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South Indian Bank Clerk study materials
South Indian Bank Clerk study resources

South Indian Bank Clerk: General and Banking Awareness: Policy Rates, Deposit Safety and Asset Quality

South Indian Bank Clerk · Work through your exam, one topic at a time.

All guide sections

General and Banking Awareness: Policy Rates, Deposit Safety and Asset Quality

General / Banking Awareness covers the RBI and monetary policy, the structure of Indian banking and its products, asset classification and recovery law, financial inclusion, payment systems, plus a small static and current-affairs component. Questions are factual and direct, so precise definitions of rates and thresholds are what earn marks.

Policy rates and reserves

  • Repo is the rate at which the RBI lends to banks against securities; reverse repo absorbs liquidity from banks.
  • The liquidity adjustment corridor has the MSF rate as its ceiling and the Standing Deposit Facility (introduced in April 2022) as its floor, with the repo rate in the middle. The bank rate is aligned with the MSF rate.
  • CRR is held as cash with the RBI and earns no interest. SLR is held by the bank itself in cash, gold or approved securities.

Structure, safety and asset quality

  • Scheduled commercial banks include public sector, private, foreign, small finance and payment banks; payment banks accept deposits but cannot lend.
  • DICGC insures deposits up to ₹5 lakh per depositor per bank, a limit raised in 2020.
  • An account is an NPA when overdue beyond 90 days. SMA-0 is 1-30 days, SMA-1 is 31-60 days and SMA-2 is 61-90 days.
  • SARFAESI (2002) allows enforcement of secured assets without court intervention; the IBC (2016) governs insolvency resolution.

Worked example

A bank's net demand and time liabilities are ₹400 crore and the CRR is 4%. The cash reserve it must park with the RBI is 4% of ₹400 crore = ₹16 crore. If an option offers ₹16 crore as the SLR requirement, it is wrong: SLR is maintained by the bank itself, not deposited with the RBI.

Financial inclusion and payments

Priority sector lending is 40% of adjusted net bank credit, with 18% for agriculture. NPCI operates UPI, IMPS, RuPay, NACH and AePS; PMJDY, MUDRA and Stand-Up India are inclusion schemes.

Traps that cost marks

Repo and reverse repo swapped; DICGC read as ₹5 lakh per branch; SARFAESI assumed to cover unsecured loans.