Economy Chapters

1. Economy and Economics2. Characteristics of Indian Economy3. Agriculture and Land Development4. National Income5. Planning6. Unemployment7. Trade and Commerce8. New Economic Policy9. Indian Financial System10. Indian Fiscal System11. Banking in India12. Tax System13. Industry14. Foreign Trade15. Glossary of Economic and Financial Terms16. Some Noteworthy Facts17. Socio Economic and Caste Census 2011

Banking in India

Banking in India plays a crucial role in the country’s economic development by mobilizing savings and providing credit to various sectors.

Definition

Banking in India refers to the system of institutions that accept deposits, provide loans, and offer financial services to individuals and businesses.

Types of Banks in India

  • Commercial Banks: Public Sector Banks (e.g., SBI), Private Sector Banks (e.g., HDFC), and Foreign Banks.
  • Cooperative Banks: Serve specific communities or groups with localized banking.
  • Regional Rural Banks (RRBs): Provide banking facilities in rural areas.
  • Development Banks: Focus on long-term financing for industrial and agricultural development.
  • Reserve Bank of India (RBI): Central bank regulating banking operations.

Functions of Banks

  • Accepting deposits (savings, current, fixed deposits).
  • Providing loans and advances to individuals and businesses.
  • Credit creation to boost economic activity.
  • Agency functions like collection of cheques, bills, and payment of rent and dividends.
  • Investment and fund management.
  • Foreign exchange transactions and remittances.

Recent Developments

  • Implementation of Digital Banking and UPI for faster transactions.
  • Introduction of Payment Banks and Small Finance Banks to increase financial inclusion.
  • Increased focus on financial literacy and customer protection.
  • Adoption of new technologies such as blockchain and AI in banking operations.
  • Pradhan Mantri Jan Dhan Yojana (PMJDY) to promote bank account opening for the unbanked.

Previous Year Questions

  • SSC CGL 2021: What is the full form of UPI?
  • Unified Payments Interface
  • HSSC 2020: Name the central bank of India.
  • Reserve Bank of India (RBI)
  • RRB JE 2019: What are Regional Rural Banks?
  • Banks created to provide banking services in rural areas.
  • SSC GD 2020: What is meant by ‘credit creation’ by banks?
  • The process by which banks create money by lending more than their actual deposits.
  • HSSC 2021: What is the main function of Payment Banks?
  • To provide basic banking services like deposits and payments but not loans.
  • SSC MTS 2019: What is the role of the Reserve Bank of India?
  • To regulate the banking system and control the money supply.
  • RRB NTPC 2020: Name any two types of bank deposits.
  • Savings deposits and Fixed deposits.
  • SSC CHSL 2021: What is KYC in banking?
  • Know Your Customer, a process to verify customer identity.
  • HSSC 2019: What is an NPA?
  • Non-Performing Asset, a loan on which the borrower has stopped paying interest or principal.
  • SSC GD 2021: What is financial inclusion?
  • Ensuring access to banking and financial services to all segments of society.
  • RRB JE 2021: What is meant by digital banking?
  • Banking services delivered through electronic channels like mobile apps and internet banking.
  • SSC CGL 2019: Name any two public sector banks in India.
  • State Bank of India (SBI), Punjab National Bank (PNB).
  • HSSC 2020: What is the minimum reserve ratio set by RBI?
  • Cash Reserve Ratio (CRR).
  • SSC MTS 2020: What is the function of an ATM?
  • Allows customers to withdraw cash and perform banking transactions electronically.
  • RRB NTPC 2019: What is ‘banking ombudsman’?
  • An official who addresses complaints against banks.
  • SSC GD 2019: What is a ‘current account’?
  • A bank account mainly used by businesses for frequent transactions.
  • HSSC 2021: What is the primary objective of financial literacy?
  • To help people make informed and effective financial decisions.
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