Finance Glossary

Plain English definitions for every finance term used in India — from EMI to XIRR.

390Terms defined

27Letters covered

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# 1 terms

The 50-30-20 budgeting rule allocates after-tax income into three categories: 50% for needs (rent, food, utilities,...

Personal Finance

A 19 terms

Unique Identification Number

Aadhaar is a 12-digit unique identification number issued by UIDAI to every Indian resident, serving as...

Absolute Return

Absolute return is the total percentage gain or loss on an investment from start to finish,...

Advance tax is income tax paid in quarterly instalments during the financial year. Mandatory when annual...

Tax & Deductions

Advance tax is income tax paid in instalments during the financial year rather than as a...

Tax & Deductions

After-Tax Return

After-tax return is the actual return you keep after paying all applicable taxes. Comparing investments on...

Airport Lounge Access

Airport lounge access is a premium credit card benefit that allows cardholders to use airport lounges...

Annual Information Statement

AIS is a comprehensive statement available on the Income Tax portal showing all financial transactions reported...

Tax & Deductions

Alpha measures a mutual fund manager's ability to generate returns above the benchmark index. Positive alpha...

Amortization is the process of paying off a loan through regular scheduled payments. Each EMI covers...

Anchor bias is the cognitive tendency to rely too heavily on the first piece of information...

An annuity is a contract with an insurance company where you pay a lump sum and...

Annual Percentage Rate

APR is the true annualised cost of a loan including interest rate plus all fees, processing...

Atal Pension Yojana

Atal Pension Yojana is a government pension scheme for unorganised sector workers (18-40 years). Guarantees a...

Arbitrage is simultaneously buying and selling the same asset in different markets to profit from price...

An arbitrage fund exploits simultaneous price differences between the cash and futures market for the same...

Asset Allocation

Asset allocation is the strategy of dividing a portfolio among different asset classes -- equity, debt,...

Asset classes are broad categories of investments with similar characteristics, risk profiles, and market behaviour. The...

Asset-Liability Management

Asset-liability management at the personal level means matching the tenure and nature of your investments to...

Personal Finance

ATM and Cash Limits

ATMs have transaction and daily cash withdrawal limits. Understanding your bank's ATM limits, free transaction counts,...

B 13 terms

Balance of Payments

Balance of Payments (BoP) is the complete record of a country's financial transactions with the rest...

Balanced Advantage Fund

BAF / Dynamic Asset Allocation Fund

A Balanced Advantage Fund dynamically shifts allocation between equity and debt based on market valuations. High...

Safe Deposit Locker

A bank locker (safe deposit locker) is a small safe housed in the bank vault that...

Banking Ombudsman

The Banking Ombudsman (now RBI Integrated Ombudsman) is a free grievance redressal mechanism for bank customers....

Basic Savings Account

A Basic Savings Bank Deposit (BSBD) account is a simplified, no-minimum-balance account with limited free transactions....

A bear market is a sustained decline of 20% or more in stock prices from recent...

A benchmark is the index against which a mutual fund's performance is measured. Large-cap funds benchmark...

Beta measures a stock or fund's volatility relative to the market (benchmark). Beta of 1 =...

Blue chip refers to shares of large, financially stable, well-established companies with a long track record...

A bond is a fixed-income debt instrument where the issuer (government or corporation) borrows money from...

Break-Even Point

Break-even point is where total gains exactly equal total costs -- zero profit, zero loss. In...

Personal Finance

Budget (Personal)

A personal budget is a plan allocating income to expenses, savings, and investments each month. The...

Personal Finance

A bull market is a sustained period of rising stock prices -- typically defined as a...

C 41 terms

Compound Annual Growth Rate

CAGR is the annualised return rate that smooths out year-to-year volatility to show consistent growth as...

Capital gain is profit from selling a capital asset above its purchase price. Taxed as STCG...

Tax & Deductions

Capital Gains Tax

Capital gains tax is the tax on profit from selling a capital asset (equity, property, gold,...

Tax & Deductions

Carpet area is the actual usable area within the walls of an apartment -- the area...

Personal Finance

Carry Trade Impact on India

A carry trade involves borrowing in low-interest currencies (Japanese Yen at near-zero rates) and investing in...

Cash flow is the net movement of money in and out over a period. Positive cash...

Personal Finance

Health and Education Cess

Cess is a designated surcharge collected along with income tax for specific government purposes. India currently...

Tax & Deductions

Dishonoured Cheque

A cheque bounce (dishonour) occurs when a bank refuses to pay a cheque due to insufficient...

A chit fund is a group savings and credit scheme where a fixed number of members...

A CIBIL dispute is the process of correcting errors in your credit report. CIBIL reports can...

Credit Information Bureau India Limited Score

CIBIL Score is a 3-digit number between 300 and 900 representing an individual's creditworthiness based on...

Guidance Value / Ready Reckoner Rate

Circle rate (also called Guidance Value in Karnataka, Ready Reckoner Rate in Maharashtra) is the minimum...

Tax & Deductions

Circuit Breaker (Stock Market)

Circuit breakers are automatic trading halts triggered when market indices fall by specific percentages in a...

Claim Settlement Ratio

Claim Settlement Ratio is the percentage of insurance claims an insurer settles out of total claims...

A co-applicant shares equal legal responsibility for a loan. Adding a co-applicant with high income significantly...

A co-borrower jointly applies for and is equally responsible for repaying a loan. Different from a...

Compound Interest

Compound interest is interest calculated on both the principal and the accumulated interest from previous periods....

Compounding Frequency

Compounding frequency determines how often interest is calculated and added to principal. Daily compounding is better...

