Glossary · 148 terms
Banking & Finance
All banking & finance terms in the EquitiesIndia.com glossary — plain-English definitions written for Indian retail investors.
Account Aggregator(AA framework)
An Account Aggregator (AA) is a new class of RBI-regulated entity that acts as a consent manager, enabling individuals to securely share their financial data held across multiple institutions with third-party service providers for purposes such as loan underwriting, financial planning, or wealth management.
Account Aggregator Ecosystem(AA ecosystem)
The Account Aggregator (AA) ecosystem is a consent-based financial data-sharing framework in India, regulated by RBI, in which NBFC-AAs act as data intermediaries between Financial Information Providers (FIPs) and Financial Information Users (FIUs) to enable seamless, secure sharing of financial data for credit underwriting, wealth management, and other use cases.
Asset Quality Review(AQR)
The Asset Quality Review (AQR) was a RBI-initiated special examination of Indian bank loan portfolios conducted in 2015-16 under Governor Raghuram Rajan, which uncovered large-scale divergence between banks' reported NPAs and the actual stress in their books, leading to a sharp increase in recognised bad loans.
Asset Reconstruction Company (ARC)(ARC)
An Asset Reconstruction Company (ARC) is a specialised financial institution that acquires bad loans (NPAs) from banks and financial institutions at a discount and works to recover the dues through restructuring, asset sale, or legal proceedings.
Bank Merger Impact Analysis(PSB Consolidation)
Bank merger impact analysis evaluates the operational, financial, and competitive consequences when two or more banks are consolidated, focusing on synergy realisation versus short-term disruption costs.
Bank Nationalisation (1969/1980)(Bank Nationalisation 1969)
Bank nationalisation refers to the Indian government's acquisition of majority ownership in private commercial banks in two waves — 14 banks in 1969 under Prime Minister Indira Gandhi and 6 more in 1980 — creating the public-sector banking system that has since dominated Indian banking.
Bank Rate (Detailed)(Bank Rate)
The bank rate is the penal interest rate at which the Reserve Bank of India provides long-term funds to commercial banks without collateral, and it is automatically linked to the Marginal Standing Facility rate under the current monetary policy framework.
Bank Recapitalisation(PSB recapitalisation)
Bank recapitalisation refers to the process by which the government or private investors infuse fresh capital into a bank to restore its capital adequacy ratios, enable continued lending, and in the case of Indian public sector banks, address NPA-driven erosion of equity capital.
Banking Correspondent (BC) Model(Business Correspondent)
The Business Correspondent model is RBI's last-mile financial inclusion framework allowing banks to deliver basic banking services through agents — individuals, NGOs, corporates — in underserved geographies where full branches are not commercially viable.
Banking Ombudsman Scheme(RBI Ombudsman)
The Banking Ombudsman Scheme is an RBI-administered alternative dispute resolution mechanism that allows bank customers to file complaints against deficiencies in banking services without paying any fee, with the ombudsman empowered to award compensation up to specified limits.
Banking Sector Reforms (India)(Narasimham Reforms)
Banking sector reforms in India refer to the sequence of structural, regulatory, and ownership changes introduced since 1991 to modernise the financial system, improve efficiency, and align Indian banks with international prudential norms.
Base Rate(Bank Base Rate)
The Base Rate was the minimum lending rate set by commercial banks in India, below which they were not permitted to extend credit (with certain exceptions), introduced by the RBI in July 2010 and subsequently replaced by the MCLR system in April 2016.
Basel III Norms(Basel 3)
Basel III is an international regulatory framework developed by the Basel Committee on Banking Supervision (BCBS) following the 2008 global financial crisis, establishing stricter capital adequacy, leverage, and liquidity requirements for banks. The RBI implemented Basel III norms in India on a phased basis starting April 2013, with full implementation completed over subsequent years.
Buy Now Pay Later(BNPL)
Buy Now Pay Later (BNPL) is a short-term financing product embedded at the point of purchase that allows consumers to receive goods or services immediately and repay in instalments or after a deferred period, with zero-cost EMI or interest-free short windows offered to attract users, though RBI has expressed concerns about regulatory arbitrage and over-extension of credit.
Call Money Market(Call Money)
The Call Money Market is the segment of India's money market where banks and primary dealers borrow and lend unsecured funds for very short periods — overnight (call money) or up to 14 days (notice money) — to manage daily reserve requirements and short-term liquidity.
Call Money Rate (WACR)(Call Rate)
The Call Money Rate is the interest rate on overnight unsecured interbank loans in India, with the Weighted Average Call Rate (WACR) serving as the operating target of the RBI's monetary policy, typically anchored within the LAF corridor.
Capital Adequacy Ratio(CAR)
The Capital Adequacy Ratio (CAR), also known as the Capital to Risk-weighted Assets Ratio (CRAR), measures a bank's available capital as a percentage of its risk-weighted credit exposures. It is the primary metric used by regulators, including the RBI, to assess a bank's financial strength and its ability to absorb potential losses.
Capital Controls (India) — FEMA Framework(FEMA)
India maintains a partially open capital account under the Foreign Exchange Management Act 1999 (FEMA), with current account transactions freely permitted but capital account transactions subject to specific rules, schedules, and limits administered by the RBI and the Government of India.
