How to Use this Capsule (Read first – 3 mins)

·       Exam pattern: 100 MCQs in 120 minutes; ~1.2 min/Q. No negative marking. Pass = 50% aggregate, 45% per paper.

·       Syllabus weightage (approx): Module A – Indian Economic Architecture (25%), Module B – Economic Concepts Related to Banking (20%), Module C – Indian Financial Architecture (35%), Module D – Financial Products and Services (20%).

·       D-Day strategy: Read this capsule twice. Solve all 60 MCQs at the end. Revise formulas table 30 mins before exam.

·       HIGH-YIELD topics: Repo/Reverse Repo, CRR/SLR, Inflation types, GDP/GVA, NPA classification, Basel III, Priority Sector, MSME, Money Market vs Capital Market, NPS/PMJDY/PMJJBY/PMSBY, Mutual Funds, Insurance basics.

 

SECTION 1 – Chapter-wise Short Notes (Exam-Oriented)

Module A – Indian Economic Architecture

Ch 1: Evolution of Indian Economy

·       Mixed economy (1948 Industrial Policy). Planned development started 1951 (1st Five Year Plan).

·       LPG reforms 1991: Liberalisation, Privatisation, Globalisation – by Dr. Manmohan Singh under PM P.V. Narasimha Rao.

·       NITI Aayog (1 Jan 2015) replaced Planning Commission. Chairperson = PM. CEO appointed by PM.

·       12th Five-Year Plan (2012-17) was the LAST plan. Now 3-year Action Agenda + 7-year Strategy + 15-year Vision.

·       Three sectors: Primary (agri ~17% GVA), Secondary (industry ~27%), Tertiary (services ~55%) – services largest.

Ch 2: Economic Planning

·       Father of Indian Planning: M. Visvesvaraya (1934 book ‘Planned Economy for India’).

·       Mahalanobis Model formed basis of 2nd Plan (1956-61) – heavy industry focus.

·       Rolling Plan introduced by Janata Govt (1978-83). PURA = Providing Urban Amenities in Rural Areas (Dr. APJ Kalam).

Ch 3: Sectors of Indian Economy

·       Agriculture: Green Revolution (M.S. Swaminathan, 1965-66), White Revolution (V. Kurien – milk), Blue Revolution (fisheries), Yellow (oilseeds), Pink (prawns/onion).

·       MSME (revised criteria from 1 Jul 2020): based on Investment + Turnover.

Category	Investment <=	Turnover <=
Micro	Rs 1 crore	Rs 5 crore
Small	Rs 10 crore	Rs 50 crore
Medium	Rs 50 crore	Rs 250 crore

 

Ch 4: Role of Government & PSUs

·       Maharatna (10 PSUs as per latest), Navratna, Miniratna I & II – based on net worth, profit, autonomy.

·       Disinvestment – DIPAM (Dept of Investment & Public Asset Management) under Ministry of Finance.

Ch 5: Indian Economy & Globalisation

·       BoP = Current A/c + Capital A/c + Errors. Surplus = forex reserves rise.

·       FDI vs FPI: FDI is long-term + management control (>10%); FPI is portfolio (<10%) and short-term.

·       WTO formed 1 Jan 1995, replaced GATT. India founder member.

Module B – Economic Concepts Related to Banking

Ch 6: National Income

·       GDP = market value of final goods/services produced WITHIN country.

·       GNP = GDP + NFIA (Net Factor Income from Abroad).

·       NDP = GDP – Depreciation; NNP = GNP – Depreciation.

·       National Income (NI) = NNP at Factor Cost.

·       Per Capita Income = NI / Population.

·       GVA at basic price + Net product taxes = GDP at market price (since Jan 2015 base year 2011-12).

·       CSO/MoSPI computes; Base Year currently 2011-12 (revision proposed to 2022-23).

Ch 7: Supply, Demand & Market

·       Law of Demand: Inverse relation – price up, demand down (ceteris paribus).

·       Giffen goods & Veblen goods are exceptions.

·       Elasticity: Ed = % change in Qd / % change in P. Ed>1 elastic, Ed<1 inelastic, Ed=1 unitary.

·       Market structures: Perfect competition, Monopoly, Oligopoly, Monopolistic, Monopsony.

Ch 8: Money Supply & Inflation

·       Monetary Aggregates: M1 (narrow money) = Currency with public + Demand deposits + Other deposits with RBI.

·       M2 = M1 + Savings deposits with Post Office.

·       M3 = M1 + Time deposits (BROAD MONEY – most used).

·       M4 = M3 + Total post office deposits (excl NSC).

·       Inflation types: Demand-pull, Cost-push, Stagflation (high inflation + high unemployment), Skewflation, Reflation, Disinflation, Deflation.

·       CPI base year: 2012=100 (combined). WPI base year: 2011-12=100.

·       Inflation target: 4% +/- 2% (Flexible Inflation Targeting since 2016, MPC framework).

·       Headline inflation = CPI; Core inflation = CPI excl food & fuel.

Ch 9: Theories of Interest

·       Classical: I = f(real factors); Keynesian: I depends on Liquidity Preference; Loanable Funds theory.

·       Real interest rate = Nominal rate – Inflation rate (Fisher Equation).

Ch 10: Business Cycles

·       Phases: Expansion, Peak (Boom), Recession, Trough (Depression), Recovery.

·       Recession (technical) = 2 consecutive quarters of negative GDP growth.

Ch 11: Monetary Policy

·       MPC (Monetary Policy Committee): 6 members – 3 RBI (incl Governor as Chair) + 3 external. Meets bi-monthly. Decision by majority; Governor has casting vote.

·       Quantitative tools: Repo, Reverse Repo, MSF, Bank Rate, CRR, SLR, OMO, MSS.

·       Qualitative tools: Margin requirements, Moral suasion, Direct action, Credit rationing.

