General / Banking Awareness
General / Banking Awareness
This section tests the Indian financial system: RBI's role and monetary policy, bank types and regulation, priority-sector lending, NPAs, financial inclusion, digital payments and major schemes. Indian Bank LBO expects applied awareness, not headline memorization.
Core rules
- RBI functions: Monetary authority, issuer of currency notes (except ₹1 notes), banker to government and banks, lender of last resort, custodian of forex reserves, regulator of banks and payment systems.
- Monetary tools: Repo rate is the rate at which banks borrow from RBI against securities; reverse repo absorbs liquidity. CRR is the cash reserve ratio kept with RBI; SLR is held in approved securities. OMO and MSF also affect liquidity.
- Regulators: RBI (banks, NBFCs, payment systems), SEBI (securities), IRDAI (insurance), PFRDA (pensions).
- Priority sector: Includes agriculture, MSMEs, education, housing, export credit, social infrastructure and weaker sections, with targets for banks.
Worked example
If a bank's net demand and time liabilities (NDTL) are ₹500 crore and SLR is 18%, its statutory SLR holding is 0.18 × 500 = ₹90 crore. SLR is maintained in cash, gold or approved securities; it is not the same as CRR, which is kept as cash with RBI. If the question asks for the effect of a CRR hike, say liquidity tightens and credit creation falls.
Traps
- Swapping repo and reverse repo.
- Treating SLR as cash with RBI.
- Confusing RBI with SEBI/IRDAI roles.
- Using outdated scheme names or rates; read the question's date context.
- Assuming all priority-sector lending is subsidized.