BoM Generalist Officer (Scale II/III) key terms

The share of a bank's total deposits held in current and savings accounts. These deposits usually pay little or no interest, so a higher ratio lowers funding cost and supports margins.

Cash Reserve Ratio: the percentage of net demand and time liabilities that a bank must hold as cash with the central bank. It earns no interest and cannot be lent.

Statutory Liquidity Ratio: the minimum share of net demand and time liabilities a bank must hold in approved liquid assets such as cash, gold, or specified government securities.

The regulatory deposit base used to compute reserve requirements. It aggregates liabilities to the public, including demand deposits, savings and term deposits, adjusted for balances held with other banks.

Net interest income divided by average earning assets, expressed as a percentage. It shows how profitably a bank intermediates funds between borrowers and depositors.

The minimum lending rate below which a bank may not lend, computed from cost of funds, operating expenses, and a profit margin. Floating-rate loans are priced as a spread over it.

Marginal Cost of Funds based Lending Rate: an internal benchmark for pricing loans, set from the marginal cost of deposits and other borrowings over specified tenors. It replaced the base rate for new loans.

The rate at which the central bank lends short-term funds to banks against government securities. It is the principal policy lever for signalling the cost of money.

The central bank's absorption of surplus bank liquidity against collateral. It sets a floor under short-term market rates and helps drain excess funds from the system.

A central bank window allowing banks to borrow or park funds overnight against approved securities, usually through repo and reverse repo operations. It keeps call money rates within a corridor.

Mandatory allocation of a minimum share of bank credit to specified sectors such as agriculture, micro and small enterprises, education, housing, and weaker sections, with shortfalls attracting regulatory penalties.

Micro, Small and Medium Enterprises: businesses classified by investment in plant and machinery and annual turnover thresholds. They receive concessional credit treatment and are a priority lending segment.

The period between paying for inputs and collecting cash from sales, covering inventory holding and debtor days net of creditor days. A longer cycle raises the borrowing need.

A facility allowing a borrower to draw funds up to a sanctioned limit against hypothecation of current assets. Interest is charged on the amount actually used, not the full limit.

The maximum amount a borrower may withdraw under a cash credit limit, computed from the value of current assets after prescribed margins and excluding obsolete or unpaid stock.

The borrower's own contribution to an asset's cost, expressed as a percentage that the lender does not finance. It protects the bank against a fall in the asset's value.

The loan amount divided by the appraised value of the asset financed, commonly property or gold. A higher ratio means less borrower cushion and greater lender risk.

A loan secured by a charge over immovable property, where the lender may enforce the security if the borrower defaults. The property remains with the borrower but is encumbered.

A charge created over movable assets such as inventory or receivables, where the borrower keeps possession but the lender may seize and sell the goods on default.

A security arrangement in which the borrower physically hands over movable goods to the lender, who may sell them on default. Possession moves to the lender.

A lender's right to retain another person's property until a debt or obligation is settled. It is a right of retention rather than of ownership.

A bank's right to adjust a deposit balance against a matured debt owed by the same customer. It converts a liability to the customer into recovery of an asset.

Non-Performing Asset: a loan where interest or principal has remained overdue beyond the prescribed period. It is classified as substandard, doubtful, or loss according to age and security.

An NPA that has remained non-performing for a limited period, usually up to twelve months, and where the security cover is still considered adequate. It attracts higher provisioning than standard assets.

The amount a bank sets aside from profit to absorb expected losses on loans and other assets, based on regulatory norms and ageing. It reduces reported profit and capital.

A bank's capital divided by its risk-weighted assets, expressed as a percentage. It measures the cushion available to absorb losses before depositors are exposed.

A bank's exposures multiplied by risk weights that reflect credit, market, and operational risk. The resulting figure is the denominator for capital adequacy calculations.

Internationally agreed standards on bank capital, liquidity, and leverage, issued by the Basel Committee. Successive versions raise the quality and quantity of capital required.

A law enabling secured creditors to enforce their security interest without court intervention, including taking possession and selling secured assets after due notice to the borrower.

A bank's written undertaking to pay a seller on presentation of stipulated documents, provided the terms of the credit are met. It substitutes bank credit for buyer credit.

A written order by one party directing another to pay a specified sum to a named person on demand or at a future date. In trade finance it evidences the obligation being financed.

A bank advancing funds to a seller against a bill of exchange before its due date, deducting interest for the unexpired period. It converts a receivable into immediate cash.

A bank's commitment to pay a beneficiary a specified sum if the applicant fails to perform a contractual obligation. It is a contingent liability for the bank.

A potential obligation that arises only if a specified future event occurs, such as a guarantee being invoked. It is disclosed and often attracts capital or provisioning requirements.

Know Your Customer: the process of identifying customers, verifying identity and address, and understanding expected transaction patterns before opening accounts or granting credit.

Controls and reporting obligations designed to prevent the proceeds of crime from entering the financial system, including monitoring, record keeping, and reporting suspicious transactions.

A transaction in which property is transferred to one person but the consideration is paid by another, often to conceal true ownership. Such transactions are legally prohibited.

In reasoning puzzles, a question type that requires tracing family relationships from coded or stated clues. Answers are usually a relationship label such as maternal uncle or sister-in-law.

A logical reasoning question type presenting statements and conclusions, where you decide which conclusions necessarily follow. Only conclusions true in every valid case are accepted.

A puzzle type requiring placement of people around a circle or in rows from relative-position clues. It tests systematic deduction and elimination under constraints.

A question format giving a problem with two or more statements, asking whether the data supplied is enough to answer it, without necessarily computing the answer.

Interest computed only on the original principal for the whole period, without compounding. The formula is principal multiplied by rate multiplied by time, divided by one hundred.

Interest calculated on principal plus accumulated interest, so the base grows each period. It exceeds simple interest over the same term whenever interest is added before maturity.

The current worth of a future cash flow after discounting it at a given rate for the relevant period. It underlies loan amortisation and investment appraisal.

A fixed payment made each month to repay a loan, comprising interest on the outstanding balance plus part of the principal. Early instalments are interest-heavy.

The gradual reduction of a debt through scheduled payments that cover interest and principal, or the spreading of a capital cost over its useful life.

A conclusion drawn from stated evidence rather than stated directly. In comprehension questions, an inference must be supported by the passage, not merely plausible in general.

A question type where sentences of a paragraph are given out of order and must be rearranged into a coherent sequence using connectors, pronouns, and logical flow.

A passage with words removed, where the candidate selects the option that best fits each blank in grammar and meaning. It tests vocabulary and contextual reading together.