·       LAF Corridor: MSF (upper) – Repo – SDF (lower; SDF replaced fixed Reverse Repo since Apr 2022 as floor).

·       CRR: Cash with RBI, no interest. SLR: in cash/gold/G-Sec, kept by bank itself.

Ch 12: Fiscal Policy

·       Fiscal Deficit = Total Expenditure – Total Receipts (excl borrowing).

·       Revenue Deficit = Revenue Exp – Revenue Receipts.

·       Primary Deficit = Fiscal Deficit – Interest Payments.

·       Effective Revenue Deficit = Revenue Deficit – Grants for capital assets.

·       FRBM Act 2003: Fiscal Deficit target 3% of GDP; Revenue Deficit ZERO by 2008-09 (revised). Now 4.5% glide path by FY26.

·       GST: 4 slabs (5%, 12%, 18%, 28%) + 0% + special (3% gold, 0.25% rough diamond). GST Council = Union FM + State FMs.

Module C – Indian Financial Architecture

Ch 13: Indian Financial System – Overview

·       Components: Financial Institutions + Financial Markets + Financial Instruments + Financial Services.

·       Regulators: RBI (banks/NBFCs/payments), SEBI (capital mkt), IRDAI (insurance), PFRDA (pensions), IBBI (insolvency).

Ch 14: Indian Banking Structure

·       RBI established 1 April 1935 (RBI Act 1934). Nationalised 1 January 1949.

·       Bank Nationalisation: 1st – 19 July 1969 (14 banks); 2nd – 15 April 1980 (6 banks).

·       SBI – State Bank of India Act 1955 (originally Imperial Bank, before that Bank of Calcutta 1806).

·       Categories: Commercial Banks (Public, Private, Foreign, RRB), Cooperative Banks, Small Finance Banks, Payments Banks, Local Area Banks.

·       Payments Banks: Cannot lend; Max deposit Rs 2 lakh/customer; can issue ATM/Debit cards (NOT credit cards).

·       Small Finance Banks: 75% PSL target; 50% loans <= Rs 25 lakh.

·       Differential Banking: SFBs (10), Payments Banks (Airtel, India Post, Paytm, Fino, Jio, NSDL).

Ch 15: Banking Regulation in India

·       Banking Regulation Act 1949 – Sec 5(b): Banking = accepting deposits for lending/investment, repayable on demand, withdrawable by cheque/draft/order.

·       RBI functions (4 Cs + 1 R): Currency issue, Custodian of forex, Controller of credit, Clearing house, Regulator of banks.

·       RBI Act 1934 Sec 22: Sole right to issue currency (except Re 1 by Govt of India).

·       Currency printed at: Dewas (MP), Nashik (Maharashtra), Mysuru (Karnataka), Salboni (WB).

·       Coins minted at: Mumbai, Kolkata, Hyderabad, Noida.

Ch 16: Development Financial Institutions (DFIs)

DFI	Year	Purpose
NABARD	1982	Agriculture & Rural development
SIDBI	1990	MSME finance
NHB	1988	Housing finance regulator
EXIM Bank	1982	Export-Import finance
IIFCL	2006	Infrastructure finance
NaBFID	2021	Infra financing (new DFI)

 

Ch 17: Money Market

·       Short-term (< 1 year). Regulator: RBI.

·       Instruments: Call money (1 day), Notice (2-14 days), Term money (15 days-1 yr), Treasury Bills (91/182/364 days), CP (Commercial Paper – by corporates, min 7 days), CD (Certificate of Deposit – by banks, min 7 days), Repo, CBLO/TREPS.

·       T-Bills issued at discount, redeemed at face value. Issued by RBI on behalf of GoI.

·       CP: Min Rs 5 lakh, multiples of Rs 5 lakh, by listed cos with min net worth Rs 4 cr.

Ch 18: Capital Market

·       Long-term (> 1 year). Regulator: SEBI (1988, statutory 1992).

·       Primary Market – new issues (IPO, FPO, Rights, Private placement, QIP, OFS).

·       Secondary Market – trading existing securities (BSE 1875, NSE 1992).

·       Indices: Sensex (BSE-30, base 1978-79=100), Nifty (NSE-50, base Nov 3, 1995=1000).

·       Depositories: NSDL (1996), CDSL (1999) – hold securities in dematerialised form.

·       ASBA mandatory for IPO (Application Supported by Blocked Amount). T+1 settlement adopted; T+0 introduced 2024.

Ch 19: Forex Market & FEMA

·       FERA 1973 -> FEMA 1999 (effective 1 June 2000). Civil offence (FERA was criminal).

·       Current A/c convertibility: Full (since 1994). Capital A/c: Partial.

·       LRS Limit (Liberalised Remittance Scheme): USD 2,50,000 per FY for resident individuals.

·       Forex Reserves = Foreign Currency Assets + Gold + SDR + Reserve Tranche Position with IMF.

Ch 20: Financial Inclusion

·       PMJDY (28 Aug 2014): Zero balance, RuPay debit card, Rs 2 lakh accident insurance (for new accounts after 28.8.18 – was Rs 1 lakh earlier), Overdraft up to Rs 10,000.

·       PMJJBY: Life cover Rs 2 lakh, age 18-50, premium Rs 436/yr (revised from Rs 330).

·       PMSBY: Accidental death/disability Rs 2 lakh, age 18-70, premium Rs 20/yr (revised from Rs 12).

·       APY (Atal Pension Yojana): Age 18-40, pension Rs 1000-5000 from age 60. Now NOT for income tax payers.

·       Stand-Up India: Loan Rs 10 lakh – Rs 1 crore for SC/ST/Women entrepreneurs (greenfield).

·       MUDRA: Shishu (up to Rs 50K), Kishore (50K-5L), Tarun (5L-10L), Tarun Plus (10L-20L launched 2024).

