Default
Fundamental analysisFailure to meet a debt obligation when it falls due.
In plain terms
Rating outlook, interest coverage and promoter pledging warn well in advance.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Default option
Risk & psychologyWhat happens when no active decision is made.
In plain terms
Set it to doing nothing, so deviations must be justified rather than the reverse.
Cross-default clause
Fundamental analysisAlso called: Cross-default
A term defining a default under any other borrowing as a default under this one.
In plain terms
The transmission mechanism that turns one subsidiary's missed payment into a group-wide event, and the reason distress moves so much faster than the underlying deterioration did.
Acceleration clause
Fundamental analysisAlso called: Acceleration
The lender's right, on an event of default, to declare the entire outstanding amount immediately due rather than waiting for the agreed schedule.
In plain terms
It compresses a repayment calendar into a single date. Most covenant breaches never reach it, which is precisely what makes the right worth having.
Environment design
Risk & psychologyChanging surroundings and defaults so good behaviour needs less willpower.
In plain terms
Do not try to resist the sweets by the till. Take the other aisle.
Expected credit loss
AccountingAlso called: ECL
The allowance a lender carries against a loan from the day it is written, computed as the probability of default multiplied by the loss if default happens, applied to the exposure at that point.
In plain terms
A model output, not a measurement. Two lenders with the same borrowers can carry materially different numbers and both be perfectly compliant, which is why the notes also compare it with the regulator’s formula.
IBC
Regulation & taxAlso called: Insolvency and Bankruptcy Code
India’s Insolvency and Bankruptcy Code, governing time-bound resolution of defaults.
In plain terms
Faster and more predictable than the old regime, and promoters are generally barred from bidding for their own company.
Investor Protection Fund
Regulation & taxAlso called: IPF
An exchange-maintained fund compensating claims against a defaulting member, up to a limit.
In plain terms
A backstop, not a guarantee of full recovery.
New tax regime
Regulation & taxAlso called: Tax regime
India’s default income tax structure, with wider slabs, a larger standard deduction and almost no other deductions.
In plain terms
The fixed thali. Cheaper for most salaried people who do not have a home loan, and it needs no paperwork.
Stage 3 assets
AccountingAlso called: Stage 3, Gross stage 3
Credit-impaired loans under the expected credit loss framework — being more than ninety days overdue is treated as default unless the lender can demonstrate otherwise.
In plain terms
They cost a lender twice: the provision rises, and interest is thereafter recognised on the amount net of that provision, so income falls at the same moment the charge goes up.
Fixed obligation to income ratio
Market basicsAlso called: FOIR
Total monthly loan obligations expressed as a share of net monthly income, used by lenders to decide how much they will lend you.
In plain terms
Guaranteed loans generally sit in the numerator even while payments are current, which is how one signature for a relative can remove most of your own home loan capacity before anybody has defaulted.
Gain on assignment
AccountingAlso called: Gain on derecognition of assigned loans
The present value of the excess interest spread on a sold loan pool, recognised in income at the moment a transfer qualifies to come off the balance sheet.
In plain terms
Future interest brought into this quarter. It does not repeat unless another pool is sold, and it rests on disclosed assumptions about prepayment and default that reduce the spread actually collected.
Gold ETF
Market basicsAn exchange-traded fund backed by physical gold.
In plain terms
Gold exposure without making charges, storage or purity risk. The practical default for most people.
NIFTY 50
Market basicsAn index of 50 large NSE-listed companies, weighted by free-float market capitalisation.
In plain terms
The default measure of "the Indian market". A weighted average, so the biggest names dominate it.
Secured creditor
Regulation & taxA lender holding a charge over an identified asset, with a claim on that asset ahead of unsecured creditors.
In plain terms
Whether your lender is one decides how a default unfolds. A home loan lender has a statutory route to the flat; an app that lent you ₹40,000 has a slow civil one to nothing in particular.
Succession
Regulation & taxThe legal process determining who inherits property, governed in India by religion-specific personal law.
In plain terms
The Hindu Succession Act, Muslim personal law and the Indian Succession Act cover different groups. A will is what lets you decide instead of accepting the default.
Year on year
Fundamental analysisAlso called: YoY
Comparing a period with the same period a year earlier.
In plain terms
The default comparison, because it removes seasonality. Sequential mostly measures the season.