10 Key

Banking Terms
EXPLAINED

NII CAR GNPA CRR PPOP

NIM CASA NNPA SLR LCR

 Net Interest Income - NII
The difference between interest earned on loans
and interest paid on deposits.

Net Interest Margin - NIM

This is in a way the spread earned on the money
the bank has. This is given by
(Interest Earned – Interest Spent )/ (Average
Interest Generating Assets)
 Capital Adequacy Ratio - CAR
This is a measure of the Bank’s minimum required
Equity Capital as per regulations. It is calculated by
dividing a bank's capital by its risk-weighted assets.

Current and Savings Accounts - CASA

A low-cost source of funds for banks. Typically
Current Accounts pay 0% interest, while Savings
accounts pay low interest rates. Thus the bank is able
to raise money at lower rates through CASA.
 Gross Non Performing Assets - GNPA
The amount of loans classified as non-performing.
Here the borrower has failed to repay the
loan/interest on time.

Net Non Performing Assets - NNPA

Banks are supposed to put aside provisions for Non-
Performing Loans. Net NPA can broadly be seen as
Gross NPA minus these provisions.
 Cash Reserve Ratio - CRR
The amount a bank has to set aside as Cash with the
Central Bank – in order to ensure liquidity for
depositors withdrawing money.

Statutory Liquidity Ratio - SLR

The amount of money banks have to keep in very
liquid instruments (Treasuries or Gold) such that it
can be liquidated easily in emergency.
 Pre Provisioning Operating Profit - PPOP
A measure of a bank's operating profitability before
accounting for loan loss provisions. It is the income
generated by a bank from its core business
activities, such as net interest income, fee income,
and trading income, minus its operating expenses.

Liquidity Coverage Ratio - LCR

A regulatory requirement that measures a bank's
ability to meet its liquidity needs during a 30-day
stress scenario. It is calculated by dividing a bank's
high-quality liquid assets (HQLA) by its net cash
outflows over the next 30 days.
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