Module D – Financial Products and Services

Ch 21: Loans & Advances

·       Fund-based: CC, OD, Term Loan, Bill discounting, Demand Loan.

·       Non-fund based: LC, Bank Guarantee, Co-acceptance.

·       Working Capital assessment methods: Operating cycle, Turnover (Nayak Committee – 25% of turnover), MPBF (Tandon), Cash budget.

Ch 22: Asset Classification & NPA

·       NPA: Interest/installment overdue > 90 days (term loans); CC/OD out of order > 90 days; Bills overdue > 90 days; Agri short duration > 2 crop seasons; Agri long duration > 1 crop season.

Asset Type	Period	Provision (Secured)
Standard	<= 90 days	0.40% (general); higher for CRE
Sub-standard	NPA up to 12 months	15%
Doubtful D1	12-24 months	25%
Doubtful D2	24-48 months	40%
Doubtful D3	> 48 months	100%
Loss	Identified loss	100%

 

·       SARFAESI 2002: applies if NPA, secured loan, dues > Rs 1 lakh, not agri land. 60-day notice u/s 13(2), then possession u/s 13(4).

·       DRT for dues >= Rs 20 lakh.

·       IBC 2016: Insolvency Resolution within 180 (+90) = 330 days max.

Ch 23: Priority Sector Lending (PSL)

·       Total PSL target: 40% of ANBC for domestic banks. Foreign banks (>= 20 branches): 40%; (< 20 branches): 40% with sub-targets staggered.

·       Sub-targets: Agri 18% (within which Small & Marginal Farmers 10%), MSE 7.5%, Weaker Sections 12%, Micro Enterprises 7.5%.

·       Categories: Agri, MSME, Education (up to Rs 20L), Housing (Metro: Rs 35L cost <= Rs 45L; Others: Rs 25L), Social Infra, Renewable Energy, Export Credit (up to 2%), Weaker Sections.

·       PSLC (Priority Sector Lending Certificate) – tradable on RBI’s e-Kuber. 4 types: General, SF/MF, Agri, Micro.

Ch 24: Basel Norms

·       Basel I (1988): Credit risk only, CAR 8%.

·       Basel II (2004): 3 Pillars – Min Capital + Supervisory Review + Market Discipline. Credit + Market + Operational risk.

·       Basel III (post 2008 crisis): India implements – CET1 5.5% + CCB 2.5% + Tier 1 = 9.5% + Total CRAR 11.5% (incl CCB 2.5%) – hence min CRAR (incl CCB) = 11.5% in India (vs 10.5% Basel).

·       LCR (Liquidity Coverage Ratio) >= 100%; NSFR (Net Stable Funding Ratio) >= 100%.

·       Leverage Ratio: 4% for D-SIBs, 3.5% others (India).

Ch 25: Insurance

·       IRDAI (1999) – Hyderabad. Life Insurance: utmost good faith (uberrima fides), insurable interest at proposal.

·       General insurance: insurable interest both at proposal and at loss. Indemnity principle.

·       Bancassurance: Banks selling insurance. Open architecture: bank can tie up with up to 9 insurers (3 each segment).

Ch 26: Mutual Funds

·       Regulator: SEBI (MF Regulations 1996). 4-tier: Sponsor -> Trustees -> AMC -> Custodian.

·       Types: Open-ended, Close-ended, Interval. By asset: Equity, Debt, Hybrid, Solution-oriented, Other (Index, FoF).

·       ELSS – 3 yr lock-in, 80C deduction up to Rs 1.5 lakh.

·       NAV = (Assets – Liabilities) / Units outstanding.

·       Exit load typical: 1% if redeemed before 1 year. Expense ratio capped by SEBI.

Ch 27: Pension Funds

·       PFRDA Act 2013. NPS – Tier I (mandatory, lock-in till 60), Tier II (voluntary, no lock-in).

·       NPS subscriber age: 18-70 (entry); exit at 60 (60% lump sum tax-free, 40% annuity).

·       Additional 80CCD(1B) deduction: Rs 50,000 over and above 80C limit.

·       APY moved under PFRDA. UPS (Unified Pension Scheme) – announced 2024, effective 1 Apr 2025.

Ch 28: Payment Systems & Digital Banking

·       RTGS – Real Time Gross Settlement, min Rs 2 lakh, no max, 24×7 since Dec 2020.

·       NEFT – Net settlement, no min/max (Rs 50,000 cash limit non-customers), 24×7 since Dec 2019.

·       IMPS – Immediate Payment Service, 24×7, max Rs 5 lakh per transaction.

·       UPI – launched 11 Apr 2016 by NPCI; per txn limit Rs 1 lakh (Rs 5 lakh for tax/health/education/IPO/G-Sec/Insurance).

·       AePS – Aadhaar enabled Payment System. BBPS – Bharat Bill Payment. NACH – National Automated Clearing House.

·       CBDC e-Rupee: Wholesale (Nov 2022), Retail (Dec 2022).

 

SECTION 2 – Important Formulas & Definitions

Key Formulas (Memorise This Table)

