Small voluntary groups, typically comprising women, that come together to save and collectively manage funds. SHGs empower their members by providing access to credit, improving financial literacy, and fostering economic independence.
SME (Small and Medium Enterprise) refers to businesses that maintain revenues, assets, or a number of employees below certain thresholds defined by regulatory authorities. SMEs are typically categorized into small and medium-sized businesses based on factors like annual turnover and employee count. They play a critical role in economic development, contributing significantly to employment, innovation, and industrial growth. SMEs often benefit from specialized financial services, government incentives, and support programs to enhance their competitiveness and sustainability.
The Electronic National Automated Clearing House (ENACH) for Non-Banking Financial Companies (NBFCs) is a digital payment system in India that enables NBFCs to automate the collection of recurring payments from their customers' bank accounts. This system allows NBFCs to efficiently collect payments such as loan repayments, insurance premiums, and other regular financial commitments.
The National Automated Clearing House (NACH) is a centralized electronic payment system implemented by the National Payments Corporation of India (NPCI). It facilitates interbank transactions, automates recurring payments, and streamlines bulk transactions such as loan EMIs, insurance premiums, and utility payments. For NBFCs, NACH enhances operational efficiency, reduces processing time, minimizes errors, and improves customer service by ensuring timely and accurate transaction processing.
CCIL (The Clearing Corporation of India Limited) is commonly known as CIBIL (Credit Information Bureau India Limited). It is one of the leading credit information companies in India, responsible for collecting and maintaining credit records of individuals and businesses. CIBIL provides credit reports and scores to banks, financial institutions, and lenders to help assess the creditworthiness of loan applicants. This information is crucial for lenders when making decisions about loan approvals, interest rates, and credit limits.
The Indian Banks' Association (IBA) is a prominent industry association representing banks in India. While it primarily serves banks, it also collaborates with NBFCs on common industry issues, policies, and regulatory matters affecting the financial sector. The IBA facilitates discussions, formulates recommendations, and liaises with regulators and government bodies to promote the interests of its member banks and, indirectly, the broader financial ecosystem, including NBFCs.
A Non-Banking Financial Company (NBFC) is a financial institution that provides various banking services without holding a banking license. NBFCs offer services such as loans, asset financing, investment advisory, and wealth management, but they cannot accept deposits like traditional banks. They play a crucial role in the financial system by catering to underserved segments, providing credit, and facilitating investments.
RBI stands for Reserve Bank of India. It's the central bank of India, responsible for regulating the country's monetary system. It oversees and regulates banks and financial companies to ensure financial stability, protect depositor interests, and maintain the overall health of the financial system. RBI sets guidelines, issues licenses, monitors compliance, and enforces regulations to govern activities of financial companies, ensuring they operate within the framework of prudential norms and maintain adequate capital adequacy ratios.
The Securities and Exchange Board of India (SEBI) is the regulatory authority in India that oversees the securities markets and protects investor interests. While primarily focused on regulating stock exchanges and securities trading, SEBI also regulates certain categories of NBFCs that are involved in activities such as merchant banking, underwriting, and portfolio management. SEBI ensures compliance with securities laws, promotes transparency and fair practices in the financial markets, and fosters investor confidence in NBFC activities related to securities and investments.
SIDBI (Small Industries Development Bank of India) is a financial institution established by the Government of India to promote, finance, and develop micro, small, and medium enterprises (MSMEs). SIDBI provides financial assistance through various schemes and products aimed at fostering the growth and modernization of the MSME sector. It offers direct lending, credit guarantees, equity support, and refinancing services to help businesses access capital for expansion, innovation, and infrastructure development. SIDBI plays a vital role in strengthening the MSME ecosystem, contributing to job creation, entrepreneurship, and overall economic growth in India.
Micro Finance Institutions(MFIs) are organizations that provide small loans and financial services to low-income individuals or groups, particularly in underserved or rural areas. MFIs aim to promote financial inclusion by supporting entrepreneurship, empowering communities, and helping people lift themselves out of poverty by offering credit, savings, and insurance services.
The Bureau of Indian Standards (BIS) is the national standards body of India, established under the Bureau of Indian Standards Act, 1986. BIS is responsible for developing and implementing standards for products, services, and systems to ensure quality, safety, and reliability. It provides certification and quality marks for a wide range of goods, including electronics, construction materials, and food products
A Corporate Identification Number (CIN) is a unique alphanumeric code assigned by the Registrar of Companies (RoC) to companies incorporated in India. This 21-character code is used to identify and track a company’s legal status, and it contains information about the company’s registration, such as the type of company, its registration state, year of incorporation, and its unique registration number.The CIN is used in all official filings and communications with the Ministry of Corporate Affairs (MCA), ensuring compliance and transparency in business operations.
