1. What is a Financial Institution?
An organisation that provides financial services—accepting deposits, giving loans, investment products, insurance, pension, brokerage, etc.—and is regulated by a financial-sector regulator (RBI, SEBI, IRDAI, PFRDA).
2. Types of Financial Institutions in India
| Sl. | Category | Main Regulator | Examples |
|---|
| 1 | Commercial Banks | RBI | SBI, PNB, HDFC Bank |
| 2 | Cooperative Banks | RBI + State Govt. | Saraswat Bank, Amul Cooperative |
| 3 | NBFCs | RBI | Bajaj Finance, Muthoot Finance |
| 4 | Development Financial Institutions (DFIs) | RBI | NABARD, SIDBI, IFCI |
| 5 | All-India Financial Institutions (AIFI) | RBI | EXIM, NHB, IIB |
| 6 | Insurance Companies | IRDAI | LIC, ICICI Lombard |
| 7 | Mutual Funds | SEBI | SBI MF, HDFC MF |
| 8 | Pension Funds | PFRDA | NPS Trust, HDFC Pension |
| 9 | Stock Exchanges | SEBI | NSE, BSE |
| 10 | Payment Banks | RBI | Airtel Payments Bank, Paytm |
3. Reserve Bank of India (RBI) – Central Bank
- Established: 1 Apr 1935 (Private shareholders); Nationalised: 1 Jan 1949
- Headquarters: Mumbai (earlier Calcutta)
- 1st Governor: Sir Osborne Smith
- 1st Indian Governor: C. D. Deshmukh
- Present logo: Panther & Palm tree; 2023 logo: Rupee symbol + Lion & Palm tree
- Autonomy: RBI Act 1934, Preamble – “to regulate the issue of bank notes & keeping of reserves”
- Monetary Policy Committee (MPC): 6 members (3 RBI + 3 GoI); Repo rate decided every 2 months
- RBI prints currency through: Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL) & Security Printing Press (Nashik & Dewas)
4. Commercial Banks – Key Numbers (as on 31 Mar 2023)
| Parameter | Figure |
|---|
| Total Scheduled Commercial Banks | 141 |
| Public Sector Banks (PSBs) | 12 (post-2020 mega-merger) |
| Private Sector Banks | 21 (old + new) |
| Foreign Banks | 45 |
| Regional Rural Banks (RRBs) | 43 (sponsored by PSBs) |
| Total Bank Branches | 1.5 lakh+ |
| ATMs | 2.2 lakh+ |
| Financial Inclusion Plan | PMJDY: 50 crore+ accounts opened (Aug 2014→) |
5. Bank Nationalisation Milestones
| Date | Event |
|---|
| 19 Jul 1969 | 14 major banks (>₹50 cr deposits) nationalised |
| 15 Apr 1980 | 6 more banks nationalised |
| 1993 | New Bank of India merged with PNB |
| 2017-20 | 10 PSBs merged into 4 (e.g., Dena+Vijaya+BoB → Bank of Baroda) |
| 2020 | 10 PSBs → 4 (e.g., OBC+United → PNB; Syndicate → Canara) |
6. Development Banks / DFIs
| Name | Year | Purpose | HQ |
|---|
| IFCI | 1948 | Industrial finance | New Delhi |
| SBI (state-owned) | 1955 | Replace Imperial Bank | Mumbai |
| IDBI | 1964 | Industrial development | Mumbai (now a PSB) |
| SIDBI | 2 Apr 1990 | MSME promotion | Lucknow |
| NABARD | 12 Jul 1982 | Agri & rural dev. | Mumbai |
| EXIM Bank | 1982 | Export-import credit | Mumbai |
| NHB | 9 Jul 1988 | Housing finance | New Delhi |
| IIB (India Infrastructure) | 1997 | Infra funding | Mumbai |
7. Small Finance & Payments Banks
- 10 Small Finance Banks licensed (2015 in-principle): AU, Equitas, Ujjivan, Jana, etc.
- 6 Payment Banks live: Airtel, India Post, Fino, Paytm, Jio, NSDL.
- Both categories cannot give loans; only SFBs can lend.
8. Insurance & Pension Bigwigs
- LIC: Life Insurance Corp. of India – formed 1 Sep 1956; nationalisation of 245 insurers.
- IRDAI constituted: 1999 (Malhotra Committee) → IRDA Act 1999; HQ: Hyderabad.
- ESIC: 1952 – Employees’ State Insurance (health & pension).
- EPFO: 1952 – Provident Fund; under Labour Ministry; 27 crore accounts.
- PFRDA: 2003 – NPS; interim regulator 2003, statutory 2014.
9. Securities Market Institutions
- SEBI: Est. 12 Apr 1988 (statutory 1992); HQ: Mumbai Bandra Kurla Complex.