CASA Ratio(Current Account Savings Account Ratio)
The CASA Ratio is the proportion of a bank's total deposits held in current account and savings account (CASA) deposits, which are low-cost or zero-cost liabilities, serving as a key indicator of a bank's funding cost advantage and deposit franchise strength.
Cash-to-GDP Ratio(Cash-GDP Ratio)
The cash-to-GDP ratio measures the value of currency in circulation as a percentage of nominal gross domestic product, serving as an indicator of an economy's reliance on physical cash relative to its overall economic size.
CBDC (Digital Rupee)(Digital Rupee)
The Central Bank Digital Currency (CBDC), known as the Digital Rupee or e₹, is a sovereign digital currency issued by the Reserve Bank of India representing a direct liability of the central bank — distinct from commercial bank deposits or private cryptocurrencies. The RBI launched pilot programmes for both wholesale (e₹-W) and retail (e₹-R) variants in late 2022.
Central Bank Digital Currency(e-Rupee)
A Central Bank Digital Currency (CBDC) is a digital form of sovereign currency issued and backed by the central bank — in India's case, the Reserve Bank of India — representing a direct liability of the RBI, with India piloting both wholesale (e-Rupee-W) and retail (e-Rupee-R) variants of the digital rupee.
Certificate of Deposit Market(CD Market)
The Certificate of Deposit market is India's wholesale money market segment where scheduled commercial banks and select all-India financial institutions issue short-term, freely transferable, unsecured obligations to raise funds, with maturities ranging from seven days to one year.
Co-Lending Model(CLM)
The Co-Lending Model (CLM) is an RBI-regulated framework enabling banks and NBFCs to jointly originate and fund priority sector loans, typically in an 80:20 risk-sharing ratio, combining the NBFC's last-mile reach with the bank's lower-cost funds to extend credit to underserved segments.
Commercial Paper Market(CP Market)
The Commercial Paper market allows highly rated corporates, NBFCs, and other eligible issuers to raise short-term funds directly from investors at market-determined rates, bypassing banks and providing an important source of working capital and NBFC funding.
Cooperative Bank(Co-operative Bank)
A Cooperative Bank in India is a financial institution owned and operated by its members on a cooperative basis, primarily serving the credit needs of agriculture, rural communities, and small businesses. Cooperative banks in India operate under a dual regulatory framework involving both the RBI and state government registrars.
Core Banking Solution (CBS)(CBS)
A Core Banking Solution (CBS) is a centralised, networked software platform that enables a bank to process and record all transactions in real time across all its branches, allowing customers to access their accounts and conduct banking operations from any branch or digital channel.
Cost of Deposits(deposit cost)
Cost of Deposits is the annualised interest expense paid by a bank as a percentage of its average deposit base, representing the funding cost side of the Net Interest Margin equation, with lower-cost Current Account and Savings Account deposits being the primary lever to keep this metric down.
Credit Cost(provisioning cost)
Credit Cost in banking is the provisioning expense — covering both specific provisions on non-performing assets and general or standard asset provisions — expressed as a percentage of average advances, and it is the single largest variable cost that separates a well-managed bank from a stressed one.
Credit Growth Decomposition(sectoral credit deployment)
Credit growth decomposition breaks down aggregate bank lending growth into its constituent segments — retail versus corporate, secured versus unsecured, and public sector versus private sector banks — to understand the quality, sustainability, and risk profile of the overall credit expansion.
Credit Information Companies(CIC)
Credit Information Companies (CICs) are RBI-licensed entities that collect, collate, and disseminate credit data of individuals and companies from member lending institutions, enabling lenders to assess creditworthiness through standardised credit reports and scores.
Credit-Deposit Ratio(CD ratio)
The Credit-Deposit (CD) Ratio measures the proportion of a bank's deposits that have been deployed as loans, serving as a key indicator of how aggressively a bank is utilising its deposit base for lending.
CRR(Cash Reserve Ratio)
The Cash Reserve Ratio (CRR) is the mandatory percentage of a commercial bank's net demand and time liabilities (NDTL) that must be maintained as cash deposits with the Reserve Bank of India, used to regulate liquidity in the banking system.
Currency in Circulation(CIC)
Currency in circulation (CIC) is the total value of banknotes and coins held outside the Reserve Bank of India's vaults — that is, currency held by the public and in bank tills — representing the physical cash component of India's money supply.
D-SIB (Domestic Systemically Important Banks)(D-SIB)
Domestic Systemically Important Banks (D-SIBs) are banks designated by the RBI as 'too big to fail' due to their size, interconnectedness, complexity, and lack of substitutability, requiring them to hold additional Common Equity Tier 1 capital buffers above the standard Basel III minimum.
Deposit Insurance (DICGC)(DICGC)
Deposit Insurance and Credit Guarantee Corporation (DICGC) is an RBI subsidiary that insures bank deposits up to ₹5 lakh per depositor per bank, protecting retail savers in the event of a bank failure.
Deposit Insurance Coverage(DICGC Insurance)
Deposit insurance coverage in India refers to the guarantee provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC) that protects depositors' funds up to a specified per-depositor, per-bank limit if the bank fails, currently set at Rs 5 lakh.
Development Finance Institutions (DFIs)(DFIs)
Development Finance Institutions are specialised financial intermediaries established to provide long-term capital for infrastructure and industrial development, with NaBFID (National Bank for Financing Infrastructure and Development) re-establishing this category in India under the NaBFID Act 2021.
