General Awareness (Banking and Financial Awareness)
Banking and Financial Awareness is static banking plus recent developments: RBI, monetary policy, financial institutions, schemes and payment systems. It is the most factual section and the easiest to score if revised in lists.
Core facts
- RBI: set up on 1 April 1935, nationalised in 1949, headquarters in Mumbai; issues currency except the ₹1 note and coins, which are the Government's; banker to banks and government; lender of last resort.
- Policy tools: repo (RBI lends against securities), reverse repo and SDF (RBI absorbs liquidity), MSF and Bank Rate (penal lending), CRR (cash with RBI, earns no interest), SLR (approved securities, earns interest), and OMO.
- MPC: six members - three from RBI including the Governor as chair, three nominated by the Government; inflation target 4% with a ±2% band; at least four meetings a year.
- Acts and bodies: RBI Act 1934, Banking Regulation Act 1949, SARFAESI 2002, IBC 2016, DICGC (₹5 lakh per depositor per bank), NABARD, SIDBI, EXIM Bank, NPCI, SEBI, IRDAI and PFRDA.
- Priority sector: 40% of ANBC, with 18% for agriculture.
Worked example
A bank's NDTL is ₹2,000 crore, with CRR 4.5% and SLR 18%. CRR = 4.5% × 2,000 = ₹90 crore maintained with RBI. SLR = 18% × 2,000 = ₹360 crore held in government securities, cash or gold.
Traps
Reversing the effects of repo and reverse repo; treating CRR as interest-earning; saying DICGC covers ₹5 lakh per account instead of per depositor per bank; attributing securities-market regulation to RBI instead of SEBI.