A Director Identification Number (DIN) is a unique identification number assigned to individuals who wish to become directors of companies in India. Issued by the Ministry of Corporate Affairs (MCA), the DIN serves as a permanent identification number for directors and is required for all new and existing directors of Indian companies.
The Ministry of Corporate Affairs (MCA) is a government body in India responsible for regulating corporate entities and businesses under the Companies Act, Limited Liability Partnership Act, and other related laws. The MCA oversees company registrations, compliance, and governance, ensuring that companies adhere to statutory regulations. It also supervises the functioning of the Insolvency and Bankruptcy Code (IBC) and protects investor interests by maintaining transparency in corporate practices.
The Registrar of Companies (RoC) is an office under the Ministry of Corporate Affairs (MCA) in India, responsible for administering the Companies Act and ensuring company compliance with legal requirements. The RoC oversees company incorporation, maintains records of registered companies, and ensures they comply with regulatory obligations like filing annual returns, financial statements, and other statutory documents.
A Business Credit Bureau is an organization that gathers and reports information on a company's credit history and financial activities. It provides credit reports to lenders, suppliers, and other entities to help assess a business's creditworthiness. These bureaus play a key role in business lending decisions and risk management.
A Business Credit Report provides a detailed overview of a company’s credit history, including payment behavior, outstanding debts, and creditworthiness. It helps lenders, suppliers, and investors evaluate the financial health and reliability of the business. This report is crucial for securing loans or negotiating better terms with partners.
A Business Credit Score is a numerical rating that reflects a company's financial health and creditworthiness. It is based on factors like payment history, debt levels, and credit utilization. Lenders use this score to assess the risk of lending to a business. A higher score increases the chances of securing loans or favorable terms.
A credit bureau is an organization that collects and maintains credit information about individuals and businesses. It gathers data from various financial institutions regarding credit accounts, payment histories, and outstanding debts. This information is used to generate credit reports and credit scores, which help lenders assess the creditworthiness of potential borrowers. Credit bureaus play a crucial role in the lending process by providing insights into an individual's or entity's credit behavior, helping to inform lending decisions and promote responsible credit usage.
A credit report is a detailed document that provides an individual's credit history, including information about credit accounts, payment history, outstanding debts, and public records such as bankruptcies or foreclosures. Compiled by credit reporting agencies, the report includes details like account balances, credit limits, payment patterns, and inquiries from lenders. Credit reports are used by lenders to assess creditworthiness when evaluating loan applications or credit requests
A credit score is a numerical representation of an individual's creditworthiness, typically ranging from 300 to 850. It is calculated based on various factors, including payment history, credit utilization, length of credit history, types of credit accounts, and recent credit inquiries. A higher credit score indicates a lower risk to lenders, making it easier for individuals to secure loans and favorable interest rates. Credit scores play a crucial role in personal finance decisions, influencing approvals for credit cards, mortgages, and other forms of credit. Regularly monitoring and maintaining a good credit score is essential for financial health.
Cash Credit (CC) is a short-term loan facility offered by banks to businesses for working capital needs. It allows companies to withdraw funds up to a predetermined limit, even without a positive account balance. Interest is charged only on the amount used, making it a flexible financing option for managing day-to-day operations.
A detailed report that provides information about a company's credit history, including its credit score, outstanding loans, repayment history, and financial behavior. Lenders use the CCR to evaluate a company's creditworthiness and assess the risk before extending credit or loans.
CIBIL is one of India’s leading credit information companies that collects and maintains credit records of individuals and businesses. It generates CIBIL scores and reports, which help lenders assess the creditworthiness of potential borrowers before granting loans or credit.
An e-signature, or electronic signature, is a digital representation of a person's intent to sign a document, which meets legal requirements for authenticity and integrity. E-signatures can be created using various methods, including typed names, scanned signatures, or digital certificate-based signatures. They streamline the signing process for contracts and agreements, enabling quicker transactions while maintaining security and compliance.