Corporate bonds are debt instruments issued by companies to raise funds, paying regular interest (coupon) and...

Corpus refers to the total accumulated investment pool -- retirement corpus, education corpus, emergency corpus. It...

A covered call is an options strategy where you sell a call option on shares you...

Consumer Price Index

CPI measures inflation from a consumer's perspective -- the cost of a basket of goods and...

A credit bureau collects and maintains credit information of individuals and companies from lenders. India has...

A credit card provides a revolving credit line with a 45-50 day interest-free grace period. Unpaid...

Credit Card Debt Trap

The credit card debt trap occurs when you cannot pay the full outstanding balance and begin...

Credit Card Interest

Credit card interest in India is 36-42% per annum (3-3.5% per month) -- the highest interest...

Credit Card Rewards

Credit card reward programs offer points, cashback, miles, or discounts on spending. When used wisely on...

Credit Card Rewards Optimisation

Credit card rewards programs (cash back, points, miles) can generate Rs 15,000-60,000 in annual value if...

Credit history is the complete record of your borrowing and repayment behaviour over time -- all...

Credit limit is the maximum amount you can borrow on a credit card or credit line....

Credit ratings evaluate the creditworthiness of debt instruments (bonds, debentures) issued by companies or governments. In...

Credit score (300-900) is a numerical measure of creditworthiness from credit bureaus (CIBIL, Experian, Equifax, CRIF)....

Credit Score and Loan Rates

Your CIBIL score directly determines the interest rate you get on home, car, and personal loans....

Credit Utilisation Ratio

Credit utilisation ratio is the percentage of your total available credit limit that you are currently...

Critical Illness Insurance

Critical illness insurance pays a lump sum upon first diagnosis of specified serious illnesses -- heart...

Crop Insurance (PMFBY)

Pradhan Mantri Fasal Bima Yojana

PMFBY provides crop insurance to farmers protecting against natural calamities, pests, and diseases. Premium is heavily...

Cross-Currency Transactions

Cross-currency transactions involve converting money between non-domestic currencies. For NRIs sending money to India, or for...

Cost to Company

CTC is the total annual cost an employer bears for an employee including salary, employer PF,...

Cost to Company Breakup

CTC (Cost to Company) includes everything the employer spends on an employee: basic salary, HRA, allowances,...

Current Account

A current account is a bank account designed for businesses and professionals with high-frequency transactions. It...

Current Account Deficit

Current Account Deficit is when India imports more goods, services, and investment income than it exports....

D 15 terms

Dearness Allowance

Dearness Allowance is a salary component paid to government employees and pensioners to compensate for inflation....

A debt fund is a mutual fund investing in fixed-income instruments -- government bonds, corporate bonds,...

The debt snowball method clears multiple loans by paying off the smallest balance first (regardless of...

Personal Finance

Debt-Free Strategy

Becoming debt-free requires systematically eliminating high-interest debt (credit cards, personal loans) while maintaining essential long-term debt...

Personal Finance

Debt-to-Income Ratio

DTI ratio is the percentage of gross monthly income going to all debt obligations. Indian banks...

A Demand Draft (DD) is a pre-paid payment instrument issued by a bank on behalf of...

Dematerialised Account

A demat account holds securities (shares, bonds, ETFs, mutual fund units) in electronic format, replacing physical...

Depreciation is the reduction in value of an asset over time due to wear, usage, or...

Personal Finance

A direct plan is a mutual fund class purchased directly from the AMC without distributor commission....

Direct vs Regular Fund

Direct mutual fund plans have no distributor commission, resulting in 0.5-1% lower expense ratio than regular...

Distressed Asset Investing

Distressed asset investing involves buying financially troubled companies' debt or equity at deep discounts, betting on...

Diversification

Diversification means spreading investments across different assets, sectors, and geographies to reduce risk. When one investment...

Dividend is a share of company profits distributed to shareholders. Post-2020, dividends are fully taxable at...

Dividend yield is the annual dividend per share divided by the current share price, expressed as...

Dormant Bank Account

A bank account becomes dormant (inoperative) if there are no customer-initiated transactions for 24 months. After...

E 20 terms

National Automated Clearing House

NACH is India's bulk auto-debit system for recurring transactions -- SIP investments, loan EMIs, insurance premiums....

Education loans finance higher education costs in India and abroad. Interest paid is fully deductible under...

Equity Linked Savings Scheme

ELSS is a diversified equity mutual fund with 3-year lock-in qualifying for Section 80C deduction (up...

Tax & Deductions

An emergency fund is 3-6 months of essential living expenses kept in highly liquid, low-risk instruments....

Personal Finance

Equated Monthly Instalment

EMI is the fixed monthly payment made to repay a loan. Each EMI consists of two...

Moratorium Period

An EMI holiday (moratorium) is a period during which the borrower is not required to make...

EMI on Credit Card

Credit card EMI converts large purchases into monthly instalments with an interest rate of 12-24% per...

EMI vs Full Payment Decision

Converting purchases to EMI on a credit card is a choice with real costs. No-cost EMI...

Employees Provident Fund

EPF is a mandatory retirement savings scheme for salaried employees earning below Rs 15,000/month basic (voluntary...

EPF Withdrawal Rules

EPF can be fully withdrawn on retirement or after 2 months of unemployment. Partial withdrawal is...

Employees Pension Scheme

EPS is the pension component of EPF. Employer contributes 8.33% of basic salary (up to Rs...

Equitable Mortgage

An equitable mortgage is created by depositing original title documents of a property with a lender...

Equity refers to ownership stake in a company. When you buy shares you become a part-owner...

An escrow account is a neutral third-party account that holds money or assets during a transaction...