Concept	Formula
GDP (Expenditure)	C + I + G + (X – M)
GNP	GDP + NFIA
NNP	GNP – Depreciation
National Income	NNP at Factor Cost
GVA at Basic Price	GDP at MP – Net Product Taxes
Per Capita Income	NI / Population
Real Interest	Nominal Interest – Inflation (Fisher)
Inflation Rate	((CPI_t – CPI_t-1) / CPI_t-1) x 100
Money Multiplier	1 / Reserve Ratio (simple); M3/M0 (broad)
CRAR	(Tier 1 + Tier 2) / RWA x 100
LCR	HQLA / Net Cash Outflows over 30 days >= 100%
NSFR	Available Stable Funding / Required Stable Funding >= 100%
Fiscal Deficit	Total Exp – (Total Receipts – Borrowings)
Primary Deficit	Fiscal Deficit – Interest Payments
Revenue Deficit	Revenue Expenditure – Revenue Receipts
Net NPA %	(Gross NPA – Provisions) / Net Advances x 100
Provision Coverage Ratio	Total Provisions / Gross NPA x 100
NIM	(Interest Earned – Interest Expended) / Avg Earning Assets
Working Capital (Nayak)	25% of projected turnover; Bank 4/5; Margin 1/5
NAV (MF)	(Assets – Liabilities) / Units Outstanding
EMI	P x r x (1+r)^n / ((1+r)^n – 1) ; r = monthly rate
Yield (T-Bill)	((FV – Issue Price) / Issue Price) x (365/Days) x 100
Compound Interest (FV)	FV = P(1 + r/n)^(n.t)
Doubling (Rule of 72)	Years to double = 72 / Rate of Interest

 

Key Definitions

Term	Definition
Repo Rate	Rate at which RBI lends to banks against G-Secs (collateralised)
Reverse Repo / SDF	Rate at which RBI absorbs liquidity (SDF since Apr 2022 = floor)
MSF	Marginal Standing Facility – emergency overnight borrowing, +25 bps over Repo
Bank Rate	Long-term lending rate by RBI = MSF rate
CRR	Cash Reserve Ratio – % of NDTL kept with RBI in cash; no interest
SLR	Statutory Liquidity Ratio – % of NDTL in cash/gold/G-Sec; with bank itself
NDTL	Net Demand and Time Liabilities
MCLR	Marginal Cost of Funds based Lending Rate (since 1 Apr 2016)
EBLR	External Benchmark Lending Rate (since 1 Oct 2019) for retail/MSE
RWA	Risk Weighted Assets
NPA	Non-Performing Asset – 90+ days overdue
SMA	Special Mention Account: SMA-0 (1-30d), SMA-1 (31-60d), SMA-2 (61-90d)
CASA	Current Account + Savings Account ratio
KYC	Know Your Customer (PMLA 2002)
FATCA	Foreign Account Tax Compliance Act (US)
BCBS	Basel Committee on Banking Supervision
FATF	Financial Action Task Force – AML body
NEFT/RTGS	Net/Real-Time Gross Settlement (electronic transfer systems)
DICGC cover	Rs 5 lakh per depositor per bank (since Feb 2020)
Insurable interest	Stake in subject matter (life: at proposal; general: both)

 

 

SECTION 3 – Most Expected MCQs (Pattern 2024-2026)

A. Indian Economic Architecture

Q1. NITI Aayog replaced the Planning Commission on:

a) 1 January 2014

b) 1 January 2015

c) 15 August 2014

d) 26 January 2015

Ans: b) 1 January 2015  [Officially established 1.1.2015 by Cabinet resolution]

Q2. Father of Indian Planning is:

a) M. Visvesvaraya

b) P.C. Mahalanobis

c) Jawaharlal Nehru

d) V.K.R.V. Rao

Ans: a) M. Visvesvaraya  [1934 book ‘Planned Economy for India’]

Q3. Under revised MSME definition, a Small enterprise has investment up to:

a) Rs 1 crore

b) Rs 5 crore

c) Rs 10 crore

d) Rs 50 crore

Ans: c) Rs 10 crore  [Investment <= 10 cr and Turnover <= 50 cr]

Q4. The largest contributor to India’s GVA is:

a) Agriculture

b) Industry

c) Services

d) Mining

Ans: c) Services  [Services ~55% of GVA]

Q5. India’s economic reforms (LPG) started in the year:

a) 1985

b) 1990

c) 1991

d) 1992

Ans: c) 1991  [By Dr. Manmohan Singh under PM Narasimha Rao]

B. Economic Concepts Related to Banking

Q6. Inflation target set under MPC framework is:

a) 2% +/- 2%

b) 4% +/- 2%

c) 5% +/- 2%

d) 6% +/- 2%

Ans: b) 4% +/- 2%  [RBI Act amended 2016, MPC set up; CPI-Combined target]

Q7. Which of the following is part of M1 (narrow money)?

a) Time deposits with banks

b) Demand deposits with banks

c) Post office time deposits

d) NSCs

Ans: b) Demand deposits with banks  [M1 = CWP + DD + Other deposits with RBI]

Q8. Stagflation refers to:

a) Low inflation + high growth

b) High inflation + recession

c) Deflation + growth

d) Inflation in only some sectors

Ans: b) High inflation + recession  [Stagnation + inflation]

Q9. Real interest rate is best given by (Fisher equation):

a) Nominal + Inflation

b) Nominal – Inflation

c) Inflation – Nominal

d) Nominal x Inflation

Ans: b) Nominal – Inflation  [Approximation; exact uses (1+r) ratios]

Q10. The base year for new GDP series in India is:

a) 2004-05

b) 2010-11

c) 2011-12

d) 2017-18

Ans: c) 2011-12  [Since Jan 2015; revision to 2022-23 proposed]

Q11. Recession in technical terms means:

a) GDP fall in one quarter

b) Negative growth for 2 consecutive quarters

c) Fall in employment for a year

d) Inflation > 8%

Ans: b) Negative growth for 2 consecutive quarters  [Standard NBER-style definition]

Q12. CRR is maintained as a percentage of:

a) Total Demand Liabilities

b) Total Time Liabilities

c) NDTL

d) Total Assets

Ans: c) NDTL  [Net Demand and Time Liabilities]

Q13. Effective Revenue Deficit equals:

a) Revenue Deficit + Interest

b) Revenue Deficit – Grants for capital assets

c) Fiscal – Interest

d) Revenue Exp – Capital Receipts

Ans: b) Revenue Deficit – Grants for capital assets  [Concept introduced after Rangarajan Committee]

