💰 Pillar 1: Money, Banking & Finance

RBI • Monetary Policy • Digital Payments • Banking

1. Money: Evolution & Functions

🍅🌽 Barter System & Its Disadvantages

Double Coincidence of Wants: Both parties must want what the other has
High Search & Transaction Costs: Finding the right trading partner is difficult
Storage Problems: Perishable commodities lose value over time
No Specialization: Discourages division of labour

📏 Functions of Money

Primary Functions (2):

Measure of Value: Unit of account (gm=wt, ml=vol, ₹=value)
Medium of Exchange: Facilitates buying & selling of goods/services

Secondary Functions (3):

Store of Value: Savings for future use
Transfer of Value: Remittances (e.g., soldier in Kashmir to parents in Kanyakumari)
Deferred Payments: Credit/EMI system (e.g., iPhone on EMI)

Contingent Functions (3):

Basis of Credit System: Financial markets (shares, bonds)
Employing Factors of Production: Land, Labour, Capital
Redistribution of National Income: Via taxation

💵 Evolution of Money

Type	Features	Intrinsic Value	Examples
Commodity Money	Perishable, not uniform, not pure	✅ Yes	Iron nails, bear pelts, cocoa beans, whale teeth, gold nuggets
Metallic Money	Stamped by traders/kings for uniformity & trust	✅ Yes	Indo-Greek coins, Kushana coins, Gupta gold coins (most spectacular), Delhi Sultanate Silver Tanka, Sher Shah Suri Rupiyah, Akbar's Muhr
Full-Bodied Coins	Intrinsic value ≥ Face value	✅ Yes	Gupta coins (~8gm gold), risk of debasement
Token Coins	Intrinsic value < Face value	⚠️ Less	Modern Indian coins (Cupronickel), Coinage Act 2011 prohibits melting
Paper Money (Fiat)	No intrinsic value, issued by Govt/Central Bank	❌ No	Currency notes (RBI Act 1934), ₹1 note by Finance Secretary, other notes by RBI Governor
Bank Money	Deposit money, cheques, DD	❌ No	Cheques, Demand Drafts (Negotiable Instruments Act 1881)
Digital Money	Electronic payments	❌ No	UPI, NEFT, RTGS, IMPS, Cards

                💵⚖️ Legal Tender: Currency that must be accepted for payment of debts (fulfills 2 conditions: Fiat Money + Legally valid)
                
                        Type
                        Limit
                        Examples
                    
                        Limited Legal Tender
                        Recipient can refuse beyond limit
                        
                            Coins: ₹1 and above upto ₹1000
50 paisa × 20 coins = upto ₹10
₹1 paper note
Below 50 paisa coins withdrawn (2011)

                        Unlimited Legal Tender
                        No restriction
                        All RBI bank notes (Section 26, RBI Act 1934)

Type	Limit	Examples
Limited Legal Tender	Recipient can refuse beyond limit	Coins: ₹1 and above upto ₹1000 50 paisa × 20 coins = upto ₹10 ₹1 paper note Below 50 paisa coins withdrawn (2011)
Unlimited Legal Tender	No restriction	All RBI bank notes (Section 26, RBI Act 1934)

💵 Demonetization

Definition: Removal of legal tender status of currency notes
Previous Instances: 1946, 1978
2016 Demonetization: ₹500 & ₹1000 notes (Mahatma Gandhi series) banned
Specified Bank Notes Act 2017: RBI not required to honor "I promise to pay..."

💵 ₹2000 Note Withdrawal (2023)

Status: NOT demonetized, but withdrawn from circulation
Options: Deposit (no limit) or Exchange (₹20,000 per visit) by Sept 30, 2023
Reasons: Temporary measure, not commonly used, clean note policy, 4-5 year lifespan
Result: 97%+ notes returned by Jan 2024

🐷🔖 Bank Money / Deposit Money

Cheque: Three parties - Drawer (Sender), Drawee (Bank), Payee (Recipient)
Types: Stale (3 months), Post-dated, Ante-dated
IFSC Code: 11 alphanumeric - identifies bank branch
MICR Code: 9 digits in Magnetic Ink - for automated clearance
Cheque Truncation System (CTS): Faster settlement via scanned images
Positive Pay Mechanism: Protects against cheque manipulation
2024 Reform: CTS settlement within few hours (T+1 cycle)

2. Digital Payment Systems

💸📡 Electronic Orders / Digital Payment

Payment & Settlement System Act 2007: Empowers RBI to regulate card payment, e-payment related products and services.

💸📡 Core Banking Solution (CBS)

Banking software with web-platform for centralized data management & branch-less banking
Examples: Finacle, BanCS, E-Kuber (RBI)

📡 Payment Systems Comparison

System	Full Form	Amount Range	Settlement	Features
RTGS	Real Time Gross Settlement	Min ₹2 lakh	Instant, 24/7	Gross settlement (individual transactions)
NEFT	National Electronic Funds Transfer	Upto ₹10 lakh	30 min intervals, 24/7	Batch processing
IMPS	Immediate Payment Service	₹1 to ₹5 lakh	Instant, 24/7	Mobile-based, immediate
UPI	Unified Payment Interface	₹1 lakh/day (normal) ₹2 lakh (capital markets) ₹5 lakh (G-Sec/IPO)	Instant, 24/7	QR code, Push & Pull transactions

🕵🏻 NPCI (National Payment Corporation of India)

Established: 2008 (Not-for-profit company under Companies Act)
Ownership: Promoted by banks, later Paytm/PhonePe became shareholders
Key Products:
- UPI (Unified Payment Interface)
- RuPay Card
- BHIM (Bharat Interface for Money, 2016)
- NACH (National Automated Clearing House)
- Aadhaar Enabled Payment System (AEPS)
- e-RUPI (Digital gift voucher, 2021)

🤳 UPI (Unified Payment Interface)

Technology: Based on IMPS, QR code based payments
Features:
- Push transactions (payer initiates)
- Pull transactions (payee requests)
- Bank account linking via VPA (Virtual Payment Address)
Daily Limits:
- Normal transactions: ₹1 lakh/day
- Capital markets: ₹2 lakhs/day
- G-Sec/IPO: ₹5 lakhs/day
UPI Variants:
- UPI Lite: On-device wallet, upto ₹500/transaction, no PIN required
- UPI Lite-X: Offline payments via NFC (Near Field Communication)
- 123PAY: For feature phones - IVR, missed call, USSD based
- Conversational Payments: Voice-based UPI transactions
Pre-sanctioned Credit Line: UPI overdraft facility (2023)
Interoperable Card-less Cash Withdrawal (ICCW): UPI at ATMs
QR Code Coin Vending Machine: Using UPI (2023)
UPI for Cash Deposit Machines (CDMs): Card-less deposits
Single-block-multiple-debits: One authorization for multiple payments
Delegated Payments: Secondary accounts for children (2024)

💳 RuPay Card

Launched: 2012 (World's 7th payment gateway)
Channels: ATM, PoS, Online portals
Benefit: Lower fees than Mastercard/Visa
Network Portability: RBI order (2024) - customers can switch networks
International Acceptance: Growing acceptance in UAE, Singapore, etc.