Open Banking is a system that enables third-party providers to access customer financial data through secure application programming interfaces (APIs). This approach allows consumers to share their banking information with authorized services, fostering innovation and competition in the financial services sector. Open Banking can facilitate various services, such as personalized financial management tools, payment initiation services, and tailored lending options.
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines programmed to think and learn. AI encompasses a variety of technologies and methodologies, including machine learning, natural language processing, and robotics, allowing systems to analyze data, recognize patterns, and make decisions. Applications of AI are vast, ranging from virtual assistants and chatbots to autonomous vehicles and predictive analytics, transforming industries and enhancing efficiency in various processes.
An Application Programming Interface (API) is a set of rules that allows different software applications to communicate and interact. It defines how requests and data should be exchanged, enabling developers to integrate functionalities from one system into another. APIs are essential for web and mobile applications, facilitating seamless interactions and enhancing user experiences.
Financial Technology (fintech) involves leveraging advanced technologies to enhance financial services. This includes digital lending platforms that use algorithms for quick loan approvals, online payment systems for seamless transactions, and data analytics to better assess credit risk and customer behavior. These innovations improve operational efficiency, customer experience, and expand financial access.
Machine Learning (ML) is a subset of artificial intelligence that enables systems to learn from data and improve their performance over time without being explicitly programmed. ML algorithms analyze patterns in data to make predictions or decisions based on new inputs. It encompasses various techniques, including supervised learning, unsupervised learning, and reinforcement learning. Applications of machine learning are widespread, including image and speech recognition, recommendation systems, fraud detection, and predictive analytics.
National Electronic Funds Transfer (NEFT) enables electronic fund transfers between bank accounts across India. It helps NBFCs efficiently manage transactions like loan disbursements, repayments, and vendor payments, enhancing operational efficiency and customer experience.
Asset Finance Companies are financial institutions that specialize in providing loans to businesses for the purchase of assets. These assets can include machinery, equipment, vehicles, and real estate.
A financial institution that collects and maintains credit information from various lenders about individuals and businesses. CICs compile data regarding credit history, repayment behavior, and outstanding loans to create credit reports and scores. These reports are used by lenders to assess the creditworthiness of potential borrowers, helping them make informed lending decisions.
Foreign Direct Investment (FDI) refers to investment made by a company or individual in one country into business interests located in another country. This typically involves the acquisition of a significant ownership stake or establishing new business operations, such as a subsidiary or joint venture. FDI allows foreign investors to gain a direct interest in the business, potentially influencing its operations and strategy.
A type of financial company that provides loans, advances, and investments in securities. ICCs play a role in supporting businesses and individuals by offering financial services outside the banking sector.
IFC stands for International Finance Corporation. It's a member of the World Bank Group and is the largest global development institution focused on the private sector in emerging markets.
Net Owned Funds (NOF) in the context of companies refers to the total assets of a company minus its total liabilities. It represents the company's equity or net worth. A higher NOF indicates a stronger financial position for a company. It means the company has more assets than liabilities and can better absorb losses or economic downturns.
The cash flow statement is a financial document that tracks a company's cash inflows and outflows over a specific period. It categorizes cash flows into three activities: operating, investing, and financing. This statement helps stakeholders understand how a company generates and uses cash, providing insights into its liquidity, financial flexibility, and overall cash management.
Collateral refers to assets that borrowers pledge to lenders as security for a loan. This arrangement provides the lender with a guarantee that they can recover their funds if the borrower fails to repay the loan. Common forms of collateral include real estate, vehicles, savings accounts, and other valuable property. By offering collateral, borrowers may secure lower interest rates or larger loan amounts, as the risk for the lender is reduced.
A creditor is an individual or entity that lends money or extends credit to another party, known as the debtor. Creditors can include banks, financial institutions, businesses, and individuals who provide loans or credit for various purposes, such as purchasing goods, services, or real estate. In return for the credit extended, creditors expect repayment of the principal amount along with any agreed-upon interest or fees.
A debtor is an individual or entity that owes money to another party, typically referred to as a creditor. Debtors can arise from various financial transactions, including loans, credit agreements, and purchases made on credit. The debtor is responsible for repaying the borrowed amount, often with interest, according to the terms outlined in the agreement. Understanding the rights and responsibilities of being a debtor is crucial, as it impacts financial stability and creditworthiness.
Digital lending refers to the process of providing loans through online platforms, streamlining the borrowing experience for consumers and businesses. This method leverages technology to facilitate applications, approvals, and disbursements, often resulting in faster processing times compared to traditional lending. Digital lending platforms use algorithms and data analytics to assess creditworthiness and risk, allowing for more efficient decision-making.