Q14. The ceiling of fiscal deficit (FRBM target) for FY26 is:

a) 3.0%

b) 3.5%

c) 4.5%

d) 5.5%

Ans: c) 4.5%  [Glide path announced in Budget 2021-22 / 2024-25]

Q15. GST Council is chaired by:

a) Prime Minister

b) Union Finance Minister

c) RBI Governor

d) Vice President

Ans: b) Union Finance Minister  [Article 279A; State FMs are members]

C. Indian Financial Architecture

Q16. RBI was nationalised on:

a) 1 April 1935

b) 1 January 1949

c) 1 April 1949

d) 15 August 1947

Ans: b) 1 January 1949  [Established 1935; nationalised 1949]

Q17. SDF (Standing Deposit Facility) replaced fixed Reverse Repo as floor of LAF corridor in:

a) April 2020

b) April 2021

c) April 2022

d) April 2023

Ans: c) April 2022  [Introduced in MPC of April 2022]

Q18. Maximum deposit per customer in a Payments Bank is:

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) No limit

Ans: b) Rs 2 lakh  [EOD balance limit revised from Rs 1L to Rs 2L]

Q19. The minimum tenure of a Certificate of Deposit (CD) is:

a) 7 days

b) 15 days

c) 30 days

d) 90 days

Ans: a) 7 days  [Issued by banks; same as CP minimum]

Q20. Sensex was launched with base year:

a) 1978-79 = 100

b) 1980-81 = 100

c) 1990-91 = 1000

d) 1995-96 = 1000

Ans: a) 1978-79 = 100  [Sensex (BSE-30) base value 100]

Q21. NSDL was established in:

a) 1992

b) 1996

c) 1999

d) 2003

Ans: b) 1996  [First depository in India; CDSL in 1999]

Q22. LRS limit per resident individual per FY is:

a) USD 1,00,000

b) USD 2,00,000

c) USD 2,50,000

d) USD 5,00,000

Ans: c) USD 2,50,000  [Liberalised Remittance Scheme]

Q23. PMJDY accident insurance cover (post 28.8.2018) is:

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) Rs 10 lakh

Ans: b) Rs 2 lakh  [Earlier Rs 1 lakh; revised in 2018]

Q24. PMJJBY annual premium (revised) is:

a) Rs 330

b) Rs 436

c) Rs 500

d) Rs 12

Ans: b) Rs 436  [Revised w.e.f. 1.6.2022]

Q25. Total PSL target for domestic SCBs is:

a) 32% of ANBC

b) 40% of ANBC

c) 45% of ANBC

d) 18% of ANBC

Ans: b) 40% of ANBC  [Sub-targets: Agri 18%, Weaker 12%, MSE 7.5%]

Q26. Under SARFAESI Act, possession can be taken under section:

a) 13(2)

b) 13(3A)

c) 13(4)

d) 14

Ans: c) 13(4)  [13(2) = 60-day notice; 13(4) = enforcement]

Q27. Under IBC, maximum time for resolution is:

a) 180 days

b) 270 days

c) 330 days

d) 365 days

Ans: c) 330 days  [180 + 90 + litigation = 330 cap]

Q28. Minimum CRAR for Indian banks (incl CCB) under Basel III is:

a) 9%

b) 10.5%

c) 11.5%

d) 12.5%

Ans: c) 11.5%  [9% min CRAR + 2.5% Capital Conservation Buffer]

Q29. NPS Tier I withdrawal at age 60 – tax-free lump-sum portion:

a) 40%

b) 50%

c) 60%

d) 100%

Ans: c) 60%  [60% tax-free lump-sum, 40% mandatory annuity]

Q30. Per-transaction limit of UPI for general transactions is:

a) Rs 25,000

b) Rs 50,000

c) Rs 1 lakh

d) Rs 2 lakh

Ans: c) Rs 1 lakh  [Higher Rs 5L for tax/IPO/health/edu/insurance]

D. Mixed Application & Latest Pattern (2024-2026)

Q31. RBI’s CBDC pilot for retail e-Rupee was launched in:

a) Oct 2022

b) Nov 2022

c) Dec 2022

d) Apr 2023

Ans: c) Dec 2022  [Wholesale – Nov 2022; Retail – Dec 2022]

Q32. Tarun Plus category under PM MUDRA Yojana provides loans up to:

a) Rs 5 lakh

b) Rs 10 lakh

c) Rs 15 lakh

d) Rs 20 lakh

Ans: d) Rs 20 lakh  [Tarun Plus introduced in 2024 for repeat borrowers]

Q33. NaBFID, the new infrastructure DFI, was set up in:

a) 2019

b) 2020

c) 2021

d) 2022

Ans: c) 2021  [NaBFID Act 2021]

Q34. DICGC deposit insurance cover per depositor per bank is:

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) Rs 10 lakh

Ans: c) Rs 5 lakh  [Revised from Rs 1L to Rs 5L w.e.f. 4.2.2020]

Q35. The new Unified Pension Scheme (UPS) for central govt employees becomes effective from:

a) 1 Apr 2024

b) 1 Oct 2024

c) 1 Jan 2025

d) 1 Apr 2025

Ans: d) 1 Apr 2025  [Approved Aug 2024, operational from FY 2025-26]

Q36. Nayak Committee suggested working capital limit as:

a) 15% of turnover

b) 20% of turnover

c) 25% of turnover

d) 30% of turnover

Ans: c) 25% of turnover  [20% by bank, 5% margin]

Q37. Open architecture under bancassurance allows a bank to tie up with maximum:

a) 1 insurer per segment

b) 2 insurers per segment

c) 3 insurers per segment

d) Unlimited

Ans: c) 3 insurers per segment  [3 each in life, general & health = 9 total]

Q38. ELSS lock-in period is:

a) 1 year

b) 3 years

c) 5 years

d) 7 years

Ans: b) 3 years  [Shortest among 80C instruments]

