SBI PO Interview Capsule by AffairsCloud PDF

SBI PO Interview
Capsule 2017
Dear AC Aspirants,
This interview is meant to observe the attitude, confidence level and

communication skills of the candidate. The strategy that the candidate follows to
answer the questions lets the panel members decide the suitability of the
candidate for the bank.
Here we are presenting to you all Interview Capsule for SBI PO. This capsule
includes all what you need to face an Interview. Go through this capsule
thoroughly as it will be really helpful for interview. We covered everything from
personal questions to each and every banking concept.
“The future belongs to those who believe in the beauty of their dreams.
Always insist on yourself never imitate.”
All the best for SBI PO Interview with regards from AC team
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Interview Capsule – SBI PO
Table of Contents
How to face Bank Interview................................................................................................................................... 3

About State Bank of India ....................................................................................................................................... 7
Banking Notes............................................................................................................................................................. 8
Latest in SBI ............................................................................................................................................................... 38
Questions Asked in Previous Interviews ........................................................................................................ 40
Interview Experiences ........................................................................................................................................... 43
3 Rules For Overcoming Interview Jitters
1. Strike A Power Pose For Two Minutes
Rather than hunching up and making yourself small in the waiting room chair as you
scramble to soak up last minute notes or practice one final interview question, what you
should actually find a private place to do what we call a power pose.
2. Repeat A Positive Affirmation
Repeating a positive affirmation can reduce production of cortisol and stress hormones by
almost 50%, slow the mind, lower your blood pressure and heart rate and make you feel
confident and powerful.
3. Read Over Nice Things People Have Said About You
Thinking back to a time when you were successful and confident is a great way to recreate
that confidence right before an interview. A quick and easy way to do this is to print out and
compile anything nice that someone has said about you.
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How to face Bank Interview

In a Bank PO interview, the aim of the interviewers is to assess your personality, your attitude and your
ability to handle the pressure. Before you go for an interview you need to prepare yourself well. This is
because in the process of an interview every aspect of yours will be analysed. Whatever you have to say
about yourself will be evaluated minutely.
Please remember that interviewers are well known about your knowledge on the basis of your written
marks, they only want to know your behaviour, attitude and approach.
So be cool and present yourself in a positive and polite manner. Be confident about what you saying.
Things to be kept in your mind:

1. About banks Date of Establishment, HO Place, Date of Nationalisation (if nationalized), Name
of bank before nationalization (if any), Paid-up Capital and worth of the bank, Number of
branches in India and abroad etc. Basically you have to know history, services, products,
achievement, management (name of CMD) etc of banks
2. International and national information on banking industry.
3. Brief information of Banking Regulation Act, RBI Act , Negotiable Instrument Act, Basic
Banking Knowledge: Banking, Banking Business, Debit and Credit, Types of Banks, Banking
Terms, Banking Reforms in India, Computerisation in India, Types of Accounts, Customer,
Currencies, Foreign Exchange, Types of loan accounts, Banking Technology and its
implementation, Banking Innovative Products, Third Party Products etc.
4. Keep updated. Most of the questions that the panel members ask are from the current affairs
especially from the banking sector.

5. Do not rush while speaking. Speak in calm and composed manner so that you may not utter
something inappropriate which you may regret later. Also remember to speak in a polite and
respectful manner.
6. Do not rush while speaking. Speak in calm and composed manner so that you may not utter
something inappropriate which you may regret later. Also remember to speak in a polite and
respectful manner.
7. Be prepared for situation based questions related to personal life and resolving critical issues.
Brush up your communication skills

8. Dress up: For interview clean and sober dress wearing expected. Both men and women should
wear clean and wrinkle free sober suits. Women should not wear any floral dresses. It should
be simple and sober. Nothing fancy or dress who looks party wear.
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Personal Questions:
Tell us something about yourself
Good morning to sir/mam and all the panel members.
My name is XYZ. I was born and brought up in ABC. I did my schooling from ___. I have completed my
graduation in ____from ____. I like to be disciplined in all walks of life. I like speaking in a polite manner
which at times makes a good impression on others. I am always ready to listen to others and easy to get
along with them. I coordinated the events in my college fest so you can also think me of as a good leader.
My role model is _________ who is ______ (you can also add achievements here). My strength is I can
easily adopt things in life and my weakness is sometimes I end up a little bit of overdoing to complete my
work and i hate procrastination.
Why do you want to join Banking Sector?
Answer: I am always fascinated towards the banking industry specially the role a banker plays as they reach
to the public directly. Moreover banking is one of the most reputed and fastest growing sector in India which
gives immense career growth opportunity to an individual, respect in society and job security. Being a
banker I can fulfil my own dreams as well as I can give the best in me to the bank by providing appropriate
services to the customers.
What is a Bank?
Attention: Don’t mug up from books or sites try to answer it in your style.
e.g. Banking is one of the most essential part in one’s life as it deals with cash and cash transactions.
Financial needs are equally important in life for enjoying a comfortable economic status. So it plays a vital
role for all of us.
How do you see yourself flourish in Banking Sector after 5 Years?
They are not looking to hear about your personal aspirations e.g. what you want to be and what you will do
in upcoming 5 years. They want to know if you are willing to stick around the company and grow
professionally and solve their problems or not. Tell them you see yourself in the role of Manager in MMG
Scale-II. Be sure about the responsibilities of Manager MMG Scale-II. While answering you should express
that you plan on staying at the Bank for a long time. Demonstrate some of you key strengths and how you
plan on enhancing those strengths through employment with that particular bank.
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Answer like this
Sir, I share some of the same values which this corporation is looking in Probationary Officers like customer
orientation skills, multitasking ability and ready to accept challenges. I would like to take these values to a
superior level. I’ve been preparing for this position and excited about the opportunity to work with the bank.
Why did you leave your previous job?
Attention: Speaking anything negative about your past employers would cast back badly on you. So, don’t
slander anyone.
Answer like this
I am thankful to my previous organisation, gave me an opportunity to work with them. I have learned a lot
of things how to work under pressure with confidence and how to make relationship with co-workers
professionally. Now I'm looking for better opportunity to enhance my skills and ability along with company
growth.
How will you add value to our organization?
The interviewer is hoping you might be the solution to their problems. List your main skills and how these
will be directly applicable if you get the job. Recheck the same question as, "What your strengths are and
what our company strengths are?
If there is something common, cite that as synergy. If there is nothing common, mention that you bring new
set of strengths to the table.
Do you have any achievement?
Some very respectable and admirable interviewers appreciate it if you honestly say that you haven't achieved
anything considerable yet and that you are all set to go out and prove yourself and that the concerned
company will provide you a platform for it. Most of the interviewers will expect you to impress them. So it
is always better to have a decent answer ready and prepared.
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For example, you might have been part of a team that had organized a college fest for example or a
technical symposium for your department. For all I know, you might have just signed up for that to get out
of classes and sit in the canteen but you can make up a believable crisis situation and a way out and narrate it
to them. There are many more such options. Just sit down and let your creativity flow.
Why should we select you?
This question is a great opportunity to sell yourself and your accomplishments. The answer varies if you're a
fresh graduate as opposed to a senior professional. Regardless you should include
1. How you have the required skills/experience
2. Why you're a good fit: Employers like to know that you've taken the time to understand their
organisation. So take this time to co-relate things you've done in the past with the things the company is
trying to achieve.
3. You get things done: This is the most important ability an employer is looking for. The ability to get
things done, no matter the obstacles. Give some examples from the past.
Answer like this - As I am a fresher, I have theoretical knowledge but I can do hard work for my
organization and I will put all my efforts for the good progress of organization. Being punctual and sincere, I
can finish the work given to me on time and try my best to fulfil all needs of company from me.
Do you have any questions?
If you have any genuine questions, you can ask. Otherwise, just say “thank you” and leave. You can ask
about the job challenges while emphasizing that you like to be motivated by well-focused daily work
challenges, multi-tasking and even pressure.
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About State Bank of India
Headquarters: Mumbai
Slogans: "The Banker to Every Indian", "Pure Banking, Nothing Else", "With
You - All The Way", "A Bank Of The Common Man", "The Nation Banks On
Us"
Key people: Arundhati Bhattacharya (Chairperson)
Logo: The logo came from National Institute of Design (NID), Ahmedabad
and it was inspired by Kankaria lake.
State Bank of India is a public sector banking and financial services company. It has its headquarters in
Mumbai, Maharashtra. It is the largest lender in India. It has 14 regional hubs and 57 Zonal Offices that are
located at important cities throughout India. It has nearly 16000 branches in India presently, of which 9,851
(66%) were in Rural and Semi-urban areas. It has near about 200 overseas branches spread over 36
countries.
On 7 October 2013, Arundhati Bhattacharya became the first woman to be appointed Chairperson of the
bank.
With Govt of India as SBI’s promoter its shareholding in the bank is 58.60%. After that Life Insurance
Corporation of India is the largest non-promoter shareholder in the company with 14.99% shareholding.
Formation of State Bank of India and its Nationalization:
The roots of State bank of India lies with the formation of Bank of Calcutta in 1806. Later it was renamed
to Bank of Bengal. Next the three presidency banks namely the Bank of Bengal, the Bank of Bombay
(incorporated in 1840) and the Bank of Madras (incorporated in 1843) amalgamated on 27 January 1921,
and the single entity was named the Imperial Bank of India. The Imperial Bank of India remained a joint
stock company but without Government participation.
Next, under the provisions of the State Bank of India Act of 1955, the Reserve Bank of India acquired a
controlling interest in the Imperial Bank of India and thus on 1 July 1955, the imperial Bank of India
became the State Bank of India. In 2008, the Government of India acquired the Reserve Bank of India's
stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory
authority.
Associate Banks of SBI and their merger:
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act. Under this act, 8 banks in
different princely states were made subsidiaries of SBI. These were private banks before their formation of
subsidiaries of SBI and they used to help their respective princely states only with local deposits.
Now these were made 8 SBI subsidiaries of SBI namely: State Bank of Jaipur (founded 1943), State Bank of
Bikaner (founded 1944), State Bank of Saurashtra, State Bank of Indore (founded in 1920), State Bank of
Patiala (founded 1917), State Bank of Mysore (founded 1913), State Bank of Hyderabad (founded 1941),
and State Bank of Travancore (founded 1945)
• In 1963, SBI merged State Bank of Jaipur and State Bank of Bikaner to form State Bank of Bikaner
and Jaipur.
• With a view to make SBI a ‘mega bank’, merger of associate banks was proposed.
• The first merger happened when State Bank of Saurashtra merged with SBI in 2008.
• Then in 2010, the State Bank of Indore also merged with SBI leaving the associate banks of SBI to 5
in number.
• After the amalgamation of State bank of Indore with SBI, SBI's total assets reached very close to the
10 trillion mark.
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• To merge the 5 associate banks and Bharatiya Mahila Bank (BMB) Limited with SBI, the
negotiations started in 2016. There has been News now that the complete merger would be
completed by April 2017.
SBI also has the following non-banking subsidiaries:

