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Part: 001Tips for Interview for recruitment as officers in banks in IndiaInstructions to candidatesThe purpose of the interview:The purpose of any interview is to select one suitable person for the concerned post. The person to be interviewed may be having better qualifications; however, he may not be having the requisite potentials or caliber in handling the job offered namely; better communication ability, leadership quality, emotional strength and efficient interpersonal relationship. Banking demands people who are willing to work hard by mingling with customers freely and friendly apart from maintaining a cordial; ssocial and friendly relationship with their colleagues and superiors.Phases of the interview:The interview is conducted in four phases namely;·the first phase during the course of which questions are asked about the person and his specialization in any area;·the second phase wherein questions are asked about the bank for which the interview is conducted;·the third phase wherein questions are asked about general banking, economy, finance and latest developments are asked and·the fourth phase is the final round for the interview.The interview committee:The interview committee consists of three to five imminent personalities who are well versed in banking matters and normally the services of executives or retired executives of various public sector banks are utilized for the purpose of conducting the interview. The following system is adopted by the committee members during the course of interview process:·While one member poses questions to the candidate, the other two members analyze the body language of the individual as to how he reacts to the questions and especially in respect of difficult questions;·They also review as to how the candidate comes forward to present the answers in a crisp manner thereby providing the relevant points expected by the committee members.·Basing upon the answering ability, communication ability, level of confidence, willingness to accept challenges etc., the committee members select the individuals by awarding better grades.·When the candidate is found to be inattentive on account of low level of self confidence, the committee members pose provoking questions so that the candidate is emotionally provoked to come forward with appropriate answers.The interview process:The interview process consists of the following stages:·Verification of the certificates namely; qualification certificates, experience certificates, certificates relating to extracurricular activities etc., by the team members and filling up of the requisite formats by the candidates;·Candidates waiting at the reception hall for their turn;·Candidate entering the interview room duly seeking permission of the team members;·Candidate thanking the interview members for permitting him/her inside the cabin;·Candidate sitting on the seat once offered by one/more members in the interview committee;·Candidate thanking the person who had offered the seat;·Candidate shaking his hands with the members, if offered;·Candidate eagerly awaiting for the questions from the members;·Candidate trying to attend the interview with full concentration maintaining regular eye contact with the interviewers;·Candidate answering the questions posed by the members till the entire process is treated as completed;·Candidate collects all certificates and documents once the interview is treated as completed;·Candidate thanks the committee members and·Candidate politely raises from the chair, walks towards the entrance, opens the door and gently closes the door;·Candidate meets other candidates awaiting at the reception hall cheerfully.Dress code:·Dress code is more important and a person is judged by the dress he wears. Dress makes half man.·For men: Please wear a neat trouser and one full length shirt – preferably white or light shaded; Usage of “T” shirts greatly dampens the image of the candidate and the purpose of using any ‘T” shirt is to have better comfort during the course of walking, relaxing, jogging, running, partying and relaxing. As such “T” shirts are not considered to be a fit wear during professional meetings including interviews. The candidate has to wear a good quality shoes neatly polished. If possible he can wear a “tie” and this is purely optional and certain organizations pay more attention to the personality which gets improved by way of better dressing.·For girls: Under any circumstances girls should not wear provoking dresses namely; “T” shirts, jeans pants, trousers, half gowns and shirts with messages and blouses with low cuts. A neat chudithar is considered to be the best option and wearing of sarees improves the image of the individual.A.Questions during the first phase:·Initially the candidates are invited to tell about themselves, their family members, their ambitions, their qualifications, their achievements in studies, sports, music and any other extracurricular activities;·The second question is about the place to which the candidate belongs. In case the candidate belongs to Chennai, he will be asked to tell about Chennai and the importance of the place. Necessarily the candidate should have a thorough knowledge about the place from which he is hailing;·The interviewers will pose “ice breaking questions” in order to shift the focus of the candidate. This is for the purpose of finding out the reaction of the candidate during such “focus change”. (Banks demand people who are able to face any challenges);·During the first two to three minutes, more than 80 percent of the questions will be on the personal details and basic information about the candidate. It has to be remembered that – “The first impression is the best impression” and accordingly the candidate has to behave politely, calmly, courageously and confidently.Sample questions during the first phase:·01. My dear friend, now tell us about yourself: The candidate has to inform in a crisp manner about himself, his family, his qualifications, achievements if any etc. Unnecessary details should be avoided altogether and the candidates at no cost should provide information to the committee members with an intention to derive sympathy from the committee members. Such an attitude will prompt the members either to reject or award poor marks.