💳 Card Types & Security

Card Tokenization (Oct 2022): Replaces card details with tokens for security
CVC Less Transactions: For recurring payments
Auto-Debit/E-mandates: Additional Factor of Authentication (AFA) required

💳 Transport & Travel Cards

National Common Mobility Card (NCMC, 2019): One card for all transport
FASTag (2017): Electronic toll collection on highways
SBI Nation First Transit Card (2023): For public transport

💳 Merchant Discount Rate (MDR)

Definition: Fee charged by payment gateway from merchant
MDR Subsidy: MEITY provides subsidy for digital transactions
RuPay MDR: Lower than international cards

🌐 Global Money Transfer

UPI for Foreign Tourists (2023): UPI facility for international visitors
UPI in Sri Lanka, Mauritius (2024): International expansion
India-UAE LCSS: UPI-IPP linkage (2023)
Project Nexus: Indian UPI connect with Asian nations (2024)
SWIFT: Financial messaging system (Russia banned in 2022)

👨‍⚖️ Payment System Operators

New Umbrella Entity (NUE, 2019): Alternative to NPCI for retail payments
Third Party Application Providers (TPAPs): Google Pay, WhatsApp Pay

🕵️‍♂️ Digital Payment Regulatory Bodies

Digital Transactions Ombudsman (DTO, 2019): Consumer grievance redressal
BPSS: Board for Regulation and Supervision of Payment and Settlement Systems (Statutory body)
Payment Regulatory Board (PRB): Under RBI Act amendment

3. RBI & Monetary Policy

🐯 Reserve Bank of India (RBI)

Established: 1935 (RBI Act 1934), Nationalized: 1949 (RBI Transfer of Ownership Act 1948)
History:
- 1926: Hilton Young Commission recommended setting up RBI
- 1929: Great Depression led to collapse of 450+ banks in India
- 1935: RBI operational from April 1, first Governor: Sir Osborne Smith
- 1949: All private shares transferred to Govt of India
Central Board:
- Official Directors: RBI Governor + 4 Dy. Governors
- Non-Official Directors: 2 Govt officials + 10 nominated by Govt + 4 from local boards
Functions:
- Monetary Authority: Controls money supply, makes monetary policy
- Banker to Government: Union & State govts, Public Debt Manager
- Banker to Banks: Lender of Last Resort, advises on monetary matters
- Currency Issuer: Issues M0 under RBI Act
- Regulator: All banks (BR Act 1949), Payment Systems (2007), AIFI, NBFC-D
- Promotional: Customer protection (Ombudsman), Financial Inclusion (PSL norms)
- Data Publication: Annual Financial Stability Report
- International Cooperation: BASEL, IMF, G20 FSB, NGFS (Network for Greening Financial System)
RBI Portals:
- UDGAM (2023): Unclaimed Deposits Gateway To Access inforMation
- PRAVAAH (2023): Platform for Regulatory Application, Validation And AutHorisation
- Daksh (2022): Web portal for supervision
- E-Kuber: Core banking solution for RBI operations
- Digital Payments Intelligence Platform (2024): To reduce payment fraud

🤑 Money's Demand, Supply & Creation

🤲 Demand of Money: Liquidity Preference Theory (Keynes, 1936)

People prefer to keep assets in liquid form (cash) with 3 motives:

Transaction Motive: For daily purchases (milk, vegetables)
Precautionary Motive: Against sudden/unforeseen expenditure (medical emergency)
Speculative Motive: To make best use of investment opportunities (waiting for gold/land prices to fall)

Key Point: Amount of money held in cash varies inversely with deposit interest rates.

💸📥 Deposit Types

Type	Examples	Liquidity	Interest
Time Deposits (FDRD)	Fixed deposits, Recurring deposits, Staff security deposits	Less liquid	Higher interest
Demand Deposits (CASA)	Current Account, Savings Account, Demand Draft, Overdue FD balance	More liquid	Lower/No interest

🏦🍀 Green Deposits

2023: RBI released guidelines for Green Fixed Deposits
Purpose: Money loaned to green/environment related projects
Who can collect: Banks, deposit-taking NBFCs, Housing Finance companies
Allowed: Renewable energy, waste management, clean transportation, energy efficiency, afforestation
Not Allowed: Fossil fuels, nuclear power, tobacco
Coverage: Covered by DICGC (upto ₹5 lakh)

💸📥📐 Measures of Money Supply (M0, M1, M2, M3, M4)

Measure	Components	Type	Liquidity
M0 (Reserve Money)	Currency in circulation + Bankers' deposits with RBI + Other deposits with RBI	Base Money	Highest
M1 (Narrow Money)	Currency with public + Demand deposits with Commercial Banks	Narrow	Very High
M2	M1 + Time deposits with Post Office Savings Bank	Narrow	High
M3 (Broad Money)	M1 + Time deposits with Commercial Banks	Broad	Medium
M4	M3 + Total deposits with Post Office (excluding NSC)	Broad	Lower

Note: M3 is most commonly used measure (Aggregate Monetary Resources). M1 & M2 = Narrow Money. M3 & M4 = Broad Money.

💸⚡⛵️ Money Multiplier

Definition: Amount of M3 generated with each rupee of M0
Formula: Money Multiplier = 1 / CRR (simplified)
Example: 10% CRR generates 10x times of M0 money
Factors Increasing MM:
- ↓ CRR
- ↑ Banking penetration
- ↑ Financial inclusion
- ↑ Loan demand (boom period)
- Expansionary monetary policy
Historical: 1960s < 2x, 1990s > 3x, Present > 5x

💸🖨 M0: Creation of Money

RBI's Issue Department: Assets must match liabilities

Assets of Issue Department	Liabilities of Issue Department (M0)
Rupee coins (from Govt) Gold coins (Min ₹200 cr) Gold bullion (Min ₹115 cr) Foreign Securities (earlier Min ₹400 cr, post-1995 no requirement) Indian Govt Securities	Currency in circulation (Public + Banks' vault cash) Bankers' Deposits with RBI (CRR) Other deposits with RBI (Public, NBFCs, Govts, Intl orgs)

Key Point: M0 ↑ increases when RBI's asset side increases ↑

🐯📢 Monetary Policy

Definition: Macroeconomic policy designed by Central Bank to manage money supply & interest rates, shaping inflation, consumption, savings, investment, & capital formation.

