Brief Summary
This video provides a comprehensive overview of 15 key banking awareness concepts relevant for the IBPS SO exam. It covers topics such as MSF, OMO, NBFCs, Financial Inclusion, Payment Banks, SFBCs, Bad Banks, NABARD, SIDBI, RBI Embargo Scheme, CBDC, IFSC, Project Empowered, Lead Bank Scheme, and BBPF. Each concept is explained with definitions, functions, and related sample questions to help viewers understand the type of questions that may be asked in the exam.
- MSF: Overnight emergency lending by RBI to scheduled commercial banks at a rate slightly higher than the repo rate.
- OMO: Buying and selling of government securities in the open market by RBI to manage liquidity.
- Financial Inclusion: Government schemes to provide credit access to vulnerable sections, such as PMMY, PMSBY, and PMJJBY.
Appreciation
The host, Priyanka, welcomes viewers to LegalEdge After College and introduces a session focused on banking awareness, specifically designed for the IBPS SO exam. She mentions that the session will cover 15 key concepts, building on the 15 concepts discussed in the previous session. Viewers are encouraged to ask questions and engage in the comments.
Introduction to Banking Awareness Concepts
Priyanka outlines the 15 banking awareness concepts that will be covered in the session: MSF, OMO, NBFCs, Financial Inclusion, Payment Banks, SFBCs, Bad Banks, NABARD, SIDBI, RBI Embargo Scheme, CBDC, IFSC, Project Empowered, Lead Bank Scheme, and BBPF. She emphasizes the importance of knowing the full forms and meanings of these acronyms for the exam.
Marginal Standing Facility (MSF)
MSF is an overnight emergency lending facility provided by the RBI to scheduled commercial banks. It is used when banks need funds urgently and cannot obtain them through other means like interbank lending or the Liquidity Adjustment Facility (LAF). The MSF rate is typically higher than the repo rate; currently, the repo rate is 6.50%, while the MSF rate is 6.75%. This facility was launched in 2011 and is available only to scheduled commercial banks listed in the second schedule of the RBI Act. A sample question is presented to test understanding of MSF's purpose.
Open Market Operations (OMO)
OMO refers to the buying and selling of government securities in the open market by the RBI. This is done to manage liquidity in the market. There are two types of OMO: permanent (outright purchase) and temporary (repurchase agreement or repo). The RBI conducts OMO to either increase or decrease liquidity. A sample question is presented to test understanding of the impact of RBI selling government securities on market liquidity.
Non-Banking Financial Companies (NBFCs)
NBFCs are companies registered under the Companies Act that deal in the financial sector but cannot perform banking activities like accepting deposits. They can provide loans, acquire shares, and deal in stocks and bonds. NBFCs are regulated by the RBI and require a Certificate of Registration to operate. A key requirement is a minimum net owned fund (NOF) of ₹10 crore. A sample question is presented to test understanding of the functions that NBFCs cannot perform.
Financial Inclusion
Financial inclusion is the process of ensuring that vulnerable and weaker sections of society have access to credit and banking facilities. This concept was emphasized by the Dr. C Rangarajan committee. Key government schemes under financial inclusion include Pradhan Mantri Mudra Yojana (PMMY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). As of June 2024, approximately 52 crore beneficiaries have opened accounts, generating ₹2.2 lakh crore under these schemes. A sample question is presented to identify schemes related to financial inclusion.
Payment Banks
Payment banks are digitalized banks aimed at serving unbanked and underbanked populations. They can accept current and savings account deposits and provide mobile banking services, but they cannot give loans. The Nachiket More committee recommended the establishment of payment banks in India. The first payment bank was Airtel Payment Bank, set up in January 2017. To establish a payment bank, a company needs a minimum capital of ₹100 crore and must maintain the Cash Reserve Ratio (CRR). The maximum deposit allowed in a payment bank is ₹2 lakh.
Small Finance Banks (SFBCs)
Small Finance Banks (SFBs) provide basic banking activities to underserved sections. They can accept deposits and provide loans but cannot open subsidiaries. SFBs are regulated by the RBI and must maintain minimum cash reserve and statutory liquidity ratios. Examples include AU Small Finance Bank and Ujjivan Small Finance Bank. To convert into a universal bank, an SFB must have a track record of profitability for at least 5 years and meet RBI's requirements. SFBs must allocate 75% of their lending to priority sector lending (PSL).
Bad Banks
Bad banks are entities set up to resolve Non-Performing Assets (NPAs) of public sector banks. They aim to recover the maximum possible amount from these bad loans. The government initially proposed the idea in the 2016 Economic Survey. NARCL (National Asset Reconstruction Company Limited) is an example of a bad bank established under the SARFAESI Act, with the Reserve Bank of India overseeing its operations.
NABARD
NABARD (National Bank for Agriculture and Rural Development) was established in 1982 to boost the agriculture sector by providing loans and credit in rural areas. It supervises cooperative banks and Regional Rural Banks (RRBs). NABARD was established through the National Bank for Agriculture and Rural Development Act 1981, based on the recommendations of the B Seeman committee.
SIDBI
SIDBI (Small Industries Development Bank of India) was established in April 1990 to provide credit and funding to micro, small, and medium enterprises (MSMEs). It operates under the Ministry of Finance, Government of India, and its headquarters are in Lucknow, Uttar Pradesh.
RBI Integrated Embargo Scheme
The RBI Integrated Ombudsman Scheme (RBI OS) is a unified platform for resolving consumer grievances related to banking services. It integrates three previous schemes: the RBI Banking Ombudsman Scheme, the Ombudsman Scheme for NBFCs, and the Ombudsman Scheme for Digital Transactions. The scheme aims to provide a single point of contact for complaints against banks, NBFCs, and prepaid instrument players.
Central Bank Digital Currency (CBDC)
CBDC (Central Bank Digital Currency), also known as e-rupee, is a digital form of currency approved by the Reserve Bank of India. It has the same value as fiat currency (Indian Rupees) and is considered legal tender. The Bahamas was the first economy to launch its digital currency, Sand Dollar, in 2020.
International Financial Service Center (IFSC)
IFSC (International Financial Services Centre) is a center established by the government to regulate financial products and services approved by the Reserve Bank of India or SEBI. It has nine members appointed by the central government, including representatives from RBI, SEBI, IRDAI, PFRDA, and the Ministry of Finance. The IFSC is located in Gandhinagar Gift City.
Project Empowered
Project Sashakt, also known as Project Empowered, is a strategy plan launched to reduce Non-Performing Assets (NPAs) in public sector banks. It was based on recommendations given by Sunil Mehta. The project includes guidelines for dealing with loan amounts of different sizes, involving advisory boards, settlement strategies, and reaching out to Asset Management Companies (AMCs).
Lead Bank Scheme
The Lead Bank Scheme was introduced by the Reserve Bank of India in 1969 to provide banking facilities in rural and remote areas. Under this scheme, a bank is assigned the responsibility to cover an entire district, ensuring that banking facilities are available to everyone in that area.
Bharat Bill Payment System (BBPS)
BBPS (Bharat Bill Payment System) is a payment channel conceptualized by the RBI and operated by NPCI (National Payments Corporation of India). It allows users to pay various bills, such as electricity, telecom, gas, and water bills, in one single window at any time and from anywhere.
Course Information and Conclusion
The host provides information about crash courses and self-paced batches for IBPS SO, highlighting the availability of recorded lectures, doubt-clearing sessions, study material, and practice tests. A coupon code "LEACYT" is offered for a 10% discount on any course. Viewers are encouraged to subscribe to the channel for updates on future sessions and to comment with suggestions for topics they would like covered.