·02. I see – you are from Chennai – please tell me about Chennai: Since the candidate belongs to Chennai, he is invited to tell about Chennai and he should have pre-hand information about Chennai and should come forward to tell about important places in Chennai namely; Marina beach, High Court, Kabaleeswarar Temple, Metro train facilities, Santhome church, International airport, Asia’s biggest bus station at Koyembedu and many more.·03. I find that you had studied in Presidency college. Why you preferred this college ?. How was your life in the college? The candidate has to tell about the college; the achievements of the college in academic scenario as well as in sports and in other areas;·04. I find that you had studied “EEE” - why you had chosen the course? The candidate has to tell about the purpose and the potential available for the students who had opted to pursue EEE course.·05. You are in Chennai for a long period. What is your opinion about Chennai?·06. You are having “EEE” in engineering and why you are willing to get employed in banks? (Your reply should be – In fact by working in a bank, I can develop my relationship with customers, improve my knowledge and provide better service to as many people as possible. I find that I can have more career prospects by getting employed in the banks)·07. What are your strengths and weaknesses? – Your answer should be: I am always willing to work hard under all circumstances and since I have a good communication ability, I hope that I can surely develop friendship with my colleagues, clients and others in a fast manner so that I can contribute better to the society.·08. You are a highly qualified person having one MBA degree apart from a degree in Engineering. What is the guarantee that you will be in the bank for quite a long time without shifting your attention to some other employment potential after some time ?: Your reply should not be: On account of unemployment problem, I am joining the bank; Your reply should be – even though I have better qualifications, I wish to work in the banking industry because I can have better opportunities to serve for the welfare of the society by working in the bank than any other organisations.Responsibilities of the candidates appearing for the interview:The candidate should do a home work and he should always depend upon his positive straits namely; his strength, achievements and abilities and necessarily he should believe in himself that he can accept and do the job in a better manner and he should altogether avoid any negative reply or angry reply under any circumstances; even when provoked or tempted by the interview board members and the candidate should remain calm and wear a broad smile during the entire interview process.A smile has the power to keep the individual in better spirits at all times.The following question may provoke the candidate –·Dear friend, considering your personality, I find that you look like a film actor. How do you feel yourself ?(You had not at all expected this question and you are tempted to provide an apt reply to them: Your reply should be– In fact I am fond of wearing a neat dress and I take care of my health by doing physical exercises regularly apart from eating moderate food and getting into the bed at the appropriate time. I always believe in the following proverb – “Health is wealth”. An individual may not be in a position to discharge his duties properly without adequate health.B.Second phase of the interview process:During this phase, questions will be asked about the bank for which the candidate is appearing for the interview and the following are some sample questions in case the candidate is appearing for a post in Punjab National Bank:·Do you know – where is the head office of Punjab National Bank?·Who is the present chairman of the bank?·How many branches are there in Punjab National Bank as on date?·Can you tell me about the total business of the bank?·Can you tell me about some deposit schemes available in the bank?·What do you know about the logo of Punjab National Bank?·What is the punchline of Punjab National Bank?·What is the position of Punjab National Bank among the nationalized banks as on date?(It is the responsibility of the candidate to collect the basic information about the bank for which he is appearing for the interview by visiting the website of the bank and referring other material sources in order to get the required information about the bank namely; the headquarters, number of branches, total business, profit position, important schemes, tie up with another banks, achievements of the bank, if any; the present position and ranking of the bank in terms of business, profitability, non performing assets, productivity of the employee etc., In case the candidate is appearing for a group of banks, he should have information in general about all the banks in the group)C.Third phase of the interview:During this phase, questions will be asked on general banking practices as mentioned below:The following are the questions regarding the banks in general:·Have you visited any bank branch? What was your experience?·What is the business of any bank?·What are the essential/primary functions of any bank?·What are the secondary functions of any bank?·Who can open a savings bank account?·What do you know by KYC guidelines?·Why banks insist customers in adhering to KYC guidelines?·What is the difference between Current deposit account and Savings deposit account?·What do you mean by CASA account?·Who normally opens a current account?·What do you know by a fixed deposit account?·Can a company open a savings account?·Can the director of a company open a savings account?·Who is the controlling authority for the banks in India?·What is a foreign bank?·What is meant by a public sector bank?·Which is the largest private sector bank in the country?·Which is the largest bank in the country?·You are working as an officer in savings department. The customer complains about the irritating behavior of the clerk who is working under your supervision. What will you do in this situation?·Your manager delegates some work and you are failing in doing the work within the allotted time and your manager is not happy with your performance. How will you convince your manager?·Today there is some news about annual credit policy. What do you know by that?·What do you know by reverse repo rate?·What is called as inflation?·What is rupee convertibility?·What do you know by gross domestic product?·What do you know by ASBA?·What do you know by Sensex?·What do you know by a convertible debenture?·What is an initial public offer?·What do you know by facebook – whether it is good or bad for any individual and what is your opinion?