Banking Awareness Questions for SBI PO

Reserve Bank of India - Core Functions

RBI is the central bank of India, established in 1935 under the RBI Act 1934. It is the banker to the government, banker to banks, issuer of currency, and the monetary authority. SBI PO frequently tests the difference between RBI's roles - regulatory vs developmental. RBI regulates commercial banks, NBFCs, and payment systems. It does NOT regulate insurance (IRDAI) or capital markets (SEBI).

• Established: April 1, 1935. Nationalised: January 1, 1949.
• Headquarters: Mumbai. Current Governor: Sanjay Malhotra (as of Dec 2024).
• RBI issues all currency notes EXCEPT one-rupee coin and note (issued by Ministry of Finance).
• RBI is lender of last resort to commercial banks.
• RBI manages India's foreign exchange under FEMA 1999.
• RBI publishes key reports: Monetary Policy Report, Financial Stability Report, Annual Report.

Monetary Policy Tools - CRR, SLR, Repo, Reverse Repo

These are the most tested concepts in Banking Awareness. The Monetary Policy Committee (MPC) meets every two months to set the policy repo rate. Remember: when RBI wants to reduce inflation, it increases repo rate (money becomes expensive, people borrow less). When it wants to boost growth, it cuts repo rate. CRR is the cash percentage banks must keep with RBI - earns NO interest. SLR is the percentage banks must invest in approved securities - earns interest.

• Repo Rate: Rate at which RBI lends to commercial banks (short-term, against securities).
• Reverse Repo Rate: Rate at which RBI borrows from commercial banks. Always lower than Repo.
• CRR (Cash Reserve Ratio): % of deposits kept as cash with RBI. Currently 4%.
• SLR (Statutory Liquidity Ratio): % of deposits in gold or govt securities. Currently 18%.
• MSF (Marginal Standing Facility): Emergency overnight borrowing by banks at Repo+0.25%.
• Bank Rate: Long-term lending rate of RBI. Pegged to MSF rate.

Types of Banks in India

SBI PO tests classification of banks frequently. Scheduled Banks are listed in the Second Schedule of the RBI Act and get RBI facilities. Non-Scheduled Banks do not. Among Scheduled Banks, we have Public Sector Banks (government majority stake), Private Sector Banks, Foreign Banks, Small Finance Banks, and Payment Banks. Know the key difference: Payment Banks cannot give loans or issue credit cards. Small Finance Banks can give loans but focus on small borrowers.

• Public Sector Banks: Government owns more than 50%. Example: SBI, PNB, Canara Bank.
• Private Sector Banks: Example: HDFC, ICICI, Axis, Kotak.
• Payment Banks: Can accept deposits (max Rs 2 lakh per customer), no loans. Example: Airtel, Paytm, India Post.
• Small Finance Banks: Serve unbanked sections, give microloans. Example: AU Small Finance, Ujjivan.
• Regional Rural Banks (RRBs): Joint ownership - Centre 50%, State 15%, Sponsor Bank 35%.
• Co-operative Banks: Regulated jointly by RBI and Registrar of Co-operative Societies.

Key Banking Terms - NPA, SARFAESI, Basel Norms

Terminology questions are tricky because they look similar. NPA (Non-Performing Asset) is a loan where interest or principal is overdue for 90 days or more. After NPA, banks classify assets into Sub-standard (up to 12 months NPA), Doubtful (12+ months), and Loss assets. SARFAESI Act 2002 allows banks to recover loans without court intervention by taking possession of secured assets. Basel III norms set capital adequacy requirements for banks globally.

• NPA = No payment of interest or principal for 90 days.
• SARFAESI Act 2002: Banks can seize and sell assets without court order for loans above Rs 1 lakh.
• CRAR (Capital to Risk Weighted Asset Ratio): Minimum 9% in India as per RBI (Basel III requires 8%).
• CASA Ratio: Current Account + Savings Account deposits as % of total deposits. Higher CASA = cheaper funds for bank.
• Priority Sector Lending: Banks must lend 40% of Adjusted Net Bank Credit to priority sectors (agriculture, MSMEs, education, housing, weaker sections).
• SWIFT: International messaging system for bank-to-bank transactions across borders.

