BANKING GENERAL KNOWLEDGE — RBI, BANK ACCOUNTS AND DIGITAL PAYMENTS

PRERNA FOR IAS

         Mehnat Aapki, Guidance Humari

         Roz ki Prelims Practice — Experts ke Saath

BANKING GENERAL KNOWLEDGE — RBI, BANK ACCOUNTS AND DIGITAL PAYMENTS

1. Meaning and Role of Banks

• A bank is a financial institution that accepts deposits, provides credit and offers payment and other financial services.
• Banks mobilise household savings and channel funds towards agriculture, industry, trade, housing and consumption.
• They are therefore important intermediaries between savers and borrowers and form a basic part of the financial system.

2. Reserve Bank of India

• The Reserve Bank of India (RBI) is India’s central bank.
• It was established on 1 April 1935 under the Reserve Bank of India Act, 1934.
• Its Central Office was initially located in Kolkata and was permanently shifted to Mumbai in 1937.
• RBI regulates monetary and banking conditions and acts as banker to the Government and to banks.

3. Major Functions of RBI

• RBI formulates and implements monetary policy with the objective of maintaining price stability while keeping growth in mind.
• It issues currency, manages foreign-exchange reserves, regulates banks and payment systems, and promotes financial stability.
• It also performs developmental and supervisory functions and supports financial inclusion and financial literacy. (Reserve Bank of India)

4. Deposit Accounts

• Banks offer different deposit products according to customer requirements.
• A Savings Account is primarily designed for individuals to keep money safely while retaining convenient access to funds.
• A Current Account is generally suited to businesses and others requiring frequent transactions.
• Other common products include Fixed Deposits and Recurring Deposits.

5. Lending and Other Banking Services

• Banks provide loans for purposes such as housing, education, agriculture, vehicles and business.
• They also provide services such as fund transfers, debit cards, cheque facilities, lockers, internet banking and mobile banking.
• Interest charged on loans and income from various financial services are important sources of banking revenue.

6. IFSC