1. Banking Basics

• A bank is a financial institution that accepts deposits from the public and uses funds mainly for lending, investment and payment-related services.
• The basic banking model is to mobilise savings and channel them toward productive economic activity.
• Banks provide a safe place to keep money and also provide credit to households, businesses, agriculture and governments.
• Main functions include accepting deposits, granting loans, facilitating payments, creating credit, transferring money and providing financial services.
• Commercial banks operate primarily to provide banking and financial services while earning income from interest, fees and other permitted activities.
• Public Sector Banks (PSBs) are banks in which the government has the prescribed majority ownership/control under the applicable framework.
• Private Sector Banks are banking companies primarily owned and managed by private shareholders, subject to RBI regulation.
• Foreign Banks are banks incorporated outside India that operate in India through permitted structures such as branches or wholly owned subsidiaries.
• Cooperative banks are member-oriented institutions established under the cooperative framework and subject to the applicable banking and cooperative regulation.
• Regional Rural Banks (RRBs) focus on rural and semi-urban areas and support agriculture, small businesses and other priority sectors.
• Small Finance Banks (SFBs) are differentiated banks created to promote financial inclusion by serving underserved customers.
• Payments Banks are specialised banks focused on deposits within permitted limits and payment/remittance services; they are not universal lending banks.
• A scheduled bank is a bank included in the Second Schedule of the RBI Act, 1934, subject to the statutory eligibility conditions.
• A non-scheduled bank is a bank that is not included in that Schedule.
• Universal banking refers broadly to providing a wide range of banking and financial services under the applicable regulatory framework.
• Digital banking means delivering banking products and services through electronic channels such as mobile apps, internet banking and digital payment systems.

2. Reserve Bank of India (RBI)

• RBI stands for Reserve Bank of India and is India's central bank.
• The RBI was established under the Reserve Bank of India Act, 1934.
• RBI commenced operations on 1 April 1935.
• Its central office was initially established in Kolkata and was permanently moved to Mumbai in 1937.
• RBI was nationalised in 1949.
• RBI conducts monetary policy and regulates/supervises banks and specified financial entities under the laws applicable to them.
• It acts as banker to the government and performs public debt management functions assigned under law.
• It acts as banker to banks by maintaining certain accounts and providing eligible liquidity facilities.
• RBI manages currency issuance and distribution, subject to the statutory framework; it issues banknotes except the one-rupee note, which is issued by the Government of India.
• RBI manages India's foreign exchange reserves and administers the foreign-exchange framework assigned to it under FEMA.
• RBI operates and oversees important payment and settlement systems and regulates payment-system participants under the Payment and Settlement Systems Act, 2007.
• RBI works for monetary and financial stability and promotes an efficient financial system.
• Important RBI areas include banking regulation, supervision, consumer protection, financial inclusion, currency management and development of payment infrastructure.

3. Monetary Policy

• Monetary policy is the policy through which the central bank influences money, liquidity and interest-rate conditions to achieve its mandated objectives.
• In India, RBI is responsible for formulating and implementing monetary policy under the statutory framework.
• The Monetary Policy Committee (MPC) determines the policy repo rate required to achieve the inflation target while keeping growth in mind, as provided by law.
• The MPC has six members: three from RBI and three appointed by the Central Government.
• The RBI Governor is the ex-officio Chairperson of the MPC.
• Repo rate is the policy rate at which RBI lends to eligible counterparties against eligible collateral under the repo framework.
• Reverse repo refers to the rate at which RBI absorbs liquidity through the reverse-repo facility when that facility is used.
• Standing Deposit Facility (SDF) allows eligible banks to place funds with RBI without providing collateral.
• Marginal Standing Facility (MSF) is an overnight liquidity facility available to eligible scheduled commercial banks against eligible securities, subject to RBI rules.
• Bank Rate is a rate specified by RBI for particular statutory and monetary purposes; it is distinct from the policy repo rate.
• Cash Reserve Ratio (CRR) requires banks to maintain a prescribed portion of certain liabilities as cash reserves with RBI.
• Statutory Liquidity Ratio (SLR) requires banks to maintain a prescribed portion of specified liabilities in liquid assets as per law/RBI directions.
• Open Market Operations (OMO) involve RBI purchase or sale of government securities to influence system liquidity.
• A contractionary stance generally seeks to reduce excess demand/liquidity and inflationary pressure, while an accommodative stance generally supports liquidity and economic activity.

4. Bank Accounts

• Savings Account: Designed mainly for individuals to save money while earning interest according to the bank's applicable terms.
• Current Account: Designed mainly for frequent business transactions; it generally supports high transaction activity and usually does not function like a normal interest-bearing savings deposit.
• Fixed Deposit (FD): Money is deposited for a specified period at an agreed rate subject to the bank's terms.
• Recurring Deposit (RD): A customer deposits a fixed amount periodically for a specified tenure and earns interest according to the applicable product terms.
• Basic Savings Bank Deposit Account (BSBDA): A basic banking account intended to support financial inclusion, subject to applicable RBI requirements.
• NRE Account: A Non-Resident External account generally allows eligible NRIs to maintain rupee funds in India subject to FEMA rules.
• NRO Account: A Non-Resident Ordinary account is used by eligible non-residents for managing permitted income and transactions in India.
• FCNR(B): Foreign Currency Non-Resident (Bank) deposits are eligible term deposits maintained in permitted foreign currencies.
• Joint account: An account held by two or more persons according to an agreed operating mandate such as jointly, either-or-survivor, former-or-survivor, etc.
• Nomination: A banking facility through which a depositor can nominate a person to receive the deposit proceeds after the depositor's death, subject to law and procedure.
• Inoperative account: An account may become inoperative after the prescribed period of no customer-induced transactions, subject to RBI rules.

