IBPS Study Material

As many of the Bank’s has completed first phase of recruitment and are in second phase of selecting the right candidate. Most bank’s are going through the GD/PI of the shortlisted candidates. Here they check the confidence level, their presentation & communication skills, bank’s also check the way in which the candidate express his views to others. This is done in the second round of recruitment i.e. Group Disussion.

Group Discussion (GD) is and activity, wherein 8-12 people form a group, and are given a topic to discuss/situation to analyze and reason. Normal duration of a GD ranges between 15-20 minutes. Usually, the participants are given a preparation time of 2-5 minutes but there are also instances when one will be required to speak without preparation.

Their are certain things which the candidates should keep in mind while attending the GD round. As, Group Discussions are typically used for Personality Assessment Stage, which is an important stage for selection in Bank jobs. Some of these we tried to state below:

Do’s of Group Discussions:

  • Utilize the time effectively to understand the overall meaning of the topic- Have an open mind. This will help you to bring in those points that are not likely to be raised by others.
  • Organize and structure your thoughts before speaking- i.e. Opening the GD or while summarizing it.
  • Maintain eye contact with the group in general and with the individual when he/she is speaking
  • Address the group in general; avoid over-communicating with or referring to specific individuals.
  • Use short sentences to convey the essence of your points- i.e. – speak with depth.
  • Manage the way you look, speak and conduct- Etiquette’s.
  • Control your weaknesses- e.g. difficult vocabulary, speaking about points that you cannot substantiate or defend.
  • Use the right (rare) moments when the more vocal members pause to bring in your point.
  • Use ‘we’ or ‘the group’ or ‘most of us/all of us/some of us’ – remember it’s a group discussion and you are part of the group.

Don’ts of Group Discussions:

  • Do not just think from one angle of thought and bring only obvious facts or ideas to the discussion.
  • Do not speak your thoughts in disjoint phrases. Avoid stutters and stammers.
  • Do not look at your notes while speaking or when others are speaking. Stay involved even when you are not speaking.
  • Avoid having dialogues or conversation with specific individuals within the group.
  • Do not use long-winding sentences to convey your points.
  • Do not be aggressive or use negative tone of speech.
  • Do not lose control or become nervous.
  • Do not moderate/ cut others in between unnecessarily.
  • Avoid using ‘I’ or ‘he/she’, ‘they’
  • Avoid citing examples of points raised by others or repeat your own points- remember time is limited- quantity does not fetch extra points.
  • Do not bring in new points in the summary or conclusion.
  • Avoid aggressive body language- make sure you do not occupy the space of other participants and also while making hand movements avoid having pen or pencil in the hand that point to others.

Read well about below stated topics before attending IBPS GD round and prepare well as these can also be asked in PI round.

List of important Group discussion (GD) topics which may be a part of your IBPS GD’s:  

1)      Women’s reservation bill.
2)      India economic development is not reaching to the people who need it most.
3)      Food inflation is the result of Indian Government mismanagement and apathy.
4)      Removing CBSE X exams is a bad move. Discuss
5)      India will become superpower in near future
6)      Foreign direct investment will revitalize the education system.
7)      Is disinvestment in profit making PSU’s advisable?
8)      IPL is good for business but bad for cricket?
9)      Is the Consumer really the King in India?
10)   Should the public sector especially Delhi Jal Board be privatized?
11)   Privatization will lead to Less Corruption
12)   Media has become a tool of propaganda for the rich and the powerful
13)   Education and medicine are no longer noble professions, they have become commercial.
14)   Voting should be made compulsory.
15)   Recession is the mother of innovation.
16)   Breaking down larger Indian states into smaller will lead to better governance and development.
17)   How to deal with high oil prices?
18)   Lokpal Bill should be implemented or not?
19)   Does moral policing preserve the culture?
20)   Caste based reservation- A boon or a bane?
21)   We should conserve and preserve our rich monuments.

Also, go through our post preparing for interviews.

Leave a comment below, if you have any query regarding IBPS GD/PI.