Financial Regulators in India

SBI PO loves asking which regulator controls which sector. Think of it as four pillars: RBI for banking, SEBI for securities markets, IRDAI for insurance, and PFRDA for pensions. A fifth important body is NABARD, which regulates rural cooperative banks and RRBs and provides refinance for agriculture.

• RBI: Banks, NBFCs, Payment Systems, Forex.
• SEBI (Securities and Exchange Board of India): Stock markets, mutual funds, brokers.
• IRDAI (Insurance Regulatory and Development Authority of India): Life and general insurance.
• PFRDA (Pension Fund Regulatory and Development Authority): NPS and pension funds.
• NABARD: Apex bank for agriculture and rural development. Regulates RRBs and co-op banks.
• IFSCA: Regulates International Financial Services Centres like GIFT City.

Government Banking Schemes

Current affairs overlap heavily here. Remember launch dates, target groups, and implementing agencies. Jan Dhan, Mudra, and Stand Up India are the most tested. Link each scheme to its objective using a one-line hook.

• PMJDY (Jan Dhan Yojana, 2014): Financial inclusion, zero-balance accounts with RuPay card.
• MUDRA Yojana (2015): Loans to micro enterprises. Three tiers - Shishu (up to 50k), Kishor (50k-5L), Tarun (5L-10L).
• Stand Up India (2016): Loans between Rs 10 lakh and Rs 1 crore to SC/ST and women entrepreneurs.
• PM SVANidhi (2020): Working capital loans to street vendors.
• Kisan Credit Card: Short-term credit to farmers for agricultural needs.
• PMSBY and PMJJBY: Accidental and life insurance schemes linked to Jan Dhan accounts.

• Confusing CRR and SLR: Remember CRR earns NO interest (pure cash), SLR earns interest (securities). A common MCQ trap.
• Mixing up Repo and Reverse Repo direction: Repo = RBI gives money TO banks. Reverse Repo = RBI TAKES money FROM banks.
• Thinking RBI regulates insurance or stock markets. It does NOT. IRDAI = insurance, SEBI = markets.
• Forgetting that the one-rupee note and coin is issued by Ministry of Finance, not RBI. This catches many aspirants.
• Confusing Payment Banks and Small Finance Banks: Payment Banks cannot give loans at all. Small Finance Banks can give loans but focus on small borrowers.

• CRIBS mnemonic for RBI tools: CRR, Repo, Interest (Bank Rate), Buffer (SLR), Squeeze (OMO). Use it to recall all tools quickly.
• Four Pillars of Regulation: RIPS = RBI (banking), IRDAI (insurance), PFRDA (pension), SEBI (securities).
• MUDRA tiers: Shishu = Small baby (up to 50k), Kishor = Kid growing (5L), Tarun = Teenage big loan (10L). Size increases with age.
• For NPA, remember 90-90 rule: 90 days overdue = NPA. After 90 more days (12 months total) = Doubtful asset.

• SBI PO Mains GA section has 35 questions in 35 minutes. Banking Awareness typically contributes 8-12 of those. Speed is critical - aim for under 45 seconds per banking question.
• RBI policy rates change periodically - always revise the current figures one week before the exam. Questions like 'Current Repo Rate is?' are direct and free marks.
• SBI PO is slightly harder than IBPS PO on banking awareness. Expect one or two questions on recent RBI circulars or new banking licences granted. Follow RBI's official press releases in the last 3 months before exam.
• Descriptive paper (SBI PO specific): You may get an essay or letter on topics like digital banking, UPI growth, or financial inclusion. Banking Awareness directly feeds into these - use scheme names and regulator names to make your answer authoritative.
• Government scheme questions always mention the year of launch and the target beneficiary. Learn both together. Examiners often swap the year or beneficiary in options to trap you.