Q39. Under Atal Pension Yojana, monthly pension range is:

a) Rs 500-2000

b) Rs 1000-5000

c) Rs 2000-10000

d) Rs 1000-3000

Ans: b) Rs 1000-5000  [Pension at age 60; entry age 18-40]

Q40. NEFT settlement in India operates on:

a) Real-time gross basis

b) Half-hourly batch (24×7)

c) Daily clearing

d) T+1 basis

Ans: b) Half-hourly batch (24×7)  [48 batches; 24×7 since Dec 2019]

 

SECTION 4 – Memory Tricks & Shortcuts

Mnemonics

Trick / Mnemonic	What it Helps Remember
‘CRR Cash, SLR Self’	CRR is in CASH with RBI; SLR is with bank itself
‘My Repo SDF Mind’	MSF (top) > Repo > SDF (floor) – LAF Corridor
‘M1 = CDO’	Currency + Demand deposits + Other deposits with RBI
‘MR. CABS’ (RBI Functions)	Monetary, Regulator, Currency, Agent, Banker’s bank, Supervisor
‘FAME-W-MS’ (PSL)	Farmers (SF/MF), Agri 18%, Micro 7.5%, Education, Weaker 12%, MSE 7.5%, Social Infra
‘PIES’ (Insurance)	Principle of Indemnity, Insurable interest, Utmost good faith, Subrogation
‘5-2-2 PMJDY’	5: RuPay; 2 lakh accident; 2 lakh OD or Rs 10K
‘NPA = 90 days’	Term loan 90d; Agri short = 2 seasons; long = 1 season
‘3-12-24-48’ (NPA aging)	Sub-Std 0-12m; D1 12-24m; D2 24-48m; D3 >48m
‘MIS-3’ (Basel Pillars)	Minimum capital, Internal supervisory, Market discipline
‘330 = 180+90+60’ (IBC)	180 default + 90 extension + 60 litigation buffer
‘BIS HQ = Basel’	Bank for International Settlements – Basel, Switzerland
‘LIC 1956, GIC 1972, IRDAI 1999’	Insurance regulator timeline
‘NABARD-1982, SIDBI-1990, NHB-1988’	DFI timelines
‘4-2-1-1 NPS exit’	40% annuity, 60% lump sum
‘7-7’ (CP/CD)	Both have minimum 7 days

 

Quick Differences (Easily Confused Pairs)

Aspect	First Item	Second Item
FDI vs FPI	Long-term, mgmt control, > 10%	Short-term portfolio, < 10%
GDP vs GNP	Within country	By residents (incl abroad)
CPI vs WPI	Retail (consumer)	Wholesale (no services)
NEFT vs RTGS	Net, batch, no min	Real-time, gross, min Rs 2L
CRR vs SLR	Cash with RBI, no interest	G-Sec/cash/gold with bank
MSF vs Repo	Emergency, +25 bps over Repo	Normal LAF, against G-Sec
Bank Rate vs MSF	Same rate since 2012	Long-term lending rate
SDF vs Reverse Repo	Uncollateralised, fixed floor	Collateralised, OMO based
Demand-pull vs Cost-push	Excess demand	Rising input costs
Tier I vs Tier II Capital	Core (Equity, Reserves)	Supplementary (Subordinated debt)

 

Numerical Memory Anchors

·       4 +/- 2 = 6 / 2: Inflation target band ceiling/floor

·       9.5 + 2 = 11.5: Tier 1 + Total CRAR (incl CCB) in India

·       18 – 7.5 – 12 – 10: PSL Agri-MSE-Weaker-SMF sub-target percents

·       60 – 40: NPS exit; 330: IBC max days; 90: NPA days; 91/182/364: T-Bill tenures

·       Rs 5L: DICGC; Rs 2L: PMJDY accident; Rs 1.5L: 80C; Rs 50K: 80CCD(1B)

 

SECTION 5 – Previous Year Repeated Concepts (Hot List)

Repeated Every Year (Almost Certain in 2026)

1.     Repo, Reverse Repo/SDF, CRR, SLR – latest values + LAF corridor diagram (3-4 questions).

2.     Inflation types and CPI/WPI base years; flexible inflation targeting framework (2 questions).

3.     MSME revised classification and PSL sub-targets (2-3 questions).

4.     NPA classification (Sub-standard, D1/D2/D3, Loss) and provisioning percents (2 questions).

5.     Basel III CRAR breakup; LCR, NSFR thresholds (1-2 questions).

6.     RBI history dates: 1935, 1949, nationalisation 1969 & 1980 (1 question).

7.     PMJDY, PMJJBY, PMSBY, APY – latest premiums and limits (2-3 questions).

8.     UPI / RTGS / NEFT / IMPS limits and timings (1-2 questions).

9.     Money Market Instruments (T-Bill, CP, CD, Call money) – tenures + issuers (2 questions).

10.  SARFAESI sections (13(2), 13(4), 14), DRT limits, IBC timeline 330 days (1-2 questions).

11.  Fiscal/Revenue/Primary deficit definitions; FRBM glide path (1-2 questions).

12.  GST council, Article 279A, slabs (1 question).

13.  MUDRA categories – Shishu/Kishore/Tarun/Tarun Plus (1 question).

14.  Bank nationalisation – 14 (1969) + 6 (1980) = 20 banks (1 question).

15.  Mutual fund 4-tier structure; ELSS lock-in (1 question).

16.  NPS Tier I/II, deductions 80CCD(1)/(1B)/(2) (1-2 questions).

New 2024-2026 Pattern Additions (Don’t Skip)

·       CBDC (e-Rupee Wholesale Nov 2022, Retail Dec 2022) – features and use cases.

·       UPI cross-border (UAE, Sri Lanka, France, Singapore PayNow link).