Hypothecation is the process of pledging movable property as collateral to secure a loan while retaining possession of the asset. This arrangement allows borrowers to use their assets, such as inventory, equipment, or vehicles, to guarantee the loan without surrendering control over them. In the event of default, the lender has the right to seize the hypothecated property to recover the outstanding debt.
Loan eligibility refers to the specific criteria that lenders use to determine whether an applicant qualifies for a loan. These criteria typically include factors such as credit score, income level, employment history, existing debt, and overall financial stability. Lenders assess these elements to evaluate the risk of lending money and the borrower’s ability to repay. Understanding these criteria is crucial for potential borrowers, as it helps them prepare their applications and improve their chances of securing a loan.
Loan processing is the series of steps undertaken by lenders to evaluate and approve a loan application. This process typically begins when the borrower submits an application, followed by a thorough review of their financial information, credit history, and supporting documents. Lenders conduct due diligence, which may include verifying income, assessing the applicant's debt-to-income ratio, and performing a credit check. Once the assessment is complete, the lender makes a decision, either approving or denying the loan.
An MSME loan is a financial product tailored to meet the needs of Micro, Small, and Medium Enterprises. It helps businesses with funding for expansion, working capital, or equipment purchases. These loans often come with flexible terms and government support to boost the growth of MSMEs.
A Non-Collateral-Based Loan is a type of loan that does not require the borrower to pledge any assets as security. These loans are typically granted based on the borrower’s creditworthiness and financial history. Due to the higher risk for lenders, they often come with higher interest rates compared to collateralized loans.
Prepayment charges are fees imposed by lenders when borrowers pay off their loans before the scheduled maturity date. These fees compensate the lender for the interest income they lose due to the early repayment. While not all loans include prepayment penalties, those that do typically specify the terms in the loan agreement. Borrowers should be aware of these charges as they can significantly impact the total cost of borrowing.
The profit and loss statement, also known as the income statement, summarizes a company's revenues and expenses over a specific period. It highlights the net profit or loss by subtracting total expenses from total revenues. This statement provides insights into the company's operational performance, helping stakeholders assess profitability, cost management, and overall financial health.
SME Loan is a type of financing specifically designed to meet the needs of small and medium enterprises (SMEs). These loans provide capital for various business purposes, such as expanding operations, purchasing equipment, managing cash flow, or meeting working capital requirements. SME loans typically come with flexible terms, lower interest rates, and are often supported by government initiatives like credit guarantees (e.g., CGTMSE). These loans help SMEs grow their businesses, improve productivity, and compete in the market without needing large collateral or personal guarantees.
APR (Annual Percentage Rate) is a financial term that represents the total cost of borrowing on an annual basis, expressed as a percentage of the loan amount. It includes the interest rate as well as any additional fees or costs associated with the loan, providing borrowers with a comprehensive view of what they will pay over a year. This standardized rate helps consumers compare different loan offers and understand the true cost of credit, enabling informed financial decisions.
Annual Sale Fee is often charged by financial institutions or service providers to maintain and service accounts, loans, or other financial products on an annual basis. It helps cover administrative costs and ensures ongoing support and management of the account or service throughout the year.
Assets Under Management (AUM) for an NBFC refers to the total market value of the financial assets that the company manages on behalf of its clients. It includes a range of assets such as loans, investments, and other financial instruments that the NBFC oversees. The AUM is an important metric as it indicates the scale and success of the NBFC's business, reflecting its ability to attract and manage assets effectively.
Compound Annual Growth Rate (CAGR) is a measure used to calculate the mean annual growth rate of an investment over a specified period of time, assuming the profits are reinvested at the end of each period. CAGR provides a smooth annual growth rate that represents the rate of return on an investment, disregarding the effects of volatility and fluctuations during the period.CAGR is particularly useful for comparing the growth rates of different investments or measuring the performance of a specific investment over time.
Capital Expenditure (CAPEX) refers to the funds used by a company to acquire, upgrade, or maintain physical assets such as property, plant, equipment, or technology. CAPEX is typically used for long-term investments that will provide benefits over several years, unlike operational expenses (OPEX), which cover day-to-day operational costs. CAPEX can include expenditures for purchasing new machinery, building new facilities, or investing in major upgrades to existing assets.
