UPMSP Vocational Banking 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. A cut makes credit cheaper and tends to raise loan demand and inflation.

CRR

Cash Reserve Ratio is the share of a bank's net demand and time liabilities that must be held as cash with RBI. It earns no interest and reduces lendable funds.

Scheduled Commercial Bank

A bank included in the Second Schedule of the RBI Act, 1934. It must satisfy paid-up capital and reserve conditions and complies with RBI directions.

Money Market

The market for short-term funds up to one year, covering call money, treasury bills, commercial paper and certificates of deposit. It is regulated by RBI.

KYC

Know Your Customer is the mandatory identity and address verification process before opening an account or granting credit. It also covers periodic re-verification and risk categorisation.

Either or Survivor

A joint account operation mode where any one holder can operate the account during their lifetime. On death, the balance passes to the survivor.

Recurring Deposit

A deposit scheme where a fixed amount is paid every month for an agreed term at a fixed rate. Interest compounds and the maturity value is paid at the end.

Dormant Account

A deposit account with no customer-induced transaction for the period prescribed by RBI. Reactivation needs a written request and fresh KYC verification.

EMI

Equated Monthly Instalment is the fixed monthly payment of principal plus interest on a loan. It is computed using the reducing-balance formula over the tenure.

Cash Credit

A working capital facility allowing a borrower to draw up to a sanctioned limit against hypothecated stock and book debts. Interest is charged on the amount actually used.

Non-Performing Asset

A loan or advance where interest or principal is overdue for more than 90 days. It is then classified as substandard, doubtful or loss for provisioning.

Priority Sector Lending

A mandated share of bank credit directed to agriculture, MSMEs, education, housing and weaker sections. A shortfall is deposited in the Rural Infrastructure Development Fund.

RTGS

Real Time Gross Settlement transfers high-value funds individually and instantly through RBI. There is no netting, so each transaction settles on its own.

UPI

Unified Payments Interface is an instant 24x7 payment system run by NPCI. It links bank accounts to a virtual address for mobile-based transfers.

CTS Clearing

Cheque Truncation System clears cheques using scanned images and data instead of physical movement. It speeds up clearing and reduces the risk of loss in transit.

A/c Payee Crossing

A crossing that directs the collecting bank to credit the cheque only to the named payee's account. Further endorsement to a third party is not permitted.

Double Entry System

An accounting method where every transaction is recorded with equal debits and credits. It keeps the accounting equation Assets = Liabilities + Capital in balance.

Suspense Account

A temporary account used to park a difference in the trial balance until the error is located. It must be cleared before final accounts are prepared.

Bank Reconciliation Statement

A statement reconciling the cash book balance with the passbook balance. Differences arise from unpresented cheques, uncredited cheques, bank charges, interest and errors.

Nominal Account

An account for expenses, losses, incomes and gains. The rule is debit expenses and losses, and credit incomes and gains; balances are closed to profit and loss.

Integrated Ombudsman Scheme

RBI's 2021 scheme for complaints against regulated entities. A complaint can be filed after 30 days of no response or an unsatisfactory reply, online or by post.

Fair Practice Code

A code requiring banks to disclose charges, use transparent loan agreements and treat customers fairly. It covers collection practices and grievance redressal.

Turnaround Time

The stated maximum period within which a bank must complete a service or resolve a complaint. It is published and used to measure service quality.

Rule of 72

A quick estimate of the years needed to double money: divide 72 by the annual interest rate. At 9 percent, money doubles in about eight years.

Emergency Fund

Money set aside to cover essential expenses during a job loss or medical event. The usual target is three to six months of expenses in a safe liquid form.

Credit Score

A numeric summary of credit history issued by a credit bureau such as CIBIL. A higher score improves loan approval chances and may lower the interest rate.

Principle of Indemnity

In general insurance the insurer restores the insured to the pre-loss financial position, not more. It does not apply to life insurance, which pays the sum assured.

PMJJBY

Pradhan Mantri Jeevan Jyoti Bima Yojana is a renewable one-year life insurance scheme for bank account holders in the eligible age band, at a low annual premium.

Atal Pension Yojana

A government pension scheme for the unorganised sector. Subscribers contribute regularly and receive a fixed monthly pension after attaining sixty years of age.

Section 138 NI Act

This provision makes dishonour of a cheque for insufficiency of funds a criminal offence. A statutory notice must be served before filing a complaint.

SARFAESI Act

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 lets secured creditors enforce security without going to court.

Bank Reconciliation Exercise

A practical task comparing the cash book with the bank passbook, listing unpresented and uncredited cheques, charges and errors, and arriving at the reconciled balance.