5. Deposits

• Demand deposits are deposits that can generally be withdrawn on demand, subject to account rules.
• Time deposits are deposits repayable after a specified period.
• CASA means Current Account Savings Account. CASA is important because these deposits are generally lower-cost sources of funds for banks compared with many term deposits.
• Term deposits include fixed/recurring deposit products according to the relevant product definition and banking rules.
• Deposit interest rates are determined according to RBI directions and the bank's applicable policy/product terms.
• Premature withdrawal of a term deposit may be permitted subject to the bank's terms and applicable regulatory requirements.
• DICGC stands for Deposit Insurance and Credit Guarantee Corporation. It provides deposit insurance within the applicable statutory coverage limit and conditions.
• Deposit insurance is linked to the depositor's deposits in the same right and capacity at an insured bank, subject to DICGC rules.
• Unclaimed deposits and balances are handled under RBI's applicable framework, including mechanisms for tracing and claiming eligible funds.

6. Loans and Advances

• A loan is credit provided by a bank to a borrower with an obligation to repay principal and applicable interest/charges according to agreed terms.
• Term loan: A loan repayable over a specified period through scheduled instalments or other agreed repayment arrangements.
• Cash credit: A working-capital facility generally secured by stock, receivables or other eligible security, allowing drawing up to a sanctioned limit subject to terms.
• Overdraft: A facility allowing an eligible customer to withdraw beyond the available balance up to a sanctioned limit.
• Demand loan: A loan that is repayable on demand according to its terms.
• Secured loan: A loan backed by collateral/security.
• Unsecured loan: A loan not backed by specific collateral, with approval based on creditworthiness and other risk factors.
• Working capital finance: Finance used for the day-to-day operating requirements of a business.
• Retail loans include housing, vehicle, education and personal loans, subject to bank policy and regulatory requirements.
• A gold loan is generally secured against eligible gold ornaments or other permitted gold assets, subject to applicable rules.
• A Letter of Credit is a trade-finance instrument under which a bank provides a payment undertaking subject to documentary conditions.
• A Bank Guarantee is a bank's undertaking to pay the beneficiary if specified conditions, such as default by the customer, are met.

7. Interest Rates

• MCLR means Marginal Cost of Funds Based Lending Rate. It is an internal benchmark-based lending-rate framework used for specified loans under RBI rules.
• External Benchmark Lending Rate (EBLR) links certain floating-rate loans to an external benchmark such as the policy repo rate or another permitted benchmark.
• Base Rate was an earlier benchmark lending-rate system introduced before MCLR.
• BPLR means Benchmark Prime Lending Rate, an older benchmark system used before the Base Rate framework.
• Spread is the additional margin added over a benchmark to arrive at the lending rate, subject to applicable rules.
• When policy rates change, transmission to borrowers depends on the loan's benchmark, reset frequency, spread and other contractual/regulatory factors.
• Fixed-rate loans have a rate that remains fixed for the specified period under the contract, while floating-rate loans can change when the benchmark changes.

8. Priority Sector Lending (PSL)

• Priority Sector Lending directs an appropriate share of bank credit toward sectors considered important for inclusive economic development.
• Major PSL categories include agriculture, MSMEs, export credit, education, housing, social infrastructure, renewable energy and other categories specified by RBI.
• Within PSL, RBI specifies targets/sub-targets for eligible bank categories and weaker sections.
• Small and marginal farmers and eligible vulnerable groups receive special attention within the framework.
• Priority Sector Lending Certificates (PSLCs) allow eligible banks to buy/sell certificates representing priority-sector lending achievement without transferring the underlying loans.
• PSL classification is rule-based; a loan qualifies only when it meets the relevant RBI conditions.

9. Financial Inclusion

• Financial inclusion means ensuring affordable and useful access to financial services such as bank accounts, payments, savings, credit, insurance and pensions.
• The objective is not merely opening an account; customers should be able to use financial services safely and regularly.
• Business Correspondents (BCs) extend basic banking services closer to customers, especially in areas where branches are limited.
• Financial literacy helps customers understand savings, credit, insurance, digital payments, fraud prevention and responsible financial decisions.
• Direct Benefit Transfer (DBT) enables eligible government benefits/subsidies to be transferred directly to beneficiaries' accounts through the applicable payment architecture.
• The JAM Trinity refers to Jan Dhan accounts, Aadhaar and Mobile connectivity used to support efficient delivery of financial and government services.