IBPS RRB Recruitment Notification released for various posts in Regional Rural Banks through Common Written Exam (CWE).IBPS RRB Exam will be conducted in month of September for Office Assistant at Scale I, II, and III posts and Office Assistant. So this is the high time when candidates are busy in preparing for the RRB’s to ensure their selection. Here are some tips which one should keep in mind while preparing and attempting the IBPS RRB paper.

The students might be busy in preparation for RRB exam but we need a strategy to crack the exam with a good score. For that, some points and planning should be done so that we can 100% attend the paper with accurate answers. There are generally 5 sections in any bank exam that should be well prepared.

• Reasoning
• Quantitative
• Computer awareness
• General awareness
• English

Points to be remembered while preparing for exam:

1. You have to develop a strategy while preparing for RRB. Just go through the syllabus well and mark the topics that are most important and what are least important.

2. Make it a habit of scheduling your starting days of preparation till exam date. You have to plan your studies as per your timetable. Minimum 5 hours should be given to score well in RRB.

3. You have to start from your weaker topics and denote as much time to it than stronger topics. The exam is for PO post and it’s going to be tough if you want to have a good score.

4. Do not be over confident on some subjects that you are well aware. Just be honest to yourself and try to practice well.

5. Sometimes, students takes it easy the topics like quantitative and reasoning by seeing the questions. Try to do it practically and use a stop watch just to make sure that are you able to complete the paper on time as in exam.

6. Whatever practice you do, just try to learn from your experiences. Preparation is the style how you get yourself ready for the accurate result.

7. Many times, students try to spend time on the topics they are well known and are quite perfect in that.But you also have to concentrate more on the topics that are less favorable to you.

8. The complete preparation is not the perfect solution for qualifying RRB exam with a good score. Just make sure – Do you have effective time control in yourself ? Are you able to handle the questions within the given time period irrespective of their quality and stuff?

9. Do not overlap your whole time on your preparation. You should also go through the model test papers and especially previous exam solved material so that you can match your answers at the end and have the result.

Points to be remembered while attempting paper:

• Do check your admit card with other important challan copies and documents required at the time of attempting paper and place them out.

• Read the paper carefully and check if there is any misprint in a question or some missing page.

• Just try to make points in your mind which section will you attempt first. Go through the questions and decide it in your mind.

• Never stuck on 1 question or the one you are not sure.

• Just try to attempt only those questions that are easy to do and are multiple category questions. This will make you study one time and can attempt 5 questions quickly.

• In English section, do not start reading the passage first as it spends our most of the precious time and specially in the case you are weak in English. Just try out other types of grammar questions.

• At the end, be sure that you have successfully attempted the section wise questions that are necessary for qualifying.

All the best !! We are here to share with you our experience so that you can learn from it and attempt much better. Do share your questions/queries with us so that we can answer them.

Every year thousands of candidates apply for Bank Job vacancies, but few of them get selected. Applicants need to be aware of certain things before they attempt the exam which can help them to get success in the exam. It is important to minimize your negative marking while attempting the paper as it decreases your score and effect your score card a lot. Candidates should not blindly do the guess work while doing the paper as insteed of increasing it decreases their marks. Candidates should keep following points in mind while attempting the paper:

1) The first n foremost thing is practice well as practice makes a man perfect and hence u wont prone to frequent mistakes.
2) Read the questions carefully specially in maths regarding d digits.
3) Avoid blind guess work.
4) Solve the confident questions first.
5) Be calm and composed in the examination hall while answering or else you would mistake the known ones too.
6) Improve your speed before hand by learning tricks rather than being panic at the last moment.
7) Read all the options well before  jumping to a conclusion .
8) Have a look over the different sections in the extra time provided and select your section of excellence in which you can perform well and fast as you would save ample  time to focus on the tougher sections and would provide a mental peace which is the most important here.
9) Do try to solve the left questions by being attentive and using your IQ and inteligence as sometimes guess work also proves lucky!
10) Do not stick to a particular question or section if you are not able to solve it just switch to some other problem and try the left ones afterwards with some freshness in your brain !