Objective: Keep inflation within 2-6% CPI (All India) using bi-monthly monetary policy by 6-member statutory Monetary Policy Committee (MPC).

📐 Quantitative Tools (General/Indirect Tools)

🗄✂️ Statutory Reserve Requirements: CRR & SLR

Parameter	CRR (Cash Reserve Ratio)	SLR (Statutory Liquidity Ratio)
Full Form	Cash Reserve Ratio	Statutory Liquidity Ratio
Where kept	With RBI (no interest, except extraordinary circumstances)	In liquid assets (cash, gold, G-Sec, T-Bills, State Development Loan Bonds)
Current Rate	4.50% of NDTL	18.00% of NDTL
Legal Limit	No min/max (but RBI won't keep 100%)	Max 40%
Act	RBI Act 1934	Banking Regulation Act 1949
Purpose	Money multiplier effect, buffer during bank run	Liquidity buffer, buffer during bank run

Note: CRR/SLR counted on fortnightly basis. Penalty if not maintained.

📐 Rates: LAF Corridor

Rate	Full Form	Purpose	Current (2024)
MSF	Marginal Standing Facility	Emergency borrowing from RBI (Repo + 0.25%)	6.75%
Repo Rate	Repurchase Rate	RBI lends to banks (Policy Rate)	6.50%
SDF	Standing Deposit Facility	Banks park excess funds (Repo - 0.25%, no collaterals)	6.25%
Reverse Repo	-	Legacy rate (unchanged at 3.35%)	3.35%
Bank Rate	-	Penalty rate for CRR/SLR shortfall	Linked to Repo

Policy Corridor: MSF (6.75%) ← → Repo (6.50%) ← → SDF (6.25%)

🏪 Open Market Operations (OMO)

Inflation ↑: RBI sells G-Sec → Money supply ↓
Deflation ↓: RBI buys G-Sec → Money supply ↑
Operation Twist (2019): Simultaneous buying long-term G-Sec & selling short-term G-Sec to flatten yield curve
G-SAP (2021): Government Securities Acquisition Programme - pre-announced OMO for predictability

🌽 Qualitative Tools (Selective Tools)

Moral Suasion: RBI advises banks (informal pressure)
Direct Action: Strict warning, deeper audit, restricting operations
Margin Requirements / LTV: Loan to Value ratio for secured loans
Selective Credit Control: Sector-specific lending restrictions

🐯📢🌽 Priority Sector Lending (PSL)

Target: 40% of Adjusted Net Bank Credit (ANBC) for SCBs
Categories:
- Agriculture (18%)
- Micro, Small & Medium Enterprises (MSME) - 7.5%
- Export Credit
- Education
- Housing
- Social Infrastructure
- Renewable Energy
- Startups
PSL Shortfalls: Contribute to RIDF (Rural Infrastructure Development Fund) or UIDF (Urban Infrastructure Development Fund)
PSLC (2016): Priority Sector Lending Certificates - banks can buy/sell to meet targets

📢 Monetary Policy Committee (MPC)

Established: 2016 (RBI Act amendment)
Composition: 6 members
- 3 from RBI: Governor (Chairperson) + 2 Dy. Governors
- 3 External: Appointed by Central Govt (4-year term, not eligible for reappointment)
Meetings: Bi-monthly (every 2 months)
Decision: By majority vote (Governor has casting vote in case of tie)
Mandate: Maintain inflation within 2-6% CPI (All India)
Stance Types: Accommodative, Neutral, Calibrated Tightening

🔪🤲🏻🏠🛵 Banks' Lending Rates

Evolution:

1969-1991: Administered interest rates (Govt decided)
2003: Benchmark Prime Lending Rate (BPLR)
2010: Base Rate system (ineffective transmission)
2016: Marginal Cost of Funds based Lending Rate (MCLR) - still ineffective
2019 (Oct 1): External Benchmark system (mandatory for new loans)

External Benchmark Formula: External Benchmark + Spread (Profit) + Risk Premium = Bank's Loan Interest Rate

External Benchmarks: RBI repo rate, 91-day T-bill yield, 182-day T-bill yield, or Financial Benchmarks India Ltd benchmarks

Eligible Loans: Personal loans, Retail loans (home, vehicle), MSME loans

🐯🔇 Limitations of Monetary Policy

Poor transmission (before External Benchmark)
Supply-side issues (monsoon, oil prices, wars)
Fiscal deficit, subsidy leakage, populist loan waivers
Structural issues (ease of doing business, infrastructure)
Informal moneylenders in rural areas
Black Swan Events (unprecedented crises)
Liquidity Trap (interest rates near zero, no impact on demand)

                💡 Key Concepts:
                Money Multiplier: How much M3 increases per unit of M0. Formula: MM = 1/CRR (simplified). Higher MM = more liquidity.
Liquidity Overhang: Money supply >> Demand for money (loans). Results in cheaper loan rates.
Incremental CRR (i-CRR): Temporary CRR on incremental deposits (used after ₹2000 withdrawal)
Net Interest Margin (NIM): Loan interest - Deposit interest. NIM >5% is dangerous for financial stability.