Employee Stock Option Plan

ESOPs grant employees the right to buy company shares at a pre-set price (exercise price) after...

Exchange Traded Fund

An ETF is a mutual fund that trades on a stock exchange like a regular share....

Ex-Dividend Date

The ex-dividend (XD) date is the cut-off date after which new buyers of a share do...

Exit load is a fee charged by mutual funds when you redeem units within a specified...

Expense ratio is the annual fee charged by a mutual fund expressed as a percentage of...

Expense Ratio Impact

The compounding impact of expense ratios on long-term wealth is one of the most underappreciated facts...

F 17 terms

Family Floater Health Insurance

A family floater health insurance policy covers the entire family under one sum assured. If the...

Fixed Deposit Laddering

FD laddering is a strategy of splitting a large sum into multiple FDs with different maturity...

Savings & Deposits

FD Premature Withdrawal

Breaking a Fixed Deposit before maturity incurs a penalty -- typically 0.5-1% below the contracted rate....

Financial Goals Setting

Financial goals are specific, time-bound targets for money: Rs 30L down payment in 5 years, Rs...

Personal Finance

Financial Independence

Financial Independence (FI) is achieved when passive income from investments covers all living expenses without needing...

Personal Finance

Financial Planning

Financial planning is the process of defining financial goals, assessing current finances, and creating a roadmap...

Personal Finance

Financial Independence Retire Early

FIRE is a movement where individuals save and invest aggressively (50-70% of income) to retire decades...

Fiscal deficit is the gap between government's total expenditure and total revenue (excluding borrowings). It is...

Fixed Deposit (FD)

A Fixed Deposit is a savings instrument where you deposit a lump sum with a bank...

Savings & Deposits

A flexi-cap fund can invest across large, mid, and small-cap stocks without any fixed allocation constraint....

Floating Interest Rate

A floating interest rate changes periodically based on RBI's repo rate. All new home loans post...

Fixed Obligation to Income Ratio

FOIR is the percentage of gross monthly income that goes towards all fixed debt obligations --...

Foreign Exchange (Forex)

Foreign exchange is the trading of currencies. India's forex market determines the USD/INR exchange rate. As...

Foreign Exchange Reserves

Forex reserves are foreign currency assets held by RBI -- primarily US dollars, but also Euros,...

Self-Declaration for No TDS

Form 15G (for individuals below 60) and Form 15H (for senior citizens) are self-declaration forms submitted...

Tax & Deductions

Form 16 is a TDS certificate issued by employer certifying salary paid and tax deducted during...

Tax & Deductions

Form 26AS is a consolidated annual tax statement showing all TDS deducted on your income, TCS...

Tax & Deductions

G 15 terms

Government Securities

Government securities are debt instruments issued by Government of India -- zero default risk (sovereign guarantee)....

Gross Domestic Product

GDP is the total monetary value of all goods and services produced in a country in...

A gift deed is a legal document transferring ownership of an asset (property, gold, shares) from...

Personal Finance

India abolished Gift Tax in 1998 but reintroduced gift taxation under income tax (Section 56(2)). Gifts...

Tax & Deductions

A gilt fund is a debt mutual fund that invests exclusively in government securities (G-Secs). Zero...

Goal-Based Investing

Goal-based investing means aligning each investment to a specific life goal -- child's education, home down...

Gold Exchange Traded Fund

A Gold ETF is an exchange-traded fund tracking gold bullion. Each unit represents 1 gram of...

A gold loan is secured credit against pledged gold jewellery or coins. Banks and NBFCs (Muthoot...

Gold-to-Silver Ratio

The gold-to-silver ratio shows how many grams of silver it takes to buy one gram of...

Gratuity is a retirement benefit paid by an employer to an employee as appreciation for long...

Gratuity Calculation

Gratuity is a retirement benefit paid by employer on resignation, retirement, or death after minimum 5...

Group Insurance

Group insurance covers a group of people (usually employees) under a single master policy. Employer group...

Goods and Services Tax

GST is India's unified indirect tax (implemented July 2017) replacing VAT, service tax, and excise duty....

Tax & Deductions

GST Input Tax Credit

Input Tax Credit (ITC) under GST allows businesses to offset the GST paid on purchases against...

Tax & Deductions

GST (Goods and Services Tax) in India has five rate slabs: 0%, 5%, 12%, 18%, and...

Tax & Deductions

H 18 terms

A hard inquiry occurs when a lender checks your credit report in response to a formal...

Health Insurance

Health insurance covers hospitalisation and medical expenses in exchange for an annual premium. With Indian healthcare...

Health Insurance Portability

Health insurance portability allows policyholders to switch from one health insurer to another without losing the...

Hedging is taking an offsetting position to reduce the risk of an existing investment. Like buying...

Home insurance covers the structure (building) and contents (furniture, electronics, valuables) against fire, flood, earthquake, theft,...

A home loan is a secured loan taken to purchase, construct, or renovate residential property. Typically...

Home Loan Balance Transfer

Home loan balance transfer means shifting outstanding loan to a new lender at a lower rate....

Home Loan Insurance

Home loan insurance (mortgage protection plan) pays off the outstanding home loan if the borrower dies...

Home Loan Tax Benefits

Home loan borrowers can claim two significant tax deductions: Section 24 (interest paid, up to Rs...

Tax & Deductions

Home Loan Types

Indian banks offer several home loan variants: regular home purchase loan, construction loan, plot + construction,...

How Much Life Insurance Do I Need

The required life insurance sum assured is calculated to replace lost income for dependents, clear all...

How to Write a Will

A Will is a legal document specifying how your assets should be distributed after death. In...

