Banking Awareness for Competitive Exams

Banking examinations across the country feature the General Awareness section in their recruitment examinations. A significant portion of the questions featured in those examinations come under the category of Banking Awareness, which is General Awareness about Bank-related topics.

Importance of Banking Awareness

Banking Awareness is a crucial part of the General Awareness for all Bank Exams. It is considered a high-scoring section if prepared well. Aspirants can score well in it without remembering any complex formulae and lengthy rules.

A high score in Banking awareness will in turn help in improving the overall score.

Major Exams with Banking Awareness in Their Syllabus

Banking Awareness plays a key role in nearly all Banking-related exams in the country. Some of them are listed below:

1. SBI PO & SBI Clerk Exam
2. IBPS PO & IBPS Clerk Exam
3. RBI Exams

Banking Awareness Topics

Banking Awareness covers a wide range of topics related to the banking sector, including:

• Banking History and Evolution
• Types of Banks
• Banking Regulations and Policies
• Banking Products and Services
• Financial Markets and Instruments
• International Banking
• Banking Technology
• Current Affairs related to Banking

Preparation Tips for Banking Awareness

To prepare effectively for Banking Awareness, candidates should:

• Read newspapers and magazines regularly to stay updated with current affairs related to banking.
• Refer to standard textbooks and study materials on Banking Awareness.
• Practice mock tests and previous year question papers to improve their understanding of the subject and identify areas where they need more improvement.
• Join online coaching or study groups to get additional support and guidance.

By following these tips, candidates can improve their Banking Awareness and increase their chances of success in banking examinations.

Financial Resolution and Deposit Insurance Bill 2017

The Financial Resolution and Deposit Insurance Bill, 2017, aims to protect depositors’ interests and ensure the stability of the financial system. It provides for the establishment of a resolution corporation to handle the resolution of failed banks and other financial institutions.

Types of Loans

There are various types of loans available to individuals and businesses, each with its own purpose and terms. Some common types of loans include:

• Personal loans: These are unsecured loans used for various purposes, such as debt consolidation, home improvements, or unexpected expenses.
• Auto loans: These loans are used to finance the purchase of a vehicle, such as a car, truck, or motorcycle.
• Mortgage loans: These loans are used to finance the purchase of real estate, such as a house or apartment.
• Student loans: These loans are used to finance the cost of education, such as tuition, fees, and living expenses.
• Business loans: These loans are used to finance the needs of a business, such as working capital, equipment purchases, or expansion.

Basics of Bond and Their Types & Features

Bonds are debt instruments issued by governments and corporations to raise funds. They represent a loan made by investors to the issuer, who agrees to pay interest over a specified period and repay the principal amount at maturity. Bonds come in various types, including:

• Government bonds: These are bonds issued by governments, considered low-risk investments.
• Corporate bonds: These are bonds issued by corporations, offering higher yields but with more risk.
• Municipal bonds: These are bonds issued by state and local governments, often used to finance public projects.
• Zero-coupon bonds: These bonds are issued at a discount and do not pay periodic interest, but instead appreciate in value until maturity.

Reverse Mortgage Loan

A reverse mortgage loan is a type of loan that allows senior homeowners to borrow against the equity in their homes without making monthly payments. Instead, the loan balance grows over time, and the borrower can receive the funds as a lump sum, monthly payments, or a line of credit.

Foreign Exchange Regulation Act (FERA)

The Foreign Exchange Regulation Act (FERA) is a law that regulates the foreign exchange market in India. It aims to promote the orderly development and maintenance of the foreign exchange market and to facilitate international trade and payments.

Types of Mortgages

Mortgages are loans used to finance the purchase of real estate. There are various types of mortgages available, including:

• Fixed-rate mortgages: These mortgages offer a fixed interest rate for the entire loan term, providing stability in monthly payments.
• Adjustable-rate mortgages (ARMs): These mortgages offer an initial low interest rate that can adjust periodically based on market conditions, potentially leading to higher monthly payments in the future.
• FHA loans: These loans are insured by the Federal Housing Administration (FHA) and are designed for borrowers with lower credit scores or limited down payments.
• VA loans: These loans are guaranteed by the Department of Veterans Affairs (VA) and are available to eligible veterans, active-duty military members, and certain surviving spouses.

Mutual Funds

Mutual funds are investment vehicles that pool money from multiple investors and invest it in a diversified portfolio of stocks, bonds, or other assets. They offer investors the opportunity to participate in the financial markets without the need for individual stock picking.

Bank Credit Operations

Bank credit operations involve the process of lending money to individuals and businesses. Banks assess the creditworthiness of borrowers, determine the appropriate loan amount and interest rate, and monitor the repayment of loans.

Prevention of Money Laundering Act 2002

The Prevention of Money Laundering Act (PMLA) is a law that aims to prevent and combat money laundering, which is the process of converting illegally obtained money into legitimate funds.