·What are the advantages and disadvantages of Whatsapp?(The above questions are illustrative and not exhaustive and the candidate should know fairly well about many banking as well as general aspects)D.The fourth phase of the interview:Like the initial phase or first phase, this fourth phase is also important wherein tricky questions will be asked as mentioned below:·You are hailing from Coimbatore. In case you are posted to Chennai whether you will be willing to work at Chennai. (Your answer: If I am posted at Coimbatore, I shall try my level best to bring more business to the bank since I know the place and people well and I can take care of family members who are dependent on me)·Suddenly on account of computer crash, you have to sit late – whether you will be willing to sit late and finish the job or leave early without informing your superiors? (Definitely I will never mind in sitting late and I shall always cooperate with my superiors in finishing the day to day functions of the branch. I am one among the team members and I have the responsibility to cooperate with other members during critical situations)·What information are you willing to tell about yourself? (If I am selected, I shall work hard and I shall discharge my duties to the entire satisfaction of my superiors. I shall always do the best from my side)Part: 002Selected Interview QuestiomsCandidate: 00101.Why you are willing to join in a bank?02.What do you mean by appraisal of gold loans?03.What are the different kinds of term deposits available in a commercial bank?04.What is the minimum period for which a fixed deposit is accepted and the maximum period for which a fixed deposit is accepted?05.Whether a fixed deposit can be accepted for a period more than ten years?06.What do you mean by FERA?07.What do you mean by ECS?08.What is the minimum amount that can be sent through RTGS?09.What is the maximum amount that can be remitted through NEFT?10.What is the maximum amount that can be sent abroad by any resident individual?11.What is the name of apex bank which is responsible for the development of agriculture in the country?12.What are the different kinds of schemes available in our country aiming towards poverty alleviation?13.What do you mean by crossing of any cheque?14.What are the different kinds of crossing?15.What do you mean by CASA?16.Whose signature is available in Rs. 100/- currency note?17.What do you know by dividend?18.Bank holidays are declared according to which act?19.Banks are functioning according to which act?20.RBI is functioning in the country as per which act?Candidate: 00201.What do you mean by a guarantee?02.What are the different types of guarantees?03.What do you mean by letter of credit?04.What do you know by packing credit advance?05.What do you mean by special crossing?06.What do you know by IFSC code ?07.Which is called as mother of deposits?08.Who is a called as natural guardian?09.Whether grandfathers and grandmothers can be natural guardians?10.Which type of credit facility is available to a farmer for raising crops?11.What do you mean by NULM?12.What do you mean by Gram Sadak Yojana?13.What are the salient features of MGNREGA?14.Which authority is supervising the functions of insurance companies?15.What is meant by IPO?16.What is meant by ASBA?17.What is meant by Performance guarantee issued by any commercial bank?18.What do you mean by packing credit facility issued by any commercial bank?19.What do you mean by notice money?20.Treasury bills are issued by which authority and what are the different kinds of treasury bills available in the country?Candidate: 00301.What do you know by PIN number?02.What do you know by PAN number?03.What do you mean by ASBA account?04.What are the functions of DICGC?05.What is the role played by ECGC?06.Mention the Regional Rural Banks which are functioning in Tamilnadu?07.What do you mean by Mergers and what are the different kinds of mergers?08.What do you mean by horizontal merger and reverse merger?09.Which are the top two private sector banks in our country?10.Whether housing loan is a priority sector advance and if so, upto what amount?11.Whether educational loan is a priority sector advance?12.What do you mean by micro small and medium enterprises?13.What do you mean by KYC and name any two important documents which are obtained as per KYC?14.What is the present repo rate and reverse repo rate?15.In the case of MICR code, the middle three digits represent what?16.PAN number consists of how many alpha characters?17.What do you know by biometric automated teller machines?18.What is the criteria by which a bank is considered as largest bank?19.What do you mean by commercial paper?20.What do you mean by FCNR?Candidate: 00401.What do you mean by money laundering?02.What do you mean by subprime lending?03.What is meant by LPG and who is responsible for introduction of LPG strategy in our country?04.What do you mean by PURA?05.What do you know by current ratio?06.At present how many regional rural banks are functioning in our country?07.What do you know by MICR?08.When it comes to rural lending, which are all considered to be priority sector advances?09.Who is called as an authorized dealer?10.When a loan is considered for a cobbler, the loan is granted under which category?11.Name any three security features available in any currency note?12.What is the latest private sector bank in our country?13.What do you mean by small bank and payment bank?14.What are the differences between NEFT and RTGS?15.Who is deciding the rate of interest for savings deposit accounts?16.Who cannot open savings deposit accounts?17.What is meant by memorandum of association?18.What is known as power of attorney?19.In which currencies FCNR accounts can be opened in our country?20.What are the differences between NRE and FCNR?Candidate: 00501.What do you mean by IPO?02.What do you mean by secondary market in our country?03.What do you mean by fund based limits and non fund based limits?04.What do you mean by off balance sheet items?05.What are the advantages and disadvantages of CASA?06.What are the benefits available for any bank by means of CASA?07.What do you mean overdraft facility granted by a bank?08.What do you mean by collateral security?09.In regard to educating a customer, what are the different kinds of information boards displayed in a bank branch?10.Who is the present RBI Governor?11.What do you mean by unclaimed deposits?12.How many regional centres are available for RBI in the country?13.From which date present RBI Governor is functioning