·       Digital Banking Units (DBUs) – 75 units announced 2022, RBI guidelines.

·       Sovereign Green Bonds (first issued FY23).

·       Account Aggregator framework (NBFC-AA category) – consent-based data sharing.

·       Co-lending model 2.0 (Banks + NBFCs 80:20 split).

·       Deendayal Antyodaya Yojana (NRLM/NULM) updates.

·       UPS – Unified Pension Scheme (effective 1 Apr 2025).

·       Digital Personal Data Protection Act 2023 – basic awareness.

·       RBI’s Project Nexus (cross-border instant payments).

 

SECTION 6 – Case-Based / Caselet MCQs (New Pattern)

Caselet 1 – NPA & SARFAESI

Mr. Ramesh availed a term loan of Rs 50 lakh from XYZ Bank in Jan 2023, secured by mortgage of his factory. From Oct 2024, he stopped servicing EMIs. By 31 March 2025, his account is overdue by 180 days. The bank wants to enforce security.

Q1.1 As on 31 March 2025, the loan should be classified as:

a) Standard

b) SMA-2

c) Sub-standard NPA

d) Doubtful (D1)

Ans: c) Sub-standard NPA  [NPA from 91st day; up to 12 months in NPA = Sub-standard]

Q1.2 Provision required on this secured Sub-standard NPA is:

a) 10%

b) 15%

c) 25%

d) 100%

Ans: b) 15%  [15% on secured portion of Sub-standard]

Q1.3 Before taking possession, the bank must issue notice under section:

a) Section 9 of IBC

b) Section 13(2) of SARFAESI

c) Section 14 of SARFAESI

d) Section 138 NI Act

Ans: b) Section 13(2) of SARFAESI  [Calls upon the borrower to pay within 60 days]

Q1.4 If borrower fails to pay within notice period, bank acts under:

a) 13(3)

b) 13(3A)

c) 13(4)

d) 17

Ans: c) 13(4)  [13(4) – take possession / management]

Q1.5 If borrower wishes to challenge bank’s action, he/she approaches:

a) Civil Court

b) DRT under Section 17

c) High Court

d) NCLT

Ans: b) DRT under Section 17  [Statutory remedy is DRT within 45 days]

Caselet 2 – Monetary Policy & Liquidity

In May 2026, India is facing CPI inflation of 6.2% (above tolerance band), surplus liquidity in banking system of Rs 2.5 lakh crore, and modest growth of 6.4%. RBI’s MPC is reviewing the policy stance with current Repo at 6.50%.

Q2.1 Based on the situation, the most likely MPC stance would be:

a) Accommodative

b) Neutral

c) Withdrawal of accommodation

d) Easy

Ans: c) Withdrawal of accommodation  [Inflation > 6%, surplus liquidity = tighten]

Q2.2 To absorb the surplus liquidity, RBI is most likely to use:

a) Repo auction

b) Variable Rate Reverse Repo / SDF

c) MSF

d) OMO Purchase

Ans: b) Variable Rate Reverse Repo / SDF  [VRRR / SDF absorb; MSF and OMO purchase add liquidity]

Q2.3 The current floor of LAF corridor is:

a) Reverse Repo (fixed)

b) SDF

c) MSF

d) Bank Rate

Ans: b) SDF  [SDF since 8 April 2022; uncollateralised]

Q2.4 If MPC hikes Repo by 25 bps, MSF rate would automatically become:

a) 6.50%

b) 6.75%

c) 7.00%

d) 7.25%

Ans: c) 7.00%  [MSF = Repo + 25 bps; new Repo 6.75% + 25 = 7.00%]

Q2.5 The MPC voting requires majority. In case of tie, the casting vote is with:

a) Senior-most member

b) RBI Deputy Governor

c) RBI Governor

d) Government Nominee

Ans: c) RBI Governor  [RBI Act Section 45ZD – Governor has casting vote]

Caselet 3 – Priority Sector Lending

ABC Bank (a domestic SCB) has Adjusted Net Bank Credit (ANBC) of Rs 1,00,000 crore as on 31 March 2026. Its current PSL exposure is – Agriculture: Rs 16,000 cr (of which Small & Marginal Farmers Rs 8,000 cr); MSE: Rs 7,800 cr; Weaker Sections: Rs 11,000 cr; Total PSL Rs 39,500 cr.

Q3.1 Total PSL target as a % of ANBC for ABC Bank is:

a) 32%

b) 40%

c) 45%

d) 18%

Ans: b) 40%  [Domestic SCB target]

Q3.2 Is ABC Bank meeting Agriculture sub-target of 18%?

a) Yes – exceeded

b) No – shortfall Rs 2,000 cr

c) Met exactly

d) Cannot determine

Ans: b) No – shortfall Rs 2,000 cr  [Required 18% of 1,00,000 = 18,000 cr; actual 16,000]

Q3.3 Within Agri, the SF/MF sub-target is:

a) 8%

b) 9%

c) 10%

d) 12%

Ans: c) 10%  [10% of ANBC for Small & Marginal Farmers]

Q3.4 To bridge Agri shortfall in current year, the bank can:

a) Carry forward to next year

b) Buy PSLC

c) Invest in RIDF only

d) Ignore – it’s not mandatory

Ans: b) Buy PSLC  [PSLC traded on RBI e-Kuber; shortfall also goes to RIDF/SIDBI fund]

Q3.5 PSLC trading platform is hosted on:

a) NPCI

b) BSE

c) RBI e-Kuber

d) NSE

Ans: c) RBI e-Kuber  [Quarter-end trading; 4 categories]

Caselet 4 – Mutual Fund & Investor Suitability

Mrs. Mehta, age 35, has Rs 5 lakh to invest with a 5-year horizon. She wants tax benefit under Section 80C, moderate risk, and exposure to equities. She approaches her bank for advice.