10. Major Government Banking and Financial Schemes

• Pradhan Mantri Jan Dhan Yojana (PMJDY): Promotes universal access to basic banking services, especially for financially excluded households.
• Pradhan Mantri Mudra Yojana (PMMY): Supports eligible micro and small business activities through institutional credit under the MUDRA framework.
• Stand-Up India: Facilitates bank loans for eligible SC/ST and women entrepreneurs for setting up greenfield enterprises, subject to scheme rules.
• PM SVANidhi: Provides working-capital support to eligible street vendors under the scheme's current guidelines.
• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): Government-backed life insurance scheme available to eligible subscribers through participating banks/post offices and insurers.
• Pradhan Mantri Suraksha Bima Yojana (PMSBY): Government-backed accident insurance scheme for eligible subscribers.
• Atal Pension Yojana (APY): Pension scheme targeted especially at workers in the unorganised sector, with pension benefits based on contribution and applicable rules.
• Kisan Credit Card (KCC): Provides timely institutional credit to eligible farmers and other permitted beneficiaries for agricultural and related needs.

11. Digital Banking

• Internet banking allows customers to access banking services through a web-based channel.
• Mobile banking provides banking services through mobile applications or other approved mobile channels.
• UPI enables instant account-to-account payments through participating banks and authorised applications.
• UPI Lite is designed to make small-value payments simpler within the applicable operational framework.
• UPI 123PAY expands UPI access through feature-phone oriented payment options.
• UPI AutoPay supports recurring payments/mandates for eligible transactions.
• QR code payments allow customers to initiate digital payments by scanning a payment QR.
• Tokenisation replaces actual card details with a token for eligible transactions, improving security by reducing exposure of the underlying card number.
• CBDC is digital money issued by a central bank; India's retail and wholesale CBDC experiments are commonly referred to as the Digital Rupee/e₹.

12. Payment Systems

13. National Payments Corporation of India (NPCI)

• NPCI stands for National Payments Corporation of India.
• It is an umbrella organisation for operating retail payment and settlement systems in India.
• NPCI was promoted by RBI and the Indian Banks' Association with the support of member banks, under the applicable framework.
• Important NPCI systems/products include UPI, IMPS, RuPay, NACH, AePS, BBPS and the National Financial Switch.
• RuPay is India's domestic card payment network.
• UPI enables interoperable instant bank-account payments.
• IMPS supports instant interbank electronic fund transfers.
• NACH supports high-volume recurring and bulk electronic transactions.
• NPCI International Payments Limited (NIPL) works to take India's payment technologies to international markets.

14. Banking Technology

• Core Banking Solution (CBS) connects banking branches and channels through a centralised system, enabling customers to access services across locations.
• ATM means Automated Teller Machine and provides services such as cash withdrawal, balance enquiry and other permitted functions.
• MICR means Magnetic Ink Character Recognition and is used in cheque-processing systems.
• IFSC means Indian Financial System Code and identifies a bank branch for electronic fund-transfer routing.
• FinTech combines financial services with technology to provide faster, more accessible or innovative financial products.
• RegTech uses technology to improve regulatory compliance and reporting.
• SupTech refers to technology used by regulators and supervisors for supervision and monitoring.
• Artificial intelligence and machine learning are used in areas such as fraud detection, customer support, credit assessment and risk monitoring, subject to governance and regulatory requirements.
• Cloud computing can support scalable banking infrastructure, but banks must manage security, resilience, privacy and regulatory requirements.

15. Cheques and Negotiable Instruments

• Negotiable Instruments Act, 1881 is a major law governing negotiable instruments such as cheques, bills of exchange and promissory notes.
• A cheque is a bill of exchange drawn on a specified banker and payable on demand, subject to the statutory definition.
• Bearer cheque: generally payable to the person presenting it, subject to banking and legal checks.
• Order cheque: payable to a specified person or order, subject to endorsement/identity requirements.
• Account Payee crossing: directs that the cheque proceeds be credited to the account of the payee, subject to applicable rules.
• Post-dated cheque: carries a future date and is generally presented for payment on/after that date.
• Stale cheque: a cheque presented after the validity period prescribed by RBI/banking practice is generally not payable.
• Demand Draft: a prepaid instrument issued by a bank directing payment to a specified person/place.
• Section 138: provides for an offence related to cheque dishonour in specified circumstances and subject to statutory conditions.
• CTS means Cheque Truncation System, where the physical movement of cheques is replaced by electronic image-based processing.

16. KYC and Anti-Money Laundering

• KYC means Know Your Customer. Banks use KYC processes to establish customer identity, address and other required information.
• Customer Due Diligence (CDD) is the process of identifying/verifying customers and understanding the nature and purpose of the relationship as required by applicable rules.
• Enhanced Due Diligence (EDD) involves additional checks for customers or relationships presenting higher risk.
• CKYC means Central KYC and provides a centralised KYC-record framework.
• AML means Anti-Money Laundering.
• PMLA means Prevention of Money Laundering Act, 2002.
• FIU-IND means Financial Intelligence Unit-India. It receives and analyses specified financial transaction information and supports efforts against financial crimes.
• STR means Suspicious Transaction Report.
• CTR means Cash Transaction Report.
• Beneficial owner means the natural person(s) who ultimately owns or controls a customer/entity, as determined under applicable rules.
• FATF means Financial Action Task Force, an international standard-setting body for combating money laundering, terrorist financing and proliferation financing.

