Minimum Topics from Banking theory

Youll have to face banking awareness, not only at the MCQ-stage but also during
interview stage. Here is the list of Minimum Topics to be prepared. Dont do Ph.D
on any topic, just get an overview from MCQ point of view. (same advice for all the
topics listed in this entire article)

RBI

Banks: Basics

1.

Origin of RBI. Who is the current governor, whom

did he replace?

1.

2.

RBI vs SEBI vs IRDA: Name of their main bosses,

Who controls what? NBFCs, MFI, Gold Loans, ULIP,
Mutual funds etc.

What is bank? What are its functions?

how is it different from an NBFC/NBFCfactor, Post-office savings, Chit Fund, Nidhi
etc?

2.

Types of banks: commercial banks,

regional rural banks, cooperative banks,
investment banks, development banks etc.

3.

powers functions of RBI

4.

How does RBI control the money supply?

5.

6.

Open market operations, MSF, liquidity adjustment

facility
SLR, CRR, Repo, Reverse repo, bank rate

3.
4.

5.

What is a Scheduled commercial bank?

Public sector versus private sector
banks. Where does RTI apply?
IDBI, ICICI, IFCI, SIDBI, EXIM, NHB etc.

7.

Priority sector lending: and its subsectors. How do

they apply to Domestic bank vs foreign bank?

6.

8.

Currency chest, Mint and press. Who signs coins

and currency?

7.

Names of chairman/CMD of big banks.

8.

Basic GK related to banks: first

commercial bank in India, first bank setup
by Indians, origin of SBI/ICICI, subsidiaries
of SBI, etc.

9.
10.

Measures of money supply

Foreign exchange management, components of
forex reserves, approx. forex under RBI. Powers under
FERA/FEMA, Tarapore Committee on capital account

Bank nationalization, mergers and

consolidations.

convertibility
11.
12.

Banking regulation act and its recent amendment

Banking reform, Banking License, Narsimhan,
BASEL.

Banking services
1.

Assets, liabilities and working capital of a bank.

2.

Demand liabilities vs time liabilities

3.

Bankers rights (lien). Know your customer (KYC) norms, Adhar Card enabled
payment, Money laundering, Benami transections

4.

Types of Bank customers and provisions related to them:

1.

Minor-Guardian, partnership firms

2.

HUF and karta

3.

NRI, PIO

4.

joint account holders

5.

Married Women

6.

partnership firm accounts

7.

public/private companies

8.

trusts and cooperatives

5.

Types of bank accounts and their features:

1.

current account, savings account

2.

term deposit account, fixed deposit,

3.

PPF, senior citizens account

4.

NRE-rupee account, FCNR account, RFC, EEFC, escrow account

5.

Allied topic: post office savings account and National savings certificate

6.

Unclaimed/dormant accounts, RBI provision for them, Death of customer,

insolvent customer, liquidation, Garnishee orders

7.

Types of negotiable instruments: bank draft, bank check, promissory note,

warehouse receipt, Treasury bills etc.

8.

Cheque:
1.

order/bearer/travel/bankers cheque

2.

endorsement, cheque-crossing,

3.

post-dated cheque, what if cheque-date is invalid (31st Feb) or holiday

(2nd Oct)?

4.

when Bank should not pay, cheque-dishonor (cheque-bouncing)

5.

MICR, Cheque truncation, new CTS-system

6.

Note refund rule, clan note-policy

9.

demand drafts, telegraphic transfers, safe deposit lockers

10.

ATM: PIN, HWAK, White Label ATM, third party ATM

11.

Debit card, credit card, smart card

12.

Mobile Banking, personal banking, tele-banking, corporate banking

13.

Online banking:
1.

NEFT, RGTS, EFTS, Bankwire, E-commerce

2.

3.

core-banking solutions

4.

Electronic signature and Information Technology Act

14.

Loans
1.

different type of loan products,

2.

Subprime lending

3.

4.
5.

15.
16.

17.

networking among banks: INDONET, BankNET, RBINET, SWIFT, Point of

Sale (POS) terminal

mortgage, reverse mortgage, collaterals, stamp duty on loan

documents
lien, set-off
Priority sector lending: and its subsectors. How do they apply to
Domestic bank vs Foreign bank?
bank guarantee, letters of credit

Banking Ombudman: powers functions, appeal structure and Consumer

courts
Bancassurance, cross-selling, universal / narrow / retail banking

Rural banking
1.