Q4.1 Most suitable instrument for Mrs. Mehta is:

a) Liquid Fund

b) ELSS

c) Debt Fund

d) Bank FD

Ans: b) ELSS  [Equity Linked Savings Scheme – 80C + equity + 3-yr lock-in]

Q4.2 Maximum 80C deduction in a financial year is:

a) Rs 1,00,000

b) Rs 1,50,000

c) Rs 2,00,000

d) Rs 50,000

Ans: b) Rs 1,50,000  [Old tax regime; limit unchanged]

Q4.3 NAV of an MF scheme is calculated as:

a) (Assets+Liab)/Units

b) (Assets-Liab)/Units

c) Market Cap/Units

d) Sales-Redemption

Ans: b) (Assets-Liab)/Units  [Net Assets per unit]

Q4.4 Mutual funds are regulated under:

a) RBI Act

b) SEBI (MF) Regulations 1996

c) Companies Act 2013

d) IRDAI Act

Ans: b) SEBI (MF) Regulations 1996  [AMC structure – sponsor, trustee, AMC, custodian]

Q4.5 If Mrs. Mehta exits ELSS in year 4, the LTCG > Rs 1.25 lakh in FY26 will be taxed at:

a) 5%

b) 10%

c) 12.5%

d) 20%

Ans: c) 12.5%  [Budget 2024-25 revised LTCG on equity to 12.5%; threshold Rs 1.25 lakh]

Caselet 5 – Foreign Exchange & FEMA

Mr. Sharma, an Indian resident, plans to send his daughter abroad for higher studies. He needs to remit USD 80,000 for tuition fees and USD 30,000 for maintenance during the academic year. He also gifted USD 25,000 to a relative in the USA.

Q5.1 Total remittance falls under which scheme?

a) FEMA Schedule III

b) Liberalised Remittance Scheme (LRS)

c) ECB

d) ODI

Ans: b) Liberalised Remittance Scheme (LRS)  [Permissible Capital + Current account transactions for residents]

Q5.2 Annual LRS limit per individual is:

a) USD 1,00,000

b) USD 2,00,000

c) USD 2,50,000

d) No limit

Ans: c) USD 2,50,000  [Per FY; aggregated for all permissible transactions]

Q5.3 Total remittance proposed by Mr. Sharma is:

a) USD 1,10,000

b) USD 1,35,000

c) USD 1,30,000

d) USD 1,55,000

Ans: b) USD 1,35,000  [80,000 + 30,000 + 25,000 = 1,35,000 (within LRS limit)]

Q5.4 TCS @ 5% under LRS for education (loan-funded) above Rs 7 lakh applies; if self-funded, the rate is:

a) 0.5%

b) 5%

c) 10%

d) 20%

Ans: b) 5%  [Education above Rs 7 lakh, self-funded – 5% TCS]

Q5.5 FEMA replaced FERA in:

a) 1991

b) 1998

c) 1999 (eff. 1.6.2000)

d) 2002

Ans: c) 1999 (eff. 1.6.2000)  [FEMA is civil; FERA was criminal]

Caselet 6 – Insurance & Bancassurance

Customer X (age 45, non-smoker) walks into a bank branch wanting term life insurance of Rs 1 crore for 25 years and accident cover. The bank is registered as a Corporate Agent under IRDAI.

Q6.1 Under open architecture, the bank can sell products of how many life insurers?

a) 1

b) 2

c) 3

d) 5

Ans: c) 3  [Up to 3 each in life, general, health]

Q6.2 PMSBY can additionally provide accident cover of:

a) Rs 1 lakh @ Rs 12

b) Rs 2 lakh @ Rs 20

c) Rs 5 lakh @ Rs 100

d) Rs 10 lakh @ Rs 200

Ans: b) Rs 2 lakh @ Rs 20  [Premium revised to Rs 20 from Rs 12 in 2022]

Q6.3 Insurable interest in life insurance is required:

a) Only at proposal

b) Only at claim

c) Both

d) Not required

Ans: a) Only at proposal  [General insurance – both proposal & loss]

Q6.4 IRDAI was established in:

a) 1999

b) 2000

c) 1956

d) 1972

Ans: a) 1999  [IRDA Act 1999; renamed IRDAI in 2014 amendment]

Q6.5 Section 80C deduction for life insurance premium is allowed up to:

a) 5% of sum assured

b) 10% of sum assured (post 1.4.2012)

c) 20%

d) Full premium without limit

Ans: b) 10% of sum assured (post 1.4.2012)  [Pre-1.4.2012 it was 20%]

 

D-Day Strategy & Final Tips

Last 24 Hours Plan

17.  Morning: revise CRR/SLR/Repo + LAF corridor diagram + inflation types.

18.  Afternoon: PSL targets, NPA classification, Basel III, SARFAESI sections.

19.  Evening: Insurance principles, MF structure, NPS, financial inclusion schemes (PMJDY/PMJJBY/PMSBY/APY/MUDRA).

20.  Night: Quick browse this entire capsule + 60 MCQs above.

Exam-Hall Tactics

·       Read all options before marking – JAIIB often has ‘Both A and B’ or ‘All of the above’ as correct.

·       Eliminate clearly wrong options first; second-guessing usually keeps right answer.

·       Time check at Q25, Q50, Q75 – target 30-30-30-30 minutes per quarter.

·       No negative marking – ATTEMPT ALL 100. Educated guesses help.

·       Cases/Caselets – read the SCENARIO once, then read each Q and refer back.

·       Trust your first instinct unless you spot a clear factual error.

Confidence-Booster Mantra

"Concept clarity beats cramming. Focus on the WHY (intent of regulation) and HOW (mechanism). Numbers like 90 days, 40% PSL, 4+/-2 inflation, Rs 2 lakh PMJDY are anchors – never let them go."

 

— ALL THE BEST FOR JAIIB Exam —