Types of Cheque & Cards

There are various types of cheques and cards used for making payments and accessing funds:

• Cheques: These are written orders to a bank to pay a specified amount of money to a named person or entity.
• Debit cards: These cards allow users to make purchases or withdraw cash directly from their bank accounts.
• Credit cards: These cards allow users to make purchases or withdraw cash on credit, with the outstanding balance due at the end of the billing cycle.
• Prepaid cards: These cards are loaded with a specific amount of money and can be used for purchases or withdrawals until the balance is depleted.

LIBOR & MIBOR

• LIBOR (London Interbank Offered Rate): This is a benchmark interest rate based on the average interest rates at which banks lend to each other in the London interbank market.
• MIBOR (Mumbai Interbank Offered Rate): This is a benchmark interest rate based on the average interest rates at which banks lend to each other in the Mumbai interbank market.

Cash Management Services

Cash management services are offered by banks to help businesses manage their cash flow effectively. These services include:

• Cash concentration: This involves pooling funds from multiple bank accounts into a single account to optimize cash availability.
• Lockbox services: This involves receiving and processing payments on behalf of a business, reducing the time and effort required for cash collection.
• Electronic funds transfer (EFT): This allows businesses to transfer funds electronically between bank accounts, facilitating quick and secure payments.

Business of Banking Companies in Banking Regulation Act, 1949

The Banking Regulation Act, 1949, governs the business operations of banking companies in India. It sets out the rules and regulations that banks must follow, including requirements for capital adequacy, liquidity, and risk management.

Foreign Banks in India

Foreign banks are allowed to operate in India under the provisions of the Banking Regulation Act, 1949. These banks must comply with the same regulations as domestic banks and are subject to supervision by the Reserve Bank of India (RBI).

SWIFT Codes for banks

SWIFT codes are unique identification codes assigned to banks and financial institutions worldwide. They facilitate the secure and efficient transfer of funds between banks across different countries.

CIBIL

CIBIL (Credit Information Bureau India Limited) is a credit information company that collects and maintains credit information on individuals and businesses in India. It provides credit scores and reports to lenders, helping them assess the creditworthiness of borrowers.

Employee Provident Fund and Miscellaneous Provisions Act, 1952

The Employee Provident Fund and Miscellaneous Provisions Act, 1952, establishes the Employees’ Provident Fund (EPF) scheme, which provides retirement benefits to employees in India. It requires employers to contribute a certain percentage of their employees’ salaries to the EPF.

Fund Transfer Services

Fund transfer services allow individuals and businesses to transfer money between bank accounts, both domestically and internationally. These services can be provided through online banking, mobile banking, or by visiting a bank branch.

Types of Foreign Accounts

There are different types of foreign accounts that individuals and businesses can hold, including:

• Foreign currency accounts: These accounts allow holders to store and transact in foreign currencies.
• Non-resident ordinary (NRO) accounts: These accounts are for non-resident Indians (NRIs) and allow them to hold and repatriate funds earned in India.
• Non-resident external (NRE) accounts: These accounts are also for NRIs and allow them to hold and repatriate funds earned outside India.

Bombay Stock Exchange (BSE)

The Bombay Stock Exchange (BSE) is one of the oldest and largest stock exchanges in India. It provides a platform for trading stocks, bonds, and other financial instruments.

Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code, 2016, provides a comprehensive framework for dealing with insolvency and bankruptcy of individuals and companies in India. It aims to streamline the process of resolving financial distress and maximizing the value of assets.

Structure of the Banking Industry

The banking industry in India consists of various types of banks, including public sector banks, private sector banks, foreign banks, and cooperative banks. Each type of bank plays a specific role in the financial system and caters to different customer segments.

Bharatiya Reserve Bank Note Mudran Private Limited

Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It is responsible for printing banknotes and other security documents for the RBI.

National Stock Exchange (NSE)

The National Stock Exchange (NSE) is another major stock exchange in India. It offers a wide range of trading products and services, including stocks, derivatives, and debt instruments.

NPA and SARFAESI Act, 2002

• NPA (Non-Performing Asset): A non-performing asset is a loan or advance that has not been serviced for a specified period, typically 90 days or more.
• SARFAESI Act, 2002 (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act): This act provides a legal framework for banks and financial institutions to recover dues from defaulters by enforcing security interests.

Nationalised Banks

Nationalised banks are banks that were previously privately owned but were brought under government ownership and control. They play a significant role in providing banking services to rural

Banking System in India

The banking system in India is a diverse and complex network of financial institutions that play a vital role in the country’s economy. From the central bank, the Reserve Bank of India (RBI), to various types of commercial banks, regional rural banks, cooperative banks, and more, each institution serves a specific purpose and caters to different segments of the population.

