Banking System in India

The RBI was established in 1935 under the RBI Act 1934 and was nationalized on January 1, 1949.

The Royal Commission on Indian Currency and Finance, known as the Hilton Young Commission, recommended the creation of a central bank.

The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks.

SLR is the proportion of Net Demand and Time Liabilities (NDTL) that banks must maintain in liquid assets such as cash, gold, or government securities.

The RBI acts as the central bank and provides banking services to other commercial banks, hence it is called the Banker's Bank.

The Narasimham Committee (1991) was set up to suggest comprehensive reforms in the Indian banking sector.

As per the current RBI guidelines for 'on-tap' licensing of universal banks in the private sector, the minimum paid-up voting equity share capital is Rs. 500 crore.

Repo Rate is the rate at which the RBI lends money to commercial banks against government securities.

RRBs were set up on October 2, 1975, based on the recommendations of the M. Narasimham Working Group.

NDTL stands for Net Demand and Time Liabilities, which represents the total deposits of a bank from the public.

The regulation of Housing Finance Companies was transferred from the National Housing Bank (NHB) to the Reserve Bank of India in 2019.

14 major commercial banks were nationalized on July 19, 1969, by the Indira Gandhi government.

Punjab National Bank (PNB), established in 1894, was the first bank purely managed by Indians.

MSF is a window for banks to borrow from the RBI in an emergency situation when inter-bank liquidity dries up completely.

Currency chests are storehouses where bank notes and rupee coins are stocked on behalf of the Reserve Bank of India for distribution to other bank branches.

Issuing currency is the monopoly function of the Reserve Bank of India, not commercial banks.

NABARD was established on July 12, 1982, on the recommendations of the B. Sivaraman Committee.

The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance cover for bank deposits up to Rs. 5 Lakh per depositor.

The Base Rate is the minimum interest rate of a bank below which it cannot lend, except in specific cases permitted by the RBI.

HSBC introduced the first ATM in India in 1987 in Mumbai.

The Reserve Bank of India (RBI) mandates that banks provide a specified portion of their lending to priority sectors like agriculture and MSMEs.

Domestic Systemically Important Banks (D-SIBs) are those whose failure could potentially disrupt the entire financial system.

CIBIL collects and maintains records of an individual's credit payments pertaining to loans and credit cards to generate a credit score.

The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of RBI, provides insurance coverage for bank deposits.

Bancassurance is an arrangement where a bank and an insurance company partner so that the insurance company can sell its products to the bank's customer base.

LIC Housing Finance provides banking-like services (loans) but is registered as an NBFC under the Companies Act, not as a commercial bank.

CRR is the share of a bank's total deposit that is mandated by the RBI to be maintained with it in the form of liquid cash.

The Lead Bank Scheme was introduced in 1969 based on the recommendations of the Gadgil Study Group and Nariman Committee.

The Imperial Bank of India was reconstituted as the State Bank of India in 1955 following the recommendation of the Gorwala Committee.

The EXIM Bank of India is the principal financial institution in India for coordinating the working of institutions engaged in financing exports and imports.

ARCIL (Asset Reconstruction Company India Limited) is India's first and one of the largest ARCs, established to buy bad loans (NPAs) from banks.

OMO is a monetary policy tool used by the RBI to control money supply by buying or selling government securities in the open market.

NPCI (National Payments Corporation of India) launched UPI to facilitate instant real-time payments between two bank accounts.

IFSC is an 11-character alphanumeric code used to identify the specific bank branch participating in NEFT, IMPS, or RTGS transactions.

Scheduled banks are those which satisfy the criteria laid down in the Second Schedule of the Reserve Bank of India Act, 1934.

Banks act as collection agents for the government through OLTAS (Online Tax Accounting System) via E-PAY portals.

The call money market is a segment of the money market where banks borrow or lend funds on an overnight basis.

The Banking Regulation Act, 1949, provides the legal framework for the regulation and supervision of commercial banks in India.

LAF allows banks to borrow money from the RBI through Repo or lend money to the RBI through Reverse Repo to manage short-term liquidity.

Banks included in the Second Schedule of the Reserve Bank of India Act, 1934, are termed 'Scheduled Banks', as defined under Section 2(e).

The FSDC was set up to strengthen and institutionalize the mechanism for maintaining financial stability and enhancing inter-regulatory coordination.

The Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory body for the pension sector in India.

A Letter of Credit is a financial document issued by a bank that guarantees that a buyer's payment to a seller will be received on time and for the correct amount.

A Vostro account is an account that a correspondent bank holds on behalf of another bank; in India, it is maintained in Indian Rupees.

The Institute for Development and Research in Banking Technology (IDRBT) was established by the RBI to provide technological research and support for the banking sector.

NIM is the difference between the interest income earned by a bank and the interest paid to its depositors, expressed as a percentage of interest-earning assets.

RWA is used to determine the minimum amount of capital that must be held by banks to reduce the risk of insolvency as per Basel accords.

Co-operative banks are governed by the Banking Regulation Act, 1949 and the respective State Co-operative Societies Acts.

MUDRA provides refinance support to banks, MFIs, and other financial institutions for lending to micro and small business entities.