IIFCL Grade A flashcards

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

Repo Rate

The rate at which RBI lends short-term funds to commercial banks against government securities. Raising it tightens liquidity and curbs inflation; the MPC reviews it bi-monthly.

Priority Sector Lending

Mandate requiring scheduled commercial banks to deploy 40% of adjusted net bank credit to agriculture, MSMEs, education, housing, and weaker sections, with agriculture sub-target of 18%.

NaBFID

National Bank for Financing Infrastructure and Development, set up in 2021 as a development financial institution to provide long-tenor infrastructure financing and catalyse bond-market funding.

Flexible Inflation Targeting

India's monetary framework since 2016 sets CPI inflation at 4% with a 2%-6% tolerance band; failure for three consecutive quarters triggers a report to Parliament.

Viability Gap Funding

A capital grant from government covering part of a PPP project's cost, typically up to 20% and extendable to 40%, to make infrastructure projects commercially viable.

Basel III Capital Buffers

Beyond minimum capital, banks hold a 2.5% capital conservation buffer and a countercyclical buffer of 0%-2.5%, restricting dividends when buffers are breached.

Operating Cycle

Inventory holding days plus receivable collection days minus payable payment days. A shorter cycle frees working capital and lowers the financing requirement of a business.

Weighted Average Cost of Capital

WACC equals equity weight times cost of equity plus debt weight times post-tax cost of debt. It is the hurdle rate for evaluating capital investment proposals.

Net Present Value

Sum of discounted future cash flows minus initial investment. A positive NPV means the project adds value at the given discount rate; accept such projects.

Debt Service Coverage Ratio

Cash flow available for debt service divided by scheduled principal and interest. Lenders typically require a minimum DSCR of 1.20x to 1.50x.

Special Purpose Vehicle

A ring-fenced legal entity created solely for a project, isolating lenders from sponsor liabilities and enabling non-recourse financing based on project cash flows.

Hybrid Annuity Model

A PPP structure where government funds 40% of project cost during construction and the concessionaire arranges the rest; the balance is repaid as annuities.

Loan Life Coverage Ratio

Present value of cash flows available for debt service over the remaining loan life divided by outstanding debt. It measures long-term debt-servicing comfort.

Non-Performing Asset

A loan where principal or interest remains overdue for more than 90 days. Banks classify NPAs as sub-standard, doubtful, and loss assets under IRAC norms.

SARFAESI Act

The 2002 law allowing secured creditors to enforce security interest and take possession of assets without court intervention after a loan turns non-performing.

Capital Adequacy Ratio

Bank capital divided by risk-weighted assets. It measures solvency cushion; Indian banks must maintain a minimum CRAR of 9% plus buffers.

Compound Interest Formula

Amount equals principal times (1 + rate/100) raised to the number of periods. For two years, compound interest exceeds simple interest by principal times (rate/100) squared.

Downstream Speed

Speed of a boat moving with the current, equal to boat speed in still water plus stream speed. Upstream speed is the difference of the two.

Combination Formula

nCr equals n factorial divided by r factorial times (n minus r) factorial. It counts selections where order does not matter, unlike permutations.

Syllogism Validity

A conclusion is valid only if it follows from every possible Venn diagram of the premises. A single counter-diagram makes the conclusion invalid.

Successive Discount Formula

Two successive discounts of a% and b% equal a single discount of a + b minus ab/100 percent. Apply sequentially, never by simple addition.

Subject-Verb Agreement

Singular subjects take singular verbs. Indefinite pronouns such as each, everyone, and neither are singular; with neither-nor the nearer subject decides the verb.

Present Perfect Tense

Formed with has or have plus past participle. It describes past actions with present relevance or unfinished time, unlike simple past used for finished periods.

Fixed Prepositions

Certain words require specific prepositions: comply with, consist of, prior to, in accordance with, and despite. Comprise takes no preposition before its object.

Para Jumble Technique

Identify the opening sentence, which lacks back-references, then track pronouns, articles, and connectors. Transition words like however signal contrast between adjacent sentences.

Reading Comprehension Inference

An inference is a conclusion logically supported but not directly stated. Reject options that are true generally yet unsupported by the given passage.

Cloze Test Strategy

Read the whole passage first to grasp context, then select options fitting both grammar and meaning. Verify collocations and parallel structure before finalising.

Concession Agreement

A contract between government and a private operator granting rights to build and operate infrastructure for a defined period, specifying tariffs, obligations, and handback conditions.

Sensitivity Analysis

Testing how project NPV or DSCR changes when key variables such as traffic, tariff, construction cost, or interest rate vary. It reveals which risks matter most.

Internal Rate of Return

The discount rate at which a project's NPV equals zero. Accept projects whose IRR exceeds the cost of capital; it assumes reinvestment at the same rate.

DuPont Analysis

Decomposes return on equity into net profit margin, asset turnover, and equity multiplier, showing whether profitability, efficiency, or leverage drives returns.

Cash Flow Statement

A statement classifying cash movements into operating, investing, and financing activities, reconciling opening and closing cash balances over an accounting period.