• SBI Capital Markets Ltd
• SBI Funds Management Pvt Ltd
• SBI Factors & Commercial Services Pvt Ltd
• SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
• SBI DFHI Ltd
• SBI Life Insurance Company Limited
• SBI General Insurance
SBI card
SBI card was launched in 1998 which is a joint venture between SBI and GE Capital. It was incorporated as
SBI Cards and Payment Services Pvt Ltd. Its headquarters is in Gurgaon, Haryana.
Some Mobile Applications of SBI:
• State Bank Anywhere – SBI’s retail internet banking based application for your smartphones. The
similar app is in Hindi too.
• SBI Quick – MISSED CALL BANKING is a new service from State Bank of India which involves
Banking by giving a Missed Call or sending an SMS with pre-defined keywords to pre-defined
mobile numbers.
• State Bank Buddy - First Indian Mobile Wallet Application available in 13 Languages. It comes
with several features like Send money to registered and new users, Ask money and Send reminders
to settle dues, transfer additional cash into an account of your choice free of cost, Recharge and Pay
Bills instantly, Book for movie tickets, flights and hotel and shop for your favorite merchandise.
• State Bank mCASH - A simple and quick way to claim funds sent by State Bank of India customers
through OnlineSBI or State Bank Anywhere. Any SBI customer having Internet Banking facility can
now transfer funds to a third party without beneficiary registration, either through mobile number or
email-ID of the beneficiary.
• SBI Freedom - Away from home, balance enquiries can be made and/or money sent to the loved
ones or bills can be paid anytime 24x7!!! That is what State Bank Freedom offers - convenient,
simple, secure, anytime and anywhere banking.
• SBI Card - Access your SBI Credit Card account instantly on your Android device.
Banking Notes
What is a Bank?
Suppose you have got Rs.1,000 you don’t need for or say for a year and want to earn income from the
money until then or you want to buy a house and need to borrow Rs.100,000 and pay it back over 20
years.
It would be difficult for someone acting alone to find either a potential borrower who needs exactly
Rs.1,000 for a year or a lender who can spare Rs.100,000 for 20 years. That’s where banks come in.
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“Bank is a financial institution that undertakes the banking activity i.e. it accepts deposits and then
lends the same to earn certain profit.”
Now-a-days, banking sector acts as the backbone of modern business. Development of any country
mainly depends upon the banking system.
How do the Banks work?

The primary function of banks is to put their account holders' money to use by lending it out to others
who can then use it. When you deposit your money in the bank, your money goes into a big pool of
money along with everyone else's, and your account is credited with the amount of your deposit.
How banks create money?

Here are the ways in which banks make money
1) Loans: Lending loans to borrowers from the public is a major way for commercial banks to earn money.
These could be personal loan, home loan, car loan and other type of mortgages. Banks generally restrict the
amount of withdrawals to remain solvent, especially for forwarding loans. This ensures that the money
remains within the bank. The amount is lent to a person at a higher interest rate for a fixed period of time. As
the loan amount starts getting recovered, the bank pays a portion of the interest value to other depositors and
keeps the remaining as its earning.
2) Credit Cards: Credit cards are unsecured loans extended by a commercial bank with the sole intention of
earning heavy interest. Availing a credit card, limited or unlimited value, gives the person access to
immediate funds and the person is charged premium fees by the bank for extending this facility.
3) Public Deposits: Money kept by the public in savings and checking accounts is the largest source of
funds for commercial banks. The amount accountholders entrust the bank with safekeeping earns them a
very basic interest amount. These deposits are pooled together and loaned out to other individuals or
invested elsewhere. The banks earn interest money and share the basic percentage with the savings or
checking account holder.
4) Service Fees: Commercial banks levy service fees on its customers and even though the service fees are
marginal, it forms a large chunk of commercial bank earning medium. Commercial banks charge service
fees for ATM’s, overdrafts, operating a simple savings account, issuing debit cards, renewing debit
cards, accessing internet banking and mobile banking, issuing checks, maintaining bank lockers and
more. These fees are unavoidable since every commercial bank charges them.
● Intermediary: Banks act as an intermediary between depositors (who lend money to the bank)
and borrowers(to whom the bank lends money). The amount banks pay for deposits and the
income they receive on their loans are both called interest.
Accounts can be opened in two ways: Going to a bank branch or though Business Correspondents (BCs).
Business correspondents are the individuals or any other entities just like insurance agents and reach the
people in far flung or remote areas which are unbanked areas. They are called bank representatives. They
help the people in any banking activity like opening accounts, depositing money, withdrawing money, give
away loan, or any other transaction.
Sometimes opening a bank branch in village or remote areas is not feasible, so a BC model was initiated by
RBI.
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Functions of Banks
Assets Vs. Liabilities

Assets are the ones which are useful or valuable things a person/organization has like goods, property,
vehicles, equipment, machinery, etc. If we talk about bank’s assets: They are those which the bank has and
can be readily converted to cash whenever bank requires money.
Liabilities are the ones for which an amount of money is owed like in a company the salaries of employees
are to be given, etc. If we talk about bank’s liabilities: They are those which the bank has from the customer
deposits and borrowed money for bank’s purpose.
Letter of credit Vs. Bank Guarantee

These are given by buyers to their sellers both in India and outside India. When products are imported from
a foreign company, how the company will assure that they will get the payment in time ans full amount? So
the solution is Letter of credit and Bank Guarantee
A letter of credit is a letter issued by bank which guarantees buyer’s payment on time and in correct
amount up to the time the services will be delivered to the buyer.
Unlike in letter of credit, in a bank guarantee the payment is done only when the buyer is not able to pay
the required amount of money to the seller.
So the difference between the two is that if you give letter of credit to seller, that will ensure that bank will
pay on your behalf up to the day the services are being provided to you by the seller and if you give bank
guarantee to seller, that will ensure that bank will pay on your behalf if you are not able to pay the amount.
Insolvency Vs Bankruptcy
When a person/organization is unable to pay their debts when they become due and payable, it is called
insolvency.
When a person/organization is unable to pay their debts when they become due and payable and is also
declared as bankrupt by court, it is called bankruptcy.
All bankrupts will be called insolvent, but not vice-versa.
FDI Vs FII
Foreign Direct Investment (FDI) as the name suggests is investing directly in another country. A foreign
company which is based in some other country like France invests in India either by setting up a wholly
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owned subsidiary or getting into a joint venture with some company based in India and then conducts its
business in India.
Examples: IBM India, Maruti Suzuki, SBI life insurance, etc
Foreign Institutional Investor (FII) is similar to FDI in a way that this is also direct investment but
investment in only financial assets such as stocks, bonds etc. of a company located in another country.
Example: Any foreign company invests in the shares of Infosys (based in India).
Dormant account Vs. Frozen account

The account which has not been used for 24 months (2 years) by its operator is termed as dormant account
while the account in which all the activities have been stopped by the bank is a freezed account.
The dormant accounts can be made as operative as per bank policy. According to RBI guidelines, banks
cannot charge any money to make dormant or inoperative accounts as operative. The interest on amount of
money in saving accounts will be credited in account in case of inoperative account also.
Freezing of account means the transactions in such account cannot be performed until further notice. The
payments will be stopped in such accounts and even cheques drawn before freezing are also not allowed to
be encashed by anyone. Only RBI, SEBI, Income-tax authorities, and court can give orders to freeze account
and not the respective banks.
Cross selling Vs. Up Selling

Cross selling means selling of products/services to an already existing customer. And then if we talk about
banks, when they sell any extra banking products/services to their customer along with the product the
customer wants. Like selling a credit card and internet banking to a savings or current account customer,
selling their any bancassurance products, etc.
Unlike cross selling, up selling means encouraging customers to purchase a higher-end product or we can
say a more costly product than the customer has asked for. Like the customer asks for a credit card with
overdraft facility of Rs 10,000 but the banking representative tells him benefits of having the card with more
facilities, etc.
Consortium Financing Vs. Multiple Banking

There are cases in which big businesses require large finances which it cannot get from single lender. In
Consortium financing, several banks (or financial institutions) finance a single borrower. In this case there
is a common documentation, joint supervision and follow-up exercises between all banks/financial
institutions. So the participating banks form a new consortium bank. The whole loan amount is divided
among those banks forming consortium, so the risk also gets divided.
The bank which takes the higher risk (by giving the highest amount of loan) will act as a leader and thus it
acts as an intermediary between the consortium and the borrower.
Multiple banking is an arrangement where a borrower takes loan amount from several banks. In this case
no bank knows that his borrower has taken loan from other banks too. There is no contractual relationship
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between various banks like that in consortium banking and each bank holds its individual security and own
credit rates.
Moratorium period Vs. Grace period

When we take a loan from bank, we do not have to start paying the EMIs immediately. The bank gives some
time before start paying EMIs which are generally paid on a monthly basis. This time before start of paying
EMIs is called Moratorium period.
Unlike moratorium period, during the grace period, interest is not charged. Actually it is a period of time
after a payment becomes due. Example: Grace period is given for paying off the overdraft value of credit
card. If the money is not paid back within the grace period, interest rate is charged according to the lending
institution policy.
NRO Account Vs. NRE Account Vs. FCNR Account
NRO Account: Non Resident Ordinary (NRO) account is a Savings Account or Current Account or Fixed
Deposit Account or Recurring Deposit account opened by NRIs and PIOs. It is a rupee denominated account
i.e. the amount in the account is maintained in Indian Rupees.
NRE Account: Non Resident External (NRE) account is a rupee denominated account which can be
Savings Account or Current Account or Fixed Deposit Account or Recurring Deposit account opened by
NRIs and PIOs.
FCNR Account: Foreign Currency Non Resident (FCNR) account is a term deposit account that can be
maintained by NRIs and PIOs in foreign currency. So this means it is not a savings account. Authorized
dealer banks in India can allow deposits in any of the permitted currency (currency freely convertible).
Cheque Vs. Demand Draft

A cheque is bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on
demand and cheque also includes the electronic image of a truncated cheque and a cheque in the electronic
form.
Also known as DD, it is kind of a pre-paid negotiable instrument that is used to direct payments from one
bank to another bank or one of its own branches to pay a certain sum to the specified party.
Types of Cheques:
Order Cheque: A cheque which is payable to a particular person on his order is called an order cheque.
This is a cheque whereby the printed word Bearer on the cheque is cancelled. The cancellation of the word
Bearer automatically makes the cheque an order cheque.
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Bearer Cheque: A cheque which is payable to a person whosoever bears, is called bearer cheque. The
cheque sometimes can be made payable to “Cash” or bearer or made payable to a specific name.
Stale Cheque: Check presented at the paying bank after a certain period typically six months of its payment
date. A stale check is not an invalid check, but it may be deemed an ‘irregular’ bill of exchange. A bank may
refuse to honor it unless its drawer reconfirms it payment either by inserting a new payment date or by
issuing a new check. Also called stale dated check.
Multilated Cheque: If a cheque is torn into two or more pieces such cheque is Mutilated Cheque. If it
presented for payment, such a cheque the bank will not make payment against such a cheque without getting
confirmation of the drawer. In case, if a cheque is torn at the corners and no material fact is erased or
cancelled, the bank may make payment against such a cheque.
Post Dated Cheque: If a cheque bears a date later than the date of issue, it is termed as post dated cheque.
Any check or draft that has a future date written upon it by the user. The amount of the check will not be
drawn from the account until the date written on the check. For example, a check written on the 14th of the
month but dated for the 28th will not be cashed for another two weeks
Open Cheque: A cheque that is not a crossed cheque. The person whose name appears on the cheque can
write the name of another person on it, and the money will be paid to them. An open cheque is a cheque that
is not crossed on the left corner and payable at the drawee bank on presentation of the cheque.
Crossed Cheque: A crossed cheque is one which has two short parallel lines marked across its face. A
cheque which carries too parallel transverse lines across the face of the cheque with or without the words “I
and co”, is said to be crossed. Crossed cheques are of two types. By simply crossing a cheque or with the
words ” & Co”, by the payer, the payee can either deposit it in his/her account or endorse it in favour of
another person on the reverse. This practice is nowadays not accepted by the banks.
Cheque Truncation System (CTS)

Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by
the presenting bank en-route to the paying bank branch. In its place an electronic image of the cheque is
transmitted to the paying branch through the clearing house, along with relevant information like data on the
MICR band, date of presentation, presenting bank, etc.
This means that with this system, physical cheques will not move for clearing at different banks. This
enables the outstation cheques to get cleared in a single day and also the associated cost with the movement
of physical cheques gets eliminated.
If a customer wants to see the physical cheque, he can request it to the bank. To meet legal requirements, the
presenting banks which truncate the cheques need to preserve the physical instruments for a period of 10
years.
Negotiable Instruments
Negotiable instrument is a document which guarantees the payment of a specific amount of money, either on
demand, or at a set time, with the payer named on the document. A negotiable instrument can be transferred
from one person to another.
According to Section 13 of the Negotiable Instruments Act, 1881, “A Negotiable Instrument means a
promissory note, bill of exchange or cheque payable either to order or to bearer.”
Know your customer(KYC)

It is a process by which banks obtain information about the identity and address of the customers. It
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helps to ensure that services of the banks are not misused. It is to be completed by the banks while
opening accounts and also periodically update the same.
Requirements for opening a bank account:

● Proof of identity
● Proof of address
Proof of identity: Six documents as Officially Valid Documents (OVDs) for the purpose of producing
proof of identity. These six documents are
● Passport
● Driving Licence
● Voters’ Identity Card
● PAN Card
● Aadhaar Card issued by UIDAI
● NREGA Card
One need to submit any one of these documents as proof of identity. If these documents also contain
one’s address details, then it would be accepted as proof of address. If the document submitted by person
for proof of identity does not contain address details, then he/she will have to submit another officially
valid document which contains address details.
*If one does not have any of the documents listed above to show my ‘proof of identity’
He/She can still open a bank account known as Small Account by submitting recent photograph and
putting signature or thumb impression in the presence of the bank official.
*Difference between small accounts and other accounts

Small Accounts have certain limitations such as:
● balance should not exceed Rs.50,000
● total credits in one year should not exceed Rs.1,00,000
● total withdrawal and transfers should not exceed Rs.10,000 in a month.
● Foreign remittances cannot be credited to such accounts.
Small accounts remain operational for a period of twelve months and thereafter, for a further period of
twelve months, if the holder of such an account provides evidence to the bank of having applied for any
of the officially valid documents within twelve months of the opening of such account. The bank will
review such account after twenty four months to see if it requires such relaxation.
What is e-KYC?
e-KYC refers to electronic KYC. e-KYC is possible only for those who have Aadhaar numbers.
How does it work?

While using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI)
to release your identity/address through biometric authentication to the bank branches/business
correspondent(BC). The UIDAI then transfers your data comprising name, age, gender, and
photograph of the individual, electronically to the bank/BC. Information thus provided through e-KYC
process is permitted to be treated as an Officially Valid Document under PML Rules and is a valid
process for KYC verification.
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All about RBI

Reserve Bank of India regulates the entire banking system of the nation, has the job of ensuring monetary
stability for us, is responsible for printing our currency notes, operates the country’s credit and currency
system, and does a lot more from its position at the top of the banking system pyramid. RBI was
originally privately owned but is now owned wholly by the Indian government. Set up on April 1, 1935
under the Reserve Bank of India Act, RBI’s central office was initially in Kolkata but moved to
Mumbai in 1937.
But you probably already knew all of this. What you most likely do not know are these 10 lesser
discussed, and quite interesting facts about the RBI. Dig in to be the next RBI knowledge expert.
1. The RBI logo was inspired from the East India Company Double Mohur.
2. Formed on April 1, 1935 as a private entity, but is a government entity now. Nationalization of the central
bank did not happen till 1949.
3. The financial year of RBI is from 1 July to 30 June.
4. The first woman to become the deputy governor of RBI is K. J. Udeshi.
5. RBI demonetized notes in the denominations of Rs. 5,000 and Rs. 10,000 in 1938. They were
reintroduced in 1954 and again demonetized in 1978. RBI can print these notes according to the RBI act of
1934.
6. RBI was also the central bank for two other countries. It played the role of Central Bank of Pakistan till
June 1948 and the Central Bank of Burma ( Myanmar) till April 1947.
7. The bank was established on the recommendation of the Hilton Young Commission.
8. Manmohan Singh is the only Prime Minister to have also served as the Governor of RBI.
9. The first Indian to hold the position of the Governor of RBI was Mr. C.D. Deshmukh. He was the third
governor of RBI.
10. RBI runs a Monetary Museum in the premises of the Mumbai head office.
Wholly owned subsidiaries of RBI:
4 subsidiaries as: Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), DICGC,
NABARD, and National Housing Bank.
BRBNMPL: It was established with a view to produce bank notes in India and enable RBI to bridge the gap
between the supply and demand for bank notes in the country.
The company manages 2 Presses: Mysore in Karnataka and Salboni in West Bengal.
Objectives of RBI:
● Regulating the issue of currency in India

● keeping the foreign exchange reserves of the country
● establishing the monetary stability in the country
● developing the financial structure of the country on sound lines consistent with the national socio-
economic objectives and policies.
Major functions of RBI

1. Monetary Authority of India
RBI works as the monetary authority of India and there by operates the monetary policy. Monetary
policy is used for the control of money supply in the economy with objective to maintain economic and
financial stability and ensure adequate financial resources for the purpose of development.
2. Issuer of Currency
Reserve Bank of India has the sole right to issue Banknotes of all denominations.
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*Key points:
● First paper notes were issued by the private banks such as Bank of Hindustan and the presidency
banks during late 18th century.
● Currently, paper currency notes in India are issued in the denomination of Rs. 5, Rs.10, Rs.20,
Rs.50, Rs.100, Rs.500 and Rs.1,000. RBI can issue any note of any denomination but not
exceeding Rs. 10,000. The notes denomination is notified by Government and RBI acts
accordingly.
● RBI follows a minimum reserve system in the note issue. Initially, it used to keep 40 per cent of
gold reserves in its total assets. But, since 1957, it has to maintain only Rs. 200 crores of gold and
foreign exchange reserves, of which gold reserves should be of the value of Rs. 115 crores.
● Currency chests are storehouses where banknotes and rupee coins are stocked on behalf of the
Reserve Bank.
● The amount of a banknote is written on it in 17 languages out of 22 official languages of India.
3. RBI as Banker of Banks

The other banks keep their current accounts with RBI and RBI helps them in maintaining statutory
reserves with itself.
4. Management of foreign exchange reserves

RBI manages the Foreign Exchange Management Act, 1999 to facilitate external trade and payment and
promote orderly development and maintenance of foreign exchange market in India.
5. RBI as a regulator and supervisor of financial system

It is the most important function of RBI. It not only regulates and supervises the Indian Banks but also
Foreign Banks, Regional Rural Banks, Local Area Banks, Cooperative Banks, Financial Institutions
including Development Financial Institutions (DFIs) and Non-Banking Financial Companies.
6. RBI as Banker and Debt Manager to the Government

Central Government entrusts the Reserve Bank with all its money, remittance, exchange and banking
transactions in India and the management of its public debt. Moreover, Government also deposits its cash
balances with RBI.
7. Developmental & Promotional roles

By encouraging the commercial banks to expand their branches in the semi-urban and rural areas, the
Reserve Bank helps to reduce the dependence of the people in these areas on the defective unorganised
sector of indigenous bankers and money lenders and to develop the banking habits of the people.
What is Nationalization?
Nationalization is a process whereby a national government or State takes over the private industry,
organisation or assets into public ownership by an Act or ordinance or some other kind of orders. This
strategy has been frequently adopted by socialist governments for transition from capitalism to socialism.
In India since independence following major nationalizations have taken place
● 1770 : First bank Bank of Hindustan.
● 1949 : RBI was nationalized (RBI was state owned at the time of Indian independence).
● 1955 : Control of Imperial Bank of India was acquired by RBI
● 1969 : 14 Indian private banks were nationalised
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● 1972 : 106 insurance companies were nationalised into four insurance companies
● 1980 : 6 more Indian private banks were nationalised
● 1993: New Bank of India Merged into Punjab National Bank
Story behind Nationalization in the 1960s

Banks in India except the State Bank of India (SBI), continued to be owned and operated by private
persons.
By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the
Indian economy. At the same time, it had emerged as a large employer and a debate had followed the
nationalization of the banking industry. Indira Gandhi, the then Prime Minister of India expressed the
intention of the Government of India in the annual conference of the All India Congress Meeting in a
paper entitled "Stray thoughts on Bank Nationalization."
Government of India issued an ordinance (Banking Companies Ordinance,1969) and nationalised the 14
largest commercial banks with effect from 19 July 1969.
Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received
the presidential approval on 9 August 1969.
The Indian banking sector is classified into scheduled banks and non-scheduled banks.
All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are
Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative
Banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban
Cooperative Banks.
Scheduled Commercial Banks in India are categorized into five different groups:
● State Bank of India and its Associates
● Nationalised Banks
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● Private Sector Banks

● Foreign Banks
● Regional Rural Banks
What are Public Sector Banks?

PSBs in India are banks where a majority stake i.e. more than 50% is held by a government. Thus at
present all the nationalised banks are Public Sector banks. In addition to these, IDBI Bank Ltd and SBI are
too Public Sector Bank (though not nationalised bank) as GoI has over 50% stake in these banks too.
What are Private Sector Banks?
Private Banks are banks that do not have any government stakes. Private Banks have gained quite a strong
foothold in the Indian banking industry over the last few years especially because of optimum use of
technology. The Private Banks are accountable for a share of 18.2 percent of the Indian banking industry.
IndusInd Bank was the first private bank in India and among the fastest growing Bank Private Banks in the
country.
Comparison between Private and Public Sector Banks
● Private sector banks introduced the concept of online banking in India. This was mostly because the
private banks were technologically well equipped.
● Private sector banks were using state of the art technology and fully computerized systems since the
time they entered the Indian market whereas the Public sector banks were not.
● However despite the technological challenges the public sector banks in India are still the
preferred destinations for many as they are considered as safer options for money deposit.
What are Foreign Banks?
A foreign bank is a bank with head office outside the country in which it is located. e.g. Standard
Chartered Bank.
What are Regional Rural Banks?
After nationalization, of banks in 1960 there were problems which made it difficult for commercial banks
even under government ownership to lend to farmers. Government set up Narasimham Working Group in
1975. On the basis of this committee’s recommendations, a Regional Rural Banks Ordinance was
promulgated in September 1975, which was replaced by the Regional Rural Banks Act 1976.
First RRB: Prathama Grameen Bank
The RRBs were owned by three entities with their respective shares as follows:
● Central Government → 50%
● State government → 15%
● Sponsor bank → 35%
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NABARD
NABARD is an apex development bank, established in 1982 by a Special Act of the Parliament, with a
mandate to uplift rural India by facilitating credit flow in agriculture, cottage and village industries,
handicrafts and small-scale industries. NABARD functions to promote sustainable rural development for
attaining prosperity of rural areas in India.
RBI has sold its own stake to the Government of India. Therefore, Government of India holds 99% stake in
NABARD.
● It has power to deal with all matters concerning policy, planning as well as operations in giving
credit for agriculture and other economic activities in the rural areas.
● A refinancing agency for those institutions that provide investment and production credit for
promoting the several developmental programs for rural development.
● Improving the absorptive capacity of the credit delivery system in India, including monitoring,
formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel.
● Co-ordinates the rural credit financing activities of all sorts of institutions engaged in developmental
work at the field level.
● Prepares rural credit plans, annually, for all districts in the country.
● Promotes research in rural banking, and the field of agriculture and rural development.
IDBI
Industrial Development Bank of India (IDBI) came into being on 1st July, 1964 as a Development Financial
Institutions under IDBI Act 1964.
*Key points:
● Regarded as a Public Financial Institution in terms of Companies Act. It continued as DFI till 2004
when it was transferred into a Bank. To transform this into Bank Industrial Development Bank
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Act 2003 was passed.

