RBSE Sec Voc Banking, Financial Services and Insurance flashcards

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

Scheduled bank

A bank listed in the Second Schedule of the RBI Act 1934, having paid-up capital plus reserves of at least Rs 5 lakh and satisfying RBI that its affairs are not conducted in a manner detrimental to depositors.

Repo rate

The rate at which RBI lends short-term funds to banks against government securities; it is the policy signal rate set by the six-member Monetary Policy Committee.

Cash Reserve Ratio

The share of net demand and time liabilities that a bank must hold as cash with RBI. CRR earns no interest and is set under the Reserve Bank of India Act.

Statutory Liquidity Ratio

The portion of net demand and time liabilities a bank must hold in cash, gold or approved government securities. The Banking Regulation Act caps it at 40%.

Regional Rural Bank

A bank set up under the RRB Act 1976 to serve rural areas, typically sponsored by a commercial bank with 50% central, 15% state and 35% sponsor shareholding.

CASA ratio

Current account plus savings account deposits divided by total deposits. Because these are low-cost deposits, a higher CASA ratio generally supports a bank's net interest margin.

Either or survivor

A joint account operating instruction under which either holder can operate the account, and on the death of one holder the balance passes to the survivor.

Cash credit

A working capital facility allowing a borrower to draw up to an approved limit against hypothecation of stock and book debts, with interest charged only on the amount actually used.

MCLR

Marginal Cost of Funds based Lending Rate, the internal benchmark introduced in 2016; a bank cannot lend below it except in categories specifically permitted by RBI.

Cheque Truncation System

An image-based cheque clearing process in which the physical cheque is stopped at the presenting bank and only its electronic image and data travel for clearing.

UPI

Unified Payments Interface, an NPCI-run real-time system that lets a user link bank accounts to a virtual payment address and pay through a mobile app at any hour.

RTGS

Real Time Gross Settlement, an RBI system settling each transaction individually and irrevocably in real time, with a minimum of Rs 2 lakh and no upper limit.

UPI Lite

An on-device small-value UPI wallet that can hold up to Rs 5,000, lets users pay up to Rs 1,000 per transaction without a PIN, and is topped up from the bank account.

Card tokenisation

Replacing a debit or credit card's actual number with a unique alternate token for card-on-file transactions, so merchants never store the real card credentials.

Prepaid Payment Instrument

A stored-value instrument such as a wallet or gift card issued under RBI rules; semi-closed full-KYC PPIs may hold up to Rs 2 lakh per user.

Net Asset Value

The per-unit value of a mutual fund scheme, computed as total assets minus liabilities divided by units outstanding, and declared for each business day.

Non-Banking Financial Company

A company registered with RBI under the RBI Act to carry on financial activity, but which cannot accept demand deposits or issue cheques drawn on itself.

Mutual fund sponsor

The entity that promotes a mutual fund, appoints the trustee and asset management company, and must contribute at least 40% of the AMC's net worth.

T+1 settlement

A settlement cycle in which securities and funds are exchanged one business day after the trade date; Indian equity trades moved fully to this cycle in January 2023.

Insurable interest

A financial and legal relationship in which the policyholder benefits from the subject's continued existence and would suffer measurable loss from its loss; required when a life policy begins.

Utmost good faith

The principle requiring insurer and proposer to disclose all material facts honestly, because the insurer relies on the proposer's information to assess and price the risk.

Subrogation

In indemnity insurance, the insurer's right after paying a claim to stand in the insured's position and recover the amount from the party responsible for the loss.

Free-look period

A window of 30 days from receipt of the policy document during which a policyholder may return a life or health policy and get the premium refunded after permitted deductions.

Health cover moratorium

After 60 continuous months of coverage, a health insurer cannot reject a claim for non-disclosure of a pre-existing condition, except where fraud is proven.

Customer Due Diligence

The KYC process of identifying the customer, verifying identity and address, understanding the purpose of the relationship, and monitoring activity in line with the assessed risk.

Politically Exposed Person

An individual entrusted with a prominent public function, along with family members and close associates, treated as high risk and requiring enhanced due diligence and senior approval.

Suspicious Transaction Report

A report a regulated entity files with FIU-IND when a transaction appears linked to proceeds of crime or terrorism financing, with no minimum monetary threshold.

Cash Transaction Report

A report filed with FIU-IND for cash transactions above Rs 10 lakh in a month, or above Rs 50 lakh in aggregate in a current account in a month.

Key Fact Statement

A standard one-page loan disclosure mandated by RBI showing the all-inclusive annual percentage rate, fees, penal charges and grievance redressal, given before the agreement is signed.

Integrated Ombudsman Scheme

The 2021 RBI scheme merging banking, NBFC and prepaid issuer ombudsman schemes into one centralised framework with a single portal and email for complaints.

Mis-selling

Selling a financial product by misrepresenting its features, risks, charges or suitability, breaching fair practice and conduct norms and exposing the seller to penalties.

MUDRA loan slabs

Categories under Pradhan Mantri MUDRA Yojana: Shishu up to Rs 50,000, Kishore Rs 50,001 to Rs 5 lakh, Tarun Rs 5 to Rs 10 lakh, and Tarun Plus Rs 10 to Rs 20 lakh.