Personal Finance

House Rent Allowance

HRA is a salary component that helps cover rental housing expenses. It is partially or fully...

Tax & Deductions

HRA Calculation

House Rent Allowance Calculation

HRA (House Rent Allowance) exemption reduces your taxable income if you pay rent and receive HRA...

Tax & Deductions

HRA vs Renting vs Owning

The rent vs buy decision has significant tax implications. Renting with HRA provides an immediate tax...

Tax & Deductions

Hindu Undivided Family

An HUF (Hindu Undivided Family) is a separate legal and tax entity under Indian law comprising...

Tax & Deductions

Human Life Value

Human Life Value (HLV) is the present value of all future earnings a person would generate...

A hybrid fund invests in a mix of equity and debt, providing moderate returns with lower...

I 20 terms

Income Distribution cum Capital Withdrawal

IDCW is the SEBI-mandated name (since April 2021) for the mutual fund dividend option. It clarifies...

Indian Financial System Code

IFSC is an 11-character alphanumeric code that uniquely identifies every bank branch in India for electronic...

Immediate Payment Service

IMPS is India's 24x7 real-time interbank fund transfer service available even on holidays. Transfers up to...

Income tax is levied annually on income earned. In India, choose between old regime (with deductions)...

Tax & Deductions

Income Tax Slabs

India's income tax slabs define the percentage of tax applicable to different income ranges. India follows...

Tax & Deductions

An index fund passively replicates a stock index (Nifty 50, Nifty 500) by buying all constituent...

Indexation Benefit (Removed)

Indexation was a method of adjusting the cost of a capital asset for inflation (using CII...

Tax & Deductions

Inflation is the rate at which the general price level rises over time, reducing the purchasing...

Personal Finance

Inflation Impact on Investments

Inflation erodes the real value of investments. A 7% FD return during 6% inflation produces only...

Personal Finance

Insurance Claim Process

Filing an insurance claim correctly and promptly ensures families receive what they are entitled to. For...

Insurance Claim Rejection Reasons

Insurance claims are rejected primarily due to: non-disclosure of material facts at policy issuance, policy lapse...

Insurance Portability

Insurance portability allows you to switch health or life insurance policies from one insurer to another...

Insurance Premium

An insurance premium is the periodic amount paid to the insurer to keep the policy active....

Insurance Review Checklist

Life circumstances change constantly -- marriage, children, income growth, loan repayment, parents' age. Insurance needs change...

Insurance Rider

Rider / Add-on Cover

A rider is an optional add-on to a base insurance policy that provides additional coverage for...

Interest rate is the cost of borrowing money expressed as a percentage of the principal per...

Infrastructure Investment Trust

An InvIT is similar to a REIT but for infrastructure assets -- toll roads, power transmission...

Insurance Regulatory and Development Authority of India

IRDAI is India's insurance sector regulator, ensuring policyholder protection and orderly insurance market development. It sets...

Income Tax Return

ITR is the annual tax filing declaring total income, deductions, tax paid, and liability. Mandatory for...

Tax & Deductions

Income Tax Return Forms

The Income Tax Department has different ITR (Income Tax Return) forms for different taxpayer types. Using...

Tax & Deductions

J 7 terms

Jan Dhan Account

Pradhan Mantri Jan Dhan Yojana

PMJDY (Jan Dhan) provides zero-balance savings accounts to unbanked individuals with a RuPay debit card, Rs...

Jan Dhan Account

Pradhan Mantri Jan Dhan Yojana

PM Jan Dhan Yojana (PMJDY) is India's financial inclusion scheme providing zero-balance savings accounts to unbanked...

Joint Account Benefits

A joint account is a bank account shared by two or more people. Offers operational flexibility,...

Joint Holder vs Co-Owner

A joint holder of a financial account (bank, mutual fund, demat) has operational rights but may...

A joint venture is a business arrangement where two or more parties pool resources for a...

Personal Finance

Judgment Proof Assets

Certain assets in India are legally protected from court judgments, creditor claims, and attachment orders. Understanding...

Personal Finance

High-Yield Bond

Junk bonds are debt instruments rated below investment grade (BB or lower) that offer high yields...

K 6 terms

Kakeibo (Japanese Budgeting)

Kakeibo is a Japanese budgeting method using a physical notebook to track income, expenses, and savings...

Personal Finance

Kisan Credit Card

Kisan Credit Card (KCC) provides agricultural and allied activity credit to farmers at subsidised interest rates...

Kisan Vikas Patra

Kisan Vikas Patra (KVP) is a government savings scheme available at post offices and designated banks...

Savings & Deposits

KYC Registration Agency

KRA (KYC Registration Agency) is a SEBI-registered entity that maintains centralised KYC records for all capital...

Know Your Customer

KYC is the mandatory process by which banks, financial institutions, and mutual fund companies verify the...

Know Your Customer Compliance

KYC compliance is the ongoing process of verifying and updating customer identity. RBI mandates periodic re-KYC...

L 17 terms

Large cap refers to companies ranked 1 to 100 by full market capitalisation on Indian stock...

Life insurance provides financial protection to dependents upon the policyholder's death. The only type of life...

A liquid fund is a debt mutual fund investing in short-term money market instruments maturing within...

Loan Against Property

Loan Against Property is a secured loan where your owned property (residential or commercial) serves as...

Loan Eligibility

Loan eligibility is the maximum loan amount a bank will sanction based on your income, CIBIL...

A loan guarantor is a person who agrees to repay a loan if the primary borrower...

Loan Restructuring

Loan restructuring modifies the terms of an existing loan when a borrower faces repayment difficulty --...