and from whom he took charge as RBI Governor?14.What are the advantages of CTS?15.Certificate of deposit is issued by whom?16.RBI is called by which names – mention four names?17.What are the traditional functions of RBI?18.Who is banking ombudsman and by whom he is appointed?19.What is the time limit available for sending a complaint to banking ombudsman?20.Where is the headquarters of State Bank of India?Candidate: 00601.Why commercial banks are more particular about demand deposits?02.What do you mean by CRR?03.Where do commercial banks keep the excess cash?04.What is the function of any currency chest?05.Which are called as financial intermediaries?06.What do you know by FEMA?07.What do you mean by tag line for any bank and why banks are particular about taglines?08.Who is the first Governor of RBI?09.Who was the first Governor of RBI represented by an Indian National?10.What do you mean by PAN and who issues a PAN card?11.What do you mean by POS?12.What is the shareholding pattern by Government of India, State Government and Sponsor bank in the case of RRBs?13.What do you mean by greenshoe option?14.What is meant by doubtful assets?15.What is meant by prime security?16.New Bank of India merged with which bank in the country?17.Who has presented the theory regarding PURA?18.In the case of MGNREGA, how many days’ work has to be allotted as at present?19.What is the rate of interest charged in the case of DRI loans?20.Commercial banks have to lend how much percentage of loans under priority sector category?Candidate: 00701.What do you mean by capital market?02.Which kinds of securities are available through capital market?03.Which is the biggest stock exchange in our country?04.What do you mean by SENSEX?05.What do you mean by market capitalization?06.Tell the name of the private sector bank which was opened during this year?07.What do you mean by LIBOR?08.What do you mean by Pay in slip?09.What do you mean by withdrawal slip?10.Can you tell the name of football legend who visited India recently?11.Who is the present world chess champion?12.What do mean by nomination facility available in the banks?13.Whether nomination facility available is for loan accounts?14.What do you mean by CTS?15.What is the difference between a commercial bank and a development bank?16.What do you mean by letter of credit issued by banks?17.What do you mean by usance bill?18.A customer who has availed overdraft facility from the bank is found to utilize the amount for acquiring long term assets and what do you mean by it?19.What are the different types of loan facilities available from a commercial bank?20.What do you know by atal pension yojana?Candidate: 00801.What do you mean by garnishee order ?02.What do you mean by ITA order and on whom such order is issued?03.Under what circumstances, a bank need not honour garnishee order and ITA order?04.What are the different kinds of services available through automated teller machines?05.What is the safety measure available in automated teller machine?06.What is the maximum number of operations that are permitted for automated teller machines?07.What are the different kinds of electronic funds transfer facilities available in commercial bank nowadays?08.In the case of a cheque who is called as payee?09.What do you mean by open cheque and crossed cheque?10.What do you mean by EEFC account?11.What is known as POS?12.What do you mean by factoring?13.What do you mean by PAN number and TAN number?14.What do you mean by red label automated teller machine?15.What are the different kinds of guarantees available from a bank?16.What is meant by off balance sheet items?17.What is known by current ratio?18.Whether a deposit can be opened in the name of a blind person and what is the procedure?19.What is meant by bill of lading?20.Name any two instruments are considered as semi negotiable instruments?Candidate: 00901.Who can open Non resident external account?02.What do you know by Non resident ordinary account?03.What are the advantages and disadvantages in opening Non Resident Ordinary account?04.What are the different kinds of deposits which can be opened by a Non resident Indian?05.What is the maximum insurance claim settled by DICGC in the case of deposit accounts in case of insolvency of a bank?06.What do you mean by arbitrage?07.What do you mean by arbitrator?08.What is known as MSF?09.What is the difference between bank rate, MSF and Repo rate?10.What are the different kinds of tools employed by RBI in order to control liquidity adjustment facility in our country?11.What do you know by pay in slip and withdrawal slip which are used in banks?12.Who is known as proprietor?13.What do you mean by RKBY scheme?14.What do you know by SJSRY scheme?15.What do you mean by base rate?16.Who is an executor and who is an administrator?17.What do you mean by financial inclusion?18.When interest paid in savings deposit account is taxable?19.What is the minimum and maximum period for which one FCNR deposit is opened?20.Who can open EEFC account?Candidate: 01001.What do you know by conversion?02.What is called as material alteration?03.What do you know by CSR?04.Name any three negotiable instruments which are widely used in banks?05.What is NIFTY and on which basis, it is calculated?06.What do you know by above par, at par and below par?07.What are the loan facilities available for a transport operator?08.What do you know by SLR and what is the present SLR?09.What is the capital requirement in case of newly opened private sector bank?10.What do you mean by intangible asset?11.How many members are there in RBI board?12.RBI board consists of how many Governors, deputy governors and directors?13.Whether a minor can open an account with a commercial bank?14.What is the minimum age limit for a minor for opening a bank account?15.What is known by partnership firm?16.What are the different kinds of crop loans provided to farmers in the country?17.What do you mean by merchant banking?18.What do you know by debt recovery agent?19.What is Lok adalat?20.What do you know by break even point?Candidate: 01101.What is meant by round revolution?02.What is meant by pink revolution?03.What do you know by deferred payment guarantee?04.Name the different kinds of risks faced by any commercial bank ?05.Who is called as an arbitrator?06.What do you know by banking ombudsman?07.What is meant by black money?08.What do you mean by money laundering?09.What is the purpose of special crossing?10.When there is a claim by legal heirs and nominee in regard to a particular