Banking Awareness Notes for Competitive Exams – Banking Awareness is a high-scoring and concept-based section in competitive exams such as SBI PO/Clerk, IBPS PO/Clerk, RRB, RBI Assistant, NABARD, SSC (limited), and State-level banking exams. Below are exam-oriented, crisp, and updated notes designed for quick revision and maximum retention.
Table of Contents
1. Indian Banking System – Basics
What is a Bank?
A bank is a financial institution that:
- Accepts deposits
- Provides loans & advances
- Facilitates payments and financial services
Main Functions of Banks
- Accepting deposits
- Lending money
- Credit creation
- Agency services (cheques, drafts, remittance)
- Utility services (locker, ATM, internet banking)
2. Types of Banks in India
A. Scheduled Banks
Banks listed in Second Schedule of RBI Act, 1934
1. Commercial Banks
- Public Sector Banks (SBI & Nationalized Banks)
- Private Sector Banks
- Foreign Banks
2. Regional Rural Banks (RRBs)
- Serve rural & semi-urban areas
- Promote agriculture, MSMEs, self-employment
3. Small Finance Banks
- Promote financial inclusion
- Serve small businesses & marginal farmers
4. Payments Banks
- Cannot issue loans
- Deposit limit: ₹2 lakh per customer
B. Non-Scheduled Banks
- Not listed in RBI schedule
- Limited operations
3. Reserve Bank of India (RBI)
Key Facts
- Established: 1 April 1935
- Headquarters: Mumbai
- Governor: Appointed by Government of India
Main Functions
- Monetary authority
- Issue of currency notes (except ₹1 note & coin)
- Banker to Government
- Regulator of banks
- Controller of credit
4. Monetary Policy & Important Rates
Policy Rates (Very Important for Exams)
| Term | Meaning |
|---|---|
| Repo Rate | Rate at which RBI lends to banks |
| Reverse Repo | Rate RBI borrows from banks |
| CRR | Cash kept with RBI |
| SLR | Liquidity kept with RBI |
| Bank Rate | Long-term lending rate |
| MSF | Emergency lending rate |
5. Banking Deposits
Types of Deposits
- Savings Account
- Current Account
- Fixed Deposit (FD)
- Recurring Deposit (RD)
6. Loans & Advances
Types of Loans
- Term Loan
- Cash Credit
- Overdraft
- Demand Loan
Priority Sector Lending (PSL)
Includes:
- Agriculture
- MSME
- Education
- Housing
- Weaker sections
7. Digital Banking & Payment Systems
Important Digital Terms
- NEFT – National Electronic Funds Transfer
- RTGS – Real Time Gross Settlement
- IMPS – Immediate Payment Service
- UPI – Unified Payments Interface
Cards
- Debit Card
- Credit Card
- Prepaid Card
8. Financial Inclusion & Government Schemes
Key Schemes
- PM Jan-Dhan Yojana
- PM Mudra Yojana
- Stand-Up India
- Atal Pension Yojana
- PM Jeevan Jyoti Bima Yojana
9. NPA (Non-Performing Assets)
NPA Definition
Loan becomes NPA when interest or principal is overdue for more than 90 days
Types of Assets
- Standard Asset
- Sub-Standard Asset
- Doubtful Asset
- Loss Asset
10. Important Banking Institutions
- NABARD – Agriculture & rural development
- SIDBI – MSME financing
- EXIM Bank – Export-Import financing
- NHB – Housing finance regulation
11. Basel Norms
Basel I, II, III
- Issued by Basel Committee
- Focus on capital adequacy, risk management & stability
- CAR (Capital Adequacy Ratio) – Minimum capital banks must maintain
12. Cheques & Negotiable Instruments
Types of Cheques
- Bearer cheque
- Order cheque
- Crossed cheque
- Post-dated cheque
Dishonour of Cheque
- Covered under Section 138 of Negotiable Instruments Act
13. Important Banking Abbreviations
- KYC – Know Your Customer
- IFSC – Indian Financial System Code
- MICR – Magnetic Ink Character Recognition
- CTS – Cheque Truncation System
- AML – Anti-Money Laundering
14. Exam Preparation Tips (Banking Awareness)
- Focus on concepts + current updates
- Revise RBI policies monthly
- Practice MCQs daily
- Make short notes for formulas & definitions
- Attempt previous year questions
Frequently Asked Questions (FAQ)
Q1. Is Banking Awareness important for SBI & IBPS exams?
Yes, it carries high weightage and helps score quickly.
Q2. How many questions are asked from Banking Awareness?
Usually 5–15 questions, depending on exam level.
Q3. Do static banking topics repeat in exams?
Yes, definitions, RBI roles, banking terms are frequently repeated.
Q4. Is current affairs linked with banking awareness?
Yes, especially RBI updates, schemes & monetary policy.
Q5. Best way to revise Banking Awareness?
Short notes + daily MCQ practice + monthly current updates.
Conclusion
Banking Awareness is a must-prepare section for competitive exams. With clear concepts, regular revision, and MCQ practice, candidates can easily score maximum marks with minimum time.
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