17. Non-Performing Assets (NPA)

• An NPA is a loan/advance that ceases to generate income for the bank according to the applicable prudential norms.
• For a term loan, an asset generally becomes NPA when interest and/or principal remains overdue beyond the prescribed regulatory period, subject to applicable rules.
• Gross NPA represents the total amount of non-performing assets before specified provisions/adjustments.
• Net NPA reflects NPAs after considering specified provisions and adjustments as per regulatory methodology.
• Sub-standard asset: an asset classified as NPA for the period prescribed by prudential norms.
• Doubtful asset: an asset that remains in the sub-standard category beyond the prescribed period.
• Loss asset: an asset identified as uncollectible or of such little value that it should not continue as a bankable asset, subject to the applicable framework.
• Provisioning means setting aside an amount to cover expected losses associated with stressed or non-performing assets.
• Write-off is an accounting/regulatory action that removes a loan from the balance sheet or reduces its carrying value; it does not automatically mean the borrower is legally released from the debt.
• Recovery mechanisms include SARFAESI, Debt Recovery Tribunals, insolvency proceedings and other permitted mechanisms.

18. Insolvency and Bankruptcy Code (IBC)

• IBC means Insolvency and Bankruptcy Code, 2016.
• Its objective is to consolidate and amend laws relating to insolvency resolution in a time-bound manner and promote value maximisation.
• CIRP means Corporate Insolvency Resolution Process.
• NCLT means National Company Law Tribunal and acts as the adjudicating authority for corporate insolvency matters under IBC.
• NCLAT means National Company Law Appellate Tribunal.
• IBBI means Insolvency and Bankruptcy Board of India and regulates insolvency professionals, insolvency professional agencies and information utilities under the Code.
• Committee of Creditors (CoC) plays a central role in deciding the resolution of a corporate debtor during CIRP.
• A successful resolution plan can preserve the going-concern value of a business; if resolution fails, liquidation may follow according to the Code.

19. Basel Norms

• Basel Committee on Banking Supervision (BCBS) develops global standards for prudential regulation and banking supervision.
• Basel I focused heavily on minimum capital requirements against credit risk.
• Basel II introduced the three-pillar framework covering minimum capital requirements, supervisory review and market discipline.
• Basel III strengthened capital quality, capital buffers, leverage and liquidity standards following the global financial crisis.
• CET1 means Common Equity Tier 1 and represents the highest-quality form of regulatory capital.
• AT1 means Additional Tier 1 capital.
• Tier 2 capital provides supplementary loss-absorbing capital under the regulatory framework.
• Risk-Weighted Assets (RWA) reflect bank exposures adjusted for regulatory risk weights.
• Capital Conservation Buffer (CCB) provides an additional capital cushion above minimum requirements.
• Leverage ratio is a non-risk-weighted capital measure intended to limit excessive leverage.
• LCR means Liquidity Coverage Ratio and promotes short-term liquidity resilience.
• NSFR means Net Stable Funding Ratio and focuses on stable funding over a longer horizon.

20. Capital and Reserves

• Share capital represents funds raised by issuing shares.
• Authorised capital is the maximum share capital a company is authorised to issue under its constitutional documents and applicable law.
• Issued capital is the portion of authorised capital offered for subscription.
• Paid-up capital is the amount of issued share capital actually paid by shareholders.
• For banks, regulatory capital is divided into Tier 1 and Tier 2 categories.
• CET1 mainly consists of the highest-quality common equity instruments and eligible reserves after regulatory adjustments.
• Capital Adequacy Ratio (CAR/CRAR) broadly measures regulatory capital relative to risk-weighted assets.
• Higher-quality capital improves a bank's ability to absorb losses and maintain confidence during stress.

21. Banking Risks

• Credit risk: Risk that a borrower/counterparty fails to meet contractual obligations.
• Market risk: Risk of losses due to movements in market variables such as interest rates, exchange rates and security prices.
• Liquidity risk: Risk that an institution cannot meet obligations when due without unacceptable losses.
• Operational risk: Risk arising from inadequate or failed internal processes, people, systems or external events.
• Cyber risk: Risk from cyberattacks, system compromise, data theft or disruption.
• Interest-rate risk: Risk that changes in interest rates adversely affect earnings or economic value.
• Foreign-exchange risk: Risk from adverse movements in currency exchange rates.
• Concentration risk: Risk caused by excessive exposure to one borrower, sector, geography, product or other common risk factor.
• Systemic risk: Risk that problems in one or more institutions or markets can threaten the broader financial system.

22. Financial Markets

• A financial market connects entities that need funds with entities that have funds to invest.
• Money market deals mainly with short-term funds and instruments.
• Capital market deals mainly with medium- and long-term funds.
• Primary market is where new securities are issued.
• Secondary market is where existing securities are traded among investors.
• Government securities, corporate bonds, equities, money-market instruments and derivatives are examples of financial-market instruments.
• RBI is the key regulator for the money-market/banking/payment framework under its jurisdiction, while SEBI regulates India's securities market.

