Maharashtra HSC Vocational BFSI flashcards

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

Scheduled bank

A bank included in the Second Schedule of the RBI Act, 1934, which must satisfy RBI conditions on paid-up capital and reserves and is eligible for RBI facilities.

CRR

Cash Reserve Ratio is the percentage of a bank's net demand and time liabilities that must be held as cash balances with the RBI and earns no interest.

Payments bank

A differentiated bank licensed by RBI that accepts deposits up to ₹2 lakh per customer and offers payments and remittance services but cannot lend or issue credit cards.

NBFC

A non-banking financial company registered with RBI that provides loans and investments but cannot accept demand deposits and is outside the payment and settlement system.

SLR

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

KYC

Know Your Customer is the process of verifying a customer's identity and address, assessing risk category, and monitoring transactions to prevent money laundering and fraud.

Stale cheque

A cheque presented for payment more than three months after its date; banks refuse payment because the instrument is time-barred under the Negotiable Instruments Act.

Account payee crossing

A crossing that restricts payment of a cheque to credit in the bank account of the named payee only, preventing encashment by an unauthorised holder.

NEFT

National Electronic Funds Transfer is an RBI-operated retail funds transfer system that settles transactions in batches and has no minimum or maximum amount limit.

RTGS

Real Time Gross Settlement transfers funds individually and in real time, with a minimum transaction value of ₹2 lakh, used mainly for large-value business payments.

Non-performing asset

A loan or advance on which interest or principal remains overdue for more than 90 days, requiring the bank to classify it and make provisions.

Insurable interest

The legal and financial relationship under which the insured gains from the subject's survival or suffers loss from its damage, required for a valid insurance contract.

Utmost good faith

The principle that both insurer and insured must disclose all material facts honestly; concealment or misstatement allows the insurer to avoid the policy.

Indemnity

The principle that insurance restores the insured to the same financial position as before the loss, without profit; it applies to general insurance, not life insurance.

Subrogation

After paying a claim, the insurer acquires the insured's legal right to recover the loss from the third party responsible for it.

ULIP

A Unit Linked Insurance Plan combines life cover with market-linked investment in units, and carries a mandatory five-year lock-in under IRDAI rules.

Free-look period

The window, generally 15 days for life insurance and 30 days for distance marketing, during which a policyholder may return a policy for a refund.

Primary market

The market in which new securities are issued for the first time, through an initial public offering, further public offer, rights issue or private placement.

Treasury bill

A short-term zero-coupon instrument issued by the government at a discount and redeemed at face value, maturing in 91, 182 or 364 days.

Commercial paper

An unsecured short-term promissory note issued by creditworthy companies to raise working capital, with maturity up to one year and minimum denomination of ₹5 lakh.

Net asset value

The per-unit value of a mutual fund scheme, calculated as total assets minus liabilities divided by the number of units outstanding, usually declared daily.

SEBI

The Securities and Exchange Board of India regulates the securities market, protects investors, licenses intermediaries and promotes orderly development of the market.

SERVQUAL dimensions

The five service quality dimensions: reliability, responsiveness, assurance, empathy and tangibles; reliability, meaning consistent accurate service, matters most to customers.

Integrated Ombudsman Scheme

The RBI's 2021 one-nation scheme allowing customers to complain about deficient banking service after the bank fails to resolve the issue within 30 days.

Mis-selling

Selling a financial product by misrepresenting its nature, risk or returns, such as presenting an insurance policy as a fixed deposit, which violates conduct rules.

Suitability analysis

The process of matching a financial product's risk, tenure and cost to the customer's income, goals and risk tolerance before recommending or selling it.

Accounting equation

The double-entry relationship Assets = Liabilities + Owner's Equity, which stays balanced because every transaction affects at least two accounts equally.

Current ratio

A liquidity measure calculated as current assets divided by current liabilities; a value near 2:1 is conventionally considered comfortable for short-term solvency.

Gross profit

The profit earned from core trading activity, calculated as sales revenue minus the cost of goods sold, before operating expenses, interest and tax are deducted.

Compound interest

Interest calculated on the principal plus previously accumulated interest, using the formula P(1 + R/100)^T minus P, so returns grow faster than simple interest.

FEMA

The Foreign Exchange Management Act, 1999 governs cross-border foreign exchange transactions, permitting current account transactions freely while regulating capital account transactions.

PMLA

The Prevention of Money Laundering Act, 2002 obliges banks to verify customers, monitor transactions, and report suspicious and high-value cash transactions to the authority.

STAR method

An interview answering technique that structures a response as Situation, Task, Action and Result, giving a concrete example in a concise and verifiable way.