● A new company under the name of Industrial Development Bank of India Ltd. was incorporated as a
Govt company under the Companies Act on 27th September, 2004, and thus now it came to be
known as IDBI Ltd wef 1st October 2004 but it also worked as a Bank in terms of the Repeal Act.
● W.e.f. 2nd April, 2005, IDBI Bank Ltd. was finally amalgamated with IDBI Ltd. and was known as
IDBI Ltd. It is a Public Sector Bank as GoI has above 70% shareholding in this Bank.
SIDBI
Small Industries Development Bank of India (SIDBI) was set up under an Act of Parliament in 1990.
Though it was a wholly owned subsidiary of Industrial Development Bank of India, presently the ownership
is held by 33 Government of India owned / controlled institutions.
Functions:
● To initiate steps for technological upgradation and modernisation of existing units.

● To expand the channels for marketing the products of SSI sector in domestic and international
markets.
● To promote employment oriented industries especially in semi-urban areas to create more
employment opportunities and thereby checking migration of people to urban areas.
IFCI
Government of India set up the Industrial Finance Corporation of India (IFCI) in 1948 under a special
Act. This is the first financial institution set up in India with the main object of making medium and long
term credit to industrial needs. It issue bonds and debentures in the open market, to borrow foreign
currency from the World Bank and other organisations, accept deposits from the public and also borrow
from the Reserve Bank.
Functions
● Grants loans and advances to industrial concerns.
● Granting of loans both in rupees and foreign currencies.
● Underwrites the issue of stocks, bonds, shares etc.
● Grant loans only to public limited companies and co-operatives but not to private limited companies
or partnership firms.
EXIM
Export-Import Bank (Exim bank) was set up in 1982 to take over the operations of international finance
wing of the IDBI and to provide financial assistance to exporters and importers.
The authorised capital of Exim bank is Rs. 200 crore and paid-up-capital is Rs. 100 crore wholly
subscribed by the Central Government.
Functions
● Provides direct financial assistance to exporters of plant, machinery and related service in the form
of medium-term credit.
● Provides rediscount of export bills for a period not exceeding 90 days against short-term usance
export bills discounted by commercial banks.
● Gives overseas buyers credit to foreign importers for import of Indian capital goods and related
services.
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● Developing and financing export oriented industries.

● Collecting and compiling the market and credit information about foreign trade.
NHB
National Housing Bank(NHB), a wholly owned subsidiary of Reserve Bank of India (RBI), was set up by
an Act of Parliament in 1987.
NHB is an apex financial institution for housing. It commenced its operations in 1988.
Objective:
● To promote housing finance institutions both at local and regional levels and to provide financial and
other support incidental to such institutions and for matters connected therewith
● NHB registers, regulates and supervises Housing Finance Company (HFCs), keeps surveillance
through On-site & Off-site Mechanisms and coordinates with other Regulators.
All About SEBI

Securities Exchange Board of India was set up in 1988 to regulate the functions of securities market. It
promotes orderly development in the stock market but initially it was not able to exercise complete
control over the stock market transactions. It was left as a watchdog to observe the activities but was found
ineffective in regulating and controlling them. So in 1992, SEBI was granted legal status.
Reason for establishment: With the growth in the dealings of stock markets many malpractices started in
stock markets such as price rigging, and delay in delivery of shares, violation of rules and regulations of
stock exchange. Due to these malpractices the customers started losing confidence in the stock exchange. So
government of India decided to set up an agency or regulatory body known as Securities Exchange Board of
India (SEBI).
Functions:
● Checks Price Rigging
● Prohibits Insider trading
● Prohibits fraudulent and Unfair Trade Practices
● Registers and regulates the working of stock brokers, sub-brokers,share transfer agents, trustees,
merchant bankers and all those who are associated with stock exchange in any manner.
● Registers and regulates the working of mutual funds etc.
● Regulates takeover of the companies
All about IMF & WORLD Bank

First of all history behind the establishment of these two institutions
World bank and IMF are called the "Bretton wood institutions". In July 1944 during the United Nations
Monetary and Financial conference in Bretton woods, New hampshire, representatives of 45 governments
agreed to set up the World bank (which came into existence during the conference) and IMF (which came
into existence in 1945).
Reasons: Great Depression in the 1930s. Countries tried to protect their domestic economy by putting
barriers on foreign trade and devaluing their currency to gain market share in export markets. These led to
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decline in world trade and living standards fell sharply. By 1940s it was clear that the world needed global
institutions for economic cooperation.
IMF(International Monetary Fund) World Bank
● Stability ● Growth
● Objective: To deal with all the issues ● Objective: To lessen poverty and
related to the financial sector and promote the long term development of
macroeconomics. the economy.
● IMF is about balancing the ● World Bank is for development

international financial system in both projects in the developing world.
rich and poor countries (Greece is a
recent recipient).
● You go to the IMF when you are so ● You go to the World Bank when you
messed up that your currency is want to build a dam or power plant or
dropping like crazy. IMF comes and a road.
usually fixes stuff along with advice.
● IMF is a fund. Meaning it has a pool of ● World Bank is a bank. Meaning it

money given to it by 188 member borrows money from investors around
countries in the past and lends out of the world and then lends to the poor
that fund. It doesn't usually borrow governments.
new money. ● IBRD(188)
● IDA(172)
Some of their projects in India(2015). e.g.
● Nai Manzil - Education and Skills
Training for Minorities
● Eastern Dedicated Freight Corridor-3
● National Cyclone Risk Mitigation
Project-II
World Bank is a much bigger institution and has two arms:

IBRD (International Bank for Reconstruction and Development): Charges a slightly higher
interest rate than it borrows and it is mainly for profitable commercial projects [such as roads and
dams].
IDA(International Development Association): This is a grant body. No interest and usually countries
are given long periods for repaying. The focus is on social projects such as immunization and education,
open only for the poorest nations.
NBFC(Non-Banking Financial Company)

It is engaged in the business of loans and advances, acquisition of bonds/debentures/securities issued by
Government or local authority or other marketable securities, leasing, hire-purchase, insurance business, chit
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business but does not include any institution whose principal business is that of agriculture activity,
industrial activity, purchase or sale of any goods or providing any services and sale or purchase of
immovable property.
Difference between Banks & NBFCs

● NBFC cannot accept demand deposits
● NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on
itself
● deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to
depositors of NBFCs, unlike in case of banks.
NBFCs but exempted from the requirement of registration

● Housing Finance Companies
● Merchant Banking Companies
● Stock Exchanges
● Companies engaged in the business of stockbroking/sub-broking
● Venture Capital Fund Companies
● Nidhi Companies
● Insurance companies
● Chit Fund Companies
*Key point: There is no Ombudsman for hearing complaints against NBFCs. In respect of credit card
operations of an NBFC, which is a subsidiary of a bank if a complainant does not get satisfactory response
from the NBFC within a maximum period of thirty 30days from the date of lodging the complaint, the
customer will have the option to approach the Office of the concerned Banking Ombudsman for
redressal of his grievances.
Banking Ombudsman
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer
complaints against deficiency in certain banking services.
*Key points:
● One can file a complaint if the reply is not received from the bank within a period of one month
after the bank rejects the complaint or if the complainant is not satisfied with the reply given by the
bank.
● Compensation to be paid by the bank to the complainant is limited to the amount arising directly out
of the act or omission of the bank or Rs 10 lakhs, whichever is lower.
● Compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating
to credit card operations for mental agony and harassment.
● If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the
appellate authority vested with a Deputy Governor of the RBI.
Bharatiya Reserve Bank Note Mudran Private Ltd.

It was established with a view to produce bank notes in India and enable RBI to bridge the gap between the
supply and demand for bank notes in the country.
The company manages 2 Presses: Mysore in Karnataka and Salboni in West Bengal.
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The machinery at Mysore Site has been supplied by Switzerland and that of Salboni by Japan.
Minting of coins
According to the Coinage Act, 1906, the Government of India has the sole right to mint coins. GOI supplies
the coins to Reserve Bank of India which then circulates the coins.
Coins are minted at the four India Government Mints at

• Mumbai, Maharashtra – established in 1929 by the British Government
• Alipore (Kolkata), West Bengal – established in 1929 by the British Government
• Saifabad and Cherlapally (Hyderabad), Telangana – established in 1903 by the Government of the
erstwhile Nizam of Hyderabad and was taken over by the Government of India in 1950 & started
minting since 1953.
• Noida, Uttar Pradesh - set up in 1986 and started minting ferritic stainless steel coins from 1988.
Each mint has its mark on the coin minted by it
Security Printing and Minting Corporation of India Limited (SPMCIL)

The work of SPMCIL includes manufacturing of security paper, minting of coins, printing of currency and
bank notes, non-judicial stamp papers, postage stamps, travel documents, etc.
Printing Presses:
There are 4 printing presses in the country which are
• Currency Note Press, Nashik Road
• Bank Note Press, Dewas
• India Security Press, Nashik
• Security Printing Press, Hyderabad
Paper Mill
The Security Paper Mill (SPM), Hoshangabad is responsible for manufacturing of different types of Security
Papers.
DICGC(Deposit Insurance and Credit Guarantee Corporation)

Aim: To bring financial stability to the banking system through deposit insurance, special for the benefit of
small depositors. So it is a deposit insurance provider for small depositors.
Banks insured by the DICGC

Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local
area banks and regional rural banks
Cooperative Banks: All co-operative banks other than those from the State of Meghalaya and the Union
Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli
Primary cooperative societies are NOT insured by the DICGC.

