Financial Terms Glossary

Plain-English explanations of the finance terms you'll run into on loan applications, tax forms, and investment platforms in India.

CIBIL Score

A three-digit number between 300 and 900 that represents your creditworthiness, calculated by TransUnion CIBIL (India's main credit bureau) based on your loan and credit card repayment history. Most banks consider 750+ a strong score that qualifies for the best interest rates; below 650 often makes approval difficult or comes with a much higher rate. Check your related tool: Loan Eligibility Calculator.

Repo Rate

The interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks. It's the primary tool RBI uses to control inflation — raising the repo rate makes borrowing costlier (cooling the economy), lowering it makes borrowing cheaper. Most floating-rate home loans move up or down when RBI changes this rate.

LTV Ratio (Loan-to-Value)

The percentage of an asset's value that a lender is willing to finance. For home loans, LTV is typically capped at 75-90% depending on loan amount; for gold loans, RBI caps it at 75%. A higher LTV means a smaller down payment, but usually a slightly higher interest rate.

FOIR (Fixed Obligation to Income Ratio)

The percentage of your monthly income that goes toward all your EMI obligations combined. Banks use this to decide how much more loan you can take on — typically capping total EMIs at 40-60% of net monthly income. See the Loan Eligibility Calculator.

EMI (Equated Monthly Instalment)

The fixed monthly payment you make toward a loan, covering both principal and interest, calculated so the loan is fully repaid by the end of the tenure. Early EMIs are interest-heavy; later ones are principal-heavy. See the Home Loan EMI Calculator.

Amortization

The process of gradually paying off a loan through regular instalments, where each payment covers both interest and a portion of the principal — the split between the two changes every month as the outstanding balance shrinks.

Circle Rate / Ready Reckoner Rate / Guidance Value

The government-notified minimum property valuation for a locality, used to calculate stamp duty regardless of your actual purchase price. Different states use different names for the same concept: "circle rate" in Delhi/UP, "ready reckoner rate" in Maharashtra, "guidance value" in Karnataka. See the Stamp Duty Calculator.

TDS (Tax Deducted at Source)

Tax that's deducted upfront by whoever is paying you — your employer, bank, or tenant — before the money reaches you, and deposited directly with the Income Tax Department on your behalf. You can claim it back at tax filing time if your actual tax liability is lower. See the TDS Calculator.

Section 80C

A section of the Income Tax Act (available only under the old tax regime) that lets you deduct up to ₹1.5 lakh per year from taxable income for specified investments and expenses — EPF, PPF, ELSS mutual funds, life insurance premiums, home loan principal repayment, and children's tuition fees, among others.

Section 80D

Allows a tax deduction for health insurance premiums paid for yourself, spouse, children, and parents — up to ₹25,000 for yourself/family (₹50,000 if you're a senior citizen), plus an additional amount for parents' premiums. Available only under the old tax regime.

Standard Deduction

A flat amount automatically deducted from your salary income before tax is calculated, with no proof or investment required. Currently ₹75,000 under the new tax regime and ₹50,000 under the old regime for FY 2026-27.

STCG / LTCG (Short-Term / Long-Term Capital Gains)

Profit from selling an investment or asset. Classified as "short-term" or "long-term" based on how long you held it (12 months for equity, 24 months for property/other assets) — long-term gains are usually taxed at a lower rate than short-term. See the Capital Gains Tax Calculator.

NAV (Net Asset Value)

The per-unit price of a mutual fund, calculated by dividing the total value of the fund's holdings by the number of units outstanding. When you buy a mutual fund, you're buying units at that day's NAV.

CAGR (Compound Annual Growth Rate)

The single, constant annual growth rate that would take an investment from its starting value to its ending value, smoothing out the actual year-to-year ups and downs. See the CAGR Calculator.

SIP (Systematic Investment Plan)

A method of investing a fixed amount into a mutual fund at regular intervals (usually monthly), rather than a lump sum — this smooths out market volatility through rupee-cost averaging. See the SIP Calculator.

EEE (Exempt-Exempt-Exempt)

A tax status given to certain government savings schemes (like PPF and Sukanya Samriddhi Yojana) where all three stages are tax-free: the money you put in, the interest it earns, and the amount you withdraw at maturity.

Moratorium Period

A break in loan repayment, most common in education loans, during which you're not required to pay EMIs — often covering the course duration plus a few months to find a job. Interest may still accrue during this period depending on the lender.

Processing Fee

A one-time charge by the lender for processing your loan application, typically 0.5%-2% of the loan amount, deducted upfront — separate from the interest rate, and worth factoring into your true cost of borrowing.

Foreclosure / Prepayment Charge

A fee some lenders charge if you pay off a loan earlier than scheduled. For floating-rate home loans to individuals, RBI mandates zero foreclosure charges — but other loan types (personal, fixed-rate) may still carry one.

DTAA (Double Taxation Avoidance Agreement)

A treaty between India and another country that prevents the same income from being taxed twice — relevant for NRIs earning income in India while being tax residents elsewhere. See the NRE/NRO FD Calculator.

These are simplified, general explanations for everyday understanding — not legal or tax definitions. Rules and thresholds mentioned (like Section 80C limits or TDS rates) are current as of FY 2026-27 and may change in future budgets.