If a student follows the above mentioned points before and during the exams he will surely minimize negative marks up to a great extent and will definitely do better in Bank Exams compared to others because most of the candidates do not pay attention in minimizing their negative marking.

We wish All the Best to our candidates for the upcoming Bank Exams and hope for their success.

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In the banking examination, the interviews are going on for 19 nationalized banks and candidates are preparing for the interview questions. It just not only depends upon the type of questions you have been asked by the interviewer but also the way you are behaving inside the interview hall. This question wanders inside the mind of many candidates who are expecting their interview calls. Let’s share some of the points to be remembered how to behave inside the interview hall-:

  • You have to be very careful about the knowledge and presentation at the time of attending your interview. Just be sure of your intellectual skills firstly and have enough confidence so that no one can see that you are getting nervous.
  • Interview is the ending part of the process of selection so that counts several features like your confidence, knowledge, your behavior, attitude etc.
  • As you enter the interview hall and come across the interview panel members, just wish them good morning / noon as per the timings. There should be sweetness dissolved in your voice with softness. And sit confidently after they offered you.
  • While having your seat, avoid making noise of the chair and sit straight with your arms on the armrest. Do not lean or stoop forward as it looks awkward.
  • Now, its turn for the interviewer to proceed further. Never try to start yourself. Wait until he/she goes through your resume and then start answering their questions confidently.
  • Be clear and bold in your way of answering to them. Do not give long or too short answers. Speak just as it is required. If you don’t know the answer, tell them without giving wrong or incorrect information.
  • Just be honest and try to answer confidently. While answering, avoid looking here and there or around the room. Just have eye contact with the interviewer .this shows your self confidence and your positive attitude.
  • While giving the answers, don’t try to show that you are fully aware and making haste in answering it. Just be patient and calm and answer it correctly. Don’t try to be fake and vague.
  • At the last, when interviewer ends the interview, just wish them and leave the hall silently.

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IBPS exam tests one thing to the core – Candidate’s time management skills. This has been proved both in IBPS PO as well as IBPS Clerical Exam. Time Management is a critical thing for IBPS Bank Exams. “How do we manage the time and finish the paper on time?” – one good question asked by all candidates who take up the IBPS exam. Maths or quantitative aptitude part consumes lot of time. We will hardly find maths questions without multiplication and division. Here we have come up with short cut method for percentage calculation:

How to find 2.5 percent of a number?

  • Choose a number (start with 2 digits and advance to 3 with practice).
  • Divide by 4 (or divide twice by 2).
  • Move the decimal point one place to the left.


  • If the number selected is 110:
  • Divide 110 by 4: 110/4 = 27.5
  • Move the decimal point one place to the left :  2.75
  • So, 2.5% of 110 = 2.75.

How to find 5% of a number?

  • Choose a large number (or sum of money).
  • Move the decimal point one place to the left.
  • Divide by 2 (take half of it).


  • If the amount of money selected is Rs.850:
  • Move the decimal point one place to the left.: 85
  • Divide by 2: 85/2 = 42.50
  • So 5% of Rs.850 = Rs.42.50.

How to find 15% of a number?

  • Choose a 2-digit number.
  • Multiply the number by 3.
  • Divide by 2.
  • Move the decimal point one place to the left.


  • If the number selected is 43:
  • Multiply by 3: 3 × 43 = 129
  • Divide by 2: 129/2 = 64.5
  • Move the decimal point one place to the left: 6.45
  • So 15% of 43 = 6.45

How to find 20 percent of a number?

  •  Choose a 2-digit number.
  • Divide the number by 5.


  • If the number selected is 38:
  • Divide by 5: 38/5 = 7.6
  • So 20% of 38 = 7.6

How to find 25 percent of a number

  • Divide by 4.


  • If the number selected is 86:
  • Divide 86 by 4: 86/4 = 21.5
  • So 25% of 86 = 21.5.

How to find 33 1/3 percent of a number

  • Choose a number.
  • Divide the number by 3.


