1.7 Banking and financial inclusion notes

1. 1.7.1Structure of Indian banking: scheduled, cooperative, regional rural and differentiated banks

   Indian banking has commercial banks (public, private, foreign), cooperative banks, regional rural banks and newer differentiated banks (payments and small finance banks), all under RBI.

   Advanced · 6 min · Full course
2. 1.7.2Bank nationalisation and reforms: 1969, 1980, Narasimham committees and PSB mergers

   India nationalised 14 banks in 1969 and 6 in 1980, liberalised banking after the 1991 Narasimham reforms, and in 2017-2020 merged public sector banks into 12.

   Advanced · 6 min · Full course
3. 1.7.3Prudential regulation: Basel norms, capital adequacy and deposit insurance (DICGC)

   Prudential rules make banks hold enough capital and liquid assets to absorb losses, and DICGC insures each depositor up to ₹5 lakh.

   Advanced · 6 min · Full course
4. 1.7.4Non-performing assets: classification, twin balance sheet problem and resolution (ARCs, NARCL)

   A loan unpaid for more than 90 days is an NPA; India's bad-loan crisis peaked around 2018 and was cleaned up through recognition, recapitalisation, the IBC and recovery laws.

   Advanced · 6 min · Full course
5. 1.7.5Insolvency and Bankruptcy Code 2016

   The IBC 2016 replaced a patchwork of slow laws with one time-bound process in which creditors, not the promoter, decide the fate of a defaulting company.

   Advanced · 5 min · Full course
6. 1.7.6NBFCs and development finance institutions: NABARD, SIDBI, EXIM Bank and NaBFID

   NBFCs lend like banks without being banks, and apex development banks such as NABARD, SIDBI and EXIM Bank provide long-term finance for agriculture, small industry, exports and infrastructure.

   Advanced · 5 min · Full course
7. 1.7.7Priority sector lending and financial inclusion: lead bank scheme, Jan Dhan and SHG–bank linkage

   India pushes banks to lend to farmers, small firms and the poor through priority sector targets, the lead bank scheme and schemes like Jan Dhan and SHG linkage.

   Advanced · 6 min · Full course
8. 1.7.8Payment systems: NPCI, UPI, RTGS, NEFT and digital payments

   RBI runs the large-value systems (RTGS, NEFT) while NPCI runs retail systems such as UPI, IMPS and RuPay; UPI processed about 24,162 crore transactions worth ₹314 lakh crore in 2025-26.

   Advanced · 5 min · Full course
9. 1.7.9Commercial banks: credit creation and portfolio management

   A commercial bank keeps only a fraction of each deposit as reserves and lends the rest, so the banking system turns one primary deposit into deposits many times larger; how a bank spreads its funds over cash, investments and loans is its portfolio management.

   Advanced · 11 min · Full course

Medha AI is an independent preparation service. It is not affiliated with, endorsed by or connected to APPSC, TSPSC, MPSC, UPSC or any other commission or government body.