RBI vs NABARD

2.

Rural infrastructure development fund (RIDF) and budget-2013 allocation for

RIDF

3.

financial inclusion and various government schemes associated with it

(covered in my economic survey summaries, available on mrunal.org/economy)

4.

regional rural banks, their amalgation

5.

cooperative banks

6.

micro-finance institutions (MFI)

7.

primary agricultural credit Society

8.

Banking correspondent agents (covered in my article)

9.

lead bank scheme, local area banks, service area approach

10.

Kisan credit card, interest subvention on crop-loans

Bad Loans
1.

What is NPA?

2.

Gross NPA versus net NPA

3.

Asset classification under NPA

(substandard/doubtful/loss)

4.

Current figure of NPA? Which bank has highest

NPA?

5.

Capital adequacy norms, hypothecation

6.

CIBIL and credit rating

7.

SARFAESI Act and its recent amendment

8.

asset reconstruction companies

9.

Debt recovery tribunals.

10.

Lok Adalats

11.

Industrial sickness

12.

Board for industrial and financial Reconstruction

International banking
1.

Bretton Woods

2.

World Bank

3.

IMF: SDR, voting rights

4.

Who are the Main boss of IMF, W

ADB?

5.

BASEL

6.

bank for International settlemen

7.

Asian clearing union

8.

Islamic Banking

9.

ADR, GDR, IDR

^Almost all of these topics have been covered in my articles on

Mrunal.org/Economy
again, most of these topics have been covered in my articles on
Mrunal.org/Economy

Sample questions from previous papers

Observe the following questions asked in previous IBPS PO papers, itll give you an
idea on what kind of information you should be focusing on, while reading the
banking awareness theory.
Q. RBI related

1.

Which of the following is a correct statement?

a.

b.

c.

d.

2.

State Bank of India is the sole authority to issue

and manage currency in India.
A nationalised bank is the sole authority to issue
and manage currency in India.
A cooperative bank is the sole authority to issue
and manage currency in India.
RBI is the sole authority to issue and manage
currency in India. None of these

By increasing repo rate, the economy may observe the

following effects:
a.

b.

Rate of interest on loans and advances will be

costlier
Industrial output would be affected to an extent

1 Which of the following is NOT a function

Reserve Bank of India?
a.

Fiscal Policy Functions

b.

Exchange Control Functions

c.

Issuance, Exchange and destru

currency notes

d.

Monetary Authority Functions

e.

Supervisory and Control Funct

1 Interest payable on savings bank accoun

a.

Not regulated by RBI.

b.

Regulated by State Governmen

c.

Regulated by Central Governm

c.
d.

e.

Banks will increase rate of interest on deposits

Industry houses may borrow money from foreign
countries

d.

Regulated by RBI.

e.

Regulated by Finance minister

All of these

1 Nationalization of banks aimed at all of the

following except
a.

1 Axis Bank is a

Provision of adequate credit

foragriculture, SME & exports

b.

Removal of control by a few capitalists

c.

Provision of credit to big industries only

d.

Access of banking to masses

e.

Encouragement of a new class of

entrepreneurs

a.

Public Sector bank

b.

Private Sector Bank

c.

Co-operative Bank

d.

Foreign Bank

e.

Gramin Bank

Q. Bank Nationalisation / types of banks related

1.

Which of the following statements is

true?
a.

Banks cannot accept demand and

time deposits from public.

b.

Banks can accept only demand

deposits from public

c.

Banks can accept only time

deposits from public

1 Which one of the following is a retail bankin

a.

Home Loans

b.

Working capital finance

c.

Corporate term loans

d.

Infrastructure financing

e.

Export Credit

2.

d.

Banks can accept both demand

and time deposits from public.

e.

Banks can accept demand and

time deposits only from government.

With reference to a cheque which of the

following is the drawee bank?
a.

The bank that collects the cheque

b.

The payees bank

c.

The endorsees bank

d.

The endorsers bank

e.

1 A money deposit at a bank that cannot be w

for a preset fixed of time is known as a
a.

Term deposit

b.

Checking Account

c.