23. Money Market Instruments

• Treasury Bills (T-Bills): Short-term government securities issued at a discount and redeemed at face value, with tenors specified by the government/RBI framework.
• Commercial Paper (CP): Short-term unsecured money-market instrument issued by eligible entities subject to RBI rules.
• Certificate of Deposit (CD): Negotiable money-market instrument issued by eligible banks and specified financial institutions under applicable regulations.
• Call money: Very short-term funds generally for overnight borrowing/lending among eligible participants.
• Notice money: Short-term funds with maturity beyond overnight up to the prescribed period.
• Repo: Transaction involving sale/purchase of eligible securities with an agreement to reverse the transaction.
• Tri-party repo: Repo in which a third party facilitates collateral management and settlement according to the framework.
• TREPS is a tri-party repo platform operated by CCIL.

24. Capital Market

• Equity share represents ownership interest in a company.
• Preference share carries preferential rights regarding dividend and/or repayment of capital as specified.
• Bond is a debt instrument under which the issuer owes money to investors according to specified terms.
• Debenture is a debt instrument used to raise funds, subject to the Companies Act and securities regulations where applicable.
• IPO means Initial Public Offering—the first public issue of shares by a company.
• FPO means Follow-on Public Offer—an additional public issue by an already listed company.
• Rights issue offers new shares to existing eligible shareholders in proportion to their holdings, subject to the issue terms.
• Bonus issue involves issuing additional shares to existing shareholders from eligible reserves, subject to law.
• REIT means Real Estate Investment Trust.
• InvIT means Infrastructure Investment Trust.

25. Government Securities

• G-Secs are debt securities issued by the Central Government to finance its fiscal requirements.
• State Development Loans (SDLs) are securities issued by state governments.
• Treasury Bills are short-term government securities.
• Cash Management Bills (CMBs) are short-term government securities issued to meet temporary cash-flow mismatches, subject to the applicable framework.
• Coupon is the stated interest payment on a fixed-coupon security.
• Yield represents the effective return associated with a security at its market price and cash flows.
• Bond prices and yields generally move in opposite directions when other factors remain constant.
• RBI's Retail Direct Scheme provides eligible retail investors access to the government securities market through the RBI's platform, subject to scheme rules.

26. Foreign Exchange

• Foreign exchange (forex) refers to currencies and transactions involving exchange of one currency for another.
• Exchange rate is the price of one currency in terms of another currency.
• Currency appreciation means a currency becomes stronger relative to another currency under a market-determined rate.
• Currency depreciation means a currency becomes weaker relative to another currency.
• Devaluation is an official reduction in the value of a currency under a fixed/managed exchange-rate regime; it is different from market-driven depreciation.
• Balance of Payments (BoP) records economic transactions between residents of a country and the rest of the world during a period.
• Current account includes trade in goods/services and primary/secondary income transactions according to the international accounting framework.
• FEMA means Foreign Exchange Management Act, 1999.
• SDR means Special Drawing Rights, an international reserve asset created by the IMF.

27. International Banking

• Nostro account: An account a domestic bank maintains with a foreign bank in the foreign currency.
• Vostro account: An account a foreign bank maintains with a domestic bank in the domestic bank's currency, from the domestic bank's perspective.
• Loro account: Refers to an account maintained by another bank with a third bank, viewed from the reporting bank's perspective.
• SWIFT stands for Society for Worldwide Interbank Financial Telecommunication and provides a secure messaging network used by financial institutions.
• Letter of Credit (LC) supports trade transactions by providing a bank undertaking subject to documentary compliance.
• Bank Guarantee provides a bank's undertaking to pay the beneficiary if the contractual conditions for invocation are met.
• Correspondent banking enables banks to provide cross-border services through relationships with other banks.

28. Development Financial Institutions

• NABARD — National Bank for Agriculture and Rural Development; focuses on agriculture and rural development finance and related developmental functions.
• SIDBI — Small Industries Development Bank of India; focuses on financing and development of the MSME sector.
• EXIM Bank — Export-Import Bank of India; supports India's international trade and investment through a range of financial services.
• NHB — National Housing Bank; works in the housing-finance ecosystem and related developmental/regulatory functions as applicable after changes in its regulatory role.
• NaBFID — National Bank for Financing Infrastructure and Development; established to support long-term infrastructure finance and development.

29. Cooperative Banking

• Cooperative banks operate on cooperative principles and are generally member-oriented.
• Urban Cooperative Banks serve customers mainly in urban and semi-urban areas.
• Rural cooperative credit structures include State Cooperative Banks, District Central Cooperative Banks and Primary Agricultural Credit Societies.
• State Cooperative Bank (StCB) operates at the state level within the cooperative credit structure.
• District Central Cooperative Bank (DCCB) operates at the district level and connects with lower-level cooperative institutions.
• PACS means Primary Agricultural Credit Society and operates at the grassroots level.
• Cooperative banking regulation involves both banking regulation and the applicable cooperative-law framework, with responsibilities distributed according to the law.