Key points:
● Maximum deposit amount insured by the DICGC Each depositor in a bank is insured upto a
maximum of Rs.1,00,000
● If you have deposits with more than one bank, deposit insurance coverage limit is applied separately
to the deposits in each bank.
● Kinds of deposits insured: All deposit accounts including savings, fixed, current, recurring, except:
Deposits of the Foreign Governments Deposits of the Central and State Governments.
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● Insurance cost is fetched by the bank which is insured. The DICGC charges 10 paise per Rs. 100 as
insurance premium.
Self Help Groups(SHG)

Self help groups refer to group of 15-20 people (generally women) , who pool or collect their resources
like money so as to help each other in times of need. Self help groups give loans to its members at a
general interest rate which is less than interest rate of moneylenders.Self help groups are also able to
take loans from bank when they have pooled good amount of money. Also SHG act as building groups
of village and provide platform to discuss village issues.
Women's Self-Help Groups (WSHGs)

Formed under the state government's Nava Jatan programme to address malnourished children. WSHGs
adopt malnourished children in their area and provide them food with the help of Anganwadi centres.
Cooperative Banks
Banks in India can be broadly classified under two heads — commercial banks and co-operative banks.
While commercial banks (nationalised banks, State Bank group, private sector banks, foreign banks and
regional rural banks) account for an overwhelming share of the banking business, co-operative banks also
play an important role.
The structure of cooperative network in India can be divided into 2 broad segments
● Urban Cooperative Banks
● Rural Cooperatives
Urban Cooperatives are scheduled and non-scheduled.

Banking activities of Urban Cooperative Banks are monitored by RBI. Registration and Management
activities are managed by Registrar of Cooperative Societies (RCS). These RCS operate in single-state and
Central RCS (CRCS) operate in multiple state.
Rural Cooperatives are short-term and long-term structures.

Short-term cooperative banks are three tiered operating in different states.
● State Cooperative Banks: Operate at the apex level in states
● District Central Cooperative Banks: Operate at the district levels
● Primary Agricultural Credit Societies: Operate at the village or grass-root level.
Long-term structures
State Cooperative Agriculture and Rural Development Banks (SCARDS): Operate at state-level.
Primary Cooperative Agriculture and Rural Development Banks (PCARDBS): Operate at district/block
level.
Core points related to Monetary & Fiscal Policy

Both are complimentary to each other in balancing growth, unemployment and inflation.
Fiscal policy is by the government relates to the revenue and expenditure policies of the government and
also it is the use of government funds to influence the economy, like the annual budget and taxation.
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Monetary policy is administered by the central bank of the nation with regard to money supply, interest
rates etc.
Following are the instruments of Monetary Policy in India.
Cash Reserve Ratio (CRR) It is the share of net demand and time liabilities (deposits) that banks must
maintain as cash balance with the Reserve Bank.
Now what are Demand and Time Liabilities?
Demand Liabilities
Current Deposits, Savings bank deposits, Margins held against letters of credit/guarantees, Balances in
overdue fixed deposits, Outstanding DDs, Unclaimed deposits, Credit balances in the Cash Credit account
and deposits held as security for advances which are payable on demand & Money at Call and Short Notice
from outside the Banking System (Liability to others).
Time Liabilities
Fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank
deposits, staff security deposits, margin held against letters of credit, if not payable on demand, & deposits
held as securities for advances which are not payable on demand and Gold deposits.
Effect of increase and decrease
Lower CRR means bank can give more money as loan--> lower interest rates--> cheap loan--> more people
take loan to start business or building house or buying car-->boost in economy. However, can also lead to
inflation, if people have more cash in their hands than the items available for purchase in the market.
Higher CRR: Bank can give less money as loan-->Higher interest rate-->it becomes expensive to start a
new factory, buy a new house / car/bike. This can curb inflation but may also lead to slowdown in economy
because people wait for the interest rates to go down before taking loans.
● With every cut in 25 basis points in CRR it would infuse the liquidity of Rs.16000 crore.
Statutory Liquidity Ratio (SLR): The share of net demand and time liabilities that banks must maintain in
safe and liquid assets, such as, government securities, cash and gold. Changes in SLR often influence the
availability of resources in the banking system for lending to the private sector.
Refinance facilities: Sector-specific refinance facilities aim at achieving sector specific objectives through
provision of liquidity at a cost linked to the policy repo rate.
Liquidity Adjustment Facility (LAF): Consists of overnight and term repo/reverse repo auctions. Reserve
Bank has increased the proportion of liquidity injected in the LAF through term-repos.
Term Repos: Reserve Bank introduced term repos of different tenors, such as, 7/14/28 days to inject
liquidity over a period that is longer than overnight.
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Aim: To help develop interbank money market which in turn can set market based benchmarks for pricing
of loans and deposits and through that improve transmission of monetary policy.
Marginal Standing Facility (MSF):
Scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by
dipping into their SLR portfolio up to a limit (currently 2% of their NDTL) at a penal rate of interest
(currently 100 basis points above the repo rate).
This provides a safety valve against unanticipated liquidity shocks to the banking system. MSF rate and
reverse repo rate determine the corridor for the daily movement in short term money market interest rates.
Open Market Operations (OMOs): These include both, outright purchase/sale of government securities
for injection or absorption of liquidity
Bank Rate: Rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other
commercial papers. This rate has been aligned to the MSF rate and therefore changes automatically as and
when the MSF rate changes alongside policy repo rate changes.
Prime Lending Rate

The interest rate charged by banks to their largest, most secure, and most creditworthy customers on short-
term loans. This rate is used as a guide for computing interest rates for other borrowers. It is also called
prime rate.
Types of Accounts
Bank Accounts are classified into four different types. They are,
1) Current Account
2) Savings Account
3) Recurring Deposit Account
4) Fixed Deposit Account
1) Current account
● For business persons, firms, companies, public enterprises etc and are never used for the purpose
of investment or savings.
● These deposits are the most liquid deposits and there are no limits for number of transactions or
the amount of transactions in a day.
● No interest paid on amount held in the account, banks charges certain service charges, on such
accounts.
● Do not have any fixed maturity as these are on continuous basis accounts.
2) Savings Account
● For saving purposes
● Any individual either single or jointly can open a savings account. Most of the salaried persons,
pensioners and students use Savings Account.
● Advantage of having Savings Account is Banks pay interest for the savings. The saving account
holder is allowed to withdraw money from the account as and when required.
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● Rate of interest ranges between 4% to 6% per annum in India.

● There is no restriction on the number and amount of deposits. But withdrawals are subjected to
certain restrictions. Some banks recommend to maintain a minimum amount to keep it functioning.
3) Recurring deposit account or RD account is opened by those who want to save certain amount of
money regularly for a certain period of time and earn a higher interest rate.
● A fixed amount is deposited every month for a specified period and the total amount is repaid with
interest at the end of the particular fixed period.
● Period of deposit is minimum six months and maximum ten years.
● Interest rates vary for different plans based on the amount one saves and the period of time and also
on banks.
● No withdrawals are allowed from the RD account. However, the bank may allow to close the
account before the maturity period.
● Can be opened in single or joint names. Banks are also providing the Nomination facility to the
RD account holders.
4) Fixed Deposit Account(FD)
A particular sum of money is deposited in a bank for specific period of time. In some other countries these
are known as "Term Deposits" or even called "Bond".
● It’s one time deposit and one time take away (withdraw) account. The money deposited in this
account can not be withdrawn before the expiry of period.
● In case of need, the depositor can ask for closing the fixed deposit prematurely by paying a
penalty(usually of 1%, but some banks either charge less or no penalty) The penalty amount
varies with banks.
● A high interest rate is paid on fixed deposits. The rate of interest paid for fixed deposit vary
according to amount, period and also from bank to bank.
Miscellaneous Deposits
CASA Deposits
● It refers to Current Account Saving Account Deposits.

● Low interest deposits for the Banks compared to other types of the deposits. So banks tend to
increase the CASA deposits and for this they offer various services such as salary accounts to
companies and encouraging merchants to open current accounts also use their cash-management
facilities.
● The Bank is High CASA ratio(CASA deposits as % of total deposits) are in a more comfortable
position than the Banks with low CASA ratios , which are more dependent on term deposits for their
funding, and are vulnerable to interest rate shocks in the economy, plus lower spread they earn.
Term Deposits are of three kinds
1. Fixed deposits: A fixed rate of interest is paid at fixed, regular intervals.
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2. Re-investment deposits: Interest is compounded quarterly and paid on maturity, along with the
principal amount of the deposit. In the Flexi Deposits amount in savings deposit accounts beyond a
fixed limit is automatically converted into term-deposits.
3. Recurring deposits: Fixed amount is deposited at regular intervals for a fixed term and the
repayment of principal and accumulated interest is made at the end of the term. These deposits are
usually targeted at persons who are salaried or receive other regular income. A Recurring Deposit
can usually be opened for any period from 6 months to 120 months.
Plastic Money
Different types of plastic money available in the market today. Be it credit cards, debit cards,charge cards,
co-branded cards. More and more Indians are using them as a convenient mode of payment.
Debit Card: Money you are spending is your own and is drawn from an account you have with the
bank/institution issuing you the debit card. No money in that account? No spendy.
Credit Card: Money you are spending is the bank’s and at the end of each month the bank/institution
will issue you bill letting you know how much of their money you've spent, how much in total you owe
them and how much they require you to pay this month. There is of course usually a limit to how much
of the bank's money they will allow you to use, if you have used all of those funds - no spendy.
Prepaid cards: A prepaid card works a bit like a gift card – you top it up with money, and you can only
spend up to that amount. Often used by travellers to carry holiday money, and by anyone without a
normal bank account – generally kids, teens and people with poor credit ratings.
Smart card: It contains an electronic chip which is used to store cash. This is most useful when you have to
pay for small purchases. For example bus fares and coffee. No identification, signature or payment
authorisation is required for using this card. The exact amount of purchase is deducted from the smart card
during payment and is collected by smart card reading machines. No change is given.
Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the
purpose of offering certain exclusive benefits to the consumer. For example, the Citi-Times card gives you
all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to
Times Music events, etc.
Loans
Home Loan: Home loan as name suggest is the loan against buying property. Every individual currently
have dreams to have their own home.
Personal Loan: It is the loan granted to fulfill your expenses which ranges from buying some expensive
electronic gadgets to booking your air tickets. People used to use this facility for anything they can. They
forget that usually rate of interest on such loans will be higher than other types of loans. But still to have
something in advance end up them to borrower of such type of loans. Here we may find two types of loans
● Secured Loans-Where you provide some collateral as a safety against loans.
● Unsecured Loans-In such type of loans borrower collateral not required.
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Car Loan or Vehicle Loan: Used to meet your financial requirement when one is planning to have his
dream car or bike. It is usually a secured loan where collateral is your vehicle and in case of default lender
may recover it by taking back your vehicle. But some lenders offer unsecured loans where your credit score
matters more.
Education Loan: This is actually a handy tool for parents who not planned well for their kid’s higher
education.
Maximum Loan Available
Studies in India-Maximum Rs.10,00,000.
Studies abroad-Maximum Rs.20,00,000.
Security
Upto Rs.4,00,000: Parents need to be joint borrowers but security is not required.
Above Rs.4,00,000 and below Rs.7,50,000: Besides parents joint borrower condition, you need to bring
collateral security in the form of suitable third party guarantee will be taken. But if banks satisfied with
financial condition of the borrower then they may waive the condition of third party collateral.
Securities: Pledge, Hypothecation,Mortgage
Pledge is when the property is offered as collateral or security. It is a right to reserve a legal interest in
something. Example- a lot of banks and credit unions have what is called "cross collateral." So for instance,
if you have a vehicle loan with a bank and also have a checking account with the bank, there is an excellent
chance that you've signed a contract provision where you've "pledged" whatever funds you may have in your
checking account from time to time as additional security on the loan.
Hypothecation: It is used when you(borrower) have the actual possession of the asset, for which you have
taken the loan. Generally, this is charged against loans for movable assets, like car, bus, etc. (vehicle loans).
Here, the assets (bus, car, etc.) remain with you, and you are hypothecated to the bank for the loan granted.
In case you are unable to repay the loan amount, then the bank has the right to sell the asset (bus, car, etc.),
(which is possessed by you) and recover the total amount (with interest).
Mortgage: It is used when you (borrower) have the actual possession of the assets, for which you are
granted loan (e.g., house loan), or against which you are granted loan (e.g., house mortgaged). Mortgages
are generally those assets, which are permanently attached with Earth surface, like house, land, factory etc.
In case you are unable to repay the loan amount, the bank has the right to seize and sell the mortgage, and
recover the loan amount (with interest).
MICR
MICR stands for Magnetic Ink Character Recognition.
It is a technology which allows machines to read and process cheques enabling thousands of cheque
transactions in a short time.
MICR code is usually a nine digit code