  • If the number selected is 74
  • Divide by 3: 74/3 = 24 2/3
  • So 33 1/3% of 74 = 24 2/3

How to find 40 percent of a number

  • Choose a 2-digit number.
  • Multiply the number by 4.
  • Move the decimal point one place to the left.


  • If the number selected is 21:
  • Multiply by 4: 4 × 21 = 84
  • Move the decimal point one place to the left: 8.4.
  • So 40% of 21 = 8.4.

How to find 45 percent of a number

  • Choose a 2-digit number.
  • Multiply the number by 9.
  • Divide by 2.

Move the decimal point one place to the left.


  • If the number selected is 36:
  • Multiply by 9: 9 × 36 = 270 + 54 = 324
  • Divide by 2: 324/2 = 162
  • Move the decimal point one place to the left: 16.2
  • So 45% of 36 = 16.2.

IBPS conducted IBPS CWE Clerk Exam on 27th Nov 2011 and below is the patter of the test with respect to various sections and marks allotted to different sections – English, Reasoning, Maths, Computers and General Awareness

English Pattern

  • Passage with reference to banking/business -15 Marks
  • Cloze Test – A portion of text will be given with certain words removed. You have to add the missing words -10 Marks
  • Common Errors – 10 Marks
  • Conjunctions  – 5 Marks
  • Correct Misspelled world – 5 Marks
  • Use Correct Verbs- 5 Marks

Reasoning Pattern

  • Verbal Reasoning – 10 questions
  • Non Verbal Reasoning – 10 questions
  • Seating Arrangement – 5 questions
  • Statement N Conclusion – 5 questions
  • Number Series– 5 questions
  • Coding, Decoding – 5 questions
  • Syllogism – 5 questions

Maths Pattern

  • Sums on Decimal, Arithmetic, Mensuration, Speed, Age, Train, Interest, Percentage etc. – 25 questions

Computer Pattern

  • Basic computer questions

GA+GK Pattern

  • General Awareness in banking – (70%)
  • GK (Current Affairs) – 30%

IBPS Banking and General Awareness Questions Answers

IBPS Sample Questions for General Awareness Exam

IBPS conducted common written exam for recruitment of clerical cadre in 19 banks on 27th Nov 2011. Some of the important questions asked in IBPS CWE Clerk Exam 27 Nov 2011 were as follows –

1. What is Repo Rate??
(a) It is the rate at which RBI gives loans to its prime customers.
(b) It is the rate at which RBI gives loans to poor people.
(c) It is the rate at which commercial banks borrows rupees from RBI.
(d) It is the rate at which RBI borrows rupees from Commercial banks.
(e) None

2. N Rangaswamy is the new CM of Puducherry, he actually belongs to which party.?
(a) BSP
(b) BJP
(c) All India NR Congress.
(e) UDF

3. Who is Union Agriculture Minister at present.
(a) Rajiv Kumar Shukla.
(b) Sharad Pawar
(c) Jairam Ramesh
(d) Shashi Tharor
(e) None

4. Define KYC in banking sector.
(a) Know Your Customer.
(b) Know Your Consumer.
(c) Know Your Collapse.
(d) Knew Your Customer.
(e) None.

5. Which is the Central Bank to the Government in India.
(a) SBI
(b) RBI
(d) SEBI
(e) None.

6. NPA stands for
(a) Non Performing Asset.
(b) Non Performing Adopt.
(c) Not Performing Asset.
(d) Non Performal Asset.
(e) None

7. Financial Inclusion means
(a) Including every Indian citizen financially.
(b) Providing banking services to metropolitan areas.
(c) Special scheme for senior citizens.
(d) Special scheme for government employees.
(e) None

8. India recently with which country sign land border dispute agreement.
(a) Nepal
(b) Bangladesh
(c) Pakistan
(d) China
(e) None

9. Who is the new president of Singapore.
(a) Tony Tane
(b) Robbert Zoellick
(c) Domnique Strauss kan
(d) Yoshihiko Noda
(e) None

10. Bulls and Bears is related with
(a) Cricket
(b) Football
(c) Shares
(d) Chess
(e) None

11. Gagan Narang is recently honored with
(a) Sita Puraskar
(b) Rajiv Gandhi Khel Ratna award.
(c) Dronacharya Award
(d) Vyas Samman
(e) None