Cost of Goods Sold (COGS) refers to the direct costs attributable to the production of goods or services sold by a company. For an NBFC, COGS typically includes expenses directly related to the delivery of financial products or services, such as loan origination costs, interest expenses, and fees associated with managing investments or portfolios. These costs are deducted from revenue to calculate gross profit.
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. For NBFCs, CPI serves as an economic indicator to monitor inflation trends, which can impact interest rates, loan repayments, and investment strategies.
Cash Reserve Ratio (CRR) is the percentage of a bank's deposits that it must hold as reserves in cash with the central bank (like RBI in India). This ratio is set by the central bank and helps regulate liquidity in the banking system, influencing credit availability and inflation levels.
A Direct Selling Agent (DSA) is an individual or entity contracted by a financial institution, such as an NBFC or bank, to market and sell its financial products directly to customers. DSAs act as intermediaries between the financial institution and potential customers, facilitating the sale of loans, credit cards, insurance policies, and other financial services. .
Electronic Clearing Service (ECS) is an electronic mode of transferring funds for bulk payments and receipts. This service is used for transactions such as loan EMIs, insurance premiums, utility bills, and vendor payments. ECS facilitates the automatic, timely, and efficient transfer of funds, reducing the need for physical checks or cash transactions.
A fixed monthly payment made by a borrower to repay a loan over a specified period. EMI includes both principal and interest, allowing borrowers to plan their finances easily.
FCF (Free Cash Flow) is a financial metric that represents the cash generated by a company after accounting for capital expenditures necessary to maintain or expand its asset base. It is calculated by subtracting capital expenditures from operating cash flow. Free Cash Flow is an important indicator of a company's financial health, as it shows how much cash is available for distribution to shareholders, debt repayment, or reinvestment in the business.
Interest Rate Risk refers to the potential for losses due to changes in interest rates. For NBFCs, this risk arises from fluctuations in market interest rates affecting the cost of funds, profitability of loans, and the value of investments. Managing interest rate risk involves strategies such as hedging, diversification of funding sources, and adjusting pricing and maturity profiles of assets and liabilities to mitigate potential adverse impacts on earnings and financial stability.
Know Your Customer (KYC) is a regulatory process used by financial institutions and businesses to verify the identities of their clients and assess potential risks of illegal activities, such as money laundering and fraud. KYC involves collecting and verifying customer information, including identity documents, financial status, and business details. This process helps ensure compliance with legal requirements and enhances security by preventing identity theft and financial crimes.
The Loan-to-Value (LTV) Ratio is a financial metric used to assess the risk of a loan by comparing the loan amount to the value of the asset being financed. It is calculated by dividing the loan amount by the appraised value of the asset and is usually expressed as a percentage.A higher LTV ratio indicates higher risk for lenders, as it suggests a larger portion of the asset's value is being financed through the loan. Conversely, a lower LTV ratio generally indicates lower risk and may result in better loan terms for the borrower.
Net Asset Value (NAV) is the value of a fund's assets after subtracting its liabilities, divided by the number of shares outstanding. It represents the price per share of the fund. NAV is used to determine how much each share of a mutual fund or exchange-traded fund (ETF) is worth, helping investors understand the value of their investment.
A loan or advance where the borrower has stopped making interest or principal repayments for a specified period. NPAs are a concern for lenders, as they reflect potential losses and poor asset quality.
NPV (Net Present Value) is a financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a specific time period. It is used to assess the profitability of an investment or project by considering the time value of money. A positive NPV indicates that the projected earnings (discounted for their present value) exceed the initial investment costs, suggesting the investment is likely to be profitable
An overdraft (OD) is a credit facility that allows account holders to withdraw more money than their available balance. It provides short-term liquidity to manage cash flow or cover unexpected expenses. Interest is charged only on the overdrawn amount, making it a flexible financing option for businesses and individuals.
Operating Expense (OPEX) refers to the costs incurred in running day-to-day business operations, such as salaries, rent, utilities, and supplies.OPEX is recorded on the income statement and is deducted from revenue to calculate operating profit. Unlike capital expenditures (CAPEX), which are investments in long-term assets, OPEX covers short-term costs necessary to sustain daily operations and maintain business efficiency.
Peer-to-Peer (P2P) lending is a method of borrowing and lending money directly between individuals, facilitated by online platforms that connect borrowers with investors. P2P lending bypasses traditional financial institutions, allowing borrowers to access loans at potentially lower interest rates while providing investors with opportunities to earn returns on their funds.