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First three digits: Represent the city code that is the city in which the bank branch is located. Next three
digits: Bank code
Last three digits: Bank branch code
e.g. For example, if you have an account with Axis Bank,New Delhi (Defence Colony) then its nine digit
MICR code will be 110211004 where:
110, the first three digits representing the city code for New Delhi;
211, the next three digits representing the bank code for Axis bank;
And 004, the last three digits representing the bank branch code for Defence Colony.
IFSC
IFSC(Indian Financial System Code)
The Payment Systems such as National Electronic Funds Transfer (NEFT), Real Time Gross Settlement
(RTGS) & Centralized Funds Management System (CFMS) used IFS Codes. IFSC developed by the
Reserve Bank of India.
The code consists of 11 Characters:
First 4 characters represent the entity
Fifth position has been defaulted with a 0 (Zero) for future use
Last 6 characters denotes the branch identity
e.g ICIC0000438
SWIFT Code
It is a unique identification code for both financial and non-financial institutions approved by the
International Organization for Standardization (ISO). SWIFT Standards, a division of The Society for
Worldwide Interbank Financial Telecommunication (SWIFT), handles the registration of these codes.
SWIFT Codes are used when transferring money between banks, particularly for international wire transfers,
and also for the exchange of other messages between banks.
NEFT(National Electronic Fund Transfer) RTGS(Real Time Gross Settlement)
NEFT is a payment system facilitating one- Real Time: Instructions that are executed at
to-one funds transfer. the time they are received, rather than at some
later time.
Gross Settlement: Settlement of funds

transfer instructions occurs individually.
Minimum Amount: Rs.2 lakhs Minimum Amount: Rs.2 lakhs
Maximum Amount: No upper ceiling Maximum Amount: No upper ceiling
Timings:8 am to 7 pm(Monday through Timings:8.00 hours to 16.30 hours(Monday

Friday and also on Working Saturdays i.e. through Friday and also on Working Saturdays
Saturdays other than 2nd & 4th Saturdays).. i.e. Saturdays other than 2nd & 4th Saturdays).
Inward transactions: Free, no charges to be Inward Transactions: Free, no charge to be

levied from beneficiaries levied
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Outward transactions:
- For transactions up to Rs 10,000 : not Outward Transactions:
exceeding Rs 2.50 (+ Service Tax) Rs 2 lakh to Rs 5 lakh - Not exceeding Rs 30
-For transactions above Rs 10,000 up to Rs 1 per transaction;
lakh: not exceeding Rs 5 (+ Service Tax) Above Rs 5 lakh - not exceeding Rs 55
-For transactions above Rs 1 lakh and up to Rs transactions;
2 lakhs: not exceeding Rs 15 (+ Service Tax)
-For transactions above Rs 2 lakhs: not
exceeding Rs 25 (+ Service Tax)
Maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances and
remittances to Nepal
Immediate Payment Service (IMPS)

It is a tool through which one can transfer money instantly within banks across India through mobile,
internet and ATMs. Unlike NEFT and RTGS this facility is available 24x7x365. The IMPS facility is
provided by National Payments Corporation of India (NPCI).
Customer should do Mobile Banking Registration if he wants to transact through mobile. The customer gets
a unique Mobile Money Identifier (MMID) which is one of the inputs to start the transaction. It is a 7 digit
number issued by banks. Every mobile phone be it a basic phone or smartphone is eligible for IMPS.
Unified Payments Interface (UPI)

This system is been developed for all retail payments in the country. It has been developed by National
Payments Corporation of India (NPCI) to make the transfer of money easy and simple. Like IMPS, this
facility is also available 24x7x365, then why this new system?
There are variety of things need to be fulfilled while doing transactions through NEFT and RTGS like going
to bank, form filling, giving various details like account number, IFSC code, etc. IMPS is somewhat better.
But with UPI, you only need a smartphone with an app that has enabled UPI platform. Only one app for all
your accounts, be it be of any bank. You will be given a virtual ID and a mobile personal identification
number (MPIN) which are all required to do transactions using this new platform.
All about NPA

An asset (loan) including a leased asset, becomes non performing when it stops generating income for the
bank.
Once the borrower has failed to make interest or principle payments for 90 days the loan is considered to be
a non-performing asset.
If the status of NPAs in banks is not controlled, banks can become bankrupt.
Reasons for Occurrence of NPAs
● Normal banking operations

● Bad lending practices
● Incremental component due to internal bank management, like credit policy, terms of credit, etc.
● Competition banks are enormously selling unsecured loans
Result of NPAs
● Decrease profitability.
● Reduce capital assets and lending limits.
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● Increase loan loss reserves.
How to reduce NPA?
SARFAESI ACT 2002
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI) empowers Banks to recover their non-performing assets without the intervention of the
Court.
3 alternatives
● Securitisation
● Asset Reconstruction
● Enforcement of Security without the intervention of the Court.
Applicable only for NPA loans with outstanding above Rs.1 lakh. NPA loan accounts where the amount is
less than 20% of the principal and interest are not eligible to be dealt with under this Act.
The Act empowers the Ban
● To issue demand notice to the defaulting borrower and guarantor, calling upon them to discharge
their dues in full within 60 days from the date of the notice.
● To give notice to any person who has acquired any of the secured assets from the borrower to
surrender the same to the Bank.
● To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.
● Any Security Interest created over Agricultural Land cannot be proceeded with.
If the borrower fails to comply with the notice, the Bank may take recourse to the following measures:
1.Take possession of the security
2. Sale or lease or assign the right over the security
3. Manage the same or appoint any person to manage the same
Lok Adalats: For the recovery of small loans. They cover NPA up to Rs. 5 lakhs, both suit filed and non-
suit filed are covered.
Compromise Settlement: It is applied to advances below Rs. 10 Crores.
Credit Information Bureau: Help banks by maintaining a data of an individual defaulter and provides this
information to all banks so that they may avoid lending to him/her.
Debt Recovery Tribunal(DRT): The debt recovery tribunal act was passed by Indian Parliament in 1993.
Objective: Facilitating the banks and financial institutions for speedy recovery of dues in cases where the
loan amount is Rs. 10 lakhs and above.
Balance Sheet
● A balance sheet is a snapshot of a business' financial position on one particular day.

● It provides a summary of what a business owns or is owed. It states what assets the business
owns and what liabilities it owes, at a particular date.
● The balance sheet is used to show how the business is being funded and how those funds are
being used.
Why it is called Balance Sheet?
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Because there is a debit entry and a credit entry for everything, so the total value of the assets is always the
same value as the total of the liabilities.
Contents
● Fixed assets:: Long-term
● Current assets: Short-term
● Current liabilities: What the business owes and must repay in the short term
● Long-term liabilities: Owner's or shareholders' capital
Fixed assets
Tangible assets - e.g. buildings, land, machinery, computers, fixtures and fittings.
Intangible assets - e.g. goodwill, intellectual property rights (such as patents, trademarks and long-term
investments.
Current assets e.g. stock, work in progress, money owed by customers, cash in hand or at the bank, short-
term investments, pre-payments
Current liabilities
These are amounts owed to you and due within one year.
● money owed to suppliers
● short-term loans, overdrafts or other finance
● taxes due within the year
Long-term liabilities
Creditors due after one year: Amounts due to be repaid in loans or financing after one year, eg bank or
directors' loans, finance agreements
Capital and reserves: Share capital and retained profits, after dividends (if your business is a limited
company), or proprietors capital invested in business (if you are an unincorporated business)
What does a balance sheet show?

● How solvent the business is
● How liquid its assets are - how much is in the form of cash or can
● Be easily converted into cash, i.e. stocks and shares
● How the business is financed
● How much capital is being used
Banks Board Bureau (BBB)

The main aim of Banks Board Bureau is to recommend appointment of directors in Public Sector Banks
(PSBs) and advice on ways of raising funds and dealing with issues of stressed assets. Besides this task, the
BBB will also be a link between the government and banks and will be engaged with banks to evolve
strategies for them.
The first chairman of Banks Board Bureau selected is Vinod Rai who is former CAG.
Demat account
Demat account is an account in which the shares and securities are held in dematerialized form i.e.
electronically without any physical papers held. To carry out transactions in the stock market, one should get
open a demat account. Multiple demat accounts can be opened. Demat accounts are held by a single person
i.e. no joint accounts can be operated.
Electronic Clearing System

ECS is used for faster payments and collections. It is used for either making bulk payment of amounts or for
bulk collection of amounts. The institutions who apply for ECS can initiate the process, no need to go to
bank branch again and again.
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Two variants:
ECS Credit: ECS Credit is for making bulk payment of amounts. Under this scheme, a single account is
debited and then multiple accounts are credited. Example: A company has 50 employees and at the start of
month it gives salary to all the employees so instead of crediting each account separately, the company can
use the ECS Credit Scheme.
ECS Debit: ECS Debit is for bulk collection of amounts. Under this scheme, multiple accounts are debited
and then a single account is credited. Example: Many people go for insurance policies and they have
allowed the payment of their premiums from their account. Now it is possible that on a single day, many
customer accounts are to be debited to have the premium from them. Here ECS Debit scheme can be used.
Marginal Cost of funds based Lending Rate (MCLR)