12. RTGS means
(a) Money transfer from one branch to another branch of the same Bank.
(b) Money transfer from one branch to another branch of the different Bank.
(c) Money transfer from one Country to another country.
(d) Does not transfer money.
(e) None

13. Who is Dipika Kumari.
(a) Famous Archer.
(b) Famous Swimmer.
(c) Famous Cricketer.
(d) Famous Discuss Thrower.
(e) None

14. Which award is given in cinema sector.
(a) Pritkzer Prize.
(b) Dada Saheb Phalke award
(c) Nehru Trophy
(d) Man Booker Prize.
(e) None

15. In SEZ what does S stands for.
(a) Special
(b) Simple
(c) Stagnant
(d) Stiff
(e) None

16. Nationalized Banks are also called as
(a) Public Sector banks.
(b) Private Sector banks.
(c) Corporate banks.
(d) MFI.
(e) None

17. Where is the headquarter of International organization IAEA?
(a) Vienna
(b) Washington DC
(c) Russia.
(d) England
(e) None

18. Which Government scheme is related to Health Services.
(a) ASHA
(b) Jeevan Arogya
(c) Swabhimaan
(e) None

19. Which person is also called as a father of Green Revolution.
(a) Dr. MS Swaminanthan.
(b) Dr. Ella Bhatt.
(c) Dr. Vijay Mallya.
(d) Dr. Siddartha Mukherjee
(e) None

20. Which country is NOT related with OPEC group.
(a) China
(b) Kuwait
(c) Iran
(d) UAE
(e) None

21. Nirumpama Rao is recently appointed as an Indian ambassador to__________
(a) UK
(b) USA
(c) Russia
(d) UAE
(e) Kuwait

22. Which credit rating company is recently in news.
(b) UNDP
(c) Standard & Poor’s
(d) IAEA
(e) ADB

23. Teachers Day is celebrated on_____
(a) 5th of September.
(b) 5th of November.
(c) 5th of December.
(d) 5th of August.
(e) None

24. Currency of Iran is
(a) Real
(b) Peso
(c) Euro
(d) Dollar
(e) Lira

25. Which one is a private sector bank.
(a) IDBI
(b) Bank of Rajasthan
(c) HDFC
(e) None

26. ILO stands for
(a) International Labour Organization.
(b) International Local Organization.
(c) Indian Labour Organization.
(d) Italy Labour Organization.
(e) None

27. Which one of the following is not related with Hockey.
(a) Rangaswamy Cup
(b) Nehru Trophy
(c) Dhyanchand Cup
(d) Sultan Azlan Shah.

IBPS important sample questions for General Awareness (GA) paper. Most of the questions were asked in IBPS Clerk CWE Exam conducted on 27 Nov 2011. We are not providing the answers the questions here. Please answer them in the comment sections for others.

  • Net asset Value
  • Bangladesh currency
  • RTGS – maximum and Minimum Limit
  • What is EMI’s full form?
  • ISRO – Full Form
  • LNG – Full form
  • Current Foreign Minister
  • Why did Manmohan Singh visit Bangladesh recently?
  • Novak Djokovic – What player?
  • CASA
  • Retail Loans
  • Housing Loan
  • What is no ball in cricket?
  • Oil Producing Country?
  • G20 Summit
  • ECB
  • Literature Award
  • Gagan Narang was awarded?
  • Anushka sharma _ IIFA
  • IMF is headquartered in?
  • Who is present Ex-Chairman in Ragya sabha
  •  UNESCO mainly works for?
  • World bank head quarters?
  • Which bank has the largest no of branches and atms in India?
  • All bank should follow the rules of which Act?
  • In BR Act Expand R?
  • The Ownerships of the bank is under…???
  • Question on Teesta dispute of INDIA and Bangladesh?
  • NEFT and RTGS
  • Expand EFT?
  • Saina Nehwal is related to which sport?
  • Ranji Trophy is related to which sport?
  • Montek Singh Ahluwalia got which award?
  • Which country is the largest producer of Jute?
  • 2016 summer Olympics in which place?
  • G-8 countries
  • When is the Ozone day?
  • South Sudan president/ prime minister?
  • Japan prime minister?
  • Cheque related questions
  • Non-Performing Asset
  • New president of Singapore
  • Bulls and Bears is related with
  • Who is Dipika Kumari.
  • Nationalized Banks are also called as
  • Financial Inclusion means
  • India recently with which country sign land border dispute agreement.
  • Union Agricultur e Minister at present.
  • N Rangaswamy is the new CM of Puducherry, he actually belongs to which party.?

