General & Banking Awareness — Fundamentals

A structural note before anything else: this topic is unusually time-sensitive — repo rates, CRR/SLR values, the current RBI Governor, and scheme-specific parameters all change over time, sometimes frequently. This page deliberately explains what each concept means and how it functions (stable, definitional knowledge) rather than stating specific current figures, which would go stale and could mislead you if taken as current fact. Always verify today's actual repo rate, CRR, SLR, and officeholder names against RBI's own official website or a current-affairs source before an exam — never rely on a number stated in any static study material, including this one, without checking it's still current.

RBI's core functions — structurally stable, worth knowing precisely

The Reserve Bank of India's core functions, as an institution, are stable regardless of who currently leads it or what the current rates are: issuing currency (sole authority to issue banknotes in India), acting as banker to the government and to other banks, regulating the banking sector, managing foreign exchange reserves, and conducting monetary policy to control inflation and support growth. Understanding these five functional categories gives you a framework for classifying almost any RBI-related exam question, even one testing a specific current detail you might not have memorized.

Monetary policy tools — what each one structurally does

•Repo rate: the rate at which RBI lends short-term funds to commercial banks. Raising it makes borrowing more expensive for banks (and, downstream, for consumers/businesses), which is a tool to cool inflation; lowering it does the opposite, to stimulate borrowing/growth.

•Reverse repo rate: the rate at which RBI borrows from banks (banks parking excess funds with RBI). It's the inverse mechanism to repo — used to absorb excess liquidity from the banking system.

•CRR (Cash Reserve Ratio): the percentage of a bank's deposits it must hold as cash reserves with RBI, earning no interest on that portion — a tool to directly control how much money banks can actually lend out.

•SLR (Statutory Liquidity Ratio): the percentage of deposits a bank must hold in approved liquid assets (government securities, gold, cash) — unlike CRR, held by the bank itself, not with RBI.

The commonly-tested distinction between CRR and SLR: CRR is cash specifically, held with RBI, earning nothing; SLR can be held in interest-bearing approved securities, held by the bank itself. Getting this specific distinction precisely right is a frequent, direct exam question.

The Monetary Policy Committee (MPC) — structure, per the statute establishing it

The MPC is a 6-member committee (RBI Governor as chair, plus other RBI and external members, per the framework established by the 2016 RBI Act amendment) responsible for setting the repo rate, meeting on a defined regular cadence (commonly referred to as "bi-monthly" in exam material). > Note (verify current specifics): exact current member names, and any procedural details beyond this basic structure, should be checked against RBI's current official information — committee membership changes over time even though the 6-member structure itself is set by statute.

NPA (Non-Performing Asset) — the definitional basics

A loan/asset becomes an NPA when interest or principal payment remains overdue for a defined period (commonly cited as 90 days in exam material for most standard loan categories) — beyond this point, the bank must classify it as non-performing rather than continuing to treat it as a performing (normal, currently-being-repaid) asset, which has real accounting and regulatory-provisioning consequences for the bank. > Note (verify current specifics): exact category-specific NPA classification periods and any regulatory updates to this framework should be checked against RBI's current guidelines rather than assumed fixed indefinitely.

Types of banks in India — the structural categories

Scheduled Commercial Banks (public sector, private sector, foreign banks, regional rural banks), Cooperative Banks, and Payments Banks/Small Finance Banks (newer categories with more limited permitted activities than full-service commercial banks) are the core structural categories worth knowing distinctly — exam questions frequently test which category a specific named institution belongs to, or what activities a given category is/isn't permitted to perform.