WBCHSE HS Vocational 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.

Repo Rate

The rate at which RBI lends short-term funds to banks against government securities. Raising it makes borrowing costlier and helps control inflation by reducing liquidity in the system.

Scheduled Bank

A bank included in the Second Schedule of the RBI Act, 1934. It must maintain CRR with RBI and meet minimum paid-up capital and reserve requirements, gaining access to RBI facilities.

NBFC

A non-banking financial company that lends and invests but cannot accept demand deposits and cannot issue cheques as part of the payment system. It is regulated by RBI.

Financial Inclusion

Providing affordable financial services, including a basic account, credit, insurance and pension, to unserved and underserved sections of society. PM Jan Dhan Yojana is a flagship Indian initiative.

Current Account

A business deposit account that pays no interest and allows unlimited transactions. It is designed for firms needing frequent payments, receipts and overdraft facilities.

Recurring Deposit

A deposit account where the customer pays a fixed instalment every month for an agreed term. Interest is compounded and the maturity value is paid at the end of the term.

Crossing a Cheque

Two parallel lines drawn on a cheque that restrict it to collection through a bank account. It cannot be cashed over the counter, reducing the risk of fraudulent encashment.

Endorsement

The signature of the holder on the back of a negotiable instrument, transferring the right to receive payment. An order cheque requires endorsement plus identification before payment.

RTGS

Real Time Gross Settlement transfers funds individually and instantly, without netting, for high-value payments. It is used mainly for large business and interbank transactions during prescribed hours.

Insurable Interest

A financial or legal relationship in which the insured benefits from the subject's survival or suffers loss from its damage. It must exist when the policy is taken.

Principle of Indemnity

The insurer restores the insured to the same financial position as before the loss, neither more nor less. It applies to general insurance but not to life insurance.

Utmost Good Faith

Both parties must disclose all material facts fully and honestly. Non-disclosure or misrepresentation of material facts allows the insurer to avoid the contract.

Subrogation

After paying a claim, the insurer acquires the insured's right to recover the loss from the responsible third party. It prevents the insured from recovering twice.

Nomination

The policyholder's written designation of a person to receive the policy proceeds on death. The nominee acts as a trustee for legal heirs under Indian insurance law.

Treasury Bill

A short-term government security issued at a discount and redeemed at face value, with maturity of 91, 182 or 364 days. The investor's return is the discount.

Primary Market

The market where new securities are issued to investors, as in an IPO, FPO or rights issue. Proceeds go to the issuing company or government.

Mutual Fund NAV

Net Asset Value per unit equals total assets minus total liabilities, divided by units outstanding. It is calculated daily at the close of the market.

Debenture

A debt instrument issued by a company carrying a fixed rate of interest and repayment of principal at maturity. Holders get no ownership or voting rights.

Bond Price Sensitivity

Bond prices move inversely with market interest rates. When rates rise, the present value of fixed coupons falls and the bond price declines; longer maturity increases sensitivity.

SERVQUAL Dimensions

Five service quality dimensions: reliability, responsiveness, assurance, empathy and tangibles. Reliability, meaning dependable and accurate service, has the strongest effect on customer satisfaction.

Active Listening

Fully concentrating on the speaker, paraphrasing the message, asking clarifying questions and summarising before responding. It reduces misunderstandings in customer interactions.

Banking Ombudsman

An RBI-appointed authority that resolves customer complaints against banks after the bank has been approached first and has failed to resolve the grievance within the prescribed period.

Mis-selling

Selling a financial product without disclosing its terms, charges or risks, or selling an unsuitable product. It breaches fair practice codes and may attract regulatory penalties.

KYC

Know Your Customer: identifying and verifying a customer using proof of identity and address, then monitoring transactions. It is mandatory under the Prevention of Money Laundering Act.

DICGC Cover

Deposit insurance that protects each depositor up to the notified limit per bank, covering principal and interest. It is paid by the Deposit Insurance and Credit Guarantee Corporation.

Priority Sector Lending

A regulatory requirement directing a specified share of bank credit to agriculture, MSMEs, education, housing and weaker sections. Shortfalls are deposited in a fund.

Basel III

An international framework setting minimum capital, leverage and liquidity standards for banks. It defines Common Equity Tier 1, Tier 1 and total capital ratios.

UPI

Unified Payments Interface, a real-time 24x7 payment system run by NPCI. Users pay through a virtual payment address without sharing account numbers or IFSC codes.

Phishing

A fraud where fake emails, links or messages imitate a bank to steal passwords, PINs or OTPs. Banks never ask for such details through links or calls.

Two-Factor Authentication

Verification using two independent factors, such as a PIN the user knows plus an OTP sent to a registered device. It makes unauthorised digital transactions harder.

Payment Bank

A licensed bank that accepts deposits up to the notified limit per customer and offers payments and remittances, but cannot lend or issue credit cards.

EMI Calculation

Equated Monthly Instalment equals P times r times (1+r)^n divided by ((1+r)^n minus 1), where P is loan amount, r the monthly rate and n the number of months.