Point of Sale (POS) refers to the location where transactions are completed using a card payment system. For NBFCs, POS systems enable customers to make purchases or payments using credit or debit cards, enhancing convenience and expanding payment options.
Return on Assets (ROA) measures the company's profitability relative to its total assets. It indicates how efficiently the company is using its assets to generate profit. ROA is calculated by dividing the net income by the total assets and is usually expressed as a percentage. A higher ROA means the company is more effective in converting its investments into earnings.
ROI (Return on Investment) is a financial metric used to evaluate the profitability of an investment relative to its cost. It is calculated by dividing the net profit from the investment by the initial investment cost and expressing the result as a percentage. ROI helps investors and businesses assess the efficiency of an investment, compare different investment opportunities, and determine the potential for future growth. A higher ROI indicates a more profitable investment, while a lower ROI may suggest the need for reassessment or changes in strategy.
Real-Time Gross Settlement (RTGS) is a payment system that facilitates real-time fund transfers between banks. It allows NBFCs to make high-value transactions instantly and securely, improving liquidity management and operational efficiency.
Statutory Liquidity Ratio (SLR) is the minimum percentage of a bank's net demand and time liabilities (NDTL) that it must maintain in the form of liquid cash, gold, or other approved securities. It is mandated by the central bank (like RBI in India) to ensure liquidity and stability in the banking system while promoting credit flow to productive sectors of the economy.
Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NPCI) that facilitates instant fund transfers between bank accounts using mobile devices. UPI allows users to send and receive money, pay bills, and make purchases seamlessly by linking multiple bank accounts to a single mobile application. It operates 24/7 and supports peer-to-peer as well as merchant transactions, enhancing convenience and accessibility in digital payments
The current ratio measures a company's ability to cover short-term liabilities with short-term assets. It is calculated by dividing current assets by current liabilities. A ratio above 1 indicates financial stability, while a ratio below 1 may suggest liquidity problems, making it a key indicator for investors and creditors.
The Debt-to-Equity(D/E) Ratio is a financial metric that compares a company's total debt to its total equity. It measures the proportion of debt used to finance the company’s assets relative to shareholders' equity. A higher ratio indicates greater financial leverage and potential risk, while a lower ratio suggests a more conservative approach to financing. This ratio is important for investors and creditors when evaluating a company's financial stability.
The Interest Coverage Ratio(ICR) is a financial metric that measures a company's ability to pay interest on its outstanding debt. It is calculated by dividing the company's operating income by its interest expense. A higher ratio indicates that the company generates sufficient income to cover its interest obligations, suggesting better financial health. Conversely, a lower ratio may raise concerns about the company's ability to meet its debt payments.
Account Aggregators(AA) are financial technology platforms or services that allow individuals and businesses to consolidate and manage information from multiple financial accounts in one place. These platforms securely gather data from various sources, such as bank accounts, credit cards, investments, and loans, providing a unified view of financial health.
A loan against property (LAP) is a type of loan where you use your property as collateral to secure a loan. LAPs offer borrowers the advantage of securing large sums of money at relatively lower interest rates compared to unsecured loans, with the property serving as a guarantee for repayment.
International Financial Reporting Standards (IFRS) are globally recognized accounting standards developed by the International Accounting Standards Board (IASB). They provide a common framework for financial reporting by companies, ensuring transparency, comparability, and consistency in financial statements across international markets. NBFCs and other financial institutions adhere to IFRS to enhance financial reporting quality and facilitate global financial transactions.
Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of an investment or project. It represents the annualized rate of return at which the net present value (NPV) of all future cash flows (both incoming and outgoing) from the investment equals zero. It helps investors assess whether an investment will generate a return higher than the cost of capital or other investment opportunities. A higher IRR indicates a more attractive investment.
A set of laws and regulations aimed at preventing the illegal generation of income through criminal activities. AML measures help financial institutions detect, report, and prevent money laundering, ensuring transparency and integrity in financial transactions.
An Assessing Officer (AO) is a designated official under tax laws responsible for assessing the tax liabilities of individuals, companies, or other entities. Their role includes scrutinizing income tax returns, investigating discrepancies, and ensuring proper compliance with tax regulations. The AO may issue notices, request additional documentation, and conduct inquiries to verify the accuracy of reported income and deductions.