            

4. Banking Classification

🏦👨‍⚖️ Scheduled Banks

Definition: Banks listed in 2nd Schedule of RBI Act. Must fulfill 2 conditions:

Paid Up Capital + Reserves = Min ₹5 Lakhs
Not conducting business harmful to depositors

Benefits: Eligible for RBI window operations (Repo, MSF), Govt accounts, Financial inclusion schemes

🏦👨‍⚖️ Commercial Banks - Pre-Independence

1770: Bank of Hindustan, Calcutta (Europeans)
1806-42: Three Presidency Banks (Bengal, Bombay, Madras) → 1921: Combined into Imperial Bank of India
1865: Allahabad Bank (Europeans)
1894: PNB (Indian owned, Lala Lajpat Rai helped)
1908: Bank of Baroda by Maharaja Sayajirao Gaekwad III
1913-30s: State Bank of Mysore, Patiala, Banking industry rise & collapse, Birth of RBI (1935)

🦁 Nationalization of Banks After Independence

Year	Event
1948	RBI Transfer of Ownership Act
1955	Imperial Bank nationalized → SBI
1969	14 Private banks with ₹50 cr+ deposits nationalized (Bank of Baroda, PNB, Dena, Canara, etc.)
1980	6 banks with ₹200 cr+ deposits nationalized (Corporation Bank, Vijaya Bank, Oriental Bank of Commerce, etc.)
2019	10 banks merged into 4 anchor banks (PNB, Canara, Union Bank, Indian Bank)

Reasons for Nationalization: Nexus between banks & industrialists, reckless lending, unwillingness to open rural branches, need for financial inclusion & Five Year Plans

🏦👨‍⚖️ Commercial Banks - Private Sector Banks

Three Rounds of Licensing:

Round-1 (1993-95): ICICI, HDFC, IndusInd, DCB, UTI (later Axis), IDBI (now LIC owned), Global Trust Bank
Round-2 (2001-04): Kotak Mahindra, Yes Bank
Round-3 (2013-16): Bandhan, IDFC (later IDFC-First)

On-Tap License (2016): Can apply anytime (like driving license), provided eligibility requirements met (min 10 years XP, ₹500 cr capital, etc.)

🈶 Foreign Banks

Incorporated abroad: Registered under foreign nation's Companies Act
Examples: Citibank, Bank of America, HSBC
On-tap license: On reciprocal basis (if foreign nation allows Indian banks, RBI allows their banks)
FDI Limits:
- Public Sector Banks: Max 20%
- Private Sector Banks: Upto 49% (automatic), upto 74% (with Govt approval)

🌎🚫 Differential Banks

Type	Established	Features	Examples
RRB (Regional Rural Bank)	1976	Geographical restrictions, 75% PSL, Shareholding: Union 50% + State 15% + Sponsor Bank 35% (2015 amendment: 51% + 49% pvt)	Uttar Bihar Gramin Bank
LAB (Local Area Bank)	1996	Max 3 districts, 1 urban centre per district, rest rural	Subhadhra Local Area Bank, Kolhapur
SFB (Small Finance Bank)	2015	25% branches in unbanked rural, 75% PSL, 50% of loans < ₹25 lakh, Can become Universal Bank after 5 years	Capital SFB, Ujjivan, Utkarsh (Total 10)
PB (Payment Bank)	2015	Max ₹2 lakh deposit, No FD, No loans, No credit cards, 25% access points in rural, Can become SFB after 5 years	Airtel, India Post, FINO, Paytm, Jio, NSDL (6 at present)

🏦👨‍🌾 Cooperative Banks

Types: Primary Agricultural Credit Societies (PACS), District Central Cooperative Banks (DCCBs), State Cooperative Banks
Regulation: RBI + State Govt (dual control)
2019 Crisis: PMC Bank scam
2020 Ordinance: Banking Regulation (Amendment) Act - RBI gets more powers over UCBs
NUCFDC (2024): National Urban Cooperative Finance and Development Corporation - Umbrella org/SRO for UCBs

🚫🏦👨‍⚖️ Non-Banking Financial Institutions

Development Finance Institutions (DFI)

Purpose: Long-term finance for infrastructure, industry
Examples: EXIM Bank, NABARD, NHB, SIDBI

🚫🏦👨‍⚖️ NBFCs (Non-Banking Financial Companies)

Definition: Financial institutions that provide banking services without holding banking license
Types:
- Deposit-taking NBFCs (NBFC-D): Can accept deposits (e.g., Bajaj Finserv)
- Non-deposit taking NBFCs: Cannot accept deposits (e.g., IL&FS)
- Systemically Important NBFCs: Asset size > ₹500 cr
Regulation: RBI (under RBI Act 1934)
2022 Reform: NBFCs can directly issue credit cards
PCA Framework (2022): RBI monitors NBFCs using NPA, CRAR, Tier 1 capital

🤖💳 FinTech Companies

Definition: Technology companies providing financial services
Regulated by RBI: Digital lenders, Account Aggregators, Payment Aggregators
Regulated by Others: SEBI (robo-advisors), IRDAI (insurtech)
Digital Lending Norms (2022): RBI guidelines for LSPs (Lending Service Providers)
FLDG: First Loss Default Guarantee - FinTech covers some losses
SRO: Self-Regulatory Organisation for FinTech

👻🚫🏦 Shadow Banking

Non-bank financial intermediation that performs bank-like activities but outside normal banking regulations. Includes NBFCs, Money Market Funds, etc.

🕵️‍♂️ Credit Information & Rating

Credit Information Companies (CIC): Collect credit history (e.g., CIBIL, Experian, Equifax, CRIF High Mark)
Credit Rating Agencies (CRA): Rate creditworthiness (e.g., CRISIL, ICRA, CARE, India Ratings)
CRILC: Central Repository of Information on Large Credits (RBI) - for loans > ₹5 cr
PCR: Public Credit Registry (proposed by RBI)
NFIR (Budget 2023): National Financial Information Registry - 360° credit information
Public-Tech Platform (2023): RBI's platform for frictionless credit

5. NPA & Banking Issues

🔪💀 Non-Performing Assets (NPA)

Definition: Loan where interest/principal not paid for 90+ days from due date. For farm loans: counted on cropping seasons, not days.

🔪💀 NPA Categories

Category	Definition	Duration
Standard Assets	Borrower repaying principal & interest timely	Not NPA
SMA-0	Special Mention Account - 0	1-30 days overdue
SMA-1	Special Mention Account - 1	31-60 days overdue
SMA-2	Special Mention Account - 2	61-90 days overdue
Substandard Asset	NPA for < 12 months	90+ days
Doubtful Asset	Substandard for 12+ months	12+ months as NPA
Loss Asset	Uncollectible, little/no salvageable value	Written off

🔪💀 NPA Related Terms

Gross NPA (GNPA): Total of all NPA loans
Net NPA: GNPA minus Provisioning
Provisioning: Funds set aside to cover NPA losses (reduces profitability)
Loan Write-Off: Removes loan from balance sheet (saves tax), but bank retains right to recover
Restructured Loan: Modified principal/interest rate/tenure
Stressed Assets: NPA + Written-Off + Restructured Loans
Evergreening: New loan to pay off old loan
OTS with Haircut: One Time Settlement - borrower pays less than due (e.g., 60% payment, 40% haircut)