Loan Tenure Optimisation

Loan tenure determines the monthly EMI and total interest paid. Longer tenure = lower EMI but...

A lock-in period is the mandatory holding time during which investments cannot be redeemed or transferred....

Lock-in period is the mandatory holding period during which an investment cannot be redeemed. ELSS: 3...

Long-Term Incentive Plan

Long-Term Incentive Plans (LTIPs) reward senior employees with equity or performance-linked bonuses vesting over 3-5 years....

Liberalised Remittance Scheme

LRS allows Indian residents to remit up to USD 2,50,000 per financial year abroad for permitted...

Long-Term Capital Gains

LTCG is the profit from selling a capital asset held for longer than the minimum period...

Tax & Deductions

LTCG Tax Harvesting

LTCG tax harvesting is the strategy of selling equity mutual fund units each financial year to...

Tax & Deductions

Loan-to-Value Ratio

LTV is the percentage of property value a bank will lend. RBI mandates: up to 90%...

Lumpsum Investment

A lumpsum investment is a one-time large investment rather than periodic instalments. Best used during market...

Lumpsum investing puts a large amount in at once. SIP invests a fixed amount monthly. SIP...

M 12 terms

Market Capitalisation

Market capitalisation (market cap) is the total value of all outstanding shares of a company: share...

Married Women's Property Act Policy

A life insurance policy taken under the Married Women's Property Act (MWPA) 1874 is held in...

Maturity is the date when an investment's principal and final interest are repaid. For FDs, bonds,...

Marginal Cost of Funds based Lending Rate

MCLR is the minimum interest rate below which banks cannot lend. It replaced the Base Rate...

Mediclaim is the common term for individual or family health insurance in India, covering hospitalisation expenses....

Magnetic Ink Character Recognition

MICR is the 9-digit code printed at the bottom of cheques using magnetic ink, enabling high-speed...

Microfinance provides small loans, savings, and financial services to low-income individuals without access to traditional banking....

Mid cap refers to companies ranked 101st to 250th by market capitalisation on Indian stock exchanges....

The money market is the market for short-term borrowing and lending instruments with maturities up to...

Moonlighting and Secondary Income

Moonlighting refers to working a second job or freelancing while employed full-time. In India, the legality...

A moratorium is a temporary suspension of loan repayments granted by a lender. During moratorium, no...

A mutual fund pools money from multiple investors and invests it in a diversified portfolio of...

N 19 terms

Net Asset Value

NAV is the per-unit price of a mutual fund, calculated daily. It represents the fund's total...

NAV Adjusted Returns

NAV adjusted returns account for dividends reinvested in the fund (in growth option) versus paid out...

Non-Banking Financial Company

NBFCs offer banking-like services (loans, asset finance) without a banking licence. Regulated by RBI. Examples: Bajaj...

Non-Convertible Debenture

NCDs are fixed-income bonds issued by companies (not government), offering higher yields than FDs or G-Secs,...

National Electronic Funds Transfer

NEFT is an electronic fund transfer system for bank-to-bank transfers across India. Available 24x7 since December...

Net Banking Security

Net banking security is critical as banking fraud losses in India exceed Rs 6,000 Cr annually....

Net worth is total assets minus total liabilities. The single most important financial health metric beyond...

Personal Finance

Net Worth Calculation

Net worth = Total assets minus total liabilities. It is the single most important financial health...

Personal Finance

A New Fund Offer is the initial offering period when an AMC launches a new mutual...

National Stock Exchange Fifty

Nifty 50 is India's benchmark equity index of the top 50 companies by free-float market cap...

Nifty 50 vs Sensex

Nifty 50 (NSE) and Sensex (BSE) are India's two main equity market indices. Nifty 50 comprises...

Nomination designates who receives your financial assets upon death. Every bank account, mutual fund, insurance policy,...

Nomination in Financial Accounts

Nomination designates who receives the funds or assets in a financial account upon the account holder's...

Nominee vs Legal Heir

Nomination and inheritance (Will/succession) are two separate legal processes. A nominee is a trustee who receives...

Personal Finance

Notice Period Financial Impact

Notice periods (15 days to 3 months) have financial implications when changing jobs. Buyout (paying the...

National Pension System

NPS is India's government-regulated voluntary retirement savings scheme open to all citizens between 18 and 70...

Non-Resident Indian

An NRI (Non-Resident Indian) is an Indian citizen residing abroad for 182+ days in a financial...

NRIs (Non-Resident Indians) have three main account types in India: NRE (Non-Resident External), NRO (Non-Resident Ordinary),...

National Savings Certificate

NSC is a Government of India savings certificate with 5-year tenure and guaranteed 7.7% annual interest...

Savings & Deposits

O 9 terms

Off-Market Transaction

An off-market transaction in securities involves transferring shares directly between demat accounts without going through the...

The old tax regime allows claiming deductions (Section 80C, 80D, HRA, home loan interest, LTA, standard...

Tax & Deductions

One Time Settlement

One Time Settlement (OTS) is a negotiated arrangement where a lender accepts a lump sum less...

Online Trading and Demat

Online trading in India requires a demat account (electronic securities storage) and a trading account (for...

Open-Ended Fund

An open-ended mutual fund allows investors to buy and sell units at the prevailing NAV on...

Opportunity Cost

Opportunity cost is the value of the next-best alternative you give up when making a financial...

Personal Finance

Options Overlay Strategy

Options overlay strategies use derivatives (options contracts) alongside an existing portfolio to generate additional income or...

OTM / NACH Mandate

One Time Mandate / National Automated Clearing House

OTM (One Time Mandate) or NACH (National Automated Clearing House) is a standing instruction that allows...

An overdraft is a credit facility linked to a bank account that allows you to withdraw...