deposit when the depositor dies, to whom the bank has to pay the amount ?11.In the case of payment of deposit money to the nominee, who can prohibit the bank in settling such claims?12.What do you mean by BSBDA account and what is the present name for BSBDA account?13.What do you know by Jeevan Jyothi Bima Yojana?14.Vehicle insurance facilities are provided by which public sector insurance companies in our country?15.What do you mean by horticulture?16.What is meant by mortgage and hypothecation?17.For which kinds of banking services nomination facility is available?18.What are the different kinds of capital?19.What do you know by articles of association?20.The certificate of incorporation and certificate of commencement of business are registered with whom?Candidate: 01201.What do you mean by call money, notice money and term money?02.What is meant by layer farming?03.What is known as sericulture?04.What do you know by SHG?05.What do you know by micro credit?06.What do you know by DIR scheme?07.What do you mean by FIR?08.What is known as CAMELS?09.What do you mean by tier I capital as per BASEL-II accord?10.What do you mean by bills discounting facility provided by any bank?11.What are the differences between overdraft facility and term loan facility provided by banks to their customers?12.Who is the topmost authority in any bank?13.The topmost authority in any bank is appointed by whom?14.What do you know by JAIIB and CAIIB?15.What is the term meant for honeybee rearing?16.What do you know by SARFAESI act?17.How many banks were nationalized during the first stage?18.What do you mean by a public sector bank?19.What do you mean by a nationalized bank?20.What is the different between nationalized bank and public sector bank?Part: 003A mock interview(This is one imaginary interview session conducted with Mr. Ashwin for the purpose of guiding the candidates)Mr. Ashwin is an engineering graduate and he had completed his graduation from an engineering college situated at Chennai. Even though he wanted to get an employment in prominent companies, he could not get the job and on getting the information that banks are providing employment opportunities on large scale to all graduates in the country, he applied for IBPS officers’ examination and came out successful in the common written examination.He was informed about the interview process in the regional office of one prominent bank in Chennai and in order to avoid any tension and nervousness he came to the interview hall half an hour earlier to his scheduled timing.He started reading the day’s news paper and started relaxing himself so that he can answer the questions posed by the committee members calmly and confidently.Now he is called by the attending staff to enter into the interview room.Mr. Ashwin neatly dressed in white shirt with full sleeves wearing a dark colored pant walks inside the cabin after closing the door gently.-May I come in Sir?-Yes – Please come in and be seated.-Thank you sirsMr. Ashwin sits on the chair provided to him and looks at the members for their questions-Mr. Ashwin, which place do you belong?-Sir, I am from Chennai-What about your father?-My father is working as an accountant in a private firm.-How many members are there in your family?-Myself, my elder sister since married; my younger sister studying in a College; my younger brother working in a private firm and my father and my mother-I find that you are an engineering graduate and why you are willing to join in a bank?-I find that career growth is found to be better in banks nowadays. Apart from the above, I can serve people more while working in a bank.-(The details namely; better salary, job security, comfortable working hours etc., are to be kept in mind and under no circumstances to be disclosed to the interview committee)-Can you tell me about Chennai?-Chennai is one among the four metropolitan cities of our country. It is fast growing. Chennai is famous for automobile production and health care. There are many reputed hospitals and a large number of automobile manufacturers in the city. Apart from the above in the case of information technology, Chennai ranks number two next to Bangalore and there is a lot of scope for people who are willing to work in IT industries. The population is around 70 lakhs and by areawise, Chennai is the largest among all cities in the country. Marina beach is world’s second largest beach.-Can you tell me about Repo rate?-Commercial banks can borrow funds from RBI against government securities at Repo rate and there is an implied condition that the banks will repurchase the government securities after clearing the loans. The present repo rate is 6.25%-What is the difference between bank rate and repo rate?-When the commercial banks borrow funds from RBI against discounting bills they have to pay interest at bank rate and presently the bank rate is 7.25%. Normally Repo loans are given towards meeting short term requirements and loans at bank rate are provided towards meeting long term requirements-What do you mean by non resident Indian?-Non Resident Indian is Indian national who has gone abroad for the purpose of business, studies or employment and stayed there for more than 182 days-What do you mean by Persons of Indian Origin?-Persons of Indian Origin are people whose forefathers are/were non resident Indians at any point of time. In other words PIOs are the sons/daughters/grandsons/granddaughters of Non resident Indians who had already settled in the foreign countries and PIOs are the citizens of those countries and not of India.-What do you mean by CBS?-CBS means Core Banking Solutions. Nowadays, the entire banking functions are carried out through computers in banks and branches of all banks are connected through common network and transactions can be done from one branch of one bank with another branch of another bank comfortably using internet banking or mobile banking.-What do you mean by Moratorium?-It is the repayment holiday permitted for repayment in the case of term loans. Normally organizations generate income after some period from the date of installation of the machineries and other inventories and they may not be able to generate sufficient income towards payment of instalments due to the bank and in this connection banks permit some cushion time called as repayment holiday or moratorium. The repayment holiday may be for three months, six months or nine months depending upon the nature and size of the industry. On completion of the moratorium period, the organizations start repaying the loans.