30. Regional Rural Banks (RRBs)

• RRB means Regional Rural Bank.
• RRBs were created to provide institutional credit to rural and semi-urban areas, especially agriculture and weaker sections.
• RRBs are sponsored by scheduled commercial banks.
• They focus on agriculture, micro and small enterprises, rural businesses and other priority-sector activities.
• NABARD performs important supervisory/developmental functions relating to RRBs under the applicable framework.
• RRB amalgamation has been used to strengthen financial viability, technology, governance and operational efficiency.

31. Small Finance Banks (SFBs)

• SFBs are differentiated banks established to advance financial inclusion.
• They focus on underserved groups such as small businesses, small and marginal farmers and low-income households.
• SFBs can accept deposits and provide loans subject to RBI's licensing and regulatory conditions.
• Their business model combines banking services with a strong financial-inclusion objective.
• Do not confuse an SFB with a Payments Bank: an SFB is permitted to undertake lending within the applicable framework, whereas Payments Banks have restrictions on lending.

32. Payments Banks

• Payments Banks were created to improve access to small savings, payments and remittance services.
• They can accept deposits subject to the applicable regulatory limit and conditions.
• They can provide payment and remittance services and issue permitted payment/debit instruments.
• They are restricted from undertaking lending activities in the manner of universal banks.
• Payments Banks and Small Finance Banks are both differentiated banks, but their permitted activities and business models are different.

33. Non-Banking Financial Companies (NBFCs)

• NBFC means Non-Banking Financial Company.
• An NBFC carries on specified financial activities but is not a bank and does not have all banking powers.
• NBFCs are regulated by RBI under the applicable legal framework, while certain specialised entities may have additional regulators.
• NBFCs generally cannot accept demand deposits like banks and do not form part of the banking system in the same way as banks.
• NBFCs provide loans and other financial services to households and businesses.
• Important categories include NBFC-MFI, Housing Finance Companies, Infrastructure Finance Companies and Core Investment Companies.
• Scale-Based Regulation (SBR) places NBFCs into regulatory layers according to size, activity and risk.
• NBFCs are important providers of credit but must maintain regulatory capital, governance, risk management and reporting standards.

34. Insurance Awareness

• Insurance is a mechanism for transferring specified financial risks from an insured to an insurer in exchange for a premium.
• Life insurance provides financial protection linked to human life and may include savings/investment elements depending on the product.
• General insurance covers non-life risks such as motor, property, travel and other permitted risks.
• Health insurance provides financial coverage for eligible healthcare expenses according to policy terms.
• Reinsurance is insurance purchased by an insurer from another insurer/reinsurer to manage risk exposure.
• IRDAI means Insurance Regulatory and Development Authority of India and is the statutory insurance regulator.
• Premium is the amount paid by the policyholder for insurance coverage.
• Sum assured is the guaranteed amount specified in eligible life insurance policies, subject to policy terms.
• Underwriting is the process of assessing risk and deciding coverage terms, pricing and acceptance.
• Bancassurance refers to distribution of insurance products through banking channels.

35. Pension System

• NPS means National Pension System.
• NPS is a defined-contribution pension system in which contributions are invested according to the subscriber's selected/allotted investment choices and applicable rules.
• PFRDA means Pension Fund Regulatory and Development Authority and regulates the pension sector under its statutory mandate.
• Tier I is the primary retirement account under NPS and has withdrawal restrictions defined by the applicable rules.
• Tier II is an optional account with comparatively greater withdrawal flexibility, subject to the rules.
• Annuity is a financial product that can provide periodic income after retirement, subject to its terms.
• Atal Pension Yojana is a government-backed pension scheme targeted particularly at eligible workers in the unorganised sector.

36. Credit Rating

• A credit rating is an opinion about the creditworthiness/default risk of an issuer or debt instrument.
• Credit ratings help investors assess relative credit risk, but they are not guarantees of repayment.
• Major Indian rating agencies include CRISIL Ratings, ICRA, CARE Ratings and India Ratings, among others recognised under the applicable regulatory framework.
• Ratings generally use letter-based symbols, with higher grades indicating stronger credit quality within the agency's methodology.
• Investment grade generally refers to ratings indicating relatively lower credit risk according to the relevant rating scale.
• Do not confuse a company's credit rating with an individual's credit score.

37. Credit Information and Credit Scores

• Credit score is a numerical indicator derived from credit information and used by lenders as one input in credit assessment.
• CIBIL is commonly used to refer to TransUnion CIBIL, a credit information company in India.
• Other credit information companies include Experian, Equifax and CRIF High Mark.
• A credit report contains information about loans, credit cards, repayment behaviour, outstanding balances and other credit-related details.
• Timely repayment, responsible credit utilisation and a healthy credit history can support a stronger credit profile.
• Credit score is not the same as a bank's internal loan-approval decision; lenders consider income, repayment capacity, collateral, existing obligations and other factors.