DHFL Fraud(DHFL Scam)
The DHFL fraud involved the systematic diversion of over 34,000 crore rupees of home loan proceeds by promoters of Dewan Housing Finance Corporation through a network of shell companies, becoming the largest financial fraud by a non-banking financial company in India.
Digital Banking Unit(DBU)
A Digital Banking Unit (DBU) is a specialised fixed-point business unit established by banks to deliver digital banking products and services in a paperless, branchless environment, with the Government of India launching 75 DBUs across 75 districts in October 2022 to mark 75 years of independence.
Digital Lending Guidelines(RBI Digital Lending Guidelines)
The RBI's Digital Lending Guidelines (September 2022) regulate the practices of regulated entities and their lending service providers in digital loan origination, disbursement, and servicing, including capping First Loss Default Guarantees (FLDG) at 5 percent and mandating disclosure of all-in lending costs.
Digital Rupee (e₹) Retail Pilot(e-Rupee)
The Digital Rupee (e₹) Retail Pilot is the Reserve Bank of India's Central Bank Digital Currency (CBDC) initiative for retail transactions, launched in December 2022, allowing customers of select banks to transact using a sovereign digital currency via bank apps and merchant QR codes.
Dollar-Rupee Exchange Rate Mechanism(USD-INR Mechanism)
The Dollar-Rupee exchange rate operates under a managed float regime where market forces determine the rate within an implicit band, with the RBI intervening to prevent excessive volatility, using spot, forward, and swap markets to smooth exchange rate movements.
e-RUPI(eRUPI)
e-RUPI is a cashless, contactless digital voucher payment solution launched by the NPCI in August 2021, enabling government agencies and corporates to deliver targeted welfare benefits as pre-paid, beneficiary-specific, single-use instruments delivered via SMS or QR code.
Embedded Finance(Banking-as-a-Service)
Embedded finance is the integration of financial products — credit, insurance, payments, savings — directly into the workflows and platforms of non-financial businesses using APIs, enabling customers to access financial services at the point of need without leaving the primary application.
Expected Credit Loss(ECL)
Expected Credit Loss (ECL) is a forward-looking, probability-weighted estimate of credit losses over the life of a financial instrument, mandated under Ind AS 109 (the Indian equivalent of IFRS 9) for financial institutions, replacing the incurred loss model under the older accounting standards.
External Commercial Borrowing (ECB)(ECB)
External Commercial Borrowing (ECB) refers to loans and debt instruments raised by eligible Indian resident entities from non-resident lenders in foreign currency or Indian rupees, subject to RBI guidelines on eligible borrowers, end-uses, amounts, and cost ceilings.
Factoring(Accounts Receivable Financing)
Factoring is a trade finance arrangement in which a business sells its accounts receivable (invoices) to a third party called a factor at a discount, receiving immediate liquidity while the factor collects the full receivable amount from the buyer — with the Factoring Regulation Act, 2011 and its 2021 amendment providing the Indian legal framework.
FATCA(Foreign Account Tax Compliance Act)
The Foreign Account Tax Compliance Act (FATCA) is a US federal law enacted in 2010 that requires foreign financial institutions, including Indian banks, mutual funds, and brokerages, to identify and report financial accounts held by US persons to the US Internal Revenue Service (IRS) or face withholding penalties. India signed an intergovernmental agreement with the US in 2015 to facilitate FATCA compliance.
Fee Income (Banking)(non-interest income)
Fee Income, also called non-interest income, refers to revenue earned by a bank from services and activities other than lending, including processing fees, transaction charges, wealth management commissions, and foreign exchange services.
Financial Inclusion(Inclusive Finance)
Financial Inclusion refers to the process of ensuring that individuals and businesses, especially those excluded from or underserved by the formal financial system, have access to affordable and appropriate financial services including bank accounts, credit, insurance, and payment mechanisms. In India, it has been a central policy objective of both the RBI and successive governments.
Financial Inclusion Index(FI-Index)
The RBI Financial Inclusion Index (FI-Index) is a composite annual measure published since 2021 that captures the extent of financial inclusion across India on a 0–100 scale, encompassing access, usage, and quality dimensions.
Financial Sector Legislative Reforms Commission (FSLRC)(FSLRC)
The Financial Sector Legislative Reforms Commission (FSLRC) was a government-appointed body that submitted its 2013 report proposing a comprehensive overhaul of India's fragmented financial sector laws and the creation of a unified financial regulatory architecture.
Financial Stability Report (FSR)(FSR RBI)
The Financial Stability Report (FSR) is a bi-annual publication of the Reserve Bank of India that assesses the resilience of the Indian financial system — including banks, NBFCs, payment systems, and interconnected risk channels — and presents stress-test results projecting how the banking system would fare under adverse macroeconomic scenarios.
Fintech(financial technology)
Fintech, short for financial technology, refers to companies and solutions that use technology to deliver financial services more efficiently, accessibly, or at lower cost than traditional banking and finance institutions, spanning payments, lending, insurance, wealth management, and personal finance.
Fintech Landscape (India)
India is one of the world's largest and most innovative fintech markets, with over 10,000 startups disrupting payments, digital lending, wealth management, insurance (insurtech), and neo-banking — powered by the India Stack (Aadhaar, UPI, Account Aggregator) and a rapidly digitalising user base.