🔪💀-🤑-😕-😭 Three Stages of NPA Problem

🤑 Till mid-2000s: Boom period - corporates became over-leveraged
😟 2007-08: Subprime & Global Financial Crisis - exports ↓, policy paralysis, judicial activism → projects delayed
😰 By 2013: ~1/3rd bank loans owned by "IC1 companies" (Interest Coverage Ratio < 1) → Twin Balance Sheet Syndrome (TBS)

⚖️🔪 SARFAESI Act 2002

Full Form: Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act

Origin: Narsimham-I (1991) & Narsimham-II (1998) recommendations
Purpose: Banks can attach mortgaged assets, change board of directors, auction assets without court intervention
Not Applicable: Farm loans
Appeal: DRT (Debt Recovery Tribunal) → DRAT (Debt Recovery Appellate Tribunal) → High Court
Who has SARFAESI Powers:
- All types of banks
- Housing Finance Companies (HFCs)
- NBFCs with asset size ≥ ₹100 cr AND loan ≥ ₹20 lakh
Limitations: DRTs understaffed (1 lakh+ cases pending), asset value erosion, not suitable for all businesses

⚖️🔪🤝 Insolvency and Bankruptcy Code (IBC) 2016

Purpose: Time-bound resolution of stressed assets (330 days limit)

Creditor Categories

Type	Definition	Committee of Creditors (CoC)
Financial Creditors (FC)	Banks, NBFCs, bond holders, home buyers	✅ Can sit in CoC
Operational Creditors (OC)	Suppliers, contractors, salaried employees	❌ Cannot sit

IBC Process

Insolvency Professional (IP): Makes resolution plan (reduce interest, extend tenure, find new investor)
Committee of Creditors (CoC): Financial Creditors vote on resolution plan
If approved: Plan implemented
If rejected: Liquidation of assets

⚖️🔪🤝 IBC Statutory Bodies

NCLT: National Company Law Tribunal (Adjudicating Authority for companies)
NCLAT: National Company Law Appellate Tribunal
IBBI: Insolvency and Bankruptcy Board of India (regulator, under MCA)
Information Utility (IU): NeSL (National E-Governance Services Ltd) - maintains borrower database

⚖️🔪🤝 Pre-Packaged Insolvency Resolution Process (PIRP)

2021: Enabled for MSMEs
Process: Borrower negotiates resolution plan with lenders BEFORE approaching NCLT
Time Limit: 120 days (faster than CIRP's 330 days)
Benefits: Quick, discreet, prevents brand damage, cost-effective, preserves jobs

👻🤧🔪✋ Atmanirbhar - Loan/EMI/NPA Relief (2020)

Moratorium: Optional 6-month suspension of loan repayment (March-Aug 2020)
Not Waiver: Loan not removed, only temporarily suspended
Resolution Framework 1.0 & 2.0: KV Kamath Committee recommendations for loan restructuring

👩🔧 Bad Bank (NARCL-IDRCL, 2021)

NARCL: National Asset Reconstruction Company Limited (ARC) - Purchases bad loans
IDRCL: India Debt Resolution Company Ltd (AMC) - Manages/auctions bad loan assets
Ownership: NARCL: 51% PSBs + 49% Pvt banks/NBFCs | IDRCL: 49% PSBs + 51% Pvt
Functioning: Pays 15% cash + 85% Security Receipts (SR) to banks
Sovereign Guarantee: ₹30,600 cr for Security Receipts (5 years)
Target: Resolve stressed loan accounts > ₹500 cr each (Total ~₹2 lakh cr)

🐯💉👹🦵💬✋ Prompt Corrective Action (PCA) Framework

Purpose: RBI classifies banks into Risk thresholds (#1, #2, #3) based on capital, asset quality
Actions: Strict warning, deeper audit, restrict salaries/dividends, restrict branch expansion/lending, force merger/shutdown
2022: PCA framework extended to NBFCs
2022: 4-tiered regulatory framework for Urban Cooperative Banks

🌐🕵️‍♀️ BASEL-III Norms

BIS: Bank for International Settlements (HQ: BASEL, Switzerland) - 60 countries' Central Banks
Purpose: Ensure global financial stability
Implementation in India: Phased from 1/4/2013
Key Requirements:
- CRAR: Capital to Risk Weighted Assets Ratio ≥ 9%
- CCB: Capital Conservation Buffer
- CCCB: Counter Cyclical Capital Buffer (when RBI notifies)
- Leverage Ratio (LR)
- NSFR: Net Stable Funding Ratio
- HQLA: High Quality Liquid Assets
- LCR: Liquidity Coverage Ratio
Risk-Weighted Assets (RWA): Assets weighted by risk
2023 Reform: Increased CRAR for unsecured loans (personal loans 100%→125%, credit cards 125%→150%)
D-SIB: Domestic Systemically Important Banks (SBI, ICICI, HDFC) - must keep additional capital

🕵️‍♂️🏦💸🙇 DICGC Act

Full Form: Deposit Insurance and Credit Guarantee Corporation
1961 Act: All banks must buy deposit insurance from DICGC
Ownership: 100% owned by RBI
Coverage: Upto ₹5 lakh per depositor per bank (increased from ₹1 lakh in 2021)
Payment Timeline: Within 90 days of RBI moratorium on weak bank
Limitations: Doesn't cover PACS, NBFCs, amounts > ₹5 lakh

🈶🌐⚖️ Fugitive Economic Offenders Act, 2018

Target: Economic offenders with ₹100 cr+ cases who left India
Process: Special courts under PMLA order appearance within 6 weeks → Declare FEO → Attach Indian & Overseas properties
Appeal: Only High Court & Supreme Court (no stay orders from ordinary courts)

6. Capital Markets & Securities

📈 Share Market Basics

Primary Market: New issues (IPO, FPO, QIP)
Secondary Market: Trading of existing securities (BSE, NSE)
SEBI: Securities Exchange Board of India (regulator, established 1992)

🐮📈🐻 Equity Instruments

Equity Holders: Owners/proprietors of company, get dividends, last claim during liquidation
Preference Shares: Fixed dividend, no voting rights, priority in liquidation
Ordinary Shares: Variable dividend, voting rights, last in liquidation
Share Types: Penny stocks, Blue Chip, Multi-bagger, Cyclical/Seasonal

🔪🗃 Debt Instruments (Bonds)