38. Financial Regulators and Major Institutions

39. International Financial Institutions

• IMF — International Monetary Fund: Promotes international monetary cooperation, financial stability and balance-of-payments support.
• World Bank Group: Provides development finance, knowledge and technical support through its constituent institutions.
• IFC — International Finance Corporation: Focuses on private-sector development in developing economies.
• IDA — International Development Association: Provides concessional support to low-income countries.
• ADB — Asian Development Bank: Supports development and infrastructure across Asia and the Pacific.
• AIIB — Asian Infrastructure Investment Bank: Focuses on infrastructure and sustainable development investment.
• NDB — New Development Bank: Established by BRICS countries to mobilise resources for infrastructure and sustainable-development projects.
• BIS — Bank for International Settlements: Serves as a bank for central banks and a forum for international monetary and financial cooperation.
• FSB — Financial Stability Board: Coordinates recommendations for global financial stability.

40. Financial Inclusion and Social Security

• Financial inclusion connects people with formal savings, credit, insurance, pension and payment systems.
• PMJDY supports basic banking access.
• PMJJBY provides eligible life insurance coverage.
• PMSBY provides eligible accident insurance coverage.
• APY supports retirement/pension planning for eligible subscribers.
• DBT helps transfer eligible government benefits directly through bank-linked payment channels.
• Financial literacy is essential because access without understanding can increase the risk of fraud, over-borrowing and unsuitable financial decisions.

41. Microfinance and Self-Help Groups

• Microfinance provides small-value financial services to low-income households and micro-entrepreneurs.
• Microcredit refers specifically to small-value credit.
• Self-Help Groups (SHGs) are community-based groups that encourage savings, internal lending and access to institutional credit.
• SHG-Bank Linkage Programme connects SHGs with formal banking institutions.
• Joint Liability Group (JLG) is a group-based lending arrangement where members share joint responsibility according to the agreed terms.
• NABARD has played an important developmental role in SHG-bank linkage and rural financial inclusion.

42. Digital Rupee / Central Bank Digital Currency (CBDC)

• CBDC means Central Bank Digital Currency.
• It is a digital form of sovereign currency issued by a central bank.
• India's CBDC is commonly known as the Digital Rupee or e₹.
• Retail CBDC is intended for use by individuals and businesses for retail payments.
• Wholesale CBDC is designed for financial institutions and wholesale-market use cases.
• CBDC is different from cryptocurrency because CBDC is sovereign money issued by the central bank, while cryptocurrencies are generally privately created digital assets and are not sovereign currency.
• CBDC is also different from UPI: UPI is a payment interface/rail that moves money between accounts, whereas CBDC represents the digital form of central-bank money.
• Potential benefits include efficient settlement, programmability for permitted use cases, resilience and innovation in payments.

43. Banking Cybersecurity

• Phishing: Fraudulent communication designed to trick users into revealing credentials or financial information.
• Smishing: Phishing conducted through SMS or messaging channels.
• Vishing: Voice-based fraud in which criminals impersonate trusted persons or institutions.
• SIM swap: Fraud involving unauthorised transfer of a victim's mobile number to another SIM to intercept authentication messages.
• Malware: Malicious software designed to damage systems, steal information or gain unauthorised access.
• Ransomware: Malware that blocks access to data/systems and demands payment.
• Never share OTPs, PINs, CVV, passwords or banking credentials with callers claiming to be bank officials.
• Verify payment requests before approving UPI collect requests or mandates.
• Use official banking applications and websites and keep operating systems/apps updated.
• Enable strong authentication and transaction alerts wherever available.

44. Important Banking Abbreviations

45. Important Headquarters and Institutional Facts

• RBI: Mumbai.
• SEBI: Mumbai.
• IRDAI: Hyderabad.
• PFRDA: New Delhi.
• NABARD: Mumbai.
• SIDBI: Lucknow.
• EXIM Bank: Mumbai.
• NPCI: Mumbai.
• DICGC: Mumbai.
• IBBI: New Delhi.
• For exams, learn headquarters together with establishment year, parent/ministry where applicable and core function.

46. Important Banking Committees

• Narasimham Committee I (1991): Recommended major financial-sector and banking reforms, including stronger prudential norms and greater operational efficiency.
• Narasimham Committee II (1998): Focused on further banking-sector reforms, capital adequacy, asset quality, stronger supervision and structural improvements.
• Rangarajan Committee: Associated with several important recommendations on financial inclusion and banking/development matters across different contexts.
• Nachiket Mor Committee: Examined financial inclusion and proposed ways to provide universal access to financial services.
• Urjit Patel Committee: Examined the monetary policy framework and recommended changes that contributed to the institutionalisation of the MPC-based framework.
• Bimal Jalan Committee: Associated with the framework for determining RBI's economic capital and surplus transfer policy.