Fintech Lending(Digital Lending)
Fintech lending in India encompasses digital credit delivery through mobile applications, APIs, and data-driven underwriting models, spanning peer-to-peer lending platforms, BNPL products, and app-based personal and business loans, operating under RBI's evolving digital lending regulatory framework.
Foreign Currency Non-Repatriable (FCNR) Deposit(FCNR deposit)
A Foreign Currency Non-Repatriable (FCNR) deposit is a term deposit maintained by Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs) with Indian banks in a foreign currency, where both the principal and interest can be repatriated abroad without restriction.
Foreign Currency Reserves Management (RBI)(RBI Reserves Portfolio)
RBI's foreign currency reserves management involves the custodianship, investment, and risk management of India's foreign exchange reserves, guided by the principles of safety, liquidity, and returns, with the investment portfolio held predominantly in high-grade sovereign securities and in gold.
Fugitive Economic Offender(FEO)
A Fugitive Economic Offender (FEO) is an individual accused of a scheduled financial offence involving more than Rs 100 crore who has fled India or refuses to return to face criminal proceedings, as declared by a Special Court under the Fugitive Economic Offenders Act, 2018.
G-Sec(Government Security)
A Government Security (G-Sec) is a tradeable debt instrument issued by the central or state government of India, carrying sovereign guarantee and used to finance fiscal deficits, with maturities ranging from short-term treasury bills to long-term bonds of up to 40 years.
Gold Loan Market(Gold Loan)
The gold loan market in India involves lending against gold jewellery as collateral, with banks and specialised NBFCs such as Muthoot Finance and Manappuram Finance disbursing short-tenure, high-velocity loans at LTV (loan-to-value) ratios regulated by RBI, offering one of the fastest formal credit channels for households and small businesses.
Gold Monetisation Scheme(GMS)
The Gold Monetisation Scheme (GMS), launched by the Government of India in November 2015, enables individuals, trusts, and institutions to deposit idle physical gold with designated banks, earn interest on the gold deposited, and contribute to reducing India's gold import dependency.
Government Securities Primary Market(G-Sec Auctions)
The Government Securities Primary Market is the auction-based mechanism through which the Government of India raises funds by issuing G-Secs (dated securities) and Treasury Bills, conducted by the RBI on behalf of the government through the Negotiated Dealing System-Auction platform.
Green Deposit Framework(green FD)
The RBI Green Deposit Framework, introduced in April 2023, requires regulated entities offering green deposits to earmark the proceeds for environmentally sustainable activities as defined by an eligible list, with mandatory third-party verification, ring-fenced accounting, and impact disclosures.
IBC (Insolvency and Bankruptcy Code)(IBC)
The Insolvency and Bankruptcy Code, 2016 (IBC) consolidated India's fragmented insolvency laws into a single unified framework, establishing a time-bound Corporate Insolvency Resolution Process (CIRP) with a 330-day maximum timeline and a Committee of Creditors to oversee resolution.
IL&FS Crisis 2018(IL&FS Default)
The IL&FS crisis of 2018 erupted when Infrastructure Leasing and Financial Services defaulted on short-term debt obligations, triggering a liquidity freeze across India's NBFC sector and revealing the systemic risks of opaque group structures in infrastructure finance.
IMPS (Immediate Payment Service)(IMPS)
Immediate Payment Service (IMPS) is an NPCI-operated real-time interbank electronic fund transfer system that operates 24 hours a day, 365 days a year, allowing instant credit of funds up to Rs 5 lakh per transaction using IFSC codes, mobile numbers, or virtual payment addresses.
Indian Banking Industry Overview
India's banking sector comprises public sector banks (PSBs), private sector banks, small finance banks (SFBs), payment banks, regional rural banks (RRBs), cooperative banks, and foreign banks — regulated by the RBI, with combined assets exceeding ₹250 lakh crore and a dramatic cleanup of bad loans in the post-IBC era.
Indian Financial System Overview
India's financial system is a multi-regulator framework where the Reserve Bank of India (RBI) oversees banking and monetary policy, SEBI regulates capital markets, IRDAI governs insurance, PFRDA supervises pension funds, and NABARD supports agricultural and rural finance.
Insolvency Resolution Under IBC(CIRP)
The Insolvency and Bankruptcy Code (IBC), enacted in 2016, provides a time-bound, creditor-friendly mechanism for resolving corporate insolvency in India, with outcomes measured by recovery rates for creditors, NCLT timeline adherence, and the extent of haircuts taken by financial and operational creditors.
Inter-Creditor Agreement (ICA)(ICA banking)
An Inter-Creditor Agreement (ICA) is a legally binding agreement among the multiple lenders of a borrower undergoing financial stress that establishes decision-making rules, standstill obligations, and majority-voting thresholds for developing and implementing a resolution plan, formalised under RBI's June 2019 Prudential Framework for Resolution of Stressed Assets.
Jan Dhan Yojana(PMJDY)
Pradhan Mantri Jan Dhan Yojana (PMJDY) is India's flagship financial inclusion programme launched on August 28, 2014, aimed at providing universal access to banking services including a savings account, RuPay debit card, accidental insurance cover, and an overdraft facility to unbanked households. It was the world's largest financial inclusion initiative at launch.
