Banking Free UPSC Notes Download
Money and Banking
Money is the most vital exchange in any economic activity. We have already seen that economic activity includes all those actions that involve the production, distribution, and consumption of goods and services.
Money and Credit
Money and credit form the basis of financial transactions. Credit is an agreement between a ‘borrower’ and a ‘lender’ of money in which a borrower takes a sum from the lender to pay it back at a later time
RBI and Monetary policy
he Reserve Bank of India was set up by the RBI Act, 1935 and was nationalised on 1st Jan 1949; Its responsibilities are noted in its preamble as follows: “To regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability
Non Performing Assets
Any loan for which the principal or the interest payment remains overdue for more than 90 days is known as a Non performing Assets (NPA) in India. It is a bad loan for which there is very little chance of recovery by a bank. Mounting NPAs has the potential of bringing down the whole banking
Financial Inclusion
Financial inclusion has been defined as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low-income groups at an affordable cost
Niche Banking
Niche banking are those banks that target a specific market or specific type of project and bridge the needs of banks tailored to the specific needs of certain categories of customers. Why do we need such a banking system?
Rural Financing
Regional rural banks are established under the RRB Act, 1976.
The aim behind the establishment of RRBs was to take banking services to the doorsteps of the rural masses, especially in remote areas with no access to banking services
Payment Systems
India’s Payment system consists of several bank-to-bank transfers of payment technologies as well as payments through mobile banking systems. We shall study these systems in this chapter in detail. Banknotes and coins as a share of GDP in India
Banking
The banking sector is a critical component of the Indian economy, and as such, is an important topic for the Civil Services Exam (CSE) in India. The CSE is a competitive examination conducted by the Union Public Service Commission (UPSC) to select candidates for various civil service positions in the Indian government, including the Indian Administrative Service (IAS), the Indian Foreign Service (IFS), and the Indian Police Service (IPS).
In the UPSC CSE, candidates may be tested on their knowledge of the banking sector in India, including the role of banks in the economy, the types of banks operating in the country, the regulatory framework for banks, and the challenges and issues facing the banking industry.
Classification of Banks in accordance with the RBI Act of 1934
All banks (Commercial Banks, RRBs, and Cooperative Banks) can be categorised as either scheduled or non-scheduled.
- Scheduled Banks
The banks mentioned in the second schedule of the RBI Act of 1934.
Eligible for borrowing from RB at the Bank Rate.
Non- Scheduled Financial Institutions
Banks not included in the second schedule of the RBI Act of 1934.
Generally unable to receive loans from RBI.
Industrial Banks
It is separated between the public sector and the private sector.
governed by the Banking Regulation Act of 1949.
They can collect deposits, offer loans, and provide additional financial services for profit.
(a) Public Sector Financial Institutions
More than fifty percent of these banks’ shares are controlled by the government.
After the merger of SBI with its partner banks and Bhartiya Mahila Bank, there are currently 21 public sector banks in India (BMB).
The government carried out the nationalisation of banks in two stages:
- In July of 1969, fourteen banks were nationalised as part of the initial phase of nationalisation.
- In April 1980, six banks were nationalised during the second stage of the nationalisation of banks.
Objectives of bank nationalisation:
1. Eliminating Private Monopolies
2. Social Welfare
3. Enhancement of Banking Services
Concentration on Priority Sector Lending
Private Sector Institutions
- The majority of shares in these banks are not controlled by the government.
- Private sector banks include both Indian and international banks.
- Old Banks are private banks that were established before 1990 (liberalisation of the economy).
- Private banks that were established after 1990 (due to economic liberalisation) are classified as New Banks.
- Local Region Banks Local area banks are private banks that are permitted to operate in a limited region and are incorporated under the Companies Act of 1956. The minimum needed capital for these banks is 5 crores INR.
Regional Rural Banks Created under the RRB Act of 1976
- Regional Rural Banks are established by banks in the public sector.
- The purpose of RRBs is to promote the flow of credit to rural regions.
- Since the Kelkar committee’s April 1987 recommendations, no new RRBs have been established.
- Cooperative banks established to finance agriculture, cottage industries, etc., are able to accept deposits and make loans.
- The National Bank for Agriculture and Rural Development (NABARD) is the pinnacle of India’s cooperative sector.
Other topics that may be covered in the CSE related to the banking sector include financial inclusion, financial literacy, and the use of technology in banking.
To prepare for the CSE, candidates should familiarize themselves with the relevant subject matter and be able to analyze and interpret data and information related to the banking sector in India. It may also be helpful to stay current on developments in the banking industry and to have a basic understanding of economics and finance.
