Indian Economy: 100+ Banking and Finance Terms Glossary

Banking and finance terminology is heavily tested in Kerala PSC exams, especially for graduate-level posts. This note covers 100+ terms organized by category with current values (as of early 2026) and clear explanations.

RBI Policy Rates

Term	Full Form	Meaning	Current Rate (approx.)
Repo Rate	Repurchase Rate	Rate at which RBI lends to commercial banks (short-term)	6.00%
Reverse Repo Rate	—	Rate at which RBI borrows from commercial banks	3.35%
Bank Rate	—	Rate at which RBI lends long-term to banks (no collateral)	6.25%
MSF	Marginal Standing Facility	Emergency lending rate (1% above repo); banks can borrow up to 1% of NDTL	6.25%
CRR	Cash Reserve Ratio	% of deposits banks must keep with RBI as cash	4.0%
SLR	Statutory Liquidity Ratio	% of deposits banks must hold in gold/govt securities	18.0%

Key Monetary Concepts

Term	Meaning
NDTL	Net Demand and Time Liabilities — total deposits of a bank (demand + time - interbank)
Open Market Operations (OMO)	RBI buying/selling govt securities to control money supply
LAF	Liquidity Adjustment Facility — repo and reverse repo operations together
SDF	Standing Deposit Facility — RBI absorbs liquidity WITHOUT giving collateral (replaced reverse repo as floor)
LTRO	Long Term Repo Operation — RBI provides long-term liquidity at repo rate
TLTRO	Targeted LTRO — directed towards specific sectors

Reserve Ratios Explained

Feature	CRR	SLR
Maintained with	RBI (as cash)	Bank itself (gold/govt securities/cash)
Earns interest?	No	Yes (govt securities earn interest)
Purpose	Control money supply	Ensure solvency
Changed by	RBI	RBI
Current	4.0%	18.0%
Impact of increase	Reduces lendable funds	Reduces lendable funds

Types of Bank Accounts

Term	Meaning
Savings Account	For individuals; limited transactions; earns interest (~2.7-4%)
Current Account	For businesses; unlimited transactions; no interest
Fixed Deposit (FD)	Lump sum for fixed period; higher interest; penalty for premature withdrawal
Recurring Deposit (RD)	Monthly fixed installments for fixed period
BSBDA	Basic Savings Bank Deposit Account — zero balance account (financial inclusion)
NRE Account	Non-Resident External — foreign earnings in INR; fully repatriable; tax-free interest
NRO Account	Non-Resident Ordinary — Indian income; taxable; limited repatriation
FCNR	Foreign Currency Non-Resident — deposits in foreign currency; no exchange risk

Payment Systems

Term	Full Form	Key Details
NEFT	National Electronic Funds Transfer	Batch-wise settlement; available 24x7; no min/max limit
RTGS	Real Time Gross Settlement	Immediate individual settlement; minimum Rs.2 lakh; 24x7
IMPS	Immediate Payment Service	Real-time; up to Rs.5 lakh; 24x7; mobile/internet
UPI	Unified Payments Interface	Instant transfer via VPA; no limit for merchant payments (Rs.1 lakh P2P default)
SWIFT	Society for Worldwide Interbank Financial Telecommunication	International money transfer messaging system
NACH	National Automated Clearing House	Bulk payments — salaries, dividends, EMIs
AEPS	Aadhaar Enabled Payment System	Banking using Aadhaar + biometric
CTS	Cheque Truncation System	Electronic cheque clearing (image-based)

Non-Performing Assets (NPA)

Term	Meaning
NPA	Asset (loan) where interest/principal is overdue for more than 90 days
Sub-standard asset	NPA for less than 12 months
Doubtful asset	NPA for more than 12 months
Loss asset	Identified by bank/auditor as uncollectable
Gross NPA	Total NPAs before provisions
Net NPA	Gross NPA minus provisions
Provision Coverage Ratio (PCR)	% of NPAs covered by provisions
Write-off	Removing bad loan from books (does NOT mean waiver)

Banking Regulation

Term	Meaning
Basel Norms	International banking regulations for capital adequacy
Basel I (1988)	Minimum 8% capital adequacy ratio
Basel II (2004)	Three pillars: minimum capital, supervisory review, market discipline
Basel III (2010)	Stricter: higher capital buffers, leverage ratio, liquidity ratios
CRAR/CAR	Capital to Risk-weighted Assets Ratio — India mandates 9% (1% above Basel)
Tier 1 Capital	Core capital — equity + retained earnings (highest quality)
Tier 2 Capital	Supplementary — revaluation reserves, hybrid instruments
Leverage Ratio	Tier 1 capital / total assets (non-risk-weighted)
LCR	Liquidity Coverage Ratio — enough liquid assets to cover 30-day stress outflow
NSFR	Net Stable Funding Ratio — stable funding over 1 year

