RBI JE: General Awareness

General Awareness

RBI JE general awareness is weighted toward banking and economy, RBI's role, monetary policy, financial markets, and current events with a static-GK base. Expect direct questions rather than long analysis.

RBI and banking structure

• RBI was constituted under the RBI Act, 1934, and commenced operations in 1935; it was nationalised in 1949.
• Functions: currency issue (other than ₹1 notes and coins), banker to government, banker's bank, lender of last resort, forex reserves management, payment-system oversight.
• Monetary Policy Committee (MPC) was constituted in 2016; it has six members and sets the repo rate to target inflation. Repo is the policy rate; reverse repo absorbs liquidity; MSF is the upper bound of the corridor; bank rate is a penal/long-term reference.

Rates and reserves

• CRR: share of net demand and time liabilities kept with RBI, no interest. SLR: liquid assets held by banks. Repo: RBI lends against securities; reverse repo: RBI borrows.
• Higher repo generally raises borrowing costs, moderates credit and supports the rupee; lower repo does the opposite.

Worked example

If RBI raises the repo rate by 25 bps, what is the likely chain? Reasoning: banks' marginal cost of funds rises → lending rates (MCLR/base rate) tend to rise → credit demand cools → inflation pressure eases; the rupee may strengthen as returns improve. Deposits may reprice with a lag.

Traps

Confusing repo with reverse repo; CRR with SLR; RBI's founding year with nationalisation year; MPC with the central board; 'bank rate' with 'base rate'. Current-affairs questions reward the last six months, not old static facts alone.