RBI Monetary Policy Committee (RBI-MPC): Reserve Bank of India Monetary Policy is the macroeconomic policy laid down by the RBI (India’s Central Bank). It manages the money supply and interest rates depends on demand used by the government of India to achieve macro-economic objectives like inflation, deflation, consumption, liquidity of money and growth. Through this policy, RBI implements credit control and bank rate policies, open market operations, reserve system, policy, moral persuasion and through many other instruments.
REPO Rate: The rate of interest charged by the central bank on the cash borrowed from commercial banks. REPO Rate nothing but Bank Rate.
Reverse REPO Rate: Reverse REPO Rate is the short term borrowing rate at which RBI borrows money from banks. The Reserve bank uses this tool when it feels there is too much money floating in the banking system. An increase in the Reverse REPO Rate means that the banks will get a higher rate of interest from RBI.
Marginal Cost of funds-based Lending Rate (MCLR): It is an internal benchmark or reference rate or minimum interest rate of a bank below which it cannot lend, except allowed by the RBI.
Non-Performing Assets (NPAs): Credit facility in respect of which, the interest and/or installment of Bond finance principal has remained ‘past due’ for a specified period of time. As per RBI guidelines a loan or an advance where interest and/or installment of principal remains overdue for a period of more than 90 days in respect of a term loan.
Marginal Standing Facility (MSF): It is a very short term borrowing scheme for scheduled commercial banks to borrow funds from RBI overnight against government securities overnight.
Priority Sector Lending (PSL): RBI prescribed a role to the banks for providing a specified portion of the bank lending to few specific sectors like Agriculture, MSME, Education for poor students, and weaker sections etc.,
Indian Bank’s Association (IBA): A representative body of management of banking operating in India – an association of Indian banks and financial institutions.
Automated Clearing System (ACS) OR Bank Automated Clearing System: It is a system of electronic funds transferring which reduces man-hours to the bank employees.
Asian Development Bank (ADB): The bank, which primary mission of faster growth, development and cooperation among Asia- Pacific region in the banking sector.
Aadhaar Enabled Payments Switch (AEPS): This system is developed for the purpose which transactions are made through Aadhaar number. No one doesn’t want to visit the branch or signature or using the card. However, your account must be linked to your bank account. For AEPS transaction, one needs 1.Aadhaar number, 2. Bank IIN or name and Fingerprint.
Asset Liability Management (ALM): It is a mechanism to address the risk faced by a bank due to a mismatch between assets and liabilities due to change interest rates or liquidity issue.
Anti-Money Laundering (AML): An act is developed and to stop illegal money transaction by putting a set of procedures, rules and regulations and orders. A system is developed to detect suspicious transaction through financial institution’s customer data.
Automated Teller Machine (ATM): A machine which dispenses cash and also bank-related services with bank card insert.
Banking, Financial Services and Insurance (BFSI): The BFSI Sector Skill Council of India is set up to bring leading organizations of the BFSI industry together to create strategies and operational plans that will create standardized skill requirements for the various job roles in the industry. The skills council will also accredit well equipped service providers who will partner to disseminate the training. The skills council is seen by its stakeholders and partners as a nation-building activity with far reaching implications for social development and empowerment through financial inclusion. Great care is being taken to appropriately address the needs of the various industry verticals as well as the geographical regions of the country.
Bank for International Settlements (BIS): To serve central banks in their pursuit of monetary and financial stability to foster international cooperation in those areas and to act as a bank for central banks.
Banking Ombudsman (BO): A senior banking official is appointed as ombudsman by RBI to handle and address the customer complaints. Around 15 banking ombudsman offices are there and mostly situated in state capitals in India.
Capital Adequacy Ratio (CAR): It is a ratio of the bank’s capital to its risk. The enforcement of regulated levels of this ratio is intended to protect depositors and promote stability and efficiency of financial systems around the world.
Current and Savings Accounts (CASA) or CASA Ratio: The ratio indicates total deposits in savings and current account in the bank.
Core Banking Solution (CBS): It is software used to support bank common transactions such as the opening of accounts, making and servicing of loans, processing of transactions, calculations, related activities, etc.
Credit Information Bureau of India Ltd (CIBIL): It a is a credit information company authorized and licensed by RBI, which collects and maintain records and maintain individual payments pertaining to loans, payments, credit cards, etc., on monthly basis banks provide this information to CIBIL.
Debt Recovery Appellate Tribunal (DRAT): There are 33 debt recovery tribunal and 5 debt recovery appellate tribunals, all are working for financial recovery of the bad debts rise and due to financial institutions, NBFCs and banks.