P 23 terms

Peer-to-Peer Lending

P2P lending platforms connect individual lenders directly with borrowers, bypassing banks. In India, P2P platforms are...

Permanent Account Number

PAN is a 10-character alphanumeric unique identifier issued by the Income Tax Department. Mandatory for all...

Tax & Deductions

A pension is a regular income stream in retirement. India has multiple pension sources: NPS (market-linked),...

Pension Options in India

India has limited formal pension infrastructure for private sector employees. Available pension sources: EPF (mandatory for...

Perpetual bonds (called AT1 or Additional Tier 1 bonds in banking) have no maturity date --...

Perquisites and Taxable Benefits

Perquisites (perks) are non-cash benefits provided by employers. Some are fully taxable (company car, club membership,...

Personal Accident Insurance

Personal Accident (PA) insurance covers financial consequences of accidents: accidental death, permanent total disability, permanent partial...

Personal Financial Ratios

Personal financial ratios -- savings rate, debt-to-income, liquidity ratio -- provide quick health checks for your...

Personal Finance

A personal loan is an unsecured loan (no collateral) available from banks and NBFCs for any...

Portfolio is the complete collection of all financial investments -- equity, debt, gold, real estate, cash....

Portfolio Diversification

Portfolio diversification spreads investments across different asset classes, geographies, and sectors to reduce the impact of...

Portfolio Overlap

Portfolio overlap occurs when multiple mutual funds in your portfolio hold the same underlying stocks. High...

Portfolio Rebalancing

Portfolio rebalancing restores your portfolio to its target asset allocation after market movements have shifted the...

Post Office MIS

Post Office Monthly Income Scheme

Post Office Monthly Income Scheme (POMIS) is a government-backed savings scheme that provides guaranteed monthly income....

Savings & Deposits

Post Office Savings Schemes

India Post offers several savings schemes backed by the Government of India -- considered the safest...

Savings & Deposits

Power of Attorney

A Power of Attorney is a legal document authorising another person (attorney) to act on your...

Personal Finance

Public Provident Fund

PPF is a government-backed long-term savings scheme offering a guaranteed 7.1% annual return with complete EEE...

Savings & Deposits

PPF Maximisation Strategy

PPF (Public Provident Fund) has specific rules that, when optimised, significantly increase returns: deposit before the...

Savings & Deposits

Loan Prepayment

Prepayment is paying a portion of a loan before the scheduled due date. For floating-rate home...

Prepayment Strategy

Strategic home loan prepayment -- making additional payments beyond the EMI -- can save significant interest...

Probation Period

The probation period (typically 3-6 months for new employees) is an evaluation phase where either party...

Professional Tax

Professional tax is a state-level tax levied on individuals earning income from employment, profession, or trade....

Tax & Deductions

A put option gives the buyer the right (but not obligation) to sell an underlying asset...

Q 5 terms

Quantitative Funds

Quant mutual funds use algorithms, mathematical models, and data analysis -- not human fund managers' judgment...

Quantitative Easing

Quantitative Easing is a central bank policy where it purchases government bonds or other securities to...

Quarterly Compounding

Quarterly compounding means interest is calculated and added to principal every 3 months. Most Indian bank...

Savings & Deposits

Quarterly Results (Q1/Q2/Q3/Q4)

Listed companies in India report financial results every quarter: Q1 (April-June), Q2 (July-September), Q3 (October-December), Q4...

Acid-Test Ratio

The quick ratio measures a company's ability to meet short-term obligations using its most liquid assets...

R 19 terms

Reserve Bank of India

RBI is India's central bank and supreme monetary authority, established in 1935. It regulates money supply,...

RBI Monetary Policy

RBI's Monetary Policy Committee (MPC) meets 6 times a year to set the repo rate --...

Recurring Deposit

A Recurring Deposit is a monthly savings scheme where a fixed amount is deposited every month...

Savings & Deposits

Recurring Deposit vs SIP

Recurring Deposit (RD) and SIP are both disciplined monthly savings tools -- but for completely different...

Savings & Deposits

Ready Reckoner Rate

Ready Reckoner Rate (RR Rate) is Maharashtra's term for the minimum property valuation rate set by...

Tax & Deductions

Real estate as an investment involves purchasing property for rental income and/or capital appreciation. While owning...

Reducing Balance

Diminishing Balance Method

Reducing balance (also called diminishing balance) is the loan interest calculation method where interest is charged...

Real Estate Investment Trust

A REIT is a company that owns and operates income-producing real estate (offices, malls, warehouses) and...

Real Estate Investment Trust

A REIT is a trust that owns income-producing real estate assets (office buildings, malls, warehouses) and...

Repurchase Rate

Repo rate is the interest rate at which RBI lends short-term funds to commercial banks. It...

Real Estate (Regulation and Development) Act

RERA (2016) is India's landmark real estate regulation that protects homebuyers by mandating developer registration, project...

Personal Finance

Retirement Corpus Calculation

Retirement corpus is the total wealth needed to fund retirement without running out of money. It...

Reverse Mortgage

Reverse mortgage allows senior citizens (60+ years) who own their home to receive regular monthly income...

Risk appetite (or risk tolerance) is the degree of uncertainty in investment returns that an investor...

Repo Linked Lending Rate

RLLR is the benchmark for all new floating-rate retail loans (mandated by RBI since October 2019)....

Real Time Gross Settlement

RTGS is India's fastest interbank fund transfer system for large-value transactions. Minimum Rs 2 lakh. Settlement...

The Rule of 72 is a quick mental formula to estimate how many years it takes...

