General Awareness: Banking and Financial Awareness
General Awareness with special reference to banking tests static banking concepts, RBI policy tools and a slice of current economic and financial news. Static concepts repeat far more reliably than headlines, so secure those first and then layer on recent schemes and appointments.
Core areas
- RBI: established 1935, nationalised 1949, headquarters Mumbai. It issues currency (₹1 notes and all coins belong to the Government), holds forex reserves, acts as banker to banks and to governments, and is lender of last resort.
- Monetary policy: repo (RBI lends to banks against securities), reverse repo, marginal standing facility, bank rate, CRR (cash balance with RBI, no interest paid) and SLR (cash, gold or approved securities). The six-member Monetary Policy Committee targets 4% CPI inflation within a 2% band.
- Payments: NEFT (24×7, no minimum), RTGS (real time, minimum ₹2 lakh), IMPS, UPI; NPCI operates RuPay, UPI and IMPS.
- Safety nets and norms: DICGC insures deposits up to ₹5 lakh per depositor per bank; Basel III capital rules; priority sector lending target of 40% of adjusted net bank credit.
Worked example
A bank receives ₹200 crore of fresh deposits and CRR is 4%. It must park 4% of ₹200 crore = ₹8 crore with the RBI, earning no interest, leaving about ₹192 crore before SLR is also set aside. Reason: CRR is a percentage of net demand and time liabilities, maintained as cash balances with the RBI.
Traps that cost marks
Reversing repo and reverse repo; believing CRR earns interest; treating SLR as cash only; misstating deposit cover (₹5 lakh, per depositor per bank, principal plus interest); guessing headquarters and founding years. Policy rates change often - verify current numbers from the latest RBI monetary policy statement instead of memory.