Definition: Fixed income instrument, loan to issuer
Types:
- G-Sec: Government Securities (T-Bills, Dated Securities)
- Corporate Bonds: Issued by companies
- Municipal Bonds: Issued by local bodies
- Green Bonds: For environment projects
- Social Bonds: For social projects
- Zero Coupon Zero Principal (ZCZP): Donation-like, no repayment
Bond Yield: Return on investment (inversely related to bond price)
Operation Twist: RBI buys long-term G-Sec & sells short-term to flatten yield curve

📊 SENSEX & NIFTY

SENSEX: BSE's 30 stock index (base: 1978-79 = 100)
NIFTY: NSE's 50 stock index (base: 1995 = 1000)
Beta: Measure of stock volatility relative to market (Beta > 1 = more volatile)
Alpha: Measure of fund performance vs benchmark

📦🤹🏻‍♂️👴🏻 Mutual Funds

Definition: Pooled investment managed by Asset Management Companies (AMCs)
Types:
- Open-ended: Can buy/sell anytime
- Close-ended: Fixed tenure
- Hybrid: Mix of equity & debt
- ELSS: Equity Linked Savings Scheme (tax saving)
- ESG Funds: Environment, Social, Governance focused
- Shariya Funds: Sharia-compliant
SIP: Systematic Investment Plan (regular investment)
Risk-o-meter: SEBI mandated risk indicator (1-6 scale)

🗃😼 SEBI (Securities Exchange Board of India)

Established: 1992 (statutory body)
Functions: Regulate securities market, protect investors, promote market development
Key Reforms:
- Circuit Breaker: Trading halt if market moves too much
- T+1 Settlement: Trade settlement in 1 day (instead of T+2)
- T+0 & T+1 hour: Instantaneous & 1-hour settlement (proposed)
- Investor Protection Fund (IPF): Compensation for investor losses
- Settlement Guarantee Fund (SGF): Ensures trade settlement
SCORES Portal: SEBI Complaints Redress System
SAT: Securities Appellate Tribunal (appeals against SEBI)

📈 Stock Exchanges

BSE: Bombay Stock Exchange (1875, oldest in Asia)
NSE: National Stock Exchange (1992)
Social Stock Exchange: For social enterprises (zero-coupon, zero-principal instruments)
DEMAT Account: Dematerialized account for holding securities (CDSL, NSDL)

📦 Investment Funds

ETF: Exchange Traded Fund (tracks index, traded like stocks)
CPSE-ETF: Central Public Sector Enterprise ETF
Bharat Bond ETF: Debt ETF (2019)
Gold ETF: Tracks gold prices
Bitcoin ETF: Approved in USA (2024)
Hedge Funds: For accredited investors (rich)
REITs/InvITs: Real Estate Investment Trusts / Infrastructure Investment Trusts
Sovereign Wealth Fund: State-owned investment fund
AIF: Alternative Investment Funds

🔗💮 Cryptocurrency & Blockchain

Status in India: Not legal tender, regulated for taxation
Taxation (Budget 2022): 30% on profits, 1% TDS on transfers
Blockchain: Distributed ledger technology
Hot Wallet vs Cold Wallet: Online vs offline storage
Bitcoin Halving (2024): 50% reduction in mining reward

💮 Central Bank Digital Currency (CBDC) - e₹

Definition: Digital token of legal tender issued by RBI
Types:
- Retail CBDC: For general public (P2P, P2M)
- Wholesale CBDC: For interbank settlements
Features:
- No interest earning
- Programmability (conditional spending)
- Offline capability (proposed)
- Interoperability with UPI QR codes
- Settlement finality (instant, irreversible)
Benefits: ↓ Printing cost, ↓ Counterfeiting, ↑ Traceability, Global money transfer easier
Challenges: Digital divide, cyber terrorism, electricity dependency
2024: Non-banks can also create CBDC wallets

💠 Non-Fungible Token (NFT)

Definition: Digital file (photo, music, art) stored using blockchain
Features: Cannot be subdivided, unique, non-fungible
Uses: Digital art, ownership documents, collectibles
Challenges: Investment bubble, money laundering, high electricity consumption

7. Insurance

⚰️ Insurance: Meaning & Significance

Definition: Legal contract against eventualities of death or damage
Parties: Insured (client) & Insurer (underwriter)
Significance: Provides stability to households & entrepreneurs, channels savings to investment

⚰️ Insurance Principles

Uberrima Fides: Good faith, hide nothing
Indemnity: Only "REAL" loss, not imaginary
Subrogation: Insurer can recover from negligent 3rd party
Causa Proxima: Direct loss link
Insurable Interest: Client must have legitimate interest

⚰️🏺 History of Insurance in India

1818: Europeans started insurance companies (charged higher premium on Indians)
1870: Bombay Mutual Life Insurance (first Swadeshi company)
1912: Life Insurance Companies Act
1938: Insurance Act (tougher regulation)
1956: LIC Act - nationalized ~245 private life insurance companies
1972: GIC Act - nationalized ~107 private general insurance companies
1993: Malhotra Committee → Private insurance allowed, FDI liberalized

⚰️💀 Life Insurance

Type	Money Returned at Maturity	Money at Death	Examples
Whole Life	✅ Yes (35-40 years)	✅ Yes	Long-term policy
Endowment	✅ Yes (10-20 years)	✅ Yes	Shorter policy
Term Life	❌ No	✅ Yes	PM Jeevan Jyoti Bima
ULIP	✅ Yes (with profit)	✅ Yes	Unit Linked Insurance Plan (part insurance, part mutual fund)

⚰️💀🦁 Life Insurance - Public Sector

Post Office Life Insurance (PLI): 1884, for employees in Panchayat/municipal/PSU/Cooperative
Rural Postal Life Insurance: 1995, for villagers
LIC (1956): Life Insurance Corporation of India
- HQ: Mumbai, Magazine: "Yogakshema"
- Motto: "Yogakshemam Vahamyaham" (from Gita)
- Aam Aadmi Bima Yojana (AABY, 2007): For BPL citizens
- Disinvestment (2022): Govt sold 5% shares via IPO

🧔⚰️ PM Schemes for Life & Accident Insurance (2015)

Scheme	Type	Age	Coverage	Premium
PM Jeevan Jyoti Bima (PMJJB)	Life Insurance	18-50 years	₹2 lakh on death	₹436/year (auto-debit)
PM Suraksha Bima (PMSBY)	Accident Insurance	18-70 years	₹2 lakh on death/disability	₹20/year (auto-debit)

⚰️💊🚕🌽 General Insurance

Public Sector: GIC (1972) with 4 subsidiaries: National Insurance, New India Assurance, Oriental Insurance, United India Insurance
2021 Amendment: General Insurance Business (Nationalisation) Amendment Bill - allows privatization
ESIC: Employees' State Insurance Corporation (for organized sector workers)

