General and Banking Awareness
What this section tests
General and Banking Awareness combines static banking and economic concepts with recent developments - RBI policy decisions, government schemes, appointments, budget and economic survey terms, and financial-sector news from roughly the last six to eight months.
Core rules
- Monetary policy is framed by the six-member Monetary Policy Committee (three RBI members including the Governor, three government-nominated), chaired by the Governor, who holds the casting vote. The flexible inflation target is 4% with a ±2% band.
- Liquidity corridor: the Standing Deposit Facility (SDF) is the floor at repo minus 25 bps; the Marginal Standing Facility and Bank Rate form the ceiling at repo plus 25 bps.
- CRR is the share of NDTL held with RBI and earns no interest; SLR is held in approved securities, largely government securities.
- Deposit insurance: DICGC covers up to ₹5 lakh per depositor per bank, principal plus interest.
- Priority sector lending: 40% of Adjusted Net Bank Credit, with 18% for agriculture.
Worked example
If the repo rate is 6.50%, then the MSF rate and Bank Rate are 6.75% and the SDF rate is 6.25%. A repo cut shifts the whole corridor down; whether lending rates fall depends on transmission, which is why the SDF - not the reverse repo - is now the operative floor.
Traps
- The reverse repo still exists as a standing facility but is no longer the corridor floor.
- The Bank Rate is not the interbank overnight rate - that is the call money rate.
- Confusing CRR (cash with RBI) with SLR (approved securities).
- Recalling a scheme's name but not its ministry, launch year or beneficiary group, which is usually what is asked.