Banking Awareness
Key Concepts & Formulas
| # | Concept | Quick Explanation |
|---|---|---|
| 1 | Repo Rate | Rate at which RBI lends short-term money to banks; ↑ repo = dearer loans → inflation control |
| 2 | SLR (Statutory Liquidity Ratio) | % of NDTL banks must keep in liquid assets (cash, gold, govt. securities); currently 18 % |
| 3 | NPA Classification | Sub-standard (90-12 months), Doubtful (>12 months), Loss (uncollectible); 90-day overdue norm |
| 4 | PMJDY | Jan-Dhan: zero-balance account, RuPay debit card, accidental insurance ₹2 lakh, overdraft ₹10 k after 6 months |
| 5 | NEFT vs RTGS | NEFT: 24×7, ₹1 – no upper cap, hourly batches; RTGS: ≥ ₹2 lakh, real-time settlement |
| 6 | Base Rate → MCLR → EBLR | Lending-rate regimes; since Oct-19 external benchmark (EBLR) = repo + spread (min 2.65 pp) |
| 7 | Deposit Insurance | DICGC insures each depositor up to ₹5 lakh per bank (since 1 Feb 2020) |
10 Practice MCQs
Q1. Which of the following is NOT an instrument of selective credit control used by RBI?
A. Margin requirements
B. Moral suasion
C. Open Market Operations
D. Rationing of credit
Answer: C
Solution: Open Market Operations (OMO) is a general quantitative tool; the rest are selective/qualitative.
Shortcut: Remember Q vs Q—Quantitative = OMO, Bank Rate, CRR, SLR; Qualitative = Margin, Moral suasion, etc.
Tag: RBI policy tools
Q2. The maximum amount that can be deposited in a PPF account in a financial year is:
A. ₹1.0 lakh
B. ₹1.5 lakh
C. ₹2.0 lakh
D. ₹2.5 lakh
Answer: B
Solution: PPF ceiling ₹1.5 lakh FY 2025-26 (unchanged).
Shortcut: 1-5-9 series: 1.5 lakh PPF, 5-year lock-in, 8 % (approx.) tax-free interest.
Tag: Small savings
Q3. Which schedule of RBI Act 1934 contains the list of Scheduled Banks?
A. First
B. Second
C. Third
D. Fourth
Answer: B
Solution: Second schedule—criterion for scheduled status.
Tag: RBI Act
Q4. “SAFAL” is a digital lending product launched by:
A. SBI
B. NABARD
C. SIDBI
D. RBI
Answer: C
Solution: SIDBI’s SAFAL = Simple, Fast, Automated Loan for MSMEs.
Tag: Institutions/products
Q5. What is the minimum paid-up capital required for Small Finance Banks?
A. ₹50 cr
B. ₹100 cr
C. ₹200 cr
D. ₹500 cr
Answer: B
Solution: ₹100 crore—on-tap licensing guidelines 2019.
Tag: Bank types
Q6. The account maintained by a commercial bank with RBI in which all CRR balances are kept is called:
A. Current account
B. Savings account
C. RBI current account
C. Settlement account
Answer: C (RBI current account)
Solution: Banks keep CRR in a non-interest bearing current account with RBI.
Tag: CRR
Q7. Which one is NOT a money-market instrument?
A. Certificate of Deposit
B. Commercial Paper
C. Treasury Bill 364-day
D. Dated G-Sec 10-year
Answer: D
Solution: Dated G-Sec is capital-market; others <1 year.
Tag: Instruments
Q8. The agency that implements the PM MUDRA loan scheme is:
A. NABARD
B. SIDBI
C. RBI
D. SEBI
Answer: B
Solution: SIDBI is the designated Mudra refinancing agency.
Tag: Schemes
Q9. The ratio of liquid assets to demand & time liabilities is termed:
A. CRR
B. SLR
C. CAR
D. LCR
Answer: B
Solution: SLR formula = liquid assets / NDTL × 100.
