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A new credit analyst meets dozens of unfamiliar abbreviations in credit memos, bank statements and bureau reports in the first weeks of the job.
Group the terms by where they appear: statement terms, ratios, delinquency terms, document terms and facility terms. Define each in one line and link to a fuller explainer where one exists.
The credit memo template, sample bank statements, a bureau report and the lender's credit policy.
A shared vocabulary so the analyst can read a credit memo line by line and know what each figure means.
This glossary defines the 40 terms a new credit analyst in India meets most often in the first month: on bank statements, in ratios, in delinquency reports, in documents and in facility names. Each has a one-line plain meaning. Where a fuller explainer exists, it is linked below the tables.
Which terms go in the table?
Bank statement terms
| Term | Plain meaning |
|---|---|
| 1. Narration | The description text against each entry |
| 2. Running balance | Balance after each entry |
| 3. Value date | Date the money actually counts for interest |
| 4. UTR | Unique transaction reference for NEFT and RTGS |
| 5. IMPS | Instant interbank transfer, any time |
| 6. VPA | UPI address, such as name@bank |
| 7. NACH | NPCI’s system for bulk and recurring debits and credits, used for most EMIs |
| 8. ECS | Older electronic clearing service, now largely replaced by NACH |
| 9. UPI AutoPay | Recurring UPI mandate debit |
| 10. Inward return | A payment from this account sent back unpaid |
| 11. Outward return | A payment received that came back unpaid |
| 12. Return charge | Fee the bank debits after a bounce |
| 13. ABB | Average bank balance on sampled dates |
| 14. ADB | Average of every day’s closing balance |
| 15. MAB or AQB | Bank’s monthly or quarterly average balance for minimum-balance rules |
Ratios and income terms
| Term | Plain meaning |
|---|---|
| 16. FOIR | Fixed obligations as a percent of monthly income |
| 17. DSCR | Cash available divided by interest plus principal due |
| 18. Banking turnover | Genuine business credits, after removing transfers and loans |
| 19. Obligation | A recurring debt repayment such as an EMI or card due |
| 20. EMI | Equated monthly instalment |
| 21. LTV | Loan amount as a percent of the asset’s value |
| 22. Net take-home | Salary credited after deductions |
Delinquency terms
| Term | Plain meaning |
|---|---|
| 23. Due date | Date the instalment must be paid |
| 24. Overdue | Amount not paid by the due date |
| 25. DPD | Days past due |
| 26. SMA-0 | Overdue up to 30 days |
| 27. SMA-1 | Overdue more than 30 and up to 60 days |
| 28. SMA-2 | Overdue more than 60 and up to 90 days |
| 29. NPA | Overdue more than 90 days for a term loan |
| 30. Bureau | Credit information company holding repayment history |
Document and process terms
| Term | Plain meaning |
|---|---|
| 31. KYC | Identity and address checks |
| 32. CAM | Credit appraisal memo for the credit committee |
| 33. Sanction letter | Lender’s formal offer with terms |
| 34. Account Aggregator | RBI-licensed NBFC that shares financial data with the customer’s consent |
| 35. Mandate | Customer’s authority for recurring debits |
Facility terms
| Term | Plain meaning |
|---|---|
| 36. OD | Overdraft: draw beyond the balance, up to a limit |
| 37. CC | Cash credit: working-capital limit secured by stock and debtors |
| 38. Drawing power | The part of a CC limit currently usable, based on stock and debtors |
| 39. Term loan | Fixed amount repaid over a set schedule |
| 40. Working capital | Money tied up in running the business day to day |
Which terms are most often confused?
- ABB versus MAB. ABB judges repayment capacity; MAB decides a bank’s minimum-balance charge.
- FOIR versus DSCR. FOIR is monthly, personal and lower is better; DSCR is yearly, business and higher is better.
- OD versus CC. Both are limits; CC is tied to drawing power from stock and debtors.
- DPD versus SMA. DPD is the count of days; SMA is the label once the count crosses a band.
- Turnover versus income. Turnover is receipts; income is what remains after costs.
Worked example: reading one credit memo line
A credit memo for a salaried applicant reads: FOIR 48 percent, ABB ₹32,000, DPD 0, 2 returns in 6 months, proposed EMI ₹12,000.
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FOIR 48 percent: on a take-home of ₹50,000, fixed obligations including the new EMI are ₹24,000 (48 percent of ₹50,000).
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ABB ₹32,000: the average balance on sampled dates is about 2.7 times the ₹12,000 EMI (₹32,000 ÷ ₹12,000 = 2.67).
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DPD 0: no instalment on any existing loan is currently overdue.
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2 returns in 6 months: two debits from this account failed in the last six months. The analyst checks the reasons and whether they were later paid.
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Headroom: take-home ₹50,000 less obligations ₹24,000 leaves ₹26,000 a month for living costs.
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Existing obligations: ₹24,000 less the new ₹12,000 EMI means ₹12,000 of EMIs were already running, a FOIR of 24 percent before this loan.
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Two returns: if the bank’s return charge were, say, ₹250, that is ₹500 in fees plus GST in six months. Charges vary by bank.
Read together: the applicant is current on all loans, but cash is tight on some dates. The analyst might suggest aligning the EMI date with salary credit.
What to read next
Put these terms to work with how to read a bank statement for credit risk, and for the bigger picture, what is bank statement analysis. Fuller explainers: ABB, AMB and ADB, FOIR, DSCR, DPD, SMA and NPA, banking turnover, existing obligations, bounces and inward returns and calculating average daily balance.
TransactIQ reads Indian bank statements for lenders and returns 40+ engineered credit signals. See the bank statement analyzer.