NRB Assistant Director key terms

The share of a bank's total deposits that must be held as cash balances with the central bank. It earns little or no interest and directly limits how much a bank can lend.

The minimum portion of deposits a bank must hold in safe, liquid assets such as government securities, cash, or gold. It restricts credit expansion and safeguards depositor repayment capacity.

The interest rate a central bank charges when lending to commercial banks against eligible securities on a longer-term basis. It anchors other lending rates and signals the policy stance.

Buying or selling government securities by the central bank to inject or absorb liquidity. Purchases expand reserves and lower short-term rates; sales do the opposite.

The benchmark short-term interest rate a central bank sets to steer borrowing costs and inflation. Changes in it ripple through deposit, lending, and interbank rates.

The rate at which the central bank lends short-term funds to banks against government securities, with an agreement to repurchase them later. It is a key liquidity-management tool.

A monetary framework in which the central bank publicly commits to a numeric inflation target and uses interest rates to pursue it, with accountability for misses.

Central bank actions managing money supply, credit, and interest rates to achieve price stability, support growth, and maintain external balance.

A measure tracking the average change over time in prices paid by households for a fixed basket of goods and services. It is the common gauge of headline inflation.

A broad price index calculated as nominal GDP divided by real GDP, times one hundred. It covers all domestically produced output and is not limited to a consumer basket.

The value of all final goods and services produced in an economy in a period, measured at constant prices. It strips out inflation so growth comparisons are meaningful.

The gap between total government expenditure and total revenue excluding borrowings. It shows how much the government must borrow to fund its spending in a year.

The accumulated stock of money a government owes to domestic and foreign lenders. It rises when deficits are financed by borrowing rather than revenue.

The condition in which a government can service its debt without excessive adjustment or default. It depends on debt size relative to output, interest costs, and growth prospects.

A bank's capital expressed as a percentage of its risk-weighted assets. It measures the buffer available to absorb losses and is a core supervisory requirement.

A bank's assets adjusted for credit, market, and operational risk so riskier exposures count more. The total forms the denominator of capital adequacy ratios.

A loan on which the borrower has stopped paying principal or interest for a defined period, commonly ninety days. High levels erode earnings and capital.

An expense a bank records to build a reserve against loans expected to become uncollectible. It reduces reported profit and strengthens the allowance for credit losses.

Rules setting minimum standards for bank capital, liquidity, lending limits, and risk management. The aim is to keep individual institutions and the wider system sound.

A requirement that a bank hold enough high-quality liquid assets to survive a thirty-day stress outflow. It targets short-term funding resilience rather than solvency.

A scheme that reimburses depositors up to a set limit if a bank fails. It protects small savers and reduces the risk of panic withdrawals.

A situation where many depositors withdraw funds at once because they fear a bank will fail. It can make a solvent but illiquid bank collapse.

The tendency to take greater risks when the consequences are borne by someone else, such as insured depositors or a government bailout. It justifies prudential safeguards.

The process banks use to verify a client's identity, address, and business before opening accounts or handling transactions. It underpins anti-money-laundering compliance.

Laws, rules, and procedures that detect and report attempts to disguise the proceeds of crime as legitimate funds. Banks must monitor transactions and file suspicious activity reports.

The natural person who ultimately owns or controls an account, company, or transaction, even if another name appears on the documents. Identifying them is a KYC requirement.

An international framework of bank capital, leverage, and liquidity standards agreed after the 2008 crisis. It raises capital quality and adds buffers to strengthen resilience.

A system recording every transaction as equal debits and credits, so total debits always equal total credits. It makes errors and omissions easier to detect.

A list of all ledger account balances at a date, split into debit and credit columns that should agree. It is a check before preparing final statements.

A statement showing assets, liabilities, and equity at a point in time. Assets must equal liabilities plus equity under the accounting equation.

Accounting that records revenue when earned and expenses when incurred, regardless of when cash moves. It gives a truer picture of performance than cash receipts alone.

The systematic allocation of a fixed asset's cost over its useful life. It spreads the expense across periods that benefit from the asset.

The sum of future cash flows discounted to today at a required rate, minus the initial investment. A positive value suggests the project adds value.

The discount rate at which a project's net present value equals zero. It is compared with the cost of capital to judge viability.

The minimum return a firm must earn on funds invested to satisfy lenders and shareholders. It is the benchmark for accepting projects.

A measure of how widely values in a data set spread around their mean. A larger value indicates greater variability and, in finance, higher risk.

The ratio of standard deviation to the mean, expressing variability as a percentage. It allows risk comparison across data sets with different units or sizes.

Rules made by an executive body under authority granted by a parent statute. Courts may strike it down if it exceeds that authority or conflicts with the enabling law.

The power of courts to examine whether executive or administrative action complies with law and procedure. Remedies include writs such as certiorari and mandamus.

The freedom an official has to choose among lawful options when applying a rule. It must be exercised reasonably, in good faith, and for the purpose the law intends.

Two core procedural safeguards: hearing the affected party fairly and having an unbiased decision-maker. Administrative decisions breaching them can be quashed.