, etc). As a rule of thumb, the amount should be equivalent to about three months salary and this should be placed in low risk investments.

Equity Fund - An investment fund that invests primarily in shares.








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