Types of Banks

Type	Examples	Key Feature
Public Sector Banks	SBI, PNB, BOB, Canara Bank	Government holds majority stake (51%+)
Private Sector Banks	HDFC Bank, ICICI, Axis, Kotak	Private shareholders; RBI licensed
Small Finance Banks	AU SFB, Equitas, Ujjivan	Must lend 75% to priority sector; max loan Rs.25 lakh
Payments Banks	Paytm PB, Airtel PB, India Post PB	Cannot lend; max deposit Rs.2 lakh; payments only
Regional Rural Banks	Kerala Gramin Bank, etc.	50% Central + 15% State + 35% Sponsor bank
Cooperative Banks	District/State cooperative banks	Governed by state laws + RBI
NBFC	Bajaj Finance, Muthoot, HDFC Ltd	Non-Banking Financial Company — lends but cannot accept demand deposits

Financial Inclusion Schemes

Scheme	Year	Key Feature
Jan Dhan Yojana (PMJDY)	2014	Zero-balance account + RuPay debit card + Rs.2 lakh accident insurance
Mudra Yojana (PMMY)	2015	Loans for micro enterprises: Shishu (up to 50K), Kishore (50K-5L), Tarun (5L-10L)
Atal Pension Yojana	2015	Guaranteed pension Rs.1000-5000/month for unorganized sector
PMSBY	2015	Suraksha Bima — Rs.2 lakh accident cover for Rs.20/year
PMJJBY	2015	Jeevan Jyoti Bima — Rs.2 lakh life cover for Rs.436/year
Stand-Up India	2016	Loans Rs.10L-1Cr to SC/ST/Women entrepreneurs

Important Financial Institutions

Institution	Full Form	Role
RBI	Reserve Bank of India	Central bank; monetary policy; bank regulator
SEBI	Securities and Exchange Board of India	Stock market regulator
IRDAI	Insurance Regulatory and Development Authority of India	Insurance regulator
PFRDA	Pension Fund Regulatory and Development Authority	Pension regulator (NPS)
NABARD	National Bank for Agriculture and Rural Development	Refinance for rural/agri credit
SIDBI	Small Industries Development Bank of India	MSME financing
EXIM Bank	Export-Import Bank	International trade finance
NHB	National Housing Bank	Housing finance regulator
DRT	Debt Recovery Tribunal	Recovers bank dues above Rs.20 lakh
NCLT	National Company Law Tribunal	Insolvency/bankruptcy cases (IBC)

Digital Banking Terms

Term	Meaning
VPA	Virtual Payment Address (UPI ID like name@upi)
QR Code	Quick Response Code — scan to pay
CBDC	Central Bank Digital Currency — RBI’s “Digital Rupee” (e-Rupee)
Tokenization	Replacing card details with unique token for security
BBPS	Bharat Bill Payment System — centralized bill payment
DigiLocker	Cloud document storage by govt
Account Aggregator	Consent-based financial data sharing framework (RBI regulated)

Credit Rating Agencies

Agency	Type
CRISIL	Indian (subsidiary of S and P Global)
ICRA	Indian (subsidiary of Moody’s)
CARE	Indian
Fitch Ratings	International
Moody’s	International
S and P Global	International

Other Important Terms

Term	Meaning
Fiscal Deficit	Total expenditure minus total receipts (excluding borrowings)
Revenue Deficit	Revenue expenditure minus revenue receipts
Primary Deficit	Fiscal deficit minus interest payments
Inflation	Sustained rise in general price level
CPI	Consumer Price Index — measures retail inflation (RBI’s target: 4% +/- 2%)
WPI	Wholesale Price Index — wholesale level inflation
GDP Deflator	Broadest measure of inflation (nominal GDP / real GDP x 100)
FDI	Foreign Direct Investment — long-term investment in business
FII/FPI	Foreign Institutional/Portfolio Investor — stock market investment
Forex Reserves	Foreign currency + gold + SDR held by RBI
Balance of Payments	Record of all economic transactions with rest of world
Current Account	Trade balance + services + remittances + income
Capital Account	FDI + FPI + loans + banking capital flows

PSC Frequently Asked Questions

Question	Answer
RBI established	1 April 1935
RBI nationalized	1949
RBI headquarters	Mumbai
Current RBI Governor	Sanjay Malhotra (since Dec 2024)
Monetary Policy Committee (MPC) size	6 members (3 RBI + 3 external)
14 banks nationalized	1969 (July 19)
6 more banks nationalized	1980
Priority Sector Lending target	40% of ANBC for domestic banks
Banking Ombudsman scheme	For customer complaints against banks
Deposit insurance (DICGC) cover	Rs. 5 lakh per depositor per bank
Legal tender	Only RBI notes + govt coins
Rs. 1 note issued by	Government of India (Ministry of Finance)
All other notes issued by	RBI (signed by Governor)

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Memory Aid: Policy rates order (high to low): Bank Rate = MSF is greater than Repo is greater than SDF. CRR = Cash with RBI, SLR = Securities with self.