KYC(Know Your Customer)
Know Your Customer (KYC) is a mandatory regulatory process through which financial institutions verify the identity, address, and financial profile of their customers before onboarding them and throughout the relationship. In India, KYC norms are governed by the Prevention of Money Laundering Act (PMLA) and the RBI's Master Directions on KYC.
LAF (Liquidity Adjustment Facility)(LAF)
The Liquidity Adjustment Facility (LAF) is a monetary policy framework through which the RBI manages day-to-day liquidity in the banking system, primarily through repo and reverse repo operations. It was formally introduced in June 2000 based on the Narasimham Committee recommendations.
Leverage Ratio (Banking)(Basel III Leverage Ratio)
The banking leverage ratio is a non-risk-based capital adequacy measure under Basel III, calculated as Tier 1 capital divided by a bank's total exposure (on- and off-balance-sheet assets), and is designed to act as a backstop against excessive balance-sheet expansion.
Liquidation (IBC)(IBC Liquidation)
Under the Insolvency and Bankruptcy Code, liquidation is the process of winding up a corporate debtor when no resolution plan is approved within the CIRP timeline, with proceeds distributed to creditors in the Section 53 waterfall priority order.
Liquidity Coverage Ratio(LCR)
The Liquidity Coverage Ratio (LCR) is a Basel III prudential standard that requires banks to hold a sufficient stock of High-Quality Liquid Assets to survive a 30-day period of severe liquidity stress without central bank assistance.
Liquidity Surplus vs Deficit (Banking System)(Banking Liquidity)
Banking system liquidity refers to the net position of reserves held by scheduled commercial banks with the RBI, with a surplus indicating excess reserves parked with RBI via reverse repo or the Standing Deposit Facility, and a deficit indicating banks borrowing from RBI via repo or Marginal Standing Facility.
Loan Write-Off vs Waiver(technical write-off)
A loan write-off is an accounting action where a bank removes a bad loan from its books after fully provisioning for it, while retaining the legal right to pursue recovery; a loan waiver is a legal forgiveness of the borrower's obligation, eliminating the bank's right to recover.
Marginal Standing Facility(MSF)
The Marginal Standing Facility (MSF) is an overnight borrowing window offered by the Reserve Bank of India that allows scheduled commercial banks to borrow funds from the central bank against approved government securities at a rate typically above the repo rate. It was introduced as part of the Liquidity Adjustment Facility framework in May 2011.
MCLR(Marginal Cost of Funds-based Lending Rate)
The Marginal Cost of Funds-based Lending Rate (MCLR) is the internal benchmark rate set by banks, based on their marginal cost of funds, used to price floating-rate loans, replacing the earlier base rate regime introduced by the RBI in April 2016.
MCLR vs EBLR Transmission(External Benchmark Lending Rate)
MCLR (Marginal Cost of Funds-based Lending Rate) and EBLR (External Benchmark-based Lending Rate) are two loan pricing frameworks in India that differ fundamentally in how quickly policy rate changes are passed on to borrowers, with EBLR offering near-instantaneous transmission and MCLR transmitting with a lag of up to one year.
Microfinance(MFI)
Microfinance in India delivers small collateral-free loans, savings, and insurance products to low-income households — particularly women in rural and semi-urban areas — through joint liability group (JLG) or self-help group (SHG) methodologies, regulated under RBI's harmonised microfinance framework issued in 2022.
Moral Hazard
Moral hazard in finance refers to the tendency of an individual or institution to take greater risks than they otherwise would because they are protected from the consequences of those risks — most classically illustrated by bank deposit insurance, too-big-to-fail bailouts, and implicit government guarantees for systemically important financial institutions.
Moratorium (IBC)(IBC Moratorium)
Under Section 14 of the Insolvency and Bankruptcy Code, a moratorium is a statutory freeze on all legal proceedings, enforcement actions, and asset transfers against the corporate debtor from the date of CIRP commencement until either the resolution plan is approved or the company goes into liquidation.
National Company Law Tribunal (NCLT)(NCLT)
The National Company Law Tribunal (NCLT) is a quasi-judicial body established under the Companies Act, 2013 that serves as the adjudicating authority for insolvency proceedings under the IBC, mergers and amalgamations, class action suits, and other company law matters.
NBFC(Non-Banking Financial Company)
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act that provides financial services such as loans, asset financing, and investment products, but unlike commercial banks, it cannot accept demand deposits or issue cheques drawn on itself.
NBFC Liquidity Crisis 2018(IL&FS crisis)
The NBFC liquidity crisis of 2018 was triggered by the default of IL&FS group entities in September 2018, which caused a sudden freeze in short-term funding markets for non-banking financial companies, threatening a contagion across the broader financial system and prompting RBI intervention through liquidity measures.
NEFT (National Electronic Funds Transfer)(NEFT)
National Electronic Funds Transfer (NEFT) is an RBI-operated nationwide interbank payment system that settles fund transfers in half-hourly batches on a 24×7 basis since December 2019, with no upper transaction limit and minimal charges, making it suitable for high-value retail and corporate payments.
Neo Bank(Digital Bank)
A neo bank in India is a digital-first financial services provider that offers banking-like products — savings accounts, debit cards, spending analytics, investments — through a mobile application, operating in partnership with a licensed bank rather than holding a direct banking licence from RBI.
Net Interest Income(NII)
Net Interest Income (NII) is the difference between the interest earned by a bank on its loans and investments and the interest paid on its deposits and borrowings, representing the core operating income of a lending institution.
Net Interest Margin Compression(NIM compression)
Net Interest Margin (NIM) compression occurs when the cost of a bank's liabilities — primarily deposits — rises faster than the yield on its loan book, squeezing the spread between what the bank earns on advances and what it pays depositors.
Net Stable Funding Ratio(NSFR)
The Net Stable Funding Ratio (NSFR) is a Basel III structural liquidity standard that requires banks to maintain a stable funding profile over a one-year horizon relative to their assets and off-balance-sheet activities.
NIM(Net Interest Margin)
Net Interest Margin (NIM) is the difference between the interest income a bank earns on its loans and investments and the interest it pays on deposits and borrowings, expressed as a percentage of average interest-earning assets.
NPA(Non-Performing Asset)
A Non-Performing Asset (NPA) is a loan or advance on a bank's books where the borrower has not made interest or principal repayments for 90 days or more, indicating credit stress and requiring provisioning by the lender.
One-Time Settlement (OTS)(OTS banking)
A One-Time Settlement (OTS) is a negotiated resolution mechanism under which a bank agrees to accept a lump-sum payment from a defaulting borrower — typically at a discount to the total outstanding dues — in full and final settlement of the loan, allowing the bank to close the NPA account and the borrower to obtain a clearance certificate.
Open Banking(open finance)
Open banking is a financial services model in which banks and financial institutions provide third-party providers with programmatic access to customer financial data and banking services through Application Programming Interfaces (APIs), with the customer's consent, enabling the development of innovative financial products and services.
Open Credit Enablement Network(OCEN)
The Open Credit Enablement Network (OCEN) is an open protocol and API framework developed by iSPIRT and adopted by the Indian government to democratise credit access by standardising the way lenders, borrowers, and embedding platforms interact, enabling any digital platform to become a credit distribution channel without holding a lending licence.
Open Market Operations(OMO)
Open Market Operations (OMOs) are the RBI's purchases and sales of government securities in the open market to regulate liquidity conditions in the banking system and to influence yields on government bonds. OMO purchases inject rupee liquidity, while OMO sales absorb it.
Payment Bank(Payments Bank)
A Payment Bank is a differentiated type of bank licensed by the RBI that can accept deposits up to a specified limit per customer and provide basic payment and remittance services, but cannot issue loans or credit cards. The concept was introduced following the Nachiket Mor Committee recommendations and licences were granted from 2015 onward.
Payments Infrastructure Development Fund (PIDF)(PIDF)
The Payments Infrastructure Development Fund (PIDF) is an RBI-managed subsidy scheme established in January 2021 to incentivise banks and non-bank payment system operators to deploy acceptance infrastructure — Point-of-Sale terminals and QR codes — in Tier-3 to Tier-6 cities and northeastern states to deepen digital payment penetration.
Payments Vision 2025 (RBI)(Payments Vision)
Payments Vision 2025 is the Reserve Bank of India's five-year strategic document released in June 2022 that set quantitative and qualitative targets to deepen, diversify, and secure India's digital payments ecosystem through 2025.
Peer-to-Peer Lending(P2P Lending)
Peer-to-peer (P2P) lending in India is a form of debt financing that connects individual borrowers directly with individual or institutional lenders through RBI-registered NBFC-P2P platforms, bypassing traditional bank intermediation, with platforms such as Faircent, LenDenClub, and RupeeCircle operating under RBI's 2017 NBFC-P2P guidelines.
Pre-Pack Insolvency(Pre-Pack)
Pre-packaged insolvency resolution (pre-pack) is a hybrid insolvency mechanism available to MSMEs under the IBC, where a resolution plan is negotiated between the debtor and creditors before NCLT admission, reducing the maximum timeline to 120 days and preserving business continuity.
Priority Sector Lending(PSL)
Priority Sector Lending (PSL) is a regulatory mandate requiring commercial banks in India to extend a prescribed minimum proportion of their adjusted net bank credit (ANBC) to specified sectors deemed socially or economically important, including agriculture, micro and small enterprises, education, housing for the poor, and weaker sections. The PSL guidelines are issued by the RBI.
Priority Sector Lending Certificates (PSLC)(PSLC)
Priority Sector Lending Certificates (PSLCs) are tradeable instruments that allow banks which have exceeded their Priority Sector Lending (PSL) targets to sell their surplus achievement to banks that have fallen short, creating a market-based mechanism for meeting regulatory credit mandates.
Priority Sector Lending Shortfall(PSL shortfall)
Priority Sector Lending Shortfall arises when a commercial bank fails to meet RBI's mandated targets for lending to priority sectors — currently 40% of Adjusted Net Bank Credit for domestic scheduled commercial banks — and is penalised by being required to deposit the shortfall amount in specified low-yield government funds such as the Rural Infrastructure Development Fund.
Project Finance(SPV lending)
Project Finance is a structured lending methodology used for large infrastructure, energy, and industrial projects where the loan is extended to a ring-fenced Special Purpose Vehicle (SPV), with repayment sourced exclusively from the cash flows generated by the project itself rather than from the balance sheet or general creditworthiness of the project sponsors.
Prompt Corrective Action (PCA)(PCA framework)
Prompt Corrective Action (PCA) is a supervisory framework enforced by the Reserve Bank of India that places financially weak banks under structured restrictions on dividends, branch expansion, and lending until their financial health recovers.
Prompt Corrective Action Framework(PCA Framework)
The RBI's Prompt Corrective Action (PCA) framework is a structured supervisory tool that triggers mandatory corrective actions on banks breaching specified thresholds for capital adequacy, asset quality, or leverage, restricting their ability to expand operations until financial health is restored.
Provision for Standard Assets(standard asset provisioning)
Provision for Standard Assets is a precautionary, regulatory-mandated provisioning requirement that Indian banks must maintain against performing loans that have not yet defaulted, acting as a buffer against future credit losses embedded in otherwise healthy portfolios.
Provisioning Coverage Ratio(PCR)
The Provisioning Coverage Ratio (PCR) measures the proportion of a bank's non-performing assets that is covered by accumulated provisions, indicating how well-protected the bank's balance sheet is against potential loan losses.
Provisioning Norms(IRAC norms)
RBI's provisioning norms, governed by the Income Recognition, Asset Classification and Provisioning (IRAC) framework, specify the minimum percentage of a loan's outstanding amount that a bank must set aside as a provision depending on the NPA category — Sub-Standard, Doubtful, or Loss — and the type of collateral held.
RBI(Reserve Bank of India)
The Reserve Bank of India (RBI) is India's central bank and primary monetary authority, established in 1935, responsible for regulating the money supply, supervising commercial banks, and maintaining financial stability across the country.
RBI Governor's Role(RBI Governor)
The RBI Governor is the chief executive of the Reserve Bank of India, responsible for formulating and communicating monetary policy, supervising the banking system, managing the country's foreign exchange reserves, and acting as lender of last resort to the financial system.
RBI Monetary Policy Framework Agreement(Inflation Targeting Framework)
The RBI Monetary Policy Framework Agreement is the formal accord signed in February 2015 between the Government of India and the Reserve Bank of India that officially mandated inflation targeting as the primary objective of monetary policy, with the Consumer Price Index (CPI) as the nominal anchor.
Recovery Rate (Banking)(NPA recovery)
Recovery Rate in banking refers to the percentage of a defaulted loan's outstanding principal that a bank or creditor is ultimately able to recover through legal proceedings, asset sales, settlements, or restructuring.
Regional Rural Banks (RRBs)(RRBs)
Regional Rural Banks are government-sponsored, region-specific banks established in 1975 to extend banking services to rural areas, jointly owned by the Central Government, sponsor banks, and State Governments, and supervised by NABARD.
Repo Rate(Policy Repo Rate)
The repo rate is the interest rate at which the Reserve Bank of India lends short-term funds to commercial banks against the collateral of government securities, serving as the primary instrument of monetary policy.
Repo Rate Transmission(Monetary Transmission)
Repo Rate Transmission refers to the process by which changes in the RBI's policy repo rate flow through to bank lending rates, deposit rates, and ultimately to borrowing costs for households and businesses, with External Benchmark Linked Rate (EBLR) offering faster transmission than the older MCLR framework.
Resolution Professional (IBC)(RP)
A Resolution Professional (RP) is an insolvency professional licensed by the Insolvency and Bankruptcy Board of India (IBBI) who manages the Corporate Insolvency Resolution Process (CIRP), takes control of the corporate debtor, and facilitates the formulation and approval of a resolution plan.
Restructured Assets(restructured loans)
Restructured Assets are loans where the repayment terms — interest rate, tenure, principal schedule, or collateral — have been renegotiated at the borrower's request due to financial difficulty, with RBI frameworks governing both the conditions for restructuring and the provisioning requirements that banks must maintain on such exposures.
Return on Assets (Banking)(ROA banking)
Return on Assets (ROA) for banks measures net profit as a percentage of average total assets and is the primary profitability benchmark for the banking industry, with 1% widely regarded as the threshold that separates efficient, well-run banks from those with suboptimal cost structures or persistent asset quality issues.
Reverse Repo Rate(Reverse Repurchase Rate)
The reverse repo rate is the rate at which the Reserve Bank of India borrows short-term funds from commercial banks, absorbing excess liquidity from the banking system and acting as a floor for overnight money-market rates.
Reverse Repo Rate (Detailed)(Reverse Repo)
The reverse repo rate is the interest rate at which the Reserve Bank of India absorbs surplus liquidity from commercial banks by borrowing funds from them, making it a key tool for draining excess money from the banking system.
RTGS (Real-Time Gross Settlement)(RTGS)
Real-Time Gross Settlement (RTGS) is an RBI-operated high-value interbank payment system that settles each fund transfer instruction individually and immediately on a gross (non-netted) basis, with a minimum transaction amount of Rs 2 lakh and 24×7 availability since December 2020.
SARFAESI Act(SARFAESI)
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) empowers banks and financial institutions to enforce their security interests and recover secured loans without the intervention of courts, by issuing a 60-day demand notice to borrowers.
SBI Merger (2017)(SBI Associate Bank Merger)
The SBI Merger of 2017 refers to the consolidation of State Bank of India with its five associate banks — State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore — along with the Bharatiya Mahila Bank, effective April 1, 2017, creating India's largest bank by assets.
Scheduled Bank(Scheduled Commercial Bank)
A Scheduled Bank in India is a bank that is included in the Second Schedule of the Reserve Bank of India Act, 1934, obligating it to maintain a minimum paid-up capital and reserves and entitling it to borrow from the RBI at the bank rate. All public sector banks, private sector banks, foreign banks, and most cooperative banks are scheduled banks.
Securitisation(ABS)
Securitisation is the process by which a bank or financial institution pools illiquid assets such as loans and mortgages and converts them into tradeable securities called pass-through certificates or asset-backed securities, thereby transferring credit risk and unlocking fresh capital.
Self-Help Group(SHG)
A Self-Help Group (SHG) in India is a community-based savings and credit collective, typically comprising 10 to 20 women from similar socio-economic backgrounds, that pools regular savings, builds internal discipline through group financial management, and accesses bank credit at scale through the NABARD-promoted SHG-Bank Linkage Programme.
Slippage Rate(slippages)
The Slippage Rate measures the pace at which a bank's standard (performing) loans deteriorate into non-performing assets (NPAs) during a given period, reflecting the underlying stress in the loan portfolio.
SLR(Statutory Liquidity Ratio)
The Statutory Liquidity Ratio (SLR) is the minimum percentage of a bank's net demand and time liabilities that must be maintained in approved liquid assets — primarily government securities, cash, and gold — as mandated by the Reserve Bank of India.
Small Finance Bank(SFB)
A Small Finance Bank (SFB) is a differentiated scheduled commercial bank licensed by the RBI to primarily serve unserved and underserved segments such as small farmers, micro industries, and small businesses by providing basic banking services including deposits and loans. The RBI granted the first SFB licences in 2015.
Standing Deposit Facility (SDF)(SDF)
The Standing Deposit Facility (SDF) is a collateral-free overnight deposit window introduced by the Reserve Bank of India in April 2022 that allows banks to park surplus liquidity with the RBI at a rate below the repo rate, replacing the fixed-rate reverse repo as the floor of the LAF corridor.
Supply Chain Finance(SCF)
Supply chain finance (SCF) is a set of technology-based financing solutions that allow buyers and sellers in a supply chain to optimise working capital by leveraging the creditworthiness of the anchor buyer (typically a large corporation) to provide suppliers with early payment at rates aligned with the buyer's credit profile rather than the supplier's own.
Systemically Important Financial Institution (SIFI)(SIFI)
A Systemically Important Financial Institution (SIFI) is a bank, insurer, or financial market infrastructure whose distress or failure would cause severe disruption to the broader financial system and the real economy, warranting enhanced regulatory supervision, higher capital requirements, and resolution planning obligations.
Targeted Long-Term Repo Operations (TLTRO)(TLTRO)
Targeted Long-Term Repo Operations (TLTROs) are a special liquidity facility introduced by the Reserve Bank of India that provided banks with long-term funds at the repo rate, on the condition that the proceeds were deployed into specified sectors such as corporate bonds, commercial paper, and non-bank financial companies.
Technical Write-Off(NPA write-off)
A Technical Write-Off occurs when a bank removes a fully or substantially provisioned Non-Performing Asset from its balance sheet for accounting and regulatory capital purposes while simultaneously continuing active recovery proceedings, reflecting the practical reality that NPA resolution in India can take years.
Treasury Bill(T-Bill)
A Treasury Bill (T-Bill) is a short-term, zero-coupon government security issued by the Government of India through the RBI with maturities of 91 days, 182 days, or 364 days, sold at a discount and redeemed at face value at maturity.
Treasury Operations (Bank)(bank treasury)
Treasury Operations in a bank refer to the management of the bank's own investment portfolio—primarily in government securities, bonds, and money market instruments—to generate returns, maintain regulatory reserve requirements, and manage liquidity and interest rate risk.
TReDS(Trade Receivables Discounting System)
TReDS (Trade Receivables Discounting System) is an RBI-licensed electronic platform that enables MSMEs to discount their unpaid invoices against large corporate and government buyers at competitive interest rates, addressing the working capital challenge created by long payment cycles.
Unified Lending Interface (ULI)(ULI RBI)
The Unified Lending Interface (ULI) is a digital public infrastructure initiative announced by the Reserve Bank of India in 2024 to enable frictionless, consent-based flow of borrower data from multiple sources to lenders, accelerating credit assessment and loan disbursement — particularly for underserved segments like agriculture and MSMEs.
UPI(Unified Payments Interface)
Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NPCI) that enables instant inter-bank money transfers using a mobile device, leveraging virtual payment addresses linked to bank accounts.
Wilful Defaulter(Wilful Default)
A wilful defaulter is a borrower who has deliberately not repaid a loan despite having the capacity to do so, or has diverted or siphoned off funds contrary to the agreed end-use, as determined by a lender's Review Committee under RBI guidelines.
Yes Bank Crisis 2020(Yes Bank Moratorium)
The Yes Bank crisis of March 2020 involved the RBI placing the private sector lender under a moratorium due to deteriorating asset quality and governance failures, followed by a forced write-down of Additional Tier 1 bonds to zero and a reconstruction scheme anchored by SBI and other institutions.
Yield on Advances(loan yield)
Yield on Advances is the annualised interest income earned by a bank as a percentage of its average outstanding loan book, representing the revenue side of the Net Interest Margin equation and reflecting the pricing power a lender commands over its borrower base.