Savings Bank Deposit

d.

No Frills Account

e.

Current Deposit

The bank upon which the cheque

is drawn

Q. Banking services

1.

An ECS transaction gets bounced and you are unable to recover

your money from your customer. Under which Act criminal action
can be initiated?
a.

Indian Penal Code

b.

Negotiable Instruments Act

c.

Criminal Procedure Code

d.

Payment and Settlements Act

e.

Indian Contract Act

1 Upper limit prescrib

RTGS transaction is
a.

Rs. 1 lac

b.

Rs. 2 lacs

c.

Rs. 5 lacs

d.

Rs. 50 lac

e.

No upper
prescribed

1 NEFT means

a.

National E
Funds Transfer s

b.

Negotiated
Fund Transfer Sy

c.

National E
Fund Transfer So

d.

Non Effect
Transfer System

e.

Negotiated
Foreign Transfer

Q. online banking related

Q. ombudsman related

1.

Mr. Rajendra had filed a complaint with Banking Ombudsman

but is not satisfied with the decision. What is the next option him for
getting his matter resolved?
a.

Write to the CMD of the Bank

b.

File an appeal before the Finance Minister

c.

File an appeal before the Banking Ombudsman again

d.

File an appeal before the Dy. Governor RBI

e.

Simply close the matter as going to court involves time and

money

1 Banking Ombudsman
Scheme is applicable to the
business of
a.

All scheduled
commercial banks
excluding RRBs

b.

All scheduled
commercial banks
including RRBs

c.

Only Public Sector

Banks

d.

All Banking

Companies
e.

All scheduled banks

except private banks

#2: Banking Awareness (Current Affairs)

for this, youve to keep an eye on the newspapers + monthly current affairs in
magazines. Main focus areas:
1.
2.

3.
4.

RBIs monetary policy and key rates

Any committee made by RBI/government for Banking sector. Who is its
chairman and what is the purpose?
Any new directives to banks by RBI/Finance Ministry
Person in News: Any new appointments in RBI/Big Banks, Any Indian being
appointed in foreign banks

5.

Banking license, entry of foreign banks.

6.

When a big bank launches a new product

7.

Government schemes associated with financial inclusion/pension/insurance:

swabhiman, swavalamban etc.

Important: Whenever you come across above info, Note them in a separate
diary/file and revise multiple times.

1.

Finance Ministry has asked the Reserve Bank of

India to allow common ATMs that will be owned
and managed by non-banking entities hopping to
cut transaction costs for banks. Such ATMs are
known as

1 As per revised RBI Guidelines, Provis

secured portion of loan accounts cla
Doubtful Assets for more than one y
upto 3 (three) years is to be made at

2.

3.

a.

Black Label ATMs

a.

15%

b.

Offsite ATMs

b.

20%

c.

On site ATMs or red ATMs

c.

40%

d.

Third party ATMs

d.

25%

e.

White label ATMs

e.

30%

The committee on review of National Small

Saving Fund (NSSF) was headed by
a.

Dr. C. Rangarajan

a.

Bank of Baroda

b.

Mr. U.K. Sinha

b.

HDFC Bank

c.

Dr. Y.V. Reddy

c.

Central Bank of India

d.

Mrs. Shyamala Gopinath

d.

Punjab National Bank

e.

Dr. Usha Thorat

e.

ICICI Bank

Who is the chairman of the committee

constituted by RBI to study Issues and Concerns in
the Micro Finance Institutions (MFI) Sector?
a.

YH Malegam

b.

Dr KC Chakraborty

c.

C Rangrajan

d.

M Damodaran

e.
4.

1 Which of the following banks is head

woman CEO

Smt Usha Thorat

Which of the following states became the first

state in the country to launch RBIs e-payment

1 Who among the following has been

as a director on board of Bank of Am
first non-American on the board of t
the largest financial institutions in th
a.

Azim Premji

b.

Ratan Tata

c.

Mukesh Ambani

d.

KV Kamath

e.

Chanda Kochar

system for commercial tax payers?

1 Andhra Pradesh
2 Kerala
3 Gujarat
4 Maharashtra
5 Karnataka
Observe the sample questions from previous IBPS PO exams, this will give you an
idea on what type of information to focus on, while reading current affairs.