General Awareness (Banking and Financial Awareness)
General Awareness carries a strong banking and financial awareness component, so divide preparation between static banking facts, monetary policy, and a rolling current-affairs file.
Core rules
- RBI was established in 1935 and nationalised in 1949. It conducts monetary policy, issues most currency, and acts as banker to banks and the government. The Government of India issues ₹1 notes and all coins.
- Policy tools: repo (RBI lends to banks), reverse repo (RBI absorbs liquidity), CRR (cash kept with RBI), SLR (liquid assets held by the bank itself), MSF and LAF.
- Regulators: RBI for banks, SEBI for securities, IRDAI for insurance, PFRDA for pensions, NABARD for agriculture and rural credit.
- DICGC insures deposits up to ₹5 lakh per depositor per bank.
- NPCI operates UPI, IMPS, RuPay, and NACH.
Worked example
A bank has net demand and time liabilities of ₹1,000 crore and CRR is 4%. Its cash reserve with RBI is 4% of ₹1,000 crore = ₹40 crore. That sum cannot be lent, which is why a CRR cut raises lendable resources.
Traps
Reversing repo and reverse repo; confusing CRR (with RBI) and SLR (with the bank); crediting all currency issue to RBI; and mixing the bank nationalisation years, 1969 and 1980.