BankPulse Academy
Banking terms in plain English, one term to a page.
Each page explains one term the way a new banker needs it. The meaning first. Then how it works, and examples with rupee numbers. Then the common mistakes, and a short checklist for the desk.
Every page names the official source it rests on. Every page is read and confirmed by a person before it appears here.
What is an amortisation schedule? (Repayment schedule) UR
An amortisation schedule lists every instalment of a loan, split into interest and principal, until the balance is zero.
What is a bullet payment? (Bullet repayment) UR
A bullet payment repays the whole principal, and sometimes all the interest, in one sum on the loan's last day.
What is the current ratio? (Working capital ratio) UR
The current ratio compares a business's short-term assets with its short-term debts due within a year.
What is the debt-equity ratio? (Debt to equity ratio, or gearing ratio) UR
The debt-equity ratio compares what a business owes to lenders with what its owners put in.
What is DSCR? (Debt Service Coverage Ratio) UR
DSCR (Debt Service Coverage Ratio) compares a business's yearly cash with what it must pay that year on its loan.
What is loan eligibility calculation? (From salary slip to loan amount) UR
Loan eligibility calculation is the step-by-step method a lender uses to turn a salary slip into a maximum loan amount.
What is an EMI? (Equated Monthly Instalment) UR
An EMI is a fixed monthly payment that repays a loan's interest and principal over a set term.
FOIR counts every fixed monthly payment against income; INIR counts only the new loan's instalment against take-home income.
What is FOIR? (Fixed Obligation to Income Ratio) UR
FOIR is the share of a borrower's income that goes to fixed monthly payments, including the new loan's EMI.
How to verify own contribution (checking that the margin was really paid) UR
Verifying own contribution means matching every receipt to a debit in the borrower's bank statement, and checking the source.
What is the income multiplier method? (A loan cap set as a fixed number times income) UR
The income multiplier method sets a loan cap by multiplying the borrower's income by a fixed number the lender chooses.
What is INIR? (Instalment to Net Income Ratio) UR
INIR is the new loan's monthly instalment as a share of the borrower's take-home income.
What is LTV? (Loan to Value ratio) UR
LTV (Loan to Value) is the loan amount divided by the value of the asset pledged, shown as a percentage.
What are a moratorium and pre-EMI? (paying before the full EMI starts) UR
A moratorium is a pause before full repayment starts; pre-EMI is interest paid on the amount released so far.
What is net take-home income? (Also called Net Monthly Income, or NMI) UR
Net take-home income is the salary that reaches a borrower's account after tax and payroll deductions.
What is Own Contribution? (OCR, margin money or borrower's margin) UR
Own contribution is the part of the cost the borrower pays from his own money: cost minus loan.
What is parallel funding? (own contribution paid from a second loan) UR
Parallel funding means the borrower pays his own contribution from another loan, so two loans sit behind one purchase.
What RBI rules say about margin money UR
RBI fixes a minimum margin only for home loans, gold and silver loans, and loans against securities.
Reducing balance rate or flat rate: why the same number is not the same price UR
A reducing balance rate charges interest on what is still owed; a flat rate charges it on the whole loan.
What is a step-up EMI? (Step-up Equated Monthly Instalment) UR
A step-up EMI starts below the normal EMI and rises by a fixed step at set times, usually every year.
What is TOL/TNW? (Total Outside Liabilities to Tangible Net Worth) UR
TOL/TNW compares every rupee a business owes to outsiders with the real, tangible worth of its owners.
What is the working capital cycle? (Operating cycle or cash conversion cycle) UR
The working capital cycle is the number of days between paying for raw material and collecting cash from the customer.
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