Banking Awareness Questions for IBPS PO

Reserve Bank of India: Core Functions

RBI is the central bank of India, established on April 1, 1935 under the RBI Act 1934, and nationalized in 1949. Its headquarters is in Mumbai. RBI acts as the banker to the government, banker to banks, currency issuer, and monetary authority. The Governor heads RBI and is appointed by the Government of India for a term of 3 years, extendable up to 5 years total.

• RBI established: April 1, 1935. Nationalized: January 1, 1949.
• Current Governor: Sanjay Malhotra (appointed December 2024, succeeding Shaktikanta Das).
• RBI issues currency notes of all denominations EXCEPT 1 rupee coin and note (issued by Ministry of Finance).
• RBI acts as Lender of Last Resort for commercial banks.
• RBI regulates and supervises all scheduled commercial banks, NBFCs, and payment systems.
• Monetary Policy Committee (MPC) has 6 members: 3 from RBI, 3 external experts appointed by Government.

Key Policy Rates (Monetary Policy Tools)

RBI uses policy rates to control inflation and liquidity in the economy. These rates are reviewed in the bi-monthly MPC meetings. Repo rate is the most tested rate in IBPS PO. Think of it this way: Repo is RBI lending to banks (RE-PO = RBI gives POwer to banks). Reverse Repo is banks parking money with RBI. CRR and SLR are mandatory reserve requirements.

• Repo Rate: Rate at which RBI lends short-term funds to commercial banks.
• Reverse Repo Rate: Rate at which banks park excess funds with RBI. Always lower than Repo Rate.
• CRR (Cash Reserve Ratio): % of NDTL banks must keep as cash with RBI. Earns NO interest.
• SLR (Statutory Liquidity Ratio): % of NDTL banks must maintain in gold, cash, or approved securities.
• MSF (Marginal Standing Facility): Emergency borrowing window for banks at rate higher than Repo.
• Bank Rate: Rate for long-term borrowing from RBI. Linked to MSF rate.

Types of Banks in India

Indian banking is structured in layers. Knowing which category a bank falls into helps answer regulatory and functional questions. Scheduled banks are listed in the Second Schedule of the RBI Act and maintain CRR with RBI. Non-scheduled banks do not appear in this schedule.

• Public Sector Banks (PSBs): Government holds more than 50% stake. Example: SBI, PNB, Bank of Baroda. Currently 12 PSBs after consolidation.
• Private Sector Banks: HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank.
• Small Finance Banks (SFBs): Serve unbanked/underbanked segments. Licensed by RBI. Example: AU Small Finance Bank, Equitas SFB.
• Payment Banks: Can accept deposits up to 2 lakh per customer. CANNOT give loans. Example: Airtel Payments Bank, India Post Payments Bank.
• Regional Rural Banks (RRBs): Set up under RRB Act 1976. Jointly owned by Central Govt (50%), State Govt (15%), Sponsor Bank (35%).
• Cooperative Banks: Operate under dual regulation of RBI and Registrar of Cooperative Societies.

Financial Inclusion and Key Banking Schemes

IBPS PO GA section regularly asks about government schemes linked to banking. These are launched by either RBI, Ministry of Finance, or NABARD. Know the scheme name, launch year, purpose, and the nodal agency. This is a direct one-liner question type — no calculation needed, pure memory.

• PMJDY (Pradhan Mantri Jan Dhan Yojana): Launched August 28, 2014. Zero-balance accounts, RuPay debit card, overdraft facility up to Rs 10,000.
• MUDRA (Micro Units Development and Refinance Agency): Loans under Shishu (up to 50,000), Kishore (50,000 to 5 lakh), Tarun (5 to 10 lakh).
• Kisan Credit Card (KCC): Short-term credit to farmers for agricultural needs. Implemented through banks and RRBs.
• Stand-Up India: Loans between 10 lakh and 1 crore to SC/ST and women entrepreneurs. At least 1 borrower per bank branch.
• PMSBY/PMJJBY: PMSBY is accident insurance at Rs 12 per year. PMJJBY is life insurance at Rs 436 per year. Both linked to Jan Dhan ecosystem.
• Priority Sector Lending (PSL): Banks must lend 40% of ANBC to priority sectors. For foreign banks with 20+ branches, it is also 40%.

Regulatory Bodies and Important Banking Terms

Questions often ask which body regulates which type of financial institution. This is a tricky area because some entities have overlapping regulators. Also know key banking terms that appear in comprehension-style questions in the Mains paper.

• SEBI regulates capital markets. IRDAI regulates insurance. PFRDA regulates pension funds. RBI regulates banks and NBFCs.
• NPA (Non-Performing Asset): Loan where interest or principal is overdue for more than 90 days.
• SARFAESI Act 2002: Allows banks to recover loans by selling secured assets WITHOUT court intervention.
• BASEL III Norms: International banking regulation framework for capital adequacy, stress testing, and liquidity risk.
• CIBIL Score: Credit score from 300 to 900. Score above 750 is considered good for loan eligibility.
• NBFC: Non-Banking Financial Company. Can give loans and accept deposits but cannot issue cheques and is not part of payment settlement system.

• Confusing Repo Rate and Bank Rate: Repo is short-term lending to banks. Bank Rate is long-term and equals MSF rate. Many students mark them as the same.
• Payment Banks vs Small Finance Banks: Payment Banks CANNOT give loans. SFBs CAN give loans and accept deposits. This distinction is directly tested.
• RBI issues all currency: Wrong. The 1 rupee coin and 1 rupee note are issued by the Ministry of Finance, not RBI. Classic trap question.
• RRB ownership mix: Students often flip the sponsor bank share (35%) and state government share (15%). Remember: Centre 50, Sponsor 35, State 15.
• MUDRA loan categories: Students mix up the slabs. Shishu is the smallest (up to 50,000), Tarun is the largest (5 to 10 lakh). Think alphabetical order equals increasing loan size.

• REPO mnemonic: RE-PO = RBI Empowers banks by giving POsitive cash. Reverse Repo = banks Reverse the flow back to RBI.
• Rate order trick: MSF is Most Strict and Fastest (emergency), so it is highest. Reverse Repo is Relaxed Resting rate, so lowest. Middle = Repo.
• RRB ownership: CSC = Centre-Sponsor-Centre reversed = 50-35-15. Or remember Centre gets the biggest slice (50%), Sponsor gets second (35%), State gets least (15%).
• MUDRA animal ladder: Shishu means baby (smallest), Kishore means teenager (medium), Tarun means young adult (largest). Baby to adult = 50K to 10 lakh.

• In IBPS PO Mains, GA section has 40 questions in 35 minutes. Banking Awareness contributes roughly 10-15 questions. Prioritize RBI rates, scheme details, and regulatory body mapping.
• Current affairs banking questions: Always check the latest RBI MPC meeting outcomes before exam. Repo rate change questions appear almost every year.
• Recent trend: IBPS PO 2023 and 2024 papers had questions on Payment Banks deposit limits, MUDRA loan slabs, and PSL targets. These are direct one-liners — revise them as facts.
• Tricky format: Some questions give a statement about a scheme and ask you to identify the correct nodal agency or launch year. Do not confuse similar sounding schemes like PMSBY and PMJJBY.
• Time strategy: Banking Awareness questions in GA are fastest to attempt if revised well. Aim to finish this section in under 20 minutes to save time for current affairs questions which require more reading.