Banking Regulator

The Reserve Bank of India is

  • The central banking and monetary authority of India
  • The regulator and supervisor of commercial banks

Scheduled Banks in India

Scheduled banks comprise scheduled commercial banks and scheduled co-operative banks.

  • Scheduled commercial banks form the bedrock of the Indian financial system, currently accounting for more than three-fourths of all financial institutions’ assets.
  • SCBs are present throughout India, and their branches, having grown more than four-fold in the last 40 years now number more than 80,500 across the country.

Public Sector Banks

  • Public sector banks are those in which the majority stake is held by the Government of India.
  • Public sector banks together make up the largest category in the Indian banking system.
  • There are currently 27 public sector banks in India.
  • They include the SBI and its 6 associate banks, 19 nationalized banks and IDBI Bank Ltd.
  • Public sector banks have taken the lead role in branch expansion, particularly in the rural areas.
  • Public sector banks account for bulk of the branches in India (88 percent in 2009).
  • In the rural areas, the presence of the public sector banks is overwhelming; in 2009,
  • 96 percent of the rural bank branches belonged to the public sector.

Regional Rural Banks

  • Regional Rural Banks (RRBs) were established during 1976-1987 with a view to develop the rural economy.
  • Each RRB is owned jointly by the Central Government, concerned State13 Government and a sponsoring public sector commercial bank.
  • RRBs provide credit to small farmers, artisans, small entrepreneurs and agricultural laborers.
  • Over the years, the Government has introduced a number of measures of improve viability and profitability of RRBs, one of them being the amalgamation of the RRBs of the same sponsored bank within a State. This process of consolidation has resulted in a steep decline in the total number of RRBs to 86 as on March 31, 2009, as compared to 196 at the end of March 2005.

 Private Sector Banks

  • In this type of banks, the majority of share capital is held by private individuals and corporate.
  • Not all private sector banks were nationalized in 1969, and 1980.
  • The private banks which were not nationalized are collectively known as the old private sector banks and include banks such as The Jammu and Kashmir Bank Ltd., Lord Krishna Bank Ltd etc.
  • As at end March, 2009 there were 7 new private sector banks and 15 old private sector

Foreign Banks

  • Foreign banks have their registered and head offices in a foreign country but operate their branches in India.
  • The RBI permits these banks to operate either through branches; or through wholly-owned subsidiaries.
  • The primary activity of most foreign banks in India has been in the corporate segment.
  • However, some of the larger foreign banks have also made consumer financing a significant part of their portfolios.
  • These banks offer products such as automobile finance, home loans, credit cards, household consumer finance etc.
  • Foreign banks in India are required to adhere to all banking regulations, including priority-sector lending norms as applicable to domestic banks.
  • Some of the existing private sector banks, which showed signs of an eventual default, were merged with state owned banks.
  • It may be noted that two important erstwhile developmental financial institutions, viz. Industrial Development Bank of India (IDBI) and Industrial Credit and Investment Corporation of India (ICICI) converted themselves into commercial banks after the new bank licensing policy was announced in July 1993.
  • In addition, a foreign institution could also invest up to 74% in domestic private bank, in which up to 49% can be via portfolio investment.
  • At the end of June 2009, there were 32 foreign banks with 293 branches operating in India.
  • Besides, 43 foreign banks were operating in India through representative offices.
  • Under the World Trade Organization (WTO) Agreement, RBI allows a minimum 12 branches of all foreign banks to be opened in a year.

