Financial Terms & Abbreviations

What you'll learn

A beginner-friendly guide to India's digital payment systems (NEFT, RTGS, IMPS, UPI) and the must-know banking abbreviations (NPA, CASA, MCLR, EMI, KYC, CIBIL) for IBPS and SBI bank exams, with a comparison table, a worked EMI example, and exam-trap warnings.

This chapter has

Financial Terms & Abbreviations — solved practice questions

8 Banking Banking & Financial Awareness questions with step-by-step solutions. Attempt each, then reveal the answer.

1. Q1easy

   In banking, the abbreviation 'NEFT' stands for:

   • ANational Electronic Funds Transfer
   • BNew Electronic Financial Transaction
   • CNational Electronic Financial Transfer
   • DNet Electronic Funds Transfer
   Show answer & solution

   Correct answer: (A) National Electronic Funds Transfer

   NEFT stands for National Electronic Funds Transfer, an electronic system for one-to-one transfer of funds between banks.

2. Q2medium

   RTGS differs from NEFT mainly because RTGS settles transactions:

   • AIn batches at fixed times
   • BOn a real-time, gross (individual) basis
   • COnly once at the end of the day
   • DOnly for amounts below ₹1,000
   Show answer & solution

   Correct answer: (B) On a real-time, gross (individual) basis

   RTGS (Real Time Gross Settlement) settles each transaction individually and in real time, and is used mainly for large-value transfers.

3. Q3easy

   The abbreviation 'IFSC', used in electronic fund transfers, stands for:

   • AInternational Fund Settlement Code
   • BIndian Fund Security Code
   • CIndian Financial System Code
   • DInterbank Financial Standard Code
   Show answer & solution

   Correct answer: (C) Indian Financial System Code

   IFSC (Indian Financial System Code) is an 11-character code that uniquely identifies a bank branch in electronic payment systems.

4. Q4medium

   As per RBI norms, a loan is generally classified as a Non-Performing Asset (NPA) when interest or principal remains overdue for more than:

   • A30 days
   • B60 days
   • C90 days
   • D180 days
   Show answer & solution

   Correct answer: (C) 90 days

   An asset is treated as an NPA when interest or a principal instalment remains overdue for a period of more than 90 days.

5. Q5medium

   The 'CASA' ratio of a bank refers to the proportion of deposits held in:

   • ACurrent and Savings Accounts
   • BCash and Small Accounts
   • CCredit and Security Accounts
   • DCorporate and Salary Accounts
   Show answer & solution

   Correct answer: (A) Current and Savings Accounts

   CASA stands for Current Account and Savings Account; a higher CASA ratio means cheaper, low-cost funds for the bank.

6. Q6easy

   'EMI', commonly used in loan repayment, stands for:

   • AEqual Monthly Interest
   • BEstimated Monthly Investment
   • CExtended Monthly Income
   • DEquated Monthly Instalment
   Show answer & solution

   Correct answer: (D) Equated Monthly Instalment

   EMI (Equated Monthly Instalment) is the fixed amount a borrower repays each month, comprising both principal and interest.

7. Q7easy

   The abbreviation 'KYC', a key banking compliance requirement, stands for:

   • AKeep Your Cash
   • BKnow Your Customer
   • CKnow Your Credit
   • DKeep Your Credentials
   Show answer & solution

   Correct answer: (B) Know Your Customer

   KYC (Know Your Customer) is the process by which banks verify the identity and address of their customers.

8. Q8medium

   'CIBIL', frequently referred to while sanctioning loans, is associated with:

   • AForeign exchange rates
   • BInsurance claims settlement
   • CStock market indices
   • DAn individual's credit score and history
   Show answer & solution

   Correct answer: (D) An individual's credit score and history

   CIBIL is a credit information company that maintains records of borrowers' credit history, expressed as a credit score.

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