Electronic Funds Transfer (EFT): All the transactions are computerized network either among at the same bank or at a different bank or separate financial institution.
Equated Monthly Installment (EMI): It is a fixed amount payable by the borrower to the financial institution or bank, which includes specific amounts as interest along with principle as agreed upon while taking the advance.
Export-Import Bank of India (EXIM): To facilitate and encourage joint venture and export of technical services and international and merchant banking, administrative and managerial assistance. The functions will be planning, promoting and developing exports and imports.
Indian Banks’ Association (IBA): A representative body of management of banking in India operating in India – an association of Indian banks and financial institutions based in Mumbai. It represents 237 banking companies in India now.
Indian Financial System Code (IFSC): It is the 11-digit alphanumeric format used by the RBI to identify all the bank branches.
International Monetary Fund (IMF): An international organization to encourage international trade, facilitating financial stability, monetary cooperation, reduce poverty and to increase the cost of living and economic growth throughout the world.
Immediate Payment Service (IMPS): The IMPS is a system adopted by banks to promote the immediate and secured transaction at the convenience of the customer. The beneficiary account is credited immediately when a fund transfer request is made from your side.
Instant Money Transfer (IMT): IMT is an innovative domestic money remittance service that allows you to send money to a receiver only by using the receiver’s mobile number. The receiver can withdraw money from a bank ATM without using a card as he or she receives all the details required for withdrawal of the cash on his or her mobile phone.
Lead Bank Scheme (LBS): In every district across the country shall be assigned to a commercial bank, which has a major presence to perform the lead role and responsibilities is designated by RBI under a formulated procedure. The lead bank had to conduct and identify the financial requirement, a development program for each area with special emphasis for all rural, backward area and unbanked area.
National Bank for Agricultural and Rural Development (NABARD): The Bank has been entrusted with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas across India.
Non-Banking Finance Companies (NBFCs): A company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares or stocks or bonds or debentures or securities issued by the Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agricultural activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale or purchase or construction of immovable property.
National Electronic Funds Transfer System (NEFT): An Indian system of electronic fund transfer of money from one bank to another bank branch.
Non-Performing Assets (NPAs): Credit facility in respect of which, the interest and/or instalment of Bond finance principal has remained ‘past due’ for a specified period of time. As per RBI guidelines a loan or an advance where interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan.
Overdraft (OD): When money is withdrawn from a bank account beyond zero balance or in a situation of agreement with the account provider for an overdraft then the amount can be withdrawn up to the authorized limit. Charges and interest may apply as agreed upon.
Prime Lending Rate (PLR): The interest rate charged by banks, which are secure and most creditworthy customers on short-term loans and also used as a guide for computing interest rates for other borrowers. See also London Interbank Offered Rate. Also called prime rate.
Reserve Bank of India (RBI): The Reserve Bank of India is India’s central banking institution, which controls the monetary policy of the Indian rupee. Simply, a regulatory body for Indian Banking system.
Real Time Gross Settlement System (RTGS): The acronym ‘RTGS’ stands for Real Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received rather than at some later time; ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds’ settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.
ABBREVIATIONS
ACS – Automated Clearing System
ADB – Asian Development Bank
AEPS – Aadhaar Enabled Payments Switch
ALM – Asset Liability Management
AML – Anti-Money Laundering
ATM – Automated Teller Machine
BFSI – Banking, Financial Services and Insurance
BIS – Bank for International Settlements
BO – Banking Ombudsman
CAR – Capital Adequacy Ratio
CASA – Current and Savings Accounts
CBS – Core Banking Solution
CIBIL – Credit Information Bureau of India Limited
DRAT – Debt Recovery Appellate Tribunal
EFT – Electronic Funds Transfer
EMI – Equated Monthly Installment
EXIM – Export-Import Bank of India
IBA – Indian Banks’ Association
IFSC – Indian Financial System Code
IMF – International Monetary Fund
IMPS – Immediate Payment Service
IMT – Instant Money Transfer
LBS – Lead Bank Scheme
MCLR – Marginal Cost of funds-based Lending Rate
MPC – Monitory Policy Committee
MSF – Marginal Standing Facility
NABARD – National Bank for Agricultural and Rural Development
NBFCs – Non-Banking Finance Companies
NEFT – National Electronic Funds Transfer System
NPAs – Non-Performing Assets
OD – Overdraft
PLR – Prime Lending Rate
PSL – Priority Sector Lending
RBI – Reserve Bank of India
RTGS – Real Time Gross Settlement System