Co-operative Banks

  • Co-operative banks cater to the financing needs of agriculture, retail trade, small industry and self-employed businessmen in urban, semi-urban and rural areas of India.
  • A distinctive feature of the co-operative credit structure in India is its heterogeneity.
  • The structure differs across urban and rural areas, across states and loan maturities.
  • Urban areas are served by urban cooperative banks (UCBs), whose operations are either limited to one state or stretch across states.
  • The rural co-operative banks comprise State co-operative banks, district central cooperative banks, SCARDBs and PCARDBs.
  • The co-operative banking sector is the oldest segment of the Indian banking system. The network of UCBs in India consisted of 1721 banks as at end-March 2009, while the number of rural co-operative banks was 1119 as at end-March 2008.
  • Owing to their widespread geographical penetration, cooperative banks have the potential to become an important instrument for large-scale financial inclusion, provided they are financially strengthened.
  • The RBI and the National Agriculture and Rural Development Bank (NABARD) have taken a number of measures in recent years to improve financial soundness of co-operative banks.

Role of Reserve Bank of India

  • The Reserve Bank of India (RBI) is the central bank of the country.
  • It was established on April 1, 1935 under the Reserve Bank of India Act, 1934, which provides the statutory basis for SCARDB stands for state co-operative agricultural and rural development banks and PCARDB stands for primary co-operative agricultural and rural development banks.
  • In addition, the rural areas are served by a very large number of primary agricultural credit societies (94,942 at end-March 2008).
  • Financial Inclusion implies provision of financial services at affordable cost to those who are excluded from the formal financial system.
  • Every country has its own central bank. The central bank of USA is called the Federal Reserve Bank, the central bank of UK is Bank of England and the central bank in China is known as the People’s Bank of China and so on.
  • Most central banks were established around the early twentieth century.

Functions of RBI

When the RBI was established, it took over the functions of currency issue from the Government of India and the power of credit control from the then Imperial Bank of India. As the central bank of the country, the RBI performs a wide range of functions; particularly, it:

  • Acts as the currency authority
  • Controls money supply and credit
  • Manages foreign exchange
  • Serves as a banker to the government
  • Builds up and strengthens the country’s financial infrastructure
  • Acts as the banker of banks
  • Supervises banks

RBI as Bankers’ Bank

  • As the bankers’ bank, RBI holds a part of the cash reserves of banks,; lends the banks funds for short periods, and provides them with centralized clearing and cheap and quick remittance facilities.
  • Banks are supposed to meet their shortfalls of cash from sources other than RBI and approach RBI only as a matter of last resort, because RBI as the central bank is supposed to function as only the ‘lender of last resort’.
  • To ensure liquidity and solvency of individual commercial banks and of the banking system as a whole, the RBI has stipulated that banks maintain a Cash Reserve Ratio (CRR).
  • The CRR refers to the share of liquid cash that banks have to maintain with RBI of their net demand and time liabilities (NDTL).
  • CRR is one of the key instruments of controlling money supply. By increasing CRR, the RBI can reduce the funds available with the banks for lending and thereby tighten liquidity in the system; conversely reducing the CRR increases the funds available with the banks and thereby raises liquidity in the financial system.

RBI as supervisor

  • To ensure a sound banking system in the country, the RBI exercises powers of supervision, regulation and control over commercial banks.
  • The bank’s regulatory functions relating to banks cover their establishment (i.e. licensing), branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction and liquidation.
  • RBI controls the commercial banks through periodic inspection of banks and follow-up action and by calling for returns and other information from them, besides holding periodic meetings with the top management of the banks.
  • While RBI is directly involved with commercial banks in carrying out these two roles, the commercial banks help RBI indirectly to carry out some of its other roles as well. For example, commercial banks are required by law to invest a prescribed minimum percentage of their respective net demand and time liabilities (NDTL) in prescribed securities, which are mostly government securities. This helps the RBI to perform its role as the banker to the Government, under which the RBI conducts the Government’s market borrowing program.