- NSE: Est. 1992; started trading 1994; 1st electronic limit-order book.
- BSE: Asia’s oldest, est. 9 Jul 1875; Sensex launched 1986; 30-share index.
- NSDL & CDSL: Depositories (1996 & 1999) – demat shares.
10. International Financial Bodies – India’s share
| Body | HQ | India’s Voting (%) | India joined |
|---|
| IMF | Washington | 2.75 | 1945 (founder) |
| World Bank | Washington | 2.85 (IBRD) | 1945 |
| ADB | Manila | 6.3 (2nd largest) | 1966 |
| AIIB | Beijing | 8.5 (2nd largest) | 2016 (founder) |
| NDB (BRICS) | Shanghai | 20 % (equal vote) | 2015 (founder) |
11. Quick-Reference Tables
Table-1: Tag-lines of Famous Banks
| Bank | Tag-line |
|---|
| SBI | “Pure Banking Nothing Else” → “Banker to Every Indian” |
| PNB | “The Name you can Bank Upon” |
| BOB | “India’s International Bank” |
| Canara | “Together We Can” |
| BOI | “Relationship beyond Banking” |
| HDFC | “We Understand Your World” |
| ICICI | “Khayaal Aapka” |
Table-2: Bank & HQ – Memory Code “M-P-C-K-B”
Mumbai: SBI, BoB, IDBI, RBL, IndusInd
New Delhi: PNB, OBC, UCO, BoI, Syndicate (now merged)
Chennai: Indian Bank, IOB
Kolkata: UBI, Bandhan, Allahabad (earlier)
Bengaluru: Canara, Vijaya (now merged)
12. One-liner Revision Bullets
- RBI prints ₹1 note only; Govt. of India prints ₹1 coin.
- Bharatiya Mahila Bank merged with SBI (2017).
- HDFC Ltd. (world’s largest housing finance) merged into HDFC Bank (2023).
- “Sashakt” – PSB recap scheme 2018.
- Prompt Corrective Action (PCA) – RBI framework for weak banks.
- Basel-III capital target: 11.5 % by Mar 2023.
- ₹2000 note introduced: 8 Nov 2016 (demonetisation); printing stopped 2018-19.
- NEFT – 24×7 since Dec 2019; RTGS – 24×7 since Dec 2020.
- UPI launched: 11 Apr 2016; NPCI umbrella.
- Mudra loans – 3 categories: Shishu ₹50k, Kishore ₹5 lakh, Tarun ₹10 lakh.
- ECGC – Export Credit Guarantee Corp. (1964) – provides insurance to exporters.
- DICGC – Deposit insurance ₹5 lakh per depositor (raised from ₹1 lakh in 2020).
- Lead Bank Scheme – 1969; 1st lead bank: Nariman committee.
- On tap licence for universal banks – RBI 2016.
- SWIFT code – 8/11 digits; Indian bank example: SBININBBXXX.
13. Practice MCQs for Railway Exams
1. The Reserve Bank of India was nationalised in which year?
**Answer:** 19492. Which committee recommended the establishment of SEBI?
**Answer:** Chandra Shekhar (Narsimham) Committee3. The headquarters of NABARD is located at
**Answer:** Mumbai4. Which of the following is NOT a Development Bank?
**Answer:** SBI (it is a commercial bank, though it does development work)5. SIDBI was set up on
**Answer:** 2 April 19906. The maximum deposit insurance cover provided by DICGC per depositor is
**Answer:** ₹5 lakh7. Which of the following is the newest category of bank in India?
**Answer:** Small Finance Bank8. The first Indian Governor of RBI was
**Answer:** C. D. Deshmukh**Answer:** Washington D.C.
10. Which bank is called “India’s International Bank”?
**Answer:** Bank of Baroda11. How many public-sector banks are there in India after the 2020 mega-merger?
**Answer:** 1212. The regulatory body for insurance companies in India is
**Answer:** IRDAI13. NPS is regulated by
**Answer:** PFRDA14. Which of the following Payment Banks is promoted by the Department of Posts?
**Answer:** India Post Payments Bank15. UPI was launched by which organisation?
**Answer:** NPCI16. The licence for Small Finance Banks was granted on the recommendation of which committee?
**Answer:** Usha Thorat (RBI Internal Working Group)17. Bharatiya Mahila Bank was merged with
**Answer:** State Bank of India18. Which of the following is the apex institution for housing finance?
**Answer:** National Housing Bank (NHB)19. EXIM Bank of India was established in
**Answer:** 198220. The share of Government of India in RBI capital is
**Answer:** 100 % (fully owned by GoI)
End of Chapter – Financial Institutions
BETA