47. Important Banking Terms

• Liquidity: Ability to meet obligations when they become due.
• Solvency: Ability to meet long-term obligations and maintain assets above liabilities.
• Leverage: Use of borrowed funds relative to capital/equity.
• Haircut: Reduction applied to the value of an asset/collateral for risk-management or recovery purposes.
• Provision: Amount set aside to cover expected losses or obligations.
• Write-off: Accounting recognition that reduces/removes an asset from the books under the applicable framework; recovery efforts can continue.
• Spread: Difference between two interest rates/yields or the margin added over a benchmark.
• Yield: Return earned on a financial security relative to its price and cash flows.
• Coupon: Stated periodic interest payment on a bond/security.
• Clearing: Process of determining obligations between parties before settlement.
• Settlement: Final transfer of funds/securities to discharge obligations.
• Reconciliation: Matching records from different systems/accounts to identify and resolve differences.
• Financial literacy: Ability to understand and use financial information for sound decisions.

48. Banking Current-Affairs Terminology

• For banking exams, static Banking Awareness should be combined with recent RBI circulars, monetary-policy decisions, banking appointments, mergers, digital-payment developments, regulatory actions and major financial-sector reports.
• Track changes in repo rate, CRR, SLR, policy stance and monetary-policy decisions from official RBI announcements.
• Track new RBI regulations concerning digital lending, KYC, customer protection, cybersecurity, payment systems and bank supervision.
• Track major bank mergers/amalgamations, new licences, new products and significant regulatory actions.
• Track developments involving NPCI products such as UPI, RuPay, NACH, AePS and BBPS.
• Track important reports and indices from RBI, NABARD, SEBI, IRDAI, PFRDA, IMF, World Bank, BIS and other relevant institutions.
• For every current banking news item, remember: what happened, who was involved, date, place, amount/percentage, purpose, regulator/institution, and important numerical facts.

49. Rapid Banking Awareness Revision

Must-remember distinctions

• RBI vs SBI: RBI is the central bank; SBI is a commercial bank.
• CRR vs SLR: CRR is maintained as cash reserves with RBI; SLR is maintained by banks in prescribed liquid assets.
• Repo vs Reverse Repo: Repo is used by RBI to provide liquidity against eligible collateral; reverse repo is a liquidity-absorption mechanism when used under the framework.
• NEFT vs RTGS: NEFT is an electronic funds-transfer system; RTGS settles transactions individually on a real-time gross basis.
• UPI vs IMPS: Both support instant payments, but UPI is an interoperable interface/payment ecosystem with rich app/mandate/QR use cases, while IMPS is an instant interbank transfer service.
• Bank vs NBFC: An NBFC is not a bank and does not have all banking powers, including ordinary demand-deposit-taking powers.
• SFB vs Payments Bank: SFBs can undertake lending subject to RBI rules; Payments Banks are restricted from lending in the manner of universal banks.
• NPA vs Write-off: NPA is an asset-quality classification; write-off is an accounting action and does not automatically extinguish the borrower's liability.
• Credit rating vs Credit score: Rating generally assesses debt/issuer creditworthiness; credit score is an individual's/borrower's numerical credit indicator derived from credit information.
• CBDC vs UPI: CBDC is digital central-bank money; UPI is a payment interface/rail.

Core full forms

• RBI — Reserve Bank of India
• NPCI — National Payments Corporation of India
• NPA — Non-Performing Asset
• PSL — Priority Sector Lending
• CRR — Cash Reserve Ratio
• SLR — Statutory Liquidity Ratio
• MPC — Monetary Policy Committee
• NEFT — National Electronic Funds Transfer
• RTGS — Real Time Gross Settlement
• IMPS — Immediate Payment Service
• UPI — Unified Payments Interface
• KYC — Know Your Customer
• AML — Anti-Money Laundering
• IBC — Insolvency and Bankruptcy Code
• IBBI — Insolvency and Bankruptcy Board of India
• NBFC — Non-Banking Financial Company
• NABARD — National Bank for Agriculture and Rural Development
• SIDBI — Small Industries Development Bank of India
• EXIM — Export-Import
• IRDAI — Insurance Regulatory and Development Authority of India
• PFRDA — Pension Fund Regulatory and Development Authority

Exam strategy

• First learn definitions and differences.
• Then memorise full forms, headquarters and establishment years.
• Next learn RBI tools and the direction in which they affect liquidity.
• Practise numerical/current questions separately because rates, limits and regulatory instructions can change.
• For every banking current-affairs item, extract the institution, date, amount, percentage, product/scheme, objective and important numerical facts.

Publishing and SEO Checklist

• Use a clean URL such as /banking-awareness-notes/ rather than a long parameter-based URL.
• Replace every svayambu.in, svayambu and YOUR AUTHOR NAME placeholder before publishing.
• Use an original featured image and descriptive image filename such as banking-awareness-notes.jpg.
• Keep the visible page title aligned with the HTML title and the actual content.
• Add an author/profile page and a clear last-reviewed date for trust, especially because financial education is a high-stakes/YMYL topic.
• Link from this page to individual topic pages when you create them. Also link those topic pages back to this hub page.
• Do not create pages merely by repeating the same text with different keywords. Add genuine exam value, examples, tables, MCQs and updated information.
• Do not rely on FAQ structured data for a Google rich result; ordinary FAQ-style content can still be useful to readers, but Google retired FAQ rich-result display in 2026.
• Submit the final URL and sitemap through Google Search Console after publishing.