Financial Terms & Abbreviations: Payment Systems and Banking Jargon Made Simple
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.
By the PadhoDost Team · 📖 7 min read · Updated 4 August 2026
Part of Banking (IBPS / SBI) prep🧠 Sending money is like sending a parcel
Imagine you want to send something to a friend. If it is small and you want it there this second, you use a quick courier. If it is a heavy, valuable package, you pick a premium service built for big loads. If you can wait a little, a regular batch delivery is cheaper and perfectly fine. India's payment systems work exactly this way: NEFT, RTGS, IMPS and UPI are simply different 'delivery services' for money, and the smart aspirant knows which one fits which need. Padho, dost, and these abbreviations will feel like old friends by the end.
How Money Moves: India's Digital Payment Systems
Every rupee that moves electronically in India runs on rails regulated by the RBI (Reserve Bank of India). Two of the systems, NEFT and RTGS, are operated directly by the RBI itself. The other two, IMPS and UPI, are operated by the NPCI (National Payments Corporation of India), an umbrella body for retail payments that the RBI helped set up. Keep this 'who runs what' clear in your head, because it is one of the most repeated questions in bank exams.
| System | Full Form | Run By | Speed | Good For |
|---|---|---|---|---|
| NEFT | National Electronic Funds Transfer | RBI | Settles in batches, available 24x7 | Any amount, no minimum limit |
| RTGS | Real Time Gross Settlement | RBI | Real-time, one transaction at a time, 24x7 | Large-value transfers (a minimum threshold applies, traditionally 2 lakh) |
| IMPS | Immediate Payment Service | NPCI | Instant, 24x7 | Quick small and medium transfers |
| UPI | Unified Payments Interface | NPCI | Instant, 24x7 | App-based payments using a VPA (UPI ID) |
Must-Know Banking Terms & Abbreviations
Five terms in one glance
- ✓NPA (Non-Performing Asset): a loan on which interest or principal stays overdue for 90 days or more. It stops earning income for the bank.
- ✓CASA (Current Account Savings Account): the share of low-cost current and savings deposits in a bank's total deposits. A higher CASA ratio means cheaper funds for the bank.
- ✓MCLR (Marginal Cost of Funds based Lending Rate): the internal benchmark below which a bank generally cannot lend. Each bank calculates its own MCLR under RBI guidelines.
- ✓KYC (Know Your Customer): the identity and address verification a bank carries out (using documents like Aadhaar and PAN) before and during a customer relationship, to prevent fraud and money laundering.
- ✓CIBIL (Credit Information Bureau (India) Limited): a credit information company. A CIBIL score ranges from 300 to 900, and a higher score signals a stronger loan-repayment record.
Two of these deserve extra attention because examiners love them. For NPA, remember the magic number is 90 days overdue, which is why NPAs are also called 'bad loans' or 'stressed assets'. For CASA, the logic is simple: savings and current accounts pay little or no interest to the customer, so the more of them a bank has, the cheaper its money is and the more it can earn when it lends. That is why banks proudly announce a rising CASA ratio.
EMI: The One With a Formula
📝 Worked example: EMI on a 1,00,000 loan
Loan amount P = 1,00,000, annual interest = 12%, tenure = 12 months
Step 1 - Monthly rate r = 12 / 12 / 100 = 0.01
Step 2 - (1 + r)^n = (1.01)^12 = about 1.1268
Step 3 - Numerator = 100000 x 0.01 x 1.1268 = 1126.8
Step 4 - Denominator = 1.1268 - 1 = 0.1268
Step 5 - EMI = 1126.8 / 0.1268 = about 8,885 per month
Check - Total repaid = 8885 x 12 = 1,06,620, so interest paid = about 6,620
Quick revision before you close the book
- ✓RBI regulates all payment systems; RBI operates NEFT and RTGS; NPCI operates IMPS and UPI.
- ✓RTGS = real-time + large value (minimum threshold applies); NEFT = any amount, batch settlement; IMPS and UPI = instant, 24x7.
- ✓NPA = overdue 90 days or more; CASA = low-cost deposits, higher is better for the bank.
- ✓MCLR = a bank's internal lending benchmark; KYC = customer identity verification; CIBIL score runs 300 to 900.
- ✓EMI spreads a loan into equal monthly payments; more months usually means more total interest paid.
⚡ Quick check
A borrower has not paid the interest or principal on a bank loan for the last three months. As per the standard classification norm, this loan should now be treated as a:
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