RBSE SS Voc Banking key terms

A mandatory process in which a bank verifies a customer's identity, address and source of funds using documents such as Aadhaar, PAN or passport before opening an account or allowing certain transactions.

A deposit that the account holder can withdraw at any time without prior notice, typically held in a savings or current account and payable on demand at the branch or through an ATM.

A deposit kept with a bank for a fixed period at an agreed interest rate, such as a fixed deposit or recurring deposit, which generally cannot be withdrawn before maturity without a penalty.

A deposit account meant mainly for businesses, offering unlimited withdrawals and no interest, with overdraft facility available subject to the bank's approval and the customer's credit standing.

A savings product in which the customer deposits a fixed amount every month for a chosen tenure, and the bank pays interest on the accumulated balance at maturity.

A document that guarantees payment of a specified sum to the holder, either on demand or at a set date, and whose ownership can be transferred by delivery or endorsement and delivery.

A written order by a drawer directing a bank to pay a stated amount from the drawer's account to a named payee or bearer, valid for three months from the date written on it.

Drawing two parallel lines across the face of a cheque to restrict payment, so that the amount must be credited to a bank account rather than paid in cash across the counter.

The act of signing the back of a negotiable instrument, usually to transfer rights to another person or to authorise collection, and the signature must match the name of the payee.

Refusal by the drawee bank to pay a cheque, often because of insufficient funds, a signature mismatch or a stop-payment instruction, which may lead to legal action against the drawer.

A written promise by one person to pay a definite sum of money to another person or to their order, signed by the maker and containing an unconditional undertaking to pay.

A written instrument containing an unconditional order, signed by the maker, directing another person to pay a certain sum to a specified person or bearer on demand or at a fixed future date.

A nationwide electronic funds transfer system operated by the Reserve Bank of India that settles individual transactions in batches, allowing transfer of funds between bank accounts across the country.

A payment system in which funds are transferred individually and immediately between banks, with no netting or waiting, used mainly for high-value transactions above the prescribed minimum limit.

A real-time payment system developed by NPCI that lets users link bank accounts to a mobile app and transfer money instantly using a virtual payment address or QR code.

A unique identifier, usually in the form of a name followed by a bank handle, that a UPI user shares instead of account details to receive or send money.

An instant interbank electronic fund transfer service available twenty-four hours a day through mobile, internet and ATM channels, identified by a beneficiary account number and IFSC code.

An eleven-character alphanumeric code assigned to every bank branch in India, used in electronic transfers to identify the destination bank and branch accurately.

A facility allowing a current account holder to withdraw more than the available balance up to an approved limit, with interest charged only on the amount actually used.

A short-term working capital facility in which a borrower can draw funds up to a sanctioned limit against the security of stock and receivables, paying interest on the daily amount used.

A loan granted for a fixed period, usually repaid in instalments, and used to finance the purchase of assets such as machinery, vehicles or property rather than day-to-day expenses.

A fixed payment made by a borrower to a lender on a specified date each month, covering part of the principal and the interest so that the loan is fully repaid by the end of the tenure.

The gradual reduction of a loan balance over time through regular instalments, or the systematic writing off of an intangible asset's cost over its useful life in the books.

An asset or security pledged by a borrower to a lender to reduce the lender's risk, which the lender may sell if the borrower fails to repay the loan as agreed.

A charge created in favour of a bank over movable assets such as stock or machinery, where the borrower keeps possession but the lender can seize the goods if the loan is not repaid.

The transfer of an interest in immovable property, such as land or a building, to a lender as security for a loan, with the property returnable once the debt is repaid.

A loan or advance on which the borrower has stopped paying principal or interest for more than ninety days, forcing the bank to classify it as substandard, doubtful or a loss asset.

The amount a bank sets aside from its profits to cover expected losses on bad loans and other assets, based on the asset classification prescribed by the regulator.

A measure of a bank's financial strength, calculated as capital divided by risk-weighted assets, showing whether the bank holds enough capital to absorb unexpected losses.

International standards on bank capital, liquidity and risk management issued by the Basel Committee on Banking Supervision, which Indian banks follow through RBI guidelines.

The possibility that a borrower will fail to repay a loan or meet a contractual obligation on time, causing the lender to lose interest income or principal.

A set of laws, regulations and procedures that banks follow to detect and report the movement of illegally obtained money, including transaction monitoring and reporting suspicious activity to authorities.

The process of gathering and verifying information about a customer's identity, business and expected transactions before and during a banking relationship, with more checks for higher-risk customers.

An independent authority appointed by the Reserve Bank of India to resolve complaints of bank customers against banks free of charge, after the customer has first approached the bank.

The formal system a bank maintains to receive, record and resolve customer complaints within prescribed time limits, including escalation to the internal committee and then to the Ombudsman.

A system of recording every transaction with equal debit and credit entries in at least two accounts, so that the accounting equation and the trial balance always remain in balance.

A statement listing all ledger account balances at a given date, with debit and credit columns, prepared to check that total debits equal total credits before final accounts are made.

The principal book of accounts in which transactions are posted from the journal into individual accounts, showing the running balance of each account at any point in time.

The first record of a transaction in the books, showing the date, the accounts debited and credited, the amount and a brief narration explaining why the entry was made.

The systematic reduction in the recorded value of a fixed asset over its useful life, charged as an expense in the profit and loss account each year.

The process of ensuring that individuals and small businesses have access to affordable and useful financial services, including savings, credit, insurance and payments, especially in unbanked areas.

A national mission launched in 2014 to bring every household into the formal banking system by opening basic savings accounts with RuPay cards, overdraft cover and access to insurance and pensions.

An agent appointed by a bank to provide basic banking services such as deposits, withdrawals and account opening in areas where the bank has no branch, using biometric devices and a small outlet.

The use of a smartphone application or SMS to access bank accounts, check balances, transfer funds and pay bills, usually protected by a PIN, password or biometric authentication.

A security method that requires two independent proofs of identity, such as a password plus a one-time password sent to the customer's registered mobile number, before a transaction is allowed.

A fraud in which a criminal sends fake messages, emails or websites that imitate a bank to trick a customer into revealing passwords, card numbers or one-time passwords.

An instruction given by an account holder to the bank to refuse payment on a particular cheque or range of cheques that has already been issued but not yet presented.

Finance provided to meet a business's day-to-day operating needs such as buying stock, paying wages and covering expenses until sales proceeds are collected from customers.

A deposit account for individuals that pays a modest rate of interest, encourages thrift and allows limited withdrawals, with restrictions on the number of free transactions each month.