Finance & Banking Glossary
Key banking, markets, insurance, accounting and risk terms — explained in plain English, with links to the exams that test them.
Banking
- Repo RateThe interest rate at which the RBI lends short-term funds to commercial banks against government securities.
- Reverse Repo RateThe rate at which the RBI borrows from commercial banks, absorbing surplus liquidity.
- CRR (Cash Reserve Ratio)The share of a bank's deposits it must keep as cash reserves with the RBI.
- SLR (Statutory Liquidity Ratio)The minimum share of deposits banks must hold in liquid assets like gold and government securities.
- NPA (Non-Performing Asset)A loan on which the borrower has stopped paying interest or principal for 90+ days.
- CASA (Current Account Savings Account)The share of a bank's deposits held in low-cost current and savings accounts.
- NEFT, RTGS & IMPSIndia's three main electronic fund-transfer systems, differing by speed and value limits.
- Priority Sector Lending (PSL)RBI-mandated lending to sectors like agriculture, MSMEs and weaker sections.
- MCLR (Marginal Cost of Funds based Lending Rate)The internal benchmark below which a bank cannot lend, based on its marginal funding cost.
- KYC (Know Your Customer)The mandatory process of verifying a customer's identity and address before onboarding.
Markets
- NAV (Net Asset Value)The per-unit market value of a mutual fund scheme.
- SIP (Systematic Investment Plan)A way to invest a fixed amount in a mutual fund at regular intervals.
- Mutual FundA pooled investment vehicle that invests many investors' money in a diversified portfolio.
- IPO (Initial Public Offering)The first sale of a private company's shares to the public.
- BondA debt instrument where the issuer borrows from investors and repays with interest.
- DerivativeA contract whose value is derived from an underlying asset like a stock, index or commodity.
- Demat AccountAn account that holds shares and securities in electronic (dematerialised) form.
Insurance
- PremiumThe amount a policyholder pays an insurer to keep an insurance policy active.
- Sum AssuredThe guaranteed amount an insurer pays on a valid claim or maturity.
- UnderwritingThe process of assessing risk and deciding the terms and price of insurance cover.
- ActuaryA professional who uses statistics to price risk and value insurance liabilities.
- Surveyor & Loss AssessorA licensed professional who investigates and quantifies insurance claims.
Accounting
- Balance SheetA statement of a company's assets, liabilities and equity at a point in time.
- Working CapitalThe funds a business needs for day-to-day operations: current assets minus current liabilities.
- DepreciationThe systematic allocation of an asset's cost over its useful life.
- GST (Goods and Services Tax)India's unified indirect tax on the supply of goods and services.
- TDS (Tax Deducted at Source)Income tax collected at the point of payment by the payer, on behalf of the government.
Risk
- Credit RiskThe risk that a borrower or counterparty fails to repay as agreed.
- Market RiskThe risk of losses from movements in prices, rates or exchange rates.
- Basel NormsInternational banking regulations on capital, leverage and liquidity set by the Basel Committee.
- VaR (Value at Risk)A statistical estimate of the maximum expected loss over a period at a given confidence level.
- HedgingTaking an offsetting position to reduce exposure to an adverse price move.