Rupee Cost Averaging

Rupee Cost Averaging (RCA) -- the Indian term for Dollar Cost Averaging -- is the effect...

Rupee Cost Averaging

Rupee Cost Averaging is the investment strategy of investing a fixed amount at regular intervals regardless...

S 41 terms

Safe Withdrawal Rate

Safe Withdrawal Rate (SWR) is the percentage of a retirement corpus that can be withdrawn annually...

Salary Negotiation

Salary negotiation is a critical financial skill -- a Rs 2L higher starting salary at 28...

Salary Revision and Increment

Annual salary increments in India range from 4-15% depending on industry and performance. Understanding how increments...

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act

SARFAESI Act (2002) allows banks and financial institutions to recover non-performing loans by taking possession of...

Savings Account

A savings account provides safe storage with interest (2.5-7% per annum). Entry point for all banking....

Savings Account Interest

Savings account interest in India ranges from 2.5-7% per annum depending on the bank. Large PSU...

Savings rate is the percentage of income saved and invested. It is the single most powerful...

Personal Finance

Senior Citizen Savings Scheme

SCSS is a government-backed savings scheme exclusively for senior citizens (60+ years) offering the highest guaranteed...

Securities and Exchange Board of India

SEBI is India's capital markets regulator, established in 1992. It regulates stock exchanges, brokers, mutual funds,...

Presumptive Taxation for Business

Section 44AD is a simplified taxation scheme for small businesses with turnover up to Rs 3...

Tax & Deductions

Capital Gains Exemption on Property

Section 54 exempts capital gains from the sale of a residential house if the proceeds are...

Tax & Deductions

Section 80C allows up to Rs 1.5 lakh deduction from taxable income for specified investments and...

Tax & Deductions

Section 80D allows deduction for health insurance premiums for self, family, and parents. Up to Rs...

Tax & Deductions

HRA Deduction for Non-Salaried

Section 80GG allows a deduction for house rent paid by individuals who do not receive HRA...

Tax & Deductions

Section 87A Rebate

Section 87A provides a full tax rebate for individuals with income up to Rs 7 lakh...

Tax & Deductions

Secured Credit Card

A secured credit card is issued against a Fixed Deposit as collateral. The credit limit is...

Senior Citizen Financial Planning

Senior citizen (age 60+) financial planning has different priorities: capital preservation, regular income, healthcare inflation protection,...

Sequence of Returns Risk

Sequence of returns risk is the danger that early retirement years experience poor market returns, permanently...

Sovereign Gold Bond

SGBs are government-issued gold bonds earning 2.5% annual interest on the issue price plus gold price...

Sovereign Gold Bond Tax Details

Sovereign Gold Bond taxation: 2.5% annual interest is taxable at slab rate. Capital gains on redemption...

Tax & Deductions

Short selling is the practice of selling shares you don't own (borrowed from broker) with the...

A sinking fund is a dedicated savings account set aside to cover a predictable future large...

Personal Finance

Systematic Investment Plan

SIP is a method of investing a fixed amount in a mutual fund at regular intervals...

Small cap refers to companies ranked 251st and below by market capitalisation. They offer the highest...

A soft inquiry is a credit check that does not affect your CIBIL score. Includes: you...

Sukanya Samriddhi Yojana

SSY is a government savings scheme for girl children below age 10. Offers 8.2% interest (highest...

Savings & Deposits

Stamp duty is a state government tax on property transactions and legal documents. Paid at time...

Tax & Deductions

Short-Term Capital Gains

STCG is the profit from selling a capital asset held for less than the minimum holding...

Tax & Deductions

A Step-Up SIP (also called Top-Up SIP) automatically increases the monthly SIP amount at regular intervals...

Systematic Transfer Plan

STP automatically transfers a fixed amount from one fund (usually liquid/debt) to another (usually equity) at...

Subvention Scheme

A subvention scheme (common in real estate) is where the builder pays the EMI on the...

Sum assured is the guaranteed amount the insurer will pay to the nominee upon the insured's...

Super Built-Up Area

Super built-up area (SBA) is the total area including carpet area, walls, balcony, and proportionate share...

Personal Finance

Super Top-Up Insurance

Super top-up health insurance covers cumulative medical expenses in a year exceeding the deductible, across multiple...

Superannuation Fund

A superannuation fund is an employer-funded retirement benefit (distinct from EPF and gratuity). The employer contributes...

Surcharge is an additional tax levied on the income tax amount (not on income) for high-income...

Tax & Deductions

Surrender Value

Surrender value is the amount an insurer pays when a policyholder terminates an endowment, money-back, or...

Society for Worldwide Interbank Financial Telecommunication

A SWIFT code (also called BIC -- Bank Identifier Code) is an 8-11 character code used...

Systematic Withdrawal Plan

SWP is the reverse of SIP -- regular automatic withdrawal from a mutual fund. Used in...

Systematic Withdrawal Plan Strategy

An SWP (Systematic Withdrawal Plan) strategy for retirement creates a monthly "salary" from mutual fund corpus,...

Systematic Plan

Systematic plans in mutual funds are automated, regular transactions -- SIP (invest fixed amount monthly), SWP...

T 16 terms

A tax audit is a mandatory examination of accounts by a Chartered Accountant under Section 44AB...

Tax & Deductions

Tax harvesting means deliberately booking up to Rs 1.25 lakh of equity LTCG annually (the tax-free...

Tax & Deductions

Tax Loss Harvesting

Tax loss harvesting is deliberately selling investments at a loss to offset capital gains from other...

Tax & Deductions

Tax planning is legally minimising tax liability through systematic use of deductions, exemptions, and investment choices...

