JAIIB PPB key terms

The interest rate at which the Reserve Bank of India lends short-term funds to commercial banks against government securities, used as a main tool to control liquidity and inflation.

The rate at which the RBI absorbs surplus liquidity from banks by borrowing against government securities; normally sits below the repo rate within the liquidity adjustment corridor.

The percentage of a bank's net demand and time liabilities that must be held as cash balances with the RBI, earning no interest and reducing funds available for lending.

The minimum share of net demand and time liabilities a bank must hold in cash, gold, or approved government securities before extending credit, prescribed under the Banking Regulation Act.

The aggregate of liabilities a bank owes to the public, excluding interbank liabilities, computed as demand deposits plus time deposits plus other specified liabilities minus assets with other banks.

The RBI's window through which banks borrow against government securities at the repo rate or park surplus funds at the reverse repo rate, keeping overnight rates near the policy rate.

Actions taken by the RBI's Monetary Policy Committee to manage money supply, credit availability, and inflation using instruments such as policy rates, reserve ratios, and open market operations.

The rate at which the RBI lends long-term funds to banks without collateral or rediscounts eligible bills; it acts as the ceiling of the interest rate corridor.

A penal window allowing banks to borrow overnight from the RBI against excess government securities, above the SLR, at a rate higher than the repo rate.

Purchase or sale of government securities by the RBI in the secondary market to inject or absorb liquidity and influence short-term interest rates.

A mandate requiring banks to direct a specified share of credit to sectors such as agriculture, micro and small enterprises, education, housing, and weaker sections, as per RBI norms.

A loan or advance where interest or principal has remained overdue for more than 90 days, classified as substandard, doubtful, or loss asset depending on the period of default.

An NPA that has remained non-performing for a period up to 12 months; it carries higher risk weight and requires larger provisioning than a standard asset.

An NPA that has remained substandard for more than 12 months; it is further graded by the period since default and attracts progressively higher provisioning based on security cover.

An NPA considered uncollectible or of negligible value, identified by the bank, internal auditors, or RBI inspection, requiring full provisioning or write-off.

Special Mention Account status applied to loans with overdue amounts before they become NPAs, graded SMA-0, SMA-1, and SMA-2 based on days past due.

The charge a bank makes against profits to create a buffer for expected loan losses, calculated as a percentage of standard assets or by asset classification and security value.

The ratio of a bank's capital to its risk-weighted assets, ensuring enough cushion to absorb losses; Basel III norms require a minimum plus a capital conservation buffer.

A bank's on- and off-balance-sheet exposures multiplied by RBI-prescribed risk weights based on borrower creditworthiness and product type, used as the denominator in capital adequacy calculations.

Core capital comprising paid-up equity, statutory reserves, and disclosed free reserves, available to absorb losses without triggering insolvency; it includes Common Equity Tier 1.

Supplementary capital including revaluation reserves, general provisions, and subordinated debt, which counts toward regulatory capital but is subordinate to depositors' claims.

International capital and liquidity standards introduced after the 2008 crisis, covering higher capital requirements, leverage ratio, liquidity coverage ratio, and net stable funding ratio.

A Basel III measure requiring banks to hold enough high-quality liquid assets to survive a 30-day stress scenario of net cash outflows.

A Basel III ratio comparing available stable funding with required stable funding over a one-year horizon, discouraging excessive reliance on short-term wholesale funding.

Know Your Customer rules requiring banks to verify customer identity and address, understand the nature of business, and monitor transactions to prevent money laundering and terror financing.

A framework of laws, procedures, and reporting duties, including suspicious transaction reports and cash transaction reports, that banks follow to detect and deter laundering of illicit funds.

The process of identifying customers, verifying beneficial ownership, assessing risk profiles, and conducting ongoing monitoring proportionate to the perceived money-laundering risk.

A document such as a cheque, promissory note, or bill of exchange that guarantees payment of a stated sum and can be transferred by delivery or endorsement.

A person who takes a negotiable instrument in good faith, for value, and before maturity, thereby acquiring an absolute title free from prior defects.

An image-based clearing system in which the electronic image and data of a cheque are transmitted for payment, eliminating physical movement of the instrument.

An accounting method where every transaction affects at least two accounts, with total debits equalling total credits, keeping the balance sheet in balance.

A statement listing all ledger account balances at a given date to verify that total debits equal total credits before preparing final accounts.

A statement prepared to reconcile the bank statement balance with the cash book balance, explaining differences caused by cheques in transit, charges, or errors.

Spending on acquiring or improving long-term assets such as premises or equipment, recorded on the balance sheet rather than charged to the profit and loss account.

The systematic allocation of the cost of a fixed asset over its useful life, reflecting wear and tear or obsolescence, charged as an expense in the profit and loss account.

The principle that a rupee received today is worth more than the same rupee received later, because it can be invested to earn interest over time.

The current worth of a future sum or stream of cash flows, obtained by discounting at an appropriate interest rate over the given period.

Interest calculated on both the original principal and previously accumulated interest, so the amount grows faster than under simple interest over multiple periods.

The difference between the present value of cash inflows and the present value of outflows of a project; a positive value indicates the project adds value at the chosen discount rate.

The discount rate at which a project's net present value becomes zero, representing the effective annual return generated by the investment's cash flows.