The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue under the Ministry of Finance, India. It is responsible for the administration of direct tax laws in the country, including the Income Tax Act, Wealth Tax Act, and others. The CBDT provides essential inputs for policy and planning of direct taxes, issues guidelines, and ensures effective enforcement of tax laws.
The Central Board of Indirect Taxes and Customs (CBIC) is a part of the Department of Revenue under the Ministry of Finance, India. It is responsible for the administration of indirect taxes, including Goods and Services Tax (GST), Customs, Central Excise, and Service Tax. The CBIC formulates policies, collects indirect taxes, and ensures compliance with related laws.
Central Goods and Services Tax (CGST) is a tax levied by the central government on the supply of goods and services within a state. It is part of the dual GST system, where both the central and state governments collect taxes on intra-state transactions. CGST replaces previous central taxes like service tax, excise duty, and central sales tax. The revenue collected from CGST goes to the central government.
The Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services. It replaces multiple former taxes like VAT, service tax, and excise duty. GST is designed to simplify the tax system by applying uniform rates across the country. It is a multi-stage tax collected at each point of sale but with a mechanism to allow businesses to claim tax credits.
Integrated Goods and Services Tax (IGST) is a tax levied by the central government on the supply of goods and services between two states or during imports and exports. It applies to inter-state transactions, ensuring that taxes are properly distributed between the states and the central government. Under IGST, the central government collects the tax and later shares the revenue with the states involved.
Input Tax Credit (ITC) is a mechanism under the Goods and Services Tax (GST) system that allows businesses to claim a credit for the tax they have paid on purchases used for business purposes. In other words, if a business pays GST on the goods or services it purchases, it can reduce the tax liability by claiming the tax already paid as credit against the GST it collects from customers.
Income Tax Return (ITR) is a form that individuals, businesses, or other entities file with the Income Tax Department to report their income, expenses, tax deductions, and tax payments for a financial year. It is a way for taxpayers to declare their taxable income and the taxes they have paid or need to pay.Filing an ITR is mandatory for people who earn above a certain income threshold, and it helps the government track tax compliance.
Permanent Account Number (PAN) is a unique 10-character alphanumeric code issued by the Income Tax Department of India to individuals, businesses, and entities. It serves as an identification number for taxpayers and is used to track financial transactions, such as income tax filings, bank account openings, and large financial dealings.PAN helps in preventing tax evasion by ensuring that all taxable financial activities are recorded.
State Goods and Services Tax (SGST) is a tax levied by state governments on the supply of goods and services within a state. It is part of the dual GST system, where both the central and state governments collect taxes on intra-state transactions. SGST replaces previous state taxes like VAT, state sales tax, and luxury tax. The revenue collected from SGST is retained by the state government.
Tax Deduction Account Number (TAN) is a unique 10-digit alphanumeric number issued by the Income Tax Department of India. It is mandatory for individuals or entities responsible for deducting or collecting tax at source, such as employers who deduct TDS (Tax Deducted at Source) from salaries or companies that collect TCS (Tax Collected at Source).
Tax Collected at Source (TCS) is a tax collected by a seller from the buyer at the point of sale for certain specified goods or transactions. The seller is responsible for collecting TCS at a prescribed rate and depositing it with the government. TCS is usually applicable on items like liquor, scrap, forest produce, and minerals, as well as on certain services like e-commerce transactions.
The National Industrial Classification (NIC) is a statistical standard used to classify economic activities into various categories. The National Industrial Classification (NIC) code is a crucial system used to categorize various economic activities in India. Designed by the Ministry of Statistics and Programme Implementation, the NIC code helps in the systematic collection and analysis of statistical data related to different industries.
Asia's oldest stock exchange, located in Mumbai, BSE provides a platform for trading in equities, debt instruments, derivatives, and mutual funds, playing a key role in the Indian financial market.
Central Depository Services Limited(CDSL) is among India’s leading depository services, CDSL allows investors to hold and trade securities such as shares, bonds, and debentures in electronic form, facilitating easy and secure transactions.
An Initial Public Offering (IPO) is the process through which a privately held company offers its shares to the public for the first time. This transition from a private to a public company involves listing the company's stock on a stock exchange. The primary goals of an IPO are to raise capital for expansion, pay off debt, or provide liquidity for existing shareholders.
The National Stock Exchange of India Limited (NSE) is India's leading stock exchange, NSE facilitates the electronic trading of equities, commodities, and derivatives. It is known for its transparency, efficiency, and significant impact on the Indian financial system.