Types of Banks in India

1. Central Bank - Reserve Bank of India (RBI)

The Reserve Bank of India (RBI) is the central bank of India and the apex regulatory body for the entire banking system. It is responsible for issuing currency, regulating monetary policy, and ensuring the stability of the financial system. RBI also acts as the banker to the government and oversees the operations of other banks in the country.

2. Payments Banks

Payments banks are a new type of bank introduced by the RBI to promote financial inclusion and provide basic banking services to the unbanked population. These banks can accept deposits up to a certain limit but cannot issue loans or credit cards. Some active payments banks in India include Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank, and Paytm Payments Bank.

3. Small Finance Banks

Small finance banks are specialized banks that focus on providing financial services to the underserved and unbanked segments of the population, including small businesses, farmers, and low-income individuals. These banks can offer a range of services, including savings accounts, loans, and other financial products tailored to the needs of their target customers.

4. Commercial Banks

Commercial banks are the most common type of bank in India and offer a wide range of financial services to individuals, businesses, and organizations. They accept deposits, provide loans, and facilitate various payment and investment services. Some prominent commercial banks in India include State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank.

5. Regional Rural Banks (RRBs)

Regional rural banks are specialized banks established to provide banking services in rural areas and support agricultural activities. They are jointly owned by the central government, state governments, and sponsor banks. RRBs offer a range of financial services, including savings accounts, loans, and other banking products tailored to the needs of rural communities.

6. Private Banks

Private banks are owned and operated by private entities and are not directly controlled by the government. They offer a wide range of financial services, including personal banking, corporate banking, investment banking, and wealth management. Some well-known private banks in India include HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank.

7. [Public Sector Banks (PSBs)](/article/banking-article/public_sector_banks/

Public sector banks are owned and controlled by the government of India. They play a significant role in providing banking services to the general public and are often involved in social welfare initiatives. Some major public sector banks in India include State Bank of India (SBI), Bank of Baroda, Punjab National Bank (PNB), and Canara Bank.

8. Cooperative Banks

Cooperative banks are financial institutions owned and controlled by their members, who are typically individuals or groups from a specific community or profession. They provide a range of banking services, including savings accounts, loans, and other financial products tailored to the needs of their members. Cooperative banks can be further classified into state cooperative banks, district cooperative banks, and other cooperative banks.

These are just a few of the main types of banks in India. Each type of bank serves a specific purpose and caters to different segments of the population, contributing to the overall financial landscape of the country.

NSDL Payments Bank

Small Finance Banks

Small Finance Banks are licensed to provide basic banking services such as lending and accepting deposits. They were created to ensure financial inclusion for sections of the population that were not adequately served by other banks, such as small farmers and micro industries.

Commercial Banks

Commercial banks are established under the Banking Companies Act of 1956. They rely solely on deposits from the public and make a profit by providing loans for investment and consumption purposes.

Commercial banks are classified into various categories:

• Regional Rural Banks
• Private Banks
• Public Sector Banks
• Foreign Banks

Cooperative Banks

Cooperative banks are governed by State Government laws and primarily cater to agriculture-based communities. # Cooperative Banks

Cooperative banks are financial institutions owned by their customers. They are regulated by the Reserve Bank of India (RBI) and must adhere to all regulatory norms issued by the RBI. Failure to comply with these norms can result in penalties.

Cooperative banks are further divided into three subcategories:

• State Cooperative Banks: These banks operate at the state level and provide financial services to individuals and businesses within the state.
• District Cooperative Banks: These banks operate at the district level and provide financial services to individuals and businesses within the district.
• Other Cooperative Banks: This category includes various types of cooperative banks, such as urban cooperative banks, salary earners’ cooperative banks, and thrift cooperative banks.

Banking Awareness Sample Questions

Q 1. Who was the first Indian Governor of RBI?

1. H.V.R Iyengar
2. Sir C.D. Deshmukh
3. L.K. Jha

Q 2. What does ‘M’ stand for in IMF?

1. Monetary
2. Money
3. Mortgage
4. Mutual

Q 3. What is the full form of ‘ULIP’, the term which was in the news recently?

1. Universal Life & Insurance Plan
2. Unit Linked & Investment Plan
3. Unit Linked Insurance Plan
4. None of these

Q 4. Which of the following is NOT true when the interest rate in the economy goes up?

1. Saving increases
2. Lending decreases
3. Cost of transport increases
4. Return on capital increases
5. All of the above

Q. Banking terminology, NPA means

1. Non-Promise Asset
2. Non-Personal Account
3. Non-Performing Asset
4. Net-performing Account

Banking Awareness Preparation Strategy for Bank Exams

Here are a few tips and tricks that will help you in boosting your preparation for Banking Awareness and help you score better marks in Banking Exams.

• Candidates should be thorough with the complete syllabus and exam pattern of the exam.
• Procure banking awareness study materials and books at the earliest and stick to those limited resources only.
• Stay updated with the finance news. Prioritize banking-related news on your mobile apps.
• Also, keep an eye on the previous year’s banking awareness questions.