MCLR got effective after April 1, 2016. How RBI decided to implement MCLR system?
Before 2010, there was Benchmark Prime Lending Rate (BPLR) system. Under this banks were allowed
to lend loans to their most trust worthy customers at a low rate. But this system was not transparent.
After this, banks were advised by RBI to apply the system of base rate i.e. below this rate banks will not be
able to lend credits, except in the cases allowed by RBI. Different parameters were used. These parameters
include average cost of funds, marginal cost of funds or any other methodology which seemed reasonable.
But then banks used to change their methodology as when they wanted.
Whenever the RBI cuts the repo rate, same has to be done by banks also in their base rates, but they lower
the base rate in small because most banks currently follow average cost of funds based calculation for
arriving at respective base rates. This is the main reason for changing the policy to Marginal Cost of Funds
based Lending Rates (MCLR).
Marginal Cost of Funds: They are the funds which banks have to give to its customers and RBI instead of
investing them in other ways.
Para banking
Para banking activities are the activities carried out by the bank which are apart from its normal day-to-day
activities. Its not that bank can perform any activity other than daily activities, it can perform only those para
banking activities which are permitted by RBI.
Examples: insurance business, portfolio management services, to become pension fund managers, mutual
funds business, money market mutual funds, underwriting of bonds of PSUs, investment in venture capital
funds, etc.
Bancassurance
Bancassurance as the term suggests is Bank + Insurance. Bancassurance means selling insurance product
through banks. It is one of the para banking activity which the RBI has allowed the banks to take up. For
selling the insurance product, bank and insurance company come up in a partnership where the bank sells
the insurance company’s insurance products to its clients.
Some examples include:
SBI General Insurance Company Limited: joint venture between SBI and Insurance Australia Group (IAG).
SBI Life Insurance: joint venture life insurance company between SBI and BNP Paribas Cardiff of France.
E-Lobby
E-Lobby is a facility which is now provided by banks so that their customers can do their banking
transactions as per their convenience 24×7 i.e. without any time restriction. E-Lobby provides the facility on
bank holidays also.
Self service facilities which can be done at banking e-lobbies include: ATM withdrawals, cash deposits,
card-to-card transfers, mobile phone top-ups, railway booking, passbook printing, NEFT, opening of FD/RD
accounts, SMS alerts, cheque drop box, bill payments, mini statements, etc.
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Clean Note Policy of RBI

In order to increase the life of currency notes, Reserve Bank of India (RBI) issued Clean Note Policy in
2001.
According to the policy: The note packets should not be stapled, while the banding of packets should be
done with paper/polythene bands so that the life of the currency notes is increased.
Debt Consolidation
In simple words Debt Consolidation is going for another loan to pay the existing loan.
Technical definition says that Debt Consolidation is a form of debt refinancing that entails taking out one
loan to pay off many others. Refinancing means replacement of an existing debt to be paid with another one.
External Commercial Borrowing (ECB)

ECB refers to the loans taken from non-resident lenders i.e. the foreign companies to finance commercial
activities in India. ECBs cannot be used for investment in stock market or speculation in real estate. At some
times, borrowings from external companies can be cheaper than that borrowed within the country.
There are two ways in which ECB can be accessed in the country:
Automatic Route: Under this, the borrower is not to take any permission from RBI or GOI.
Approval Route: Under this, the borrower has to take approval from RBI or GOI.
Bharat Bill Payment System (BBPS)

With a need of bill payments system, various organizations decided to provide a single platform to make all
these payments. So an integrated bill payment system called BBPS was proposed for which the policy
guidelines were issued by the Reserve Bank of India on November 28, 2014.
National Payment Corporation (NPCI) had been identified to act as Bharat Bill Payment Central Unit
(BBPCU) which will be a single authorized entity for operating the BBPS.
The biggest advantage is that the bill can be paid anywhere and anytime. The system will provide multiple
payment modes and instant confirmation of payment. Payments may be made through the BBPS using cash,
transfer cheques, and electronic modes. The BBPS outlets would include banks, ATMs, business
correspondents, kiosks etc.s
Lead Bank Scheme

The Lead Bank Scheme was introduced in 1969 to provide lead roles to individual banks (both in public
sector and private sector) for the districts allotted to them.
Commercial banks did not have adequate presence in rural areas and also lacked the required rural
orientation and so the rural areas were not able to enjoy the benefits of banking.
So a bank (public or private) was given some area in which that bank had to play a lead role in providing
financial services to the people, making them aware about the banks and various benefits of banks and also
generating trust among people so that they deposit their money without any fear of loss or fraud. So this
bank was the lead bank of area.
Gold Monetisation Scheme

The Gold Monetisation Scheme enables individuals (households) and institutions to deposit their gold
holdings with the banks by earning interest. The deposit is treated as a term deposit in the form of gold. So
one can deposit his gold lying idle in bank lockers by earning interest at the same time.
Money laundering
It is an act of converting illegal money to legal money. A person who is found having money from illegal
sources can be made to go to prison, or any other liable punishment. So the persons or rather criminals try to
convert their illegal money to legal money so that their money appears clean which is known as money
laundering.
The act related is Prevention of Money laundering Act 2002.
A step to prevent money laundering is KYC (Know Your Customer) policy. The KYC helps to ensure that
banks’ services are not misused.
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Priority Sector Lending (PSL)

Priority Sectors are those sectors in the economy which may not get timely and adequate credit. One of the
reasons of this is that many people in weaker sections wanting of loans do not have assets to keep as security
against credits.
As notified by RBI, categories under priority sector are
Agriculture, Micro and Small Enterprises, Education, Housing, Export Credit, Others.
Types of Pre-paid Wallet Instruments
Closed System Payment Instruments: These are pre-paid cards issued by a person/organization to
facilitate the purchase of goods and services from him/it. So they do not facilitate payments and settlement
for third party services like no bill payments, etc. One cannot withdraw cash from it and also they are not
reloadable with cash.
Examples: Gift vouchers issued by banks and NBFCs, Ola Money, etc.
Semi-Closed System Payment Instruments: These are pre-paid cards issued by a person/organization to
facilitate the purchase of goods and services from clearly identified merchants (third-party) which have a
specific contract with the issuer to accept the payment instruments along with him/it. They can be reloaded.
One cannot withdraw cash from it
Examples: Paytm wallet, MobiKwik, PayU, Airtel Money, etc.
Open System Payment Instruments: These are payment instruments which can be used for purchase of
goods and services, including financial services like funds transfer at any card accepting merchant locations
(point of sale terminals) and also permit cash withdrawal at ATMs / Business Correspondents. These can be
reloadable or non-reloadable. They can only be issued by banks.
Example - Visa, MasterCard or Rupay card issued in India, Vodafone’s M-Pesa which is in alliance with
ICICI Ban, etc.
ULIP (Unit Linked Insurance Plan)
A ULIP is a product offered by insurance companies that, unlike a pure insurance policy, gives investors
both insurance and investment under a single integrated plan. So a ULIP is basically a combination of
insurance as well as investment.
How it works?
Like a premium is paid for an insurance policy, same way a premium is paid under ULIP. The difference
lies in the part that a part of the premium paid is utilized to give insurance cover to the policy holder and the
remaining part is invested in various equity and debt schemes.
Some of the ULIP providers are LIC of India, SBI Life, HDFC Life, ICICI Prudential, Kotak Mahindra Life,
etc.
Payments Bank
Payment Banks are banks which will reach their customers mainly through mobile phones rather than
traditional bank branches. They can be thought of as mobile wallets.
They offer only current account and savings account in which deposit only up to Rs 1 lakh per customer is
permitted. The savings account will earn interest also like a normal savings bank account does. Unlike a
regular bank, they cannot lend money to people and cannot issue credit cards also. However ATM or debit
card can be issued.
Department of Posts
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Small Finance bank

Small Banks are physical banks whose aim is to provide basic banking products such as deposits and supply
of credit, but in a limited area of operation. Their work is to supply credit to small farmers, micro and small
industries, and other unorganised sector entities through high technology-low cost operations.
They can accept any deposit (savings, current, fixed deposits, recurring deposits) like commercial banks.
Unlike payment banks, small finance banks will be allowed to lend money also. Their target is small
businesses and MSMEs.
Capital Local Area Bank Limited, Jalandhar is the first to start its operations as small bank in the country.
Indradhanush plan
Finance minister Arun Jaitley launched a seven pronged plan called Indradhanush in August 2015. The
mission is also known as A2G for public sector banks.
Mission of the plan: To revamp or improve the functioning of public sector banks. Indradhanush mainly
focuses on systemic changes in state-run lenders, including a fresh look at hiring, a comprehensive plan to
de-stress bloated lenders, capital infusion, accountability incentives with higher rewards including stock
options and cleaning up governance.
The plan is called Indradhanush because it contains seven elements as: Appointments, Bank Board Bureau,
Capitalization, De-stressing, Empowerment, Framework of Accountability and Governance Reforms.
CIBIL (Credit Information Bureau (India) Limited)
CIBIL is India’s first Credit Information Company (CIC) founded in August 2000. Whether it is to help loan
providers manage their business or help consumers secure credit faster and at better terms, the use of
CIBIL’s products have led to a massive change in the way the credit life cycle is managed by both loan
providers and consumers.
Role of CIBIL to loan providers and consumers:
CIBIL collects the data from member institutions (banks and other lenders) and maintains records of a
customer’s (individual or any business) payments pertaining to loans and credit cards. This information is
then used to create Credit Information Reports (CIR) and credit scores. These credit scores and reports can
be used by the lenders to evaluate and approve loan applications.
NPCI (National Payments Corporation of India)

NPCI is an umbrella organization for all retail payments system in India. It was set up with the guidance and
support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
Services provided by NPCI: National Financial Switch (NFS) ATM Network, Cheque Clearing System,
Immediate Payments Service (IMPS), Electronic Benefit Transfer, RuPay Card, Unified Payments Interface
(UPI).
For detailed banking notes follow the link: Banking and Finance
Latest in SBI
● The three state-owned banks, State Bank of India (SBI) and Punjab National Bank (PNB) and
Union Bank of India on January 1, 2017, reduced the lending rate by a good 0.9 per cent.
● While SBI reduced its marginal cost of funds based lending rate (MCLR) by 90 basis points for
all maturities, Union Bank of India reduced its MCLR by 65-90 basis points for loans of various
tenures while PNB cut its MCLRs by 70 basis points for 1, 2 and 3 year tenures.
● Following the reduction, lending rate of SBI for a one-year loan, has come down to 8% from
8.90%
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● Coca-Cola India partners the State Bank of India to enable digital transactions.
● SBI has waived Merchant Discount Rate (MDR) on debit card transactions for all small
merchants with annual turnover of up to Rs 20 lakh for one year.
● State Bank of India has signed a pact with the State General Reserve Fund of Oman (SGRF), a
Sovereign Wealth Fund to infuse $50 million in private equity fund Oman India Joint Investment
Fund (OIJIF) while the SGRF would infuse $150 million.
● Future Group’s fashion and lifestyle departmental store Central joined with SBI Card launched
a second co-branded credit card to offer benefits to consumers in the premium lifestyle and
fashion space on January 16, 2017
● SBI Launches Wealth Management Product “SBI Exclusif” in Kochi
● SBI ties up with Greenply to offer financial services to its dealers
● The country’s largest lender State Bank of India (SBI) rebranded its
corporate website as “bank.sbi” from the earlier “sbi.co.in” on February 19, 2017.
● SBI has decided to reintroduce penalty on non-maintenance of minimum balance in accounts to
be effective from April 1, 2017.
SBI slaps charges on cash deposits, breaching balances

In case of failing to maintain Monthly Average Balance (MAB) in saving accounts, penalty of up to Rs. 100
plus service tax would be levied.
Monthly Average Balance in Different Areas
Area Monthly Average Penalty
Balance
Metropolitan Rs. 5000 Rs. 50+service tax= Shortfall <=50% of MAB.
Area Rs. 75+service tax= Shortfall >50-75 %.
Rs. 100+service tax= Shortfall > 75%
Urban Area Rs. 3000 Rs. 40+service tax= Shortfall <=50% of MAB.
Rs. 60+service tax= Shortfall >50-75 %.
Semi-Urban Rs. 2000 Rs. 25+service tax= Shortfall <=50% of MAB.
Area Rs. 50+service tax= Shortfall >50-75 %.
Rural Area Rs. 1000 Rs. 20+service tax= Shortfall <=50% of MAB.
Rs. 30+service tax= Shortfall >50-75 %.
Other Transaction Charges
Cash Deposit
● Savings Banks Account holders can deposit cash 3 times a month free of charge. Beyond that, Rs.
50+ST would be levied on every transaction beyond that.
● In case of current account, the levy could go as high as Rs. 20,000.
Cash Withdrawal
● If the number of cash withdrawal from other banks ATMs in a month is more than three times
then a charge of Rs. 20 would be levied per transaction.
● If the withdrawal is more than 5 times from SBI ATMs in a month then Rs. 10 would be levied
per transaction.
● SBI will not levy any charge on withdrawals from its own ATMs if the balance
exceeds Rs.25,000.
● In case of other banks’ ATM, no charge would be levied by SBI if the balance exceeds Rs. 1 lakh.
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● Rs. 15 would be charged for SMS alerts per quarter from debit card holders who maintain an
average quarterly balance of up to Rs. 25,000 during the three-month period.
Term Deposit
Among other things, SBI has reduced the interest rates on term deposits maturing between 180 days and
1year and between 456 days and 3 years with effect from March
● SBI will now pay an interest of 6.5% on deposits with maturities between 180 days and less than
one year and 6.75% on maturities between 456 days and less than three years.
● SBI has launched a new facility ‘Work from Home’ to enable its employees to work from home
on March 7, 2017
● SBI says minimum balance penalty needed to offset Jan Dhan account cost.
● Germany’s KfW signed loan agreement with EESL and SBI
● SBI incorporates wholly owned subsidiary for premises and estate matters of SBI
● SBI Announces One Time Settlement Scheme Worth Rs 6,000 cr for Tractor Loan.
● State Bank of India and CREDAI sign MoU related to real estate sector
● All the 103 branches of BMB and business of approximately Rs. 2,000 crore would be merged
with SBI.
● Assam govt, SBI sign MoU over housing, educational loan at subsidized interest rates.
● 'Unnati' credit card launched by SBI
● Co-branded Credit Card launched by Karnataka Bank and SBI Card
● SBI merged with all its subsidiaries and entered in the league of top 50 Global Banks.
● Postal Dept, SBI join hands to promote cashless transactions
● SBI surpasses ONGC to become most valued PSU stock
● SBI, CREDAI ink MoU for concessional loan for housing projects
● SBI revises service charges; to charge ATM withdrawals at Rs 25
● SBI launches national hackathon
● SBI funds 100 MW Rooftop solar projects under WB programme
● SBI, Tirumala Milk Products tie up for providing loans to dairy farmers
● NSBI waives charge on IMPS fund transfer of up to Rs 1,000
● Nepal SBI launches first paperless Banking services sbiINTOUCH
● SBI launches realty website 'SBI-Realty' to facilitate home buyers
● SBI waives charge on IMPS fund transfer of up to Rs 1,000
Questions Asked in Previous Interviews

Banking Questions asked in previous Interviews
● What is a bank? What are the functions of bank?

● If you are posted in a branch with almost no progress, what will you do to bring it back to life?
● Define capital market and money market.
● What are the functions of RBI?
● What is NABARD? Its full form and functions. Does it work like RBI?
● RBI. Its functions and monetary policy.
● What is financial inclusion?
● How CRR and SLR helps in Economy?
● What is RTGS? If its limit is 2 lakh then for transferring money less than 2lakh what will you do?
● What is Ridden Lending?
40 | P a g e
● Phishing? How will you prevent phishing?

● Retail Lending? Which lending is better for Banks? Retail or corporate?
● What is Balance Sheet?
● What is Intangible asset?
● Explain briefly about CAD and what is the current economic situation of our country? Is CAD
increasing or decreasing now? And why?
● What is the impact of dollar outflow? Why there was ban on gold imports?
● Explain trade deficit.
● What is the benefit of lending?
● How many types of loans are there?
● Difference between Savings a/c and Savings student a/c?
● What is marginal utility?
● What is CRR and SLR?
● How will you deal with a rural person if he comes to bank to open an account without any
documents?
● What is nationalization of banks? What makes government to take up banks?
● What is the first quality that a banker should posses?
● What is the major problem that all the banks are facing?
● Difference between credit card and debit card?
● What is a negotiable instrument? How do you transfer a cheque to a payee?
● If you have to pass a cheque related to a customer's current account then what are the observations
you will make?
● What is MICR?
● Which act is used for reducing NPA?
● What is draft? What is cross cheque? What is the difference between cross cheque and Bearer
Cheque?
● If you are seated in counter then a customer comes and asks you what i have to do for opening an
account then you said to him bring that document this document he doesn't understand you. Do you
have patience to make understand him about the documents?
● What are RTGS and NEFT? Full form and differences.
● What is PIN? Can you disclose it to anybody?
● Do you use debit card? For what purposes? What we require to use debit card for payment?
● What is Indian Banking System?
● What is Banking Ombudsman and what is Single Window in bank?
● What is Cross Selling.
● Let's say that a new bank branch is about to come up then how will you inform people about it and
get customer?
● What are the qualities required in candidate as a PO?
● If one person came to you to break his fixed deposit because he needs some money what will you
do?
● What is lead banking?
● What is priority sector lending?
● What is the procedure for granting loan?
● Which technology is used in banking?
● Payment and small bank purpose
● Difference between savings account and current account.
41 | P a g e
● What are the KYC norms?

● What is demat account?
● What is Purchasing Power Parity?
● What is Narrow Banking and Payment gateways?
● What is the need for payment banks if there are other banks?
● What is the benefit of high CASA for banks?
● What is Net interest margin?
● What are the benefits for a bank in defining risk categories?
● We want to start an ATM in rural place where not even a landline connection is there then how will
you provide ATM? Can u tell the antenna name using In this process?
● What is contingent liability?
● What is the use of marketing in banks?
● What are the differences between private banks and nationalised banks?
● What is mean by Cyber crime?
● Do you know which bank give highest interest on saving accounts and how much?
Current Affairs Questions asked in previous Interviews
● What do you know about PMJDY?

● Tell us something about swachh bharat abhiyan.
● What is Bharat Ratna?
● Currency of China and its value against rupee.
● Number of lok Sabha seats?
● What is the maximum no. of ministers that can be formed out of lok sabha ?
● Who is the HRD minister?
● Names of 4 Dhams and their locations also?
● Schemes to alleviate poverty?
● Statue of Unity?
● Who is the Finance Minister and External Affairs Minister of India?
● Highest Civilian Award? Second highest civilian award?
● What is spot fixing?
● Who received Nobel Prize in Economics this year and for what?
● Who won US Open in 2015 . Women Singles?
● What is Atal pension yojana and what is mission indradhanush?
● What is financial inclusion? When did it start? Which five year plan is going on?
● What is the name of India’s First Lady prime Minister?
● What is GDP and GNP and also the difference between both?
● Briefly explain Make in India?
● What is Sewa Kendra?
● What is ISIS and what’s their aim?
● Prime minister who never visited parliament?
● What is call drop and TRAI?
● Difference between monetary and fiscal policies?
● Who abolished single child policy and why?
● What is financial literacy?
● Who started "bachpan bachao andolan"?
42 | P a g e
● What is NITI aayog?

● What is current GDP and growth rate of India?
Personal Questions asked in previous Interviews
● Your name ____ its meaning. Where you came from?

● How many members in your family?
● Your Weakness and strength
● Why not you tried for defence?
● What's your target in life?
● Why banking?
● Does banking field interest you or just because your family is in banking field and You look up to
them and that is the reason you want to join it?
● Do you watch Bollywood Movies and your favourite Actors?
● Tell me some news happened in 2-3 days.
● What’s the use of your field in banking?
● Do you have bank account? How are you doing your transactions?
● Favourite subject?
● Tell me what are your hobbies and interests?
● How you are different from other candidates?
● Any motivational films you have seen?
● Why you came to banking even after having work experience?
● Can you distinguish between manager and a leader?
● Hobbies? (If reading novels)Who is the author of your 1st novel? What is the name of the novel? Did
you like the novel?
● Did you like the banking services at your place?
● How do you motivate whom you're leading?
● Do you know about the recent controversial film?
● What you have done for swacch bharat abhiyan?
● Why you have a gap of a year after your degree?
● What are your top five preference banks? If you are appointed for the other bank you want to join or
not?
● Why should we select you? What qualities do you have that others don’t?
● What is the meaning of your name and give synonyms of it?
● What is your father’s profession?
● Which bank is your first preference? Why you filled it?
● What is the importance of your village or city or town?
● If we withdraw money from bank or deposit then message comes at your registered mobile number.
Does it charge money for that?
● Don’t you think you are overqualified for this job?
● What is Bio metric system?
● What is the use of computer in banking field?
● Why should we hire you for this position ?
Interview Experiences
Click here to View Shared Interview Experiences in our website
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SBI PO Interview

This interview is meant to observe the attitude, confidence level and

How to face Bank Interview................................................................................................................................... 3

3 Rules For Overcoming Interview Jitters

1. Strike A Power Pose For Two Minutes

2. Repeat A Positive Affirmation

3. Read Over Nice Things People Have Said About You

How to face Bank Interview

Things to be kept in your mind:

especially from the banking sector.

Brush up your communication skills

Tell us something about yourself

Good morning to sir/mam and all the panel members.

Why do you want to join Banking Sector?

How do you see yourself flourish in Banking Sector after 5 Years?

Answer like this

Why did you leave your previous job?

Answer like this

How will you add value to our organization?

what our company strengths are?

set of strengths to the table.

Do you have any achievement?

is always better to have a decent answer ready and prepared.

Why should we select you?

fresh graduate as opposed to a senior professional. Regardless you should include

1. How you have the required skills/experience

Do you have any questions?

challenges, multi-tasking and even pressure.

About State Bank of India

Formation of State Bank of India and its Nationalization:

Associate Banks of SBI and their merger:

SBI also has the following non-banking subsidiaries:

Some Mobile Applications of SBI:

How do the Banks work?

How banks create money?

Assets Vs. Liabilities

Letter of credit Vs. Bank Guarantee

Dormant account Vs. Frozen account

Cross selling Vs. Up Selling

Consortium Financing Vs. Multiple Banking

Moratorium period Vs. Grace period

NRO Account Vs. NRE Account Vs. FCNR Account

Cheque Vs. Demand Draft

Cheque Truncation System (CTS)

Know your customer(KYC)

Requirements for opening a bank account:

*Difference between small accounts and other accounts

How does it work?

All about RBI

Wholly owned subsidiaries of RBI:

● Regulating the issue of currency in India

Major functions of RBI

3. RBI as Banker of Banks

4. Management of foreign exchange reserves

5. RBI as a regulator and supervisor of financial system

6. RBI as Banker and Debt Manager to the Government

7. Developmental & Promotional roles

Story behind Nationalization in the 1960s

● Private Sector Banks