Tag: Ratios
Q10. Which public-sector bank is headquartered in Bengaluru?
A. Canara Bank
B. Indian Bank
C. Union Bank
D. Bank of Maharashtra
Answer: A
Solution: Canara Bank HQ Bengaluru.
Tag: Bank HQ
5 Previous Year Questions
[RRB NTPC 2021] Who regulates the housing finance companies in India?
A. RBI
B. NHB
C. SEBI
D. Finance Ministry
Answer: B
Solution: From 2019, RBI regulates HFCs but through National Housing Bank (NHB) as its subsidiary; hence NHB remains the face.
Tag: Regulators
[RRB NTPC 2021] The RuPay card was launched by:
A. NPCI
B. RBI
C. SBI
D. NPCI & Visa jointly
Answer: A
Solution: NPCI—National Payments Corporation of India.
Tag: Payments
[RRB Group-D 2022] What does “M” stand for in MCLR?
A. Maximum
B. Marginal
C. Minimum
D. Monetary
Answer: B
Solution: Marginal Cost of Funds based Lending Rate.
Tag: Acronyms
[RRB NTPC 2022] The Export-Import Bank of India is:
A. Scheduled commercial bank
B. Development financial institution
C. Private sector bank
D. Cooperative bank
Answer: B
Solution: EXIM Bank—wholesale DFI for export credit.
Tag: Institutions
[RRB NTPC 2020] Which of the following is a qualitative tool?
A. Bank Rate
B. CRR
C. Margin requirement
D. Open Market Operations
Answer: C
Solution: Margin requirement affects specific sectors, hence qualitative.
Tag: RBI tools
Speed Tricks & Shortcuts
| Situation | Shortcut | Example |
|---|---|---|
| Remembering repo vs reverse repo | Repo = RBI “gives” money to banks (Lends); Reverse = RBI “takes” (Absorbs) | Repo ↑ = loans costly; Reverse repo ↑ = banks park more with RBI |
| Bank HQ—East vs West | East: UBI (Kolkata), Indian Bank (Chennai); West: BoB (Vadodara), BoM (Pune) | “U-I-C” vs “B-B-M” |
| Money market maturity | All ≤ 1 year; Capital > 1 year | T-bill 91/182/364 = money; G-Sec 5-40 yr = capital |
| DICGC cover | ₹5 lakh per depositor per bank (not per branch) | Split across banks, not branches |
| NPA time rule | 90 days overdue = sub-standard (remember 90-12-12) | 90 d → SS, 12 m → Doubtful |
Common Mistakes to Avoid
| Mistake | Why Students Make It | Correct Approach |
|---|---|---|
| Confusing CRR & SLR interest | Think both earn interest | Only SLR securities earn; CRR is zero-interest |
| Counting DICGC per branch | Mis-read “per bank” | Cover is aggregate per bank, irrespective of branches |
| Reversing repo & reverse repo | Alphabet trap | Repo = RBI repo to banks (Lend); Reverse = banks reverse to RBI (Deposit) |
| Calling NPCI a regulator | “National” sounds govt. | NPCI is an umbrella organisation, not regulator; RBI regulates |
Quick Revision Flashcards
| Front | Back |
|---|---|
| Present Repo Rate (Dec 2025) | 6.50 % |
| Present SLR | 18 % |
| Full form of NEFT | National Electronic Funds Transfer |
| Full form of RTGS | Real-Time Gross Settlement |
| Headquarter of RBI | Mumbai |
| Chairman of RBI | Governor (Shaktikanta Das) |
| PMJDY overdraft limit | ₹10,000 (after 6 months satisfactory operation) |
| Minimum balance in BSBDA | Zero |
| NBFC registration act | RBI Act 1934 (Section 45-IA) |
| India’s first Small Finance Bank | Capital Small Finance Bank (2016) |
BETA