-What do you mean by EMI?-EMI means equated monthly instalments. It consists of repayment of both principal and interest payable either at monthly or quarterly intervals. Normally EMI is permitted in the case of loans like housing loans, personal loans, white goods loans etc., where the borrowers have regular income like salaries or any other remuneration.-OK Ashwin, I find that you are highly qualified having M.E. in civil engineering and MBA. Whether you will continue in the bank?-Definitely sir. I am informed that a person who joins as a clerk or an officer in any bank can get promotion upto General Manager level by the time he retires from his services and I hope that I can utilize the knowledge acquired by me while discharging my duties in the bank and I shall definitely aspire for promotions in case if I am selected in the bank.-OK. Ashwin – thank you:-Thank you sirs for your nice company.Ashwin gets up from his chair gently, moves towards the door, opens the door slowly and after getting out of the room closes the door gently.(The interview with Mr. Ashwin is treated as completed.)

SEBI is one of the most prestigious institutions in India. It has released the notification for recruitment in Grade A level exam. Being an Engineer, you are eligible to apply for this examination.This year, there are 120 vacancies in SEBI Grade A. SEBI is a brand in itself and there is no need to explain how prestigious this post is. SEBI Grade A Officer is a standout amongst the most well-known job in India. Consistently in excess of 1 lakh, people vie for Grade A posts in a Three-Step Process.Now, Since you have asked the question “What needs to be done by an Engineering Graduate to get recruited in SEBI?”I have seen a wide variety of students crack SEBI Grade A Examination. I have seen students from engineering background crack this exam. I have seen students from law background crack this exam. I have seen students from IIM’s crack this exam, I have seen students from local colleges crack this exam.Since you have done Engineering, this is going to be a plus point for you because these days I see a lot of Engineering Students cracking such high-level competitive examinations.So, it all depends upon your hard work and determination to clear this examination and also, how well you are organized with your preparation.Now, I am going to answer this one in detail covering everything from Exam Pattern, Syllabus and the most important Preparation Strategy. Once you know all these aspects of the examination, you will have a clear idea about what needs to be done to crack this examination.Let’s Start!!SEBI Grade A – Exam Pattern & Selection ProcedureSEBI Grade A Selection procedure is based on 3 major stages:Phase 1Phase 2InterviewSEBI Grade A – Phase 1Phase I Online ExaminationAn online examination of two hours duration consisting of Multiple Choice questions for 200 marks.Candidates would have to secure minimum marks separately for each section, based on Group Performance, as decided by SEBI.SEBI Grade A – Phase 2Phase II On-Line ExaminationAn online examination consisting of three papers of total 300 marks.SEBI Grade A – InterviewPhase III InterviewOnly the shortlisted candidates will be called for interview. The application fee shall not be refunded to the candidates not shortlisted for the interview. The candidate may opt for interview either in Hindi or English. Weightage of marks obtained in Phase II will be 85%, while marks obtained in interview shall be given a weight of 15%.On fulfilling the criteria of the minimum cut off marks in each subject, candidates will be shortlisted based on Group Performance as decided by SEBI.List of candidates shortlisted for interview will be made available on SEBI website. Only the shortlisted candidates will be called for interview. The application fee shall not be refunded to the candidates not shortlisted for the interview.SEBI reserves the right to modify the selection procedure if deemed fit.SEBI Grade A Syllabus Phase 1 2018 (Prelims)General AwarenessCurrent Affairs – National & InternationalBudgetAwards and HonoursImportant Financial & Economic NewsImportant DaysInternational & National OrganizationsSportsBooks and AuthorsScience – Inventions & DiscoveriesCountries & Capitals etcEnglish LanguageError SpottingSentence RearrangementReading ComprehensionFill in the BlanksPassagesSynonymsIdioms & Phrases etc.Quantitative AptitudeData InterpretationInequalitiesNumber SeriesApproximation and SimplificationData SufficiencyHCF and LCMProfit and LossSI & CIProblem on AgesWork and TimeSpeed Distance and TimeProbability, Permutation, and CombinationMensurationAverage, Ratio and Proportion etc.ReasoningPuzzlesSeating ArrangementsDirection SenseBlood RelationsSyllogismsOrder and RankingCoding-DecodingMachine Input-OutputInequalitiesAlpha-Numeric-Symbol SeriesData SufficiencyNumber System and ConversionsLogical Reasoning etc.Awareness of Securities MarketSecurities MarketsIndian Financial system – introduction – structure – finance commission – financial administration – receipts of the Government – Expenditures of the Government.Capital markets – primary market – instruments – legal issues and regulations – secondary market – stock exchanges – brokers – trading in stock exchanges – forward trading – stock index – depositories – regulationsBond Market- Money market, G.sec Market, Corporate bond market, Bond valuation, Duration, sensitivity, riskForeign Exchange market – exchange control – fixation of the exchange rate – exchange control in India – FEMA – foreign exchange transactions of commercial banks in India – currency convertibility – currency forwards, futures and options – trading in foreign exchange market – the relationship between money market and foreign exchange market.Commodity market, commodity trading, and exchangesInternational capital markets – instruments – Guidelines – foreign investment in India and its regulations.Securities LawThe relationship between Company Law and securities lawBasic concepts related to securities law, like capital, public offer, and securitiesHistorical Background of securities lawSEBI as a Market regulator, Powers, and Functions of SEBI, Quasi legislative powers, executive powers, and quasi-judicial powersRegulating the intermediaries and Stock exchanges, Meaning and Type of securities, Securities Contract, Corporatization, Demutualization and regulation of stock exchange, Listing Agreement, Dematerialization and RematerialisationRights and duties of Depository (NSDL AND CSDL), Depository Participant, Issuer and beneficiaryUnpublished Price Sensitive Information (UPSI), Insider as the connected person, Insider as the person having access to UPSI, Trading on the basis of UPSIMergers Amalgamation and takeovers, Types and legal processes during a takeover, Substantial Acquisitions, Exemptions by law, Exemption BY SEBIPublic offer and disclosure requirementsUnfair Trade Practices in the securities market, Securities Market offences, Prohibition of Insider TradingSEBI ICDR RegulationsPublic Offer requirementsRole of SEBI as a RegulatorSecurities Appellate TribunalRole of Courts in enforcing securities regulationsSyllabus for SEBI Officer Grade A – Phase II Exam (Mains)Paper ISecurities Markets (General Stream)SEBI as a Market regulator, Powers, and Functions of SEBI, Quasi legislative powers, executive powers, and quasi-judicial powersRegulating the intermediaries and Stock exchanges, Meaning and Type of securities, Securities Contract, Corporatization, Demutualization and regulation of stock exchange, Listing AgreementSEBI regulated entities: Stock-broking, Depositories, Depository Participants, Registrars, and Transfer Agents, Merchant Bankers, Custodians, Debenture Trustees, Stock Exchanges, Clearing Corporations, Credit Rating Agencies, Alternative Investment Funds, Bankers to Issues, Investment Advisors etc.Stock Broking – equity, derivative, commodityMerchant banking services – capital issue management – pricing of an issue -marketing of issuesMutual funds: Indian History, Role, legal structure, Types of schemes and main features, Real estate MFs and Reits, InVits, Distribution of financial products and investment advice: issues, concerns, and regulatory requirementsCommodity market, commodity trading, and commodity exchangesInternational capital markets – instruments – Guidelines – foreign investment in India and its regulationsHistorical Background of securities lawBasic concepts related to securities law, like capital, public offer, and securitiesThe relationship between Company Law and securities lawRights and duties of Depository (NSDL AND CSDL), Depository Participant, Issuer and beneficiaryMergers Amalgamation and takeovers, Types and legal processes during a takeover, Substantial Acquisitions, Exemptions by law, Exemption BY SEBIPublic offer and disclosure requirements, SEBI ICDR Regulations, LODR RegulationsUnfair Trade Practices in the securities market, Securities Market offences, Prohibition of Insider Trading, Unpublished Price Sensitive Information (UPSI), Insider as a connected person, Insider as the person having access to UPSI, Trading on the basis of UPSIPublic Offer requirementsForeign Portfolio Investors: Their role, nature of investments in Indian Market, their impact on Indian MarketsCollective Investment Schemes: regulatory framework, main issues/ concerns, the role of SEBI and other agenciesSecurities Appellate Tribunal: constitution, recent important casesRole of Courts in enforcing securities regulationsPaper II – English (Writing Skills)The paper on English shall be framed in a manner to assess the writing skills including expression and understanding of the topic.Paper III – Economic & Social Issues and Finance & ManagementEconomic and Social IssuesGrowth and DevelopmentMeasurement of growth: National Income and per capita incomePoverty Alleviation and Employment Generation in IndiaSustainable Development and Environmental issues. Economic Reforms in IndiaIndustrial and Labour PolicyMonetary and Fiscal PolicyPrivatizationRole of Economic Planning. GlobalizationOpening up of the Indian EconomyBalance of Payments, Export-Import PolicyInternational Economic Institutions – IMF and World BankWTORegional Economic Co-operation.Social Structure in IndiaMulticulturalismDemographic TrendsUrbanization and MigrationGender IssuesSocial Justice: Positive Discrimination in favour of the underprivilegedSocial MovementsIndian Political SystemHuman DevelopmentSocial Sectors in India, Health and Education.Finance and ManagementFinance(a) Financial System:Money Market, Capital MarketReserve Bank of India- functions, and conduct of monetary policy, Banking System in India, Financial Institutions – SIDBI, EXIM, NABARD, NHB, etc.SEBI – functions, and rolePrevention of Money LaunderingKnow Your Client Framework(b) Financial Markets:Primary and Secondary Markets (Forex, Money, Bond, Equity, etc.), functions, instruments, recent developments.(c) General Topics:Risk Management in Financial Sector Page 21 of 25Basics of Derivatives: Forward, Futures, and SwapChanging Landscape of Financial sectorRecent Developments in the Financial Sector, Portfolio Investment, Public Sector Reforms, DisinvestmentsFinancial Inclusion- use of technologyAlternate source of finance, private and social cost-benefit, Public-Private PartnershipCorporate Governance in the Financial Sector, the role of e-governance in addressing the issues of corruption and inefficiency in the government sectorThe Union Budget – Direct and Indirect taxes; Non-tax sources of Revenue, GST, Thirteenth Finance Commission and GST, Finance Commission, Fiscal Policy, Fiscal Responsibility and Budget Management Act (FRBM)Inflation: Definition, trends, estimates, consequences, and remedies (control): WPI, CPI – components and trends.Management:Management: its nature and scope; The Management Processes; Planning, Organization, Staffing, Directing and controlling; The Role of a Manager in an Organization.Leadership: The Tasks of a Leader; Leadership Styles; Leadership Theories; A successful Leader versus an effective Leader.Human Resource Development: Concept of HRD; Goals of HRD; Performance Appraisal – Potential appraisal and development – Feedback and Performance Counselling – Career Planning – Training and Development – Rewards – Employee Welfare. Motivation, Morale, and Incentives: Theories of Motivation; How Managers Motivate; Concept of Morale; Factors determining morale; Role of Incentives in Building up Morale.Communication: Steps in the Communication Process; Communication Channels; Oral versus Written Communication; Verbal versus non-verbal Communication; upward, downward and lateral communication; Barriers to Communication, Role of Information Technology.Corporate Governance: Factors affecting Corporate Governance; Mechanisms of Corporate Governance.Engineering Stream – Civil Engineering1. Building Materials: Stone, Lime, Glass, Plastics, Steel, FRP, Ceramics, Aluminium, Fly Ash, Basic Admixtures, Timber, Bricks and Aggregates: Classification, properties and selection criteria; Cement: Types, Composition, Properties, Uses, Specifications and various Tests; Lime & Cement Mortars and Concrete: Properties and various Tests; Design of Concrete Mixes: Proportioning of aggregates and methods of mix design.2. Solid Mechanics: Elastic constants, Stress, plane stress, Strains, plane strain, Mohr’s circle of stress and strain, Elastic theories of failure, Principal Stresses, Bending, Shear and Torsion.3. Structural Analysis: Basics of strength of materials, Types of stresses and strains, Bending moments and shear force, concept of bending and shear stresses; Analysis of determinate and indeterminate structures; Trusses, beams, plane frames; Rolling loads, Influence Lines, Unit load method & other methods; Free and Forced vibrations of single degree and multi-degree freedom system; Suspended Cables; Concepts and use of Computer Aided Design.4. Design of Steel Structures: Principles of Working Stress methods, Design of tension and compression members, Design of beams and beam-column connections, built-up sections, Girders, Industrial roofs, Principles of Ultimate load design.5. Design of Concrete and Masonry Structures: Limit state design for bending, shear, axial compression, and combined forces; Design of beams, Slabs, Lintels, Foundations, Retaining walls, Tanks, Staircases; Principles of pre-stressed concrete design including materials and methods; Earthquake resistant design of structures; Design of Masonry Structure.6. Construction Practice, Planning and Management: Construction – Planning, Equipment, Site investigation and Management including Estimation with latest project management tools and network analysis for different Types of works; Analysis of Rates of various types of works; Tendering Process and Contract Management, Quality Control, Productivity, Operation Cost; Land acquisition; Labour safety and welfare.7. Flow of Fluids, Hydraulic Machines, and Hydro Power:(a) Fluid Mechanics, Open Channel Flow, Pipe Flow: Fluid properties; Dimensional Analysis and Modelling; Fluid dynamics including flow kinematics and measurements; Flow net; Viscosity, Boundary layer, and control, Drag, Lift, Principles in open channel flow, Flow controls. Hydraulic jump; Surges; Pipe networks.(b) Hydraulic Machines and Hydropower: Various pumps, Air vessels, Hydraulic turbines – types, classifications & performance parameters; Powerhouse – classification and layout, storage, pondage, control of supply.8. Hydrology and Water Resources Engineering: Hydrological cycle, Groundwater hydrology, Well hydrology and related data analysis; Streams and their gauging; River morphology; Flood, drought and their management; Capacity of Reservoirs. Water Resources Engineering: Multipurpose uses of Water, River basins and their potential; Irrigation systems, water demand assessment; Resources – storages and their yields; Waterlogging, canal and drainage design, Gravity dams, falls, weirs, Energy dissipaters, barrage Distribution works, Cross drainage works and head-works and their design; Concepts in canal design, construction & maintenance; River training, measurement and analysis of rainfall.9. Environmental Engineering:(a) Water Supply Engineering: Sources, Estimation, quality standards and testing of water and their treatment; Rural, Institutional and industrial water supply; Physical, chemical and biological characteristics and sources of water, Pollutants in water and its effects, Estimation of water demand; Drinking water Standards, Water Treatment Plants, Water distribution networks.(b) Waste Water Engineering: Planning & design of domestic wastewater, sewage collection, and disposal; Plumbing Systems. Components and layout of sewerage system; Planning & design of Domestic Waste-water disposal system; Sludge management including treatment, disposal, and re-use of treated effluents; Industrial waste waters and Effluent Treatment Plants including institutional and industrial sewage management.(c) Solid Waste Management: Sources & classification of solid wastes along with planning & design of its management system; Disposal system, Beneficial aspects of wastes and Utilization by Civil Engineers.(d) Air, Noise pollution and Ecology: Concepts & general methodology.10. Geotechnical Engineering and Foundation Engineering:(a) Geotechnical Engineering: Soil exploration – planning & methods, Properties of soil, classification, various tests, and inter-relationships; Permeability & Seepage, Compressibility, consolidation and Shearing resistance, Earth pressure theories and stress distribution in soil; Properties and uses of geo-synthetics.(b) Foundation Engineering: Types of foundations & selection criteria, bearing capacity, settlement analysis, design and testing of shallow & deep foundations; Slope stability analysis, Earthen embankments, Dams, and Earth retaining structures: types, analysis, and design, Principles of ground modifications.11. Surveying and Geology: (a) Surveying: Classification of surveys, various methodologies, instruments & analysis of measurement of distances, elevation and directions; Field astronomy, Global Positioning System; Map preparation; Photogrammetry; Remote sensing concepts; Survey Layout for culverts, canals, bridges, road/railway alignment and buildings, Setting out of Curves.(b) Geology: Basic knowledge of Engineering geology & its application in projects. 12. Transportation Engineering: Highways – Planning & construction methodology, Alignment, and geometric design; Traffic Surveys and Controls; Principles of Flexible and Rigid pavements design Tunneling – Alignment, methods of construction, disposal of muck, drainage, lighting, and ventilation. Railways Systems – Terminology, Planning, designs and maintenance practices; track modernization. Harbours – Terminology, layouts, and planning. Airports – Layout, planning & design.Engineering Stream – Electrical Engineering1. Electrical Materials: Electrical Engineering Materials, crystal structures, and defects, ceramic materials, insulating materials, magnetic materials – basics, properties, and applications; ferrities, ferromagnetic materials, and components; basics of solid state physics, conductors; Photo-conductivity; Basics of Nanomaterials and Superconductors.2. Electric Circuits and Fields: Circuit elements, network graph, KCL, KVL, Node and Mesh analysis, ideal current and voltage sources, Thevenin’s, Norton’s, Superposition and Maximum Power Transfer theorems, transient response of DC and AC networks, Sinusoidal steady-state analