Bank

A bank is a financial institution that accepts deposits from customers, provides loans and advances, facilitates payments and offers various financial services.

Banking

Banking broadly refers to accepting deposits from the public for the purpose of lending or investment, together with other permitted banking services.

Bank Rate

Bank Rate is a policy-related rate associated with RBI's lending facilities and certain regulatory calculations. It is distinct from the current policy repo rate.

Base Rate

Base Rate was the minimum lending rate framework introduced for banks before the transition to the MCLR system.

It was intended to improve transparency in lending rates.

MCLR

MCLR means Marginal Cost of Funds Based Lending Rate. It is a benchmark lending-rate system introduced by RBI for eligible bank loans.

It is based on the marginal cost of funds along with other specified components.

EBLR

EBLR means External Benchmark Lending Rate. Certain floating-rate loans are linked to an external benchmark such as an RBI policy-linked benchmark, subject to applicable RBI rules.

CASA

CASA means Current Account Savings Account. It represents current and savings deposits maintained by customers with a bank.

Banks generally monitor CASA because these deposits can provide a relatively lower-cost source of funds compared with some other forms of deposits.

Float

Float refers broadly to funds that are temporarily in the payment or clearing process and have not yet reached their final destination or settlement status.

Clearing

Clearing is the process of exchanging, reconciling and determining obligations arising from payment transactions before final settlement.

Settlement

Settlement is the final transfer of funds or financial assets to discharge an obligation.

Liquidity

Liquidity refers to the ability of a bank or financial institution to meet its payment and financial obligations when they become due without unacceptable losses.

Solvency

Solvency refers to the ability of an institution to meet its long-term obligations and maintain sufficient assets/capital relative to its liabilities and risks.

Savings Account

A savings account is a deposit account generally designed for individuals and households to save money while allowing convenient withdrawals and payments subject to account terms.

Current Account

A current account is generally designed for frequent business and transactional activity. It normally facilitates a large number of transactions.

Term Deposit

A term deposit is a deposit maintained for a specified period at an agreed interest arrangement.

Fixed Deposit — FD

A fixed deposit is a type of term deposit where money is placed with a bank for a specified tenure under agreed terms.

Recurring Deposit — RD

A recurring deposit allows customers to deposit a fixed amount at regular intervals for a predetermined period.

Demand Deposit

A demand deposit is a deposit that can generally be withdrawn on demand, subject to account terms.

Current accounts and savings deposits are generally classified as demand deposits.

Time Deposit

A time deposit is a deposit that is maintained for a specified period.

CASA Ratio

CASA Ratio measures the proportion of a bank's deposits represented by current account and savings account deposits.

A higher CASA ratio can indicate a greater proportion of relatively lower-cost deposits, although profitability depends on the entire balance sheet and funding structure.

BSBDA

BSBDA means Basic Savings Bank Deposit Account. It is a basic banking account designed to provide essential banking services with simplified access.

Nomination

Nomination is a facility through which an account holder can nominate a person to receive the deposit proceeds or other eligible assets after the account holder's death, subject to applicable law and banking procedures.

Loan

A loan is an amount provided by a lender to a borrower under agreed terms regarding repayment, interest, tenure and other conditions.

Advance

Advance is a broad banking term covering credit facilities provided by banks to customers.

Term Loan

A term loan is a loan provided for a specified period and generally repaid according to an agreed schedule.

Demand Loan

A demand loan is repayable when demanded according to the terms of the facility.

Cash Credit — CC

Cash credit is a working-capital facility under which a borrower may draw funds within an approved limit, generally against eligible security and subject to banking terms.

Overdraft — OD

An overdraft allows an eligible customer to withdraw or use funds beyond the available balance up to an approved limit.

Working Capital

Working capital represents funds required for the day-to-day operations of a business.

Collateral Security

Collateral is an additional asset or security offered to support a loan obligation apart from the primary security.

Primary Security

Primary security is the asset or underlying security directly connected with the purpose of the credit facility.

Mortgage

A mortgage is a legal interest created in immovable property as security for repayment of a debt or performance of an obligation.

Hypothecation

Hypothecation is the creation of a charge on movable assets without generally transferring possession of the assets to the lender.

Pledge

A pledge involves delivery of possession of movable goods to the creditor as security for a debt or obligation.

Guarantee

A guarantee is an undertaking by a person or institution to perform or discharge the liability of another person if specified conditions are met.

EMI

EMI means Equated Monthly Instalment. It is a periodic payment made by a borrower towards repayment of principal and interest.

In a standard amortising loan, the interest and principal components of an EMI can change over time even when the EMI amount remains constant.

LTV Ratio

LTV means Loan-to-Value Ratio. It measures the loan amount in relation to the value of the underlying asset.

Repo Rate

Repo Rate is the rate at which RBI provides eligible liquidity to banks against eligible collateral under the applicable framework.

It is one of the key policy rates used in monetary policy.

Reverse Repo Rate

Reverse repo refers to the rate at which banks can place funds with RBI under the applicable liquidity framework.

SDF

SDF means Standing Deposit Facility. It allows eligible banks to place funds with RBI without the need for collateral from RBI under the facility.

MSF

MSF means Marginal Standing Facility. It is an overnight liquidity facility available to eligible scheduled commercial banks under RBI's framework.

Bank Rate

Bank Rate is a rate specified by RBI for particular regulatory and policy purposes. It should not be treated as synonymous with the repo rate.

Interest Rate Spread

Interest spread broadly represents the difference between the interest earned on assets and the interest paid on liabilities.

Net Interest Margin — NIM

NIM means Net Interest Margin. It measures the net interest earned by a bank relative to its interest-earning assets.

Net Interest Income — NII

NII is the difference between interest earned and interest expended by a bank.

Interest Income

Interest income is income earned by a bank from interest-bearing assets such as loans and eligible investments.

Interest Expense

Interest expense is the interest cost paid by a bank on liabilities such as deposits and borrowings.

NPA

NPA means Non-Performing Asset. A loan or advance generally becomes non-performing when it ceases to generate income for the bank according to applicable RBI prudential norms.

For many loan facilities, the 90-day overdue norm is the basic exam concept, subject to applicable regulatory rules and facility-specific conditions.

SMA

SMA means Special Mention Account. It identifies early stress in a loan account before it becomes an NPA.

These classifications are especially important in regulatory early-warning and stress-monitoring frameworks and should be read with the applicable RBI directions.

GNPA

GNPA means Gross Non-Performing Assets. It represents the total amount of gross NPAs before specified deductions.

NNPA

NNPA means Net Non-Performing Assets. It reflects NPAs after considering specified provisions and adjustments.

Provisioning

Provisioning means setting aside an amount to absorb expected or identified losses arising from assets, particularly stressed or non-performing loans.

PCR

PCR means Provision Coverage Ratio. It indicates the extent to which provisions cover NPAs.

Write-off

A write-off means removing a loan or asset from the bank's books for accounting purposes according to applicable rules. It does not necessarily mean that the borrower is legally released from the repayment obligation.

Loan Restructuring

Loan restructuring involves changing specified terms of a stressed credit facility, such as repayment schedule or other permitted conditions, under applicable regulatory and contractual requirements.

Wilful Default

Wilful default broadly involves deliberate failure to meet repayment obligations despite the capacity or circumstances specified under the applicable regulatory definition.

Asset Classification

Bank assets are classified according to their performance and recovery characteristics under prudential regulations.

• Standard Asset
• Sub-standard Asset
• Doubtful Asset
• Loss Asset

Capital Adequacy

Capital adequacy refers to maintaining sufficient regulatory capital relative to the risks undertaken by a bank.

CRAR

CRAR means Capital to Risk-Weighted Assets Ratio. It compares a bank's regulatory capital with its risk-weighted assets.

CET1

CET1 means Common Equity Tier 1. It represents the highest-quality form of regulatory capital under Basel III.

Additional Tier 1 — AT1

AT1 is a category of Tier 1 regulatory capital other than CET1. It generally includes qualifying instruments capable of absorbing losses according to regulatory requirements.

Tier 2 Capital

Tier 2 is supplementary regulatory capital that contributes to a bank's loss-absorption capacity under the applicable Basel framework.

Risk-Weighted Assets — RWA

Risk-weighted assets represent exposures adjusted for their relative credit, market and other risks for regulatory capital purposes.

Capital Conservation Buffer — CCB

The Capital Conservation Buffer is an additional capital buffer designed to help banks absorb losses during periods of stress.

Leverage Ratio

The leverage ratio is a non-risk-weighted capital measure intended to limit excessive leverage in the banking system.

D-SIB

D-SIB means Domestic Systemically Important Bank. Such banks are considered systemically important because their failure or serious distress could have significant effects on the domestic financial system.

G-SIB

G-SIB means Global Systemically Important Bank. These are globally important banks identified under the international framework.

CRR

CRR means Cash Reserve Ratio. It is the proportion of certain liabilities that scheduled banks are required to maintain as cash reserve with RBI according to applicable regulations.

SLR

SLR means Statutory Liquidity Ratio. It requires banks to maintain a specified proportion of their applicable liabilities in specified liquid assets under RBI rules.

LAF

LAF means Liquidity Adjustment Facility. It is an RBI framework used to manage system liquidity through specified liquidity operations.

OMO

OMO means Open Market Operations. RBI purchases or sells government securities in the open market to influence systemic liquidity and monetary conditions.

Liquidity Corridor

A liquidity corridor is a framework in which different RBI standing facility rates and policy rates help guide short-term money-market rates.

Expansionary Monetary Policy

Expansionary monetary policy aims to support economic activity by making monetary and liquidity conditions more accommodative.

Contractionary Monetary Policy

Contractionary monetary policy aims to restrain inflationary pressure by tightening monetary and liquidity conditions.

Inflation Targeting

Inflation targeting is a monetary-policy framework in which the central bank aims to keep inflation around a specified target, subject to the statutory framework.

UPI

UPI means Unified Payments Interface. It enables instant account-to-account payments through participating banks and payment applications.

NEFT

NEFT means National Electronic Funds Transfer. It is an electronic funds transfer system operated by RBI.

RTGS

RTGS means Real Time Gross Settlement. Transactions are settled individually on a gross basis in real time.

IMPS

IMPS means Immediate Payment Service. It provides immediate electronic fund transfer capability through participating banks and channels.

NACH

NACH means National Automated Clearing House. It is used for recurring and bulk electronic transactions.

AePS

AePS means Aadhaar Enabled Payment System. It enables eligible basic banking transactions using Aadhaar-based authentication through participating channels.

BBPS

BBPS means Bharat Bill Payment System. It is an integrated bill-payment ecosystem.

RuPay

RuPay is India's domestic card payment network developed by NPCI.

FASTag

FASTag uses RFID technology to facilitate electronic toll payments at participating toll plazas.

Payment Gateway

A payment gateway is a technology layer that facilitates the secure processing and transmission of payment information between relevant parties during an online transaction.

Payment Aggregator

A payment aggregator facilitates online payments for merchants by providing an integrated payment acceptance and settlement service, subject to applicable regulatory requirements.

Payment System Operator — PSO

A Payment System Operator operates a payment system subject to the applicable legal and regulatory framework.

CBDC

CBDC means Central Bank Digital Currency. India's CBDC is the Digital Rupee or e₹ issued by RBI.

e₹-R

e₹-R represents the retail Central Bank Digital Currency designed for use by customers and merchants.

e₹-W

e₹-W represents the wholesale Central Bank Digital Currency designed for wholesale financial use cases.

Tokenisation

Tokenisation replaces sensitive payment-card information with a unique token that can be used for transaction processing under the applicable framework.

QR Code

A QR code is a machine-readable code that can contain payment-related information and enable digital payments through compatible applications.

Contactless Payment

A contactless payment allows a transaction to be initiated by bringing a compatible card or device close to a payment terminal, usually using NFC technology.

Digital Wallet

A digital wallet is an application or digital mechanism used to store payment credentials, digital value or transaction information, depending on the system.

Two-Factor Authentication — 2FA

Two-factor authentication requires two different authentication factors before access or a transaction is authorised.

OTP

OTP means One-Time Password. It is a temporary authentication code used for specified login or transaction processes.

KYC

KYC means Know Your Customer. Banks use KYC processes to identify and verify customers according to applicable regulatory requirements.

CDD

CDD means Customer Due Diligence. It involves identifying and understanding customers and assessing their risk in accordance with applicable AML/KYC requirements.

EDD

EDD means Enhanced Due Diligence. It involves additional checks for customers, relationships or transactions presenting higher risks.

AML

AML means Anti-Money Laundering. AML measures aim to prevent the financial system from being used for laundering proceeds of crime.

CFT

CFT means Countering the Financing of Terrorism. It focuses on preventing financial resources from being used to support terrorism.

Beneficial Owner

The beneficial owner is the natural person who ultimately owns or controls a customer or on whose behalf a transaction is ultimately conducted, subject to applicable KYC rules.

PEP

PEP means Politically Exposed Person. PEPs require risk-based treatment under applicable AML/KYC rules.

Suspicious Transaction

A suspicious transaction is a transaction or series of transactions that gives rise to suspicion under applicable AML requirements, regardless of whether the transaction involves a particular amount.

STR

STR means Suspicious Transaction Report. It is a report made under the applicable AML reporting framework when transactions meet the relevant suspicious-transaction criteria.

Forex / FX

Foreign exchange refers to the conversion, purchase or sale of one currency against another.

Nostro Account

A Nostro account is an account maintained by one bank with another bank, generally in a foreign currency, for facilitating international transactions.

Memory phrase: "Our account with you."

Vostro Account

A Vostro account is an account that a bank maintains on behalf of another bank.

Memory phrase: "Your account with us."

Loro Account

Loro is a third-party reference to an account held by another bank with a bank.

Memory phrase: "Their account with them."

SWIFT

SWIFT means Society for Worldwide Interbank Financial Telecommunication. It provides secure standardised financial messaging between financial institutions.

BIC

BIC means Business Identifier Code. It is commonly associated with the SWIFT code used to identify financial institutions in international financial messaging.

Spot Rate

A spot exchange rate is the exchange rate used for a transaction settled on the standard spot basis applicable to that market.

Forward Contract

A forward contract is an agreement to exchange currencies or other assets at a specified future date at a predetermined rate or price.

Hedging

Hedging means using an appropriate financial instrument or strategy to reduce exposure to an identified financial risk.

SRVA

SRVA means Special Rupee Vostro Account. It is an RBI-supported mechanism for facilitating eligible international trade settlement in Indian rupees.

Herstatt Risk

Herstatt risk is a type of foreign-exchange settlement risk caused by time-zone differences, where one currency may be delivered before the counter-currency is received.

PvP

PvP means Payment versus Payment. It is a settlement mechanism designed so that the final transfer of one currency occurs only if the final transfer of the other currency also occurs according to the mechanism.

CLS

CLS stands for Continuous Linked Settlement. It is associated with reducing foreign-exchange settlement risk through a payment-versus-payment mechanism.

Money Market

The money market deals primarily with short-term funds and financial instruments.

Examples include Treasury Bills, commercial paper, certificates of deposit and call/notice money.

Capital Market

The capital market deals primarily with medium- and long-term funds. It includes markets for equity and long-term debt instruments.

Treasury Bill — T-Bill

Treasury Bills are short-term government securities issued at a discount and generally redeemed at face value.

Commercial Paper — CP

Commercial Paper is a short-term unsecured money-market instrument issued by eligible entities subject to applicable regulations.

Certificate of Deposit — CD

A Certificate of Deposit is a negotiable money-market instrument issued by eligible banks and financial institutions according to applicable rules.

Call Money

Call money refers to very short-term funds borrowed and lent, traditionally for overnight maturity.

Notice Money

Notice money generally refers to short-term funds borrowed and lent for a period beyond overnight and up to the specified short-term limit under the applicable money-market framework.

Repo in Securities Market

A repo is a transaction involving sale of securities with an agreement to repurchase them at a specified future date and price.

Yield

Yield represents the return generated by a financial instrument, often expressed as a percentage.

Bond

A bond is a debt instrument through which the issuer raises funds and agrees to make payments according to specified terms.

RBI

RBI means Reserve Bank of India. It is India's central bank and performs monetary, regulatory, supervisory and payment-system functions assigned under law.