💊 Health Insurance Schemes

Standalone Health Insurers (SAHI): Companies only providing health insurance
Types: Individual vs Floater, Fixed vs Indemnity-based
Corona Kavach vs Rakshak: COVID-specific policies
Arogya Sanjeevani Policy: Standardized health insurance
SARAL JEEVAN BIMA: Standardized term life insurance

💊🤕5️⃣👪📆 Ayushman Bharat / PM Jan Arogya Yojana (PMJAY, 2018)

Coverage: ₹5 lakh annual health insurance per family
Beneficiaries: Based on SECC 2011 data (rural & urban poor), All senior citizens aged 70+ (2024)
NHA: National Health Authority (implementing agency)
SHA: State Health Agency (state-level implementation)
Funding: 60:40 (Centre:State) for states, 90:10 for NE states
Ayushman Bharat Digital Mission: Digital health records

⚰️💊🚕🌽 Other General Insurance

PM Fasal Bima Yojana (2016): Crop insurance (1.5-5% premium)
PM-FBY 2.0 (2020): Reforms in crop insurance
NIRVIC Scheme (2019): Insurance to banks on exporters' NPA
Third Party Motor Insurance: Mandatory
Own Damage (OD) Insurance: Optional, covers vehicle damage
Free/Cashless Treatment (2024): For road accident victims
Title Insurance: For property ownership disputes
Clinical Trial Liability Insurance: For pharma companies
Bharat Griha Raksha: Standardized home insurance
Catastrophe Insurance: Proposed for natural disasters
Cyber Insurance: For cyber attacks

⚰️↗️⚰️ Re-insurance

Insurance companies buy insurance from re-insurers to spread risk. GIC Re is India's national re-insurer.

⚰️🕵️‍♀️ IRDAI (Insurance Regulatory and Development Authority of India)

Established: 1999 (IRDAI Act)
Functions: Regulate insurance sector, protect policyholders
D-SIIs: Domestic Systemically Important Insurers (LIC, GIC Re, New India Assurance)
Reforms (2024):
- 30-day free-look period rule
- Reforms for senior citizens & HIV/Cancer patients
- Bima Vahak - Village level salesmen
- Bima Vistaar - All-in-1 Policy
- Bima Sugam - One-stop digital platform
- Insurance for all at Gram Panchayat Level
NHCX: National Health Claim Exchange - portal for faster hospital bill clearing

🇺🇸💸 FDI in Insurance Sector

Limit: 74% (automatic upto 26%, approval route 26-74%)
Arguments For: Capital infusion, technology transfer, competition
Arguments Against: Profit repatriation, less focus on rural/social obligations

8. Pension

👴🏻 Pension Systems

EPFO: Employees' Provident Fund Organisation (for organized sector)
NPS: National Pension System (voluntary, regulated by PFRDA)
Atal Pension Yojana: For unorganized sector (pension ₹1,000-5,000/month)
PM Shram Yogi Mandhan: For unorganized workers (pension ₹3,000/month)
PM Vay Vandana: For senior citizens (8% return via LIC)
Maan-Dhan Yojanas: Various pension schemes (₹3,000/month)

👴🏻 PFRDA (Pension Fund Regulatory and Development Authority)

Established: 2003 (PFRDA Act)
Functions: Regulate NPS, pension funds, protect subscribers

9. Financial Inclusion

🎯 Key Schemes

💰 PM Jan Dhan Yojana (PMJDY, 2014)

Purpose: Bank accounts for all
Features: Zero balance account, RuPay debit card, overdraft upto ₹10,000, accident insurance ₹2 lakh

🚫🏦👨‍⚖️🚫👨🌾 MUDRA (Micro Units Development & Refinance Agency, 2015)

Ownership: 100% SIDBI subsidiary
Purpose: Indirect lending via SCB, RRB, Cooperative Banks, MFI, NBFCs
Products:
- Shishu: Loans upto ₹50,000
- Kishor: ₹50,000 - ₹5 lakh
- Tarun: ₹5 lakh - ₹10 lakh (upgraded to ₹20 lakh in Budget 2024)
Collateral: Collateral-free, covered by CGFMU (Credit Guarantee Fund for Micro Units)
MUDRA Rupay Card: ATM cum Debit Card for working capital
2020: 2% interest subvention on Shishu loans for prompt payees

🙋‍♀️ Stand Up India Scheme (2016)

Purpose: Each SCB branch to give Greenfield Loans ₹10 lakh - ₹1 Crore to atleast 1 SC/ST and 1 Woman entrepreneur
Tenure: Upto 7 years
Collateral: Can ask, or covered by CGFSI if without collateral
Budget 2021: Margin money reduced from 25% to 15%, Agri-biz also eligible

👭 Self-Help Group (SHG) - Bank Linkage

Definition: Informal group of 10-20 local people combining savings/resources
1992: NABARD started SHG-Bank linkage program
Budget 2019: 1 woman in each SHG eligible for ₹1 lakh loan under Mudra
2020: SHGs given ₹20 lakh collateral-free loans, Govt procures masks/sanitizers from SHGs

🤑👨🏭 PM Street Vendors' AtmaNirbhar Nidhi (PM-SVANidhi)

Boss: Ministry of Housing and Urban Affairs (MoHUA)
Loan Tenure: 1 year, monthly repayment
Interest: ~7.25%, 7% interest subsidy for timely repayment
Cycles: 1st cycle ₹10,000 → 2nd cycle ₹20,000 → 3rd cycle ₹50,000
Main Bhi Digital (2021): Digital literacy, connect with Swiggy/Zomato
Rashtriya Udyamita Vikas Pariyojana (2024): 22 weeks entrepreneurship training

🪡🧵 PM Vishwakarma Scheme (2023-Sept)

Boss: MSME Ministry
Beneficiaries: 18 trades (Carpenter, Blacksmith, Potter, Cobbler, Tailor, etc.)
Entitlements:
- PM Vishwakarma certificate & ID card
- Skill Upgradation: Basic (5-7 days) + Advanced (15+ days), ₹500/day stipend
- Toolkit purchase: Upto ₹15,000 e-vouchers
- ₹1 per digital transaction bonus (max ₹100/month)
- Marketing Support
- Loan: Upto ₹3 lakh collateral-free (5% interest by beneficiary, 8% subvention by govt)

👨🏻🌾💳 Kisan Credit Card (1998)

