UPMSP Vocational Banking key terms

A financial institution licensed to accept deposits from the public, keep that money safe, and lend it onward to borrowers. It also moves funds between customers and earns income from the difference between interest paid and charged.

The Reserve Bank of India, the country's central bank. It issues currency, sets monetary policy, licenses and supervises banks, and acts as lender of last resort, so it is the regulator every bank employee must respect.

The network of banks, cooperative societies, insurers, mutual funds, stock exchanges and regulators that channels savings from people who have surplus money to those who need funds, supporting growth and payments across the economy.

A basic deposit account for individuals that allows deposits and withdrawals, pays a small rate of interest, and usually has limits on the number and value of cash withdrawals at branches and ATMs.

A deposit account meant for businesses and traders, offering unlimited withdrawals and no interest, with overdraft facility possible. It suits frequent transactions rather than saving because the balance is expected to move daily.

A term deposit where money is locked for a chosen period at a fixed interest rate. The rate is usually higher than a savings account, and premature withdrawal is allowed with a penalty in the applicable rate.

A deposit scheme in which the customer pays a fixed amount every month for an agreed period. At maturity the accumulated instalments plus interest are paid out, encouraging regular small savings.

Know Your Customer, the mandatory process of identifying and verifying a customer through documents such as identity and address proof before opening an account or allowing high-value transactions, to prevent fraud and money laundering.

Money placed with a bank for safekeeping, which the bank records as a liability and uses to fund lending. Deposits are the main source of a bank's funds and are repayable on demand or at maturity.

A sum lent by a bank to a borrower who agrees to repay it with interest over a set schedule. The bank assesses repayment capacity, security and purpose before sanctioning any amount.

An asset pledged by a borrower to secure a loan, which the lender may sell if repayment fails. Common examples are property, gold and fixed deposits, and it reduces the lender's risk of loss.

Equated Monthly Instalment, the fixed payment a borrower makes each month on a loan. Each instalment contains interest for the period plus a part of the principal, so the loan clears by the final date.

Non-Performing Asset, a loan on which the borrower has stopped paying interest or principal for a specified period, usually more than ninety days. Banks must provide for such losses and pursue recovery.

A written order by an account holder directing the bank to pay a stated amount to a named person or bearer. Validity is three months from the date written, and it must be signed and drawn on a funded account.

The process by which cheques and other instruments are exchanged between banks and settled through a clearing house or electronic system, so that funds reach the payee's bank and the payer's account is debited.

National Electronic Funds Transfer, a retail payment system for sending money between bank accounts across India in batches. It works round the clock and has no minimum amount, but settlement is not immediate.

Real Time Gross Settlement, a payment system for large-value, time-critical transfers where each transaction is settled individually and immediately. There is a minimum transfer amount, and it is used mainly by businesses.

Immediate Payment Service, an instant interbank fund transfer available all day through mobile banking, internet banking and ATMs. It has a per-transaction limit and is useful for small urgent payments.

Unified Payments Interface, a system that links bank accounts to a virtual payment address so users can send or receive money instantly through a mobile app, using a PIN and often a QR code.

A book-keeping method in which every transaction is recorded twice, once as a debit and once as a credit of equal amount. This keeps the accounting equation balanced and helps detect errors.

The main book of accounts in which transactions are posted under individual account heads, showing debits and credits and a running balance. It is the source for preparing the trial balance and final accounts.

A statement listing the closing balances of all ledger accounts to check that total debits equal total credits. If the totals do not agree, an arithmetical or posting error exists somewhere in the books.

The book in which transactions are first recorded in date order, with the accounts to be debited and credited and a short narration. Entries are later posted from the journal to the ledger.

The way a bank treats its customers, covering polite behaviour, clear information, quick grievance handling and fair dealing. Good service builds trust, reduces complaints and keeps depositors loyal to the branch.

An independent authority appointed under RBI rules to hear customer complaints against banks that remain unresolved after the bank's own grievance process. Its decisions are binding on the bank concerned.

The percentage charged on borrowed money or paid on deposited money over a period. Banks earn by lending at a higher rate than they pay depositors, and RBI policy strongly influences these rates.

Interest calculated on the original principal plus all interest already added to it, so the amount grows faster over time. It differs from simple interest, which is always computed on the principal alone.

The knowledge and skills needed to manage money wisely, including budgeting, saving, borrowing carefully, understanding interest and using banking and insurance services safely. It helps people avoid debt traps and fraud.

A contract in which a person pays a regular premium to an insurer, which in return promises to compensate for specified losses such as death, illness, fire or accident, spreading risk across many policyholders.

The amount a policyholder pays to an insurer, monthly, quarterly or annually, to keep an insurance policy in force. Failure to pay within the grace period can lapse the policy and end its cover.

Pradhan Mantri Jan Dhan Yojana, a national financial inclusion scheme launched in 2014 to open basic savings accounts for unbanked people, with features such as a zero-balance account, a RuPay card and accident cover.

A document that promises or orders payment of a sum of money and can be transferred by delivery or endorsement, giving the holder a right to the amount. Cheques, bills of exchange and promissory notes are examples.

A law that allows banks to enforce security against defaulting borrowers without going to court, by taking possession of mortgaged assets and selling them to recover dues, after following the prescribed notice procedure.

Anti-Money Laundering, the set of laws, rules and internal checks that banks follow to detect and report transactions that may involve illegal funds, including suspicious transaction reports and strict customer due diligence.

Cash Reserve Ratio, the share of a bank's net demand and time liabilities that must be kept as cash with the RBI. It earns no interest and is used by the central bank to control liquidity in the system.

A facility allowing a customer to withdraw more than the balance in the account, up to an approved limit, with interest charged on the amount actually used. It is common for current accounts and salary accounts.

A legal charge created over immovable property, such as a house or land, in favour of a lender as security for a loan. If the borrower defaults, the lender may enforce the mortgage to recover the debt.

Closing a term deposit before its maturity date. The bank normally pays a lower interest rate than the contracted one, and some schemes may not permit withdrawal at all during a lock-in period.