SEBI

SEBI means Securities and Exchange Board of India. It regulates India's securities market within its statutory mandate.

IRDAI

IRDAI means Insurance Regulatory and Development Authority of India. It regulates and develops the insurance sector within its statutory framework.

PFRDA

PFRDA means Pension Fund Regulatory and Development Authority. It regulates and develops the pension sector under its statutory framework.

DICGC

DICGC means Deposit Insurance and Credit Guarantee Corporation. It provides deposit insurance subject to the applicable statutory framework.

SARFAESI

SARFAESI means Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

It provides a legal framework for enforcement of security interests and asset reconstruction subject to its provisions.

IBC

IBC means Insolvency and Bankruptcy Code, 2016. It provides a consolidated framework for insolvency resolution and bankruptcy-related processes.

FEMA

FEMA means Foreign Exchange Management Act, 1999. It provides the legal framework for foreign-exchange management in India.

PSS Act

PSS Act means Payment and Settlement Systems Act, 2007. It provides the statutory framework for regulation and supervision of payment systems in India.

Premium

Premium is the amount paid by an insured person or policyholder to obtain or continue insurance coverage according to the policy terms.

Sum Assured

Sum assured is the specified amount payable under a life insurance policy according to the policy terms and conditions.

Indemnity

Indemnity is the principle under which insurance compensation aims to place the insured, subject to policy terms, in approximately the same financial position as before the covered loss.

Reinsurance

Reinsurance is insurance purchased by an insurance company from another insurer to transfer part of its risks.

Annuity

An annuity is a financial arrangement that provides periodic payments according to specified terms.

NPS

NPS means National Pension System. It is a defined-contribution pension system regulated under the applicable framework.

ULIP

ULIP means Unit Linked Insurance Plan. It combines insurance protection with investment in linked funds, subject to policy terms.

Financial Inclusion

Financial inclusion means ensuring access to appropriate and affordable financial services for individuals and businesses, especially underserved sections.

Business Correspondent — BC

A Business Correspondent is an agent or service provider permitted under the applicable framework to provide specified banking services on behalf of a bank.

Business Facilitator — BF

A Business Facilitator supports banks in specified activities such as customer awareness, financial literacy or facilitating access to banking services, without performing all functions of a banking agent.

DBT

DBT means Direct Benefit Transfer. It is a mechanism through which eligible government benefits can be transferred directly to beneficiaries' accounts through the applicable payment architecture.

Financial Literacy

Financial literacy means the ability to understand financial products, risks, rights, responsibilities and basic financial decision-making.

SHG

SHG means Self-Help Group. SHGs are small voluntary groups, often involving regular savings and internal lending, that can be linked with formal financial institutions.

JLG

JLG means Joint Liability Group. Members can jointly undertake responsibility for repayment under the applicable credit arrangement.

Microfinance

Microfinance refers broadly to financial services, especially small loans, provided to eligible low-income households and micro-enterprises under the applicable regulatory framework.

Core Banking Solution — CBS

CBS means Core Banking Solution. It enables banking transactions and customer accounts to be managed through an integrated technology platform across connected branches and channels.

API

API means Application Programming Interface. It allows software systems to communicate with each other through defined interfaces.

Open Banking

Open banking refers to controlled sharing and access to financial data and services through standardised interfaces, subject to customer consent and applicable regulatory requirements.

Phishing

Phishing is a fraud technique in which attackers use deceptive messages, websites or communications to obtain sensitive information.

Smishing

Smishing is phishing carried out through SMS or text messages.

Vishing

Vishing is voice-based phishing, generally involving fraudulent telephone calls.

SIM Swap

SIM swapping is a fraud technique in which an attacker attempts to take control of a victim's mobile number by obtaining a replacement SIM or otherwise manipulating telecom processes.

Encryption

Encryption converts information into a protected form so that it cannot be readily understood without the appropriate key or process.

Biometric Authentication

Biometric authentication uses physical or behavioural characteristics such as fingerprints or facial characteristics to verify identity.

AI in Banking

Artificial Intelligence can be used in banking for fraud detection, customer service, credit analysis, risk monitoring and process automation, subject to governance and regulatory requirements.