CHSE Odisha Banking & Insurance flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Banking definition (India)

Accepting, for the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, under the Banking Regulation Act, 1949.

Scheduled bank

A bank included in the Second Schedule of the Reserve Bank of India Act, 1934, having paid-up capital and reserves of at least the prescribed amount and satisfying the RBI's conditions.

Credit creation multiplier

The multiple by which deposits expand from an initial deposit, equal to 1 divided by the cash reserve ratio, assuming no cash leakage and full lending.

Central bank functions

Currency issue, banker to government and banks, lender of last resort, custodian of foreign exchange reserves, and regulator and supervisor of the banking system.

Minimum reserve system

The RBI issues currency against a minimum backing of ₹200 crore of gold and foreign securities, of which gold must be at least ₹115 crore.

Regional Rural Bank

A bank set up under the RRB Act, 1976, for rural credit, with shareholding held by the central government, the state government and a sponsor bank.

Payments bank limits

A differentiated bank that accepts demand deposits up to a prescribed per-customer limit and cannot lend or issue credit cards, though it may offer debit cards.

Duty of secrecy

The implied obligation of a bank not to disclose a customer's account information, subject to exceptions such as legal compulsion, consent, public interest and the bank's own interest.

Minor's savings account

A savings account operated by a minor who can sign, with the bank treating the guardian as the responsible party; the minor cannot be held personally liable on a loan.

Joint account survivor clause

A mode of operation such as either or survivor, former or survivor or anyone or survivor, deciding who may operate the account and who receives the balance.

KYC periodic updation

Customer due diligence at account opening and at periodic intervals based on risk category - low, medium and high - as required by the RBI's Master Directions.

Demand vs time deposit

Demand deposits (savings and current) are payable on demand; time deposits (fixed and recurring) are repayable only after the agreed period.

Deposit insurance cover

Deposit Insurance and Credit Guarantee Corporation insurance of deposits up to ₹5,00,000 per depositor per bank, covering both principal and accumulated interest.

Certificate of deposit

A negotiable money market instrument issued by a bank or financial institution, with a minimum maturity of seven days, for wholesale rupee deposits.

Hypothecation

A charge on movable assets created in favour of a lender without transferring possession of the asset to the lender, common in vehicle and stock finance.

Five Cs of credit

Character, capacity, capital, collateral and conditions - the standard framework used by lenders to assess a borrower's creditworthiness before sanction.

Priority sector target

Domestic commercial banks must lend 40% of adjusted net bank credit to priority sectors, including 18% to agriculture and 12% to weaker sections.

Non-performing asset

A loan or advance on which interest or principal has remained overdue for more than 90 days, requiring provisioning by the bank.

Cheque definition

Under Section 6 of the Negotiable Instruments Act, 1881, a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

Account payee crossing

A crossing that restricts a cheque so that the proceeds are credited only to the payee's bank account, and not paid in cash over the counter.

RTGS

Real Time Gross Settlement, an RBI-operated system settling high-value interbank payments individually in real time, with a minimum transaction value of ₹2 lakh.

Section 138 dishonour

A provision making the dishonour of a cheque for insufficiency of funds an offence, after a demand notice within 30 days and a 15-day payment window.

Insurable interest

A financial or legal relationship with the subject matter of insurance that makes the insured benefit from its safety and suffer from its loss.

Utmost good faith

The principle requiring the proposer and insurer to disclose all material facts fully and honestly, because the insurer cannot inspect the risk personally.

Indemnity principle

The rule that a general insurance claim restores the insured to the financial position before the loss, without allowing profit; life insurance is not a contract of indemnity.

Reinsurance

The transfer of part of an insurer's risk to another insurer, the reinsurer, to reduce exposure and stabilise results; the original insured remains the first insurer's customer.

Free-look period

A window of 15 days (30 days for distance marketing) after receiving the policy during which the policyholder may cancel it and receive the premium refund.

ULIP lock-in

A unit-linked insurance plan must remain in force for at least five years before the policyholder can surrender or withdraw the fund value.

Grace period

The additional time allowed after the due date for a life insurance premium, typically 15 days for monthly and 30 days for other modes, before the policy lapses.

Average clause

A general insurance rule under which a claim is reduced in proportion to under-insurance: claim equals sum insured divided by property value, multiplied by the loss.

Third-party motor cover

Compulsory insurance under the Motor Vehicles Act covering liability for death, injury or property damage caused to a third party by the insured vehicle.

Insurance Ombudsman

An IRDAI-established forum that resolves policyholder complaints up to the prescribed monetary limit free of cost, without barring the complainant from approaching a court.