Launched by: RBI + NABARD
Purpose: Farm inputs, investment credit, working capital, post-harvest expenses, consumption requirements
Budget 2018: Extended to Animal Husbandry & Fisheries
Interest Subvention: 9% - 2% (all farmers) - 3% (regular payees) = 4% effective rate

🌐🦁 Financial Inclusion Web Portals

psbloansin59minutes.com (2018): MSME loans ₹10L - 1 cr
Jan Samarth Portal (2022): Single portal for all govt loan schemes
SARTHI Portal (2024): Insurance portal for farmers/villagers
PM-SURAJ Portal (2024): Loans for SC/ST/OBC/Nomadic tribes

📈🌐🦁 Financial Inclusion Reports

Global Microscope Report: The Economist, Accion, Gates Foundation
Global Findex Database: World Bank
Global Pension Index: Mercer CFA Institute
Financial Inclusion Index: RBI (2021) - 0-100 score
National Strategy for Financial Inclusion: RBI

👨🏻🌾👨🏼‍🔧 Customer Protection

Sector	Ombudsman	Appeal
Bank/NBFC	Banking Ombudsman, NBFC Ombudsman, Digital Transaction Ombudsman (Integrated Ombudsman, 2021)	RBI
Share/Commodity	SCORES Portal	SEBI SAT
Insurance	Insurance Ombudsman (IRDAI Act 1999, upto ₹30 lakh)	SAT
Pension	EPFO (internal) / NPS (NSDL → PFRDA)	SAT

🎯 PYQ Sniper Shots

Q: What is Money Multiplier? (Prelims 2019, 2021)
A: Ratio showing how much M3 increases per unit of M0. Formula: MM = 1/CRR (simplified). Increases when CRR decreases, banking penetration increases, loan demand increases.

Q: Difference between RTGS and NEFT?
A: RTGS - Min ₹2 lakh, instant gross settlement, 24/7. NEFT - Upto ₹10 lakh, 30 min batch intervals, 24/7.

Q: What is NPCI? (Prelims 2016)
A: National Payment Corporation of India - Not-for-profit company (2008) promoting digital payments. Products: UPI, RuPay, BHIM, NACH, AEPS, e-RUPI.

Q: What is CBDC? (Prelims 2023, 2024)
A: Central Bank Digital Currency (e₹) - Digital token of legal tender issued by RBI. Types: Retail & Wholesale. Features: No interest, programmability, offline capability, interoperability with UPI QR codes, settlement finality.

Q: What is NPA? (Prelims 2020)
A: Non-Performing Asset - Loan where interest/principal not paid for 90+ days. Categories: Substandard (<12 months), Doubtful (>12 months), Loss (uncollectible). For farm loans: counted on cropping seasons.

Q: What is Legal Tender? (Prelims 2018, CDS 2011)
A: Currency that must be accepted for debt payment. Limited: Coins (upto ₹1000), ₹1 note. Unlimited: All RBI bank notes (Section 26, RBI Act 1934).

Q: What is RBI's function as 'Lender of Last Resort'? (Prelims 2012, 2021)
A: RBI provides liquidity to banks having temporary crisis. Banks can borrow from RBI in emergencies (MSF, Repo). This prevents bank runs and maintains financial stability.

Q: What is Interest Coverage Ratio (ICR)? (Prelims 2020)
A: Ratio of company's earnings to interest payments. ICR > 1 = good (can pay interest), ICR < 1 = bad (cannot pay interest). IC1 companies = ICR < 1.

Q: What is BASEL-III? (Prelims 2016)
A: International banking norms by BIS (Bank for International Settlements) to ensure financial stability. Requires banks to maintain CRAR ≥ 9%, Capital Conservation Buffer, Counter Cyclical Buffer, Liquidity ratios.

Q: What is SARFAESI Act? (Prelims 2017)
A: Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. Allows banks to attach mortgaged assets, auction them without court intervention. Not applicable on farm loans.

Q: What is IBC Code? (Prelims 2019)
A: Insolvency and Bankruptcy Code 2016 - Time-bound resolution (330 days) of stressed assets. Process: IP makes resolution plan → CoC votes → If approved: implement, If rejected: liquidation.

Q: What is Payment Bank? (Prelims 2016, 2017)
A: Differential bank accepting max ₹2 lakh deposits, no FD, no loans, no credit cards. Examples: Airtel, India Post, Paytm. Can become Small Finance Bank after 5 years.

Q: What is Small Finance Bank? (Prelims 2017)
A: Differential bank for financial inclusion. 25% branches in unbanked rural, 75% PSL, 50% loans < ₹25 lakh. Can become Universal Bank after 5 years. Examples: Capital SFB, Ujjivan, Utkarsh.

Q: What is MUDRA? (Prelims 2016)
A: Micro Units Development & Refinance Agency (2015) - 100% SIDBI subsidiary. Indirect lending via banks/NBFCs. Products: Shishu (upto ₹50k), Kishor (₹50k-5L), Tarun (₹5L-20L). Collateral-free, covered by CGFMU.

Q: What is NFT? (Prelims 2022)
A: Non-Fungible Token - Digital file (photo, music, art) stored using blockchain. Cannot be subdivided, unique, non-fungible. Used for digital art, ownership documents. Challenges: Investment bubble, money laundering.

Q: What is DICGC? (Prelims 2019)
A: Deposit Insurance and Credit Guarantee Corporation - 100% RBI owned. Insures deposits upto ₹5 lakh per depositor per bank. Pays within 90 days of RBI moratorium on weak bank.

Q: What is MPC? (Prelims 2017)
A: Monetary Policy Committee (2016) - 6 members (3 RBI + 3 External). Bi-monthly meetings. Mandate: Maintain inflation within 2-6% CPI (All India). Decides Repo Rate.

Q: What is External Benchmark system? (Prelims 2020)
A: Bank's loan interest rate = External Benchmark (Repo/T-bill yield) + Spread + Risk Premium. Mandatory from Oct 2019 for new loans. Better transmission of monetary policy.

Q: What is Stand Up India? (Prelims 2016)
A: Each SCB branch to give Greenfield Loans ₹10L-1Cr to atleast 1 SC/ST and 1 Woman entrepreneur. Tenure: Upto 7 years. Collateral-free, covered by CGFSI.

Q: What is PM Jan Dhan Yojana? (Prelims 2015)
A: Bank accounts for all (2014). Features: Zero balance, RuPay debit card, overdraft upto ₹10,000, accident insurance ₹2 lakh. Part of financial inclusion.

UPPCS Economics Pillar 1