Tax & Deductions

Tax Collected at Source

TCS is tax collected by a seller from the buyer at the point of sale and...

Tax & Deductions

Tax Deducted at Source

TDS is the mechanism where the payer of income deducts tax at source before payment and...

Tax & Deductions

A teaser rate is an artificially low initial interest rate on a loan for a limited...

Term deposit is another name for Fixed Deposit -- a bank deposit at fixed interest for...

Savings & Deposits

Term insurance is pure life insurance providing a lump sum death benefit to nominees if the...

Term Insurance vs ULIP

Term insurance provides pure life cover with no investment component -- low cost, high coverage. ULIPs...

A thematic fund invests in companies aligned with a specific theme -- EV, digital India, healthcare,...

Top-Up Health Insurance

A top-up health insurance policy provides additional coverage above a deductible (threshold). If base policy is...

Treasury Bills are short-term government debt instruments with maturities of 91 days, 182 days, or 364...

A trust is a legal arrangement where assets are held by a trustee for the benefit...

Personal Finance

Types of Cheques

Cheques in India come in several forms: account payee (most secure), self, bearer, crossed, and post-dated....

Types of Life Insurance

Life insurance in India includes five main types: term insurance (pure protection), whole life, endowment, money-back,...

U 10 terms

Unit Linked Insurance Plan

ULIP is an insurance product combining life insurance coverage with market-linked investment. A portion of the...

Umbrella Fund Structure

Some AMCs offer multiple schemes under a single umbrella structure where investors can switch between sub-funds...

Unclaimed Investments

Unclaimed investments -- dormant mutual fund folios, forgotten demat accounts, bank accounts, insurance policies -- represent...

Personal Finance

Underwriting is the process by which an insurer evaluates an applicant's risk profile to decide whether...

Undivided Share

Undivided Share (UDS) is the proportionate ownership of land that each apartment buyer holds in a...

Personal Finance

Unit-Linked Products

Unit-linked products tie returns to the performance of underlying market units (NAV) -- making returns variable....

Unsecured vs Secured Debt

Secured debt is backed by collateral (home loan backed by property, gold loan by gold). Unsecured...

Unified Payments Interface

UPI enables instant 24x7 bank-to-bank transfers using a VPA (Virtual Payment Address) or mobile number. India...

UPI Transaction Limits

UPI (Unified Payments Interface) has per-transaction and daily limits set by NPCI and individual banks. Standard...

Utility and Defensive Stocks

Defensive stocks belong to sectors that remain stable regardless of economic cycles -- utilities (power, water),...

V 9 terms

Value Investing

Value investing is the strategy of buying stocks or funds trading below their intrinsic value --...

Value Investing Fund

Value funds invest in stocks trading below their intrinsic value -- looking for fundamentally strong companies...

Performance-Linked Pay

Variable pay is the component of compensation linked to individual, team, or company performance. It includes...

Variable Rate Loan

Floating Rate Loan

A variable (floating) rate loan has an interest rate that changes periodically based on a benchmark...

Venture Capital

Venture Capital is private equity funding provided to early-stage startups with high growth potential in exchange...

Volatility Index

India VIX (IVIX) measures expected market volatility over the next 30 days, calculated from Nifty option...

Volatility measures how much an investment's returns vary over time. High volatility means large swings in...

Voluntary Provident Fund

VPF allows salaried employees to contribute more than the mandatory 12% of basic salary to EPF....

Voluntary Retirement Scheme

VRS is an early retirement scheme offered by companies (especially PSUs and large corporates) to reduce...

W 8 terms

Wealth Management

Wealth management is a comprehensive financial planning service that integrates investment management, tax planning, estate planning,...

Personal Finance

Wealth Tax (Abolished)

India abolished Wealth Tax in 2015 (effective AY 2016-17). Previously, individuals with net wealth exceeding Rs...

Tax & Deductions

When to Use Personal Loan

Personal loans (unsecured, 12-24% interest) are expensive but sometimes the only viable option. They are justified...

Last Will and Testament

A will declares how your assets should be distributed after death. Without a will, assets distribute...

Personal Finance

Withholding Tax

TDS / Tax Deducted at Source

Withholding tax (TDS in India) is tax deducted by the payer before transferring income. Banks deduct...

Tax & Deductions

Working Capital

In personal finance, working capital is your liquid assets minus short-term liabilities -- essentially how much...

Personal Finance

Working Capital Management

Working capital management for individuals mirrors corporate practice: maintaining adequate liquidity for monthly operations while deploying...

Personal Finance

Wholesale Price Index

WPI measures inflation at the wholesale (producer) level -- the prices at which goods are sold...

X 1 terms

Extended Internal Rate of Return

XIRR is the accurate annualised return for investments with irregular cash flows like SIPs. Unlike CAGR...

Y 5 terms

Yield is the earnings generated from an investment over a period, expressed as a percentage of...

The yield curve plots interest rates of bonds of equal credit quality but different maturities. A...

Year-to-Date Return

YTD return is the percentage gain or loss of an investment from January 1 of the...

Yield to Maturity

Yield to Maturity is the total return an investor earns if a bond is held until...

Yield to Maturity

YTM is the total annualised return if you buy a bond today and hold to maturity,...

Z 4 terms

Zakat is a mandatory annual charitable contribution of 2.5% of accumulated wealth above the nisab threshold...

Personal Finance

Zero Coupon Bond

A zero coupon bond is a bond that pays no periodic interest. Instead, it is issued...

Zero-Based Budgeting

Zero-based budgeting assigns every rupee of income a specific purpose so that income minus expenses equals...

Personal Finance

Zombie Companies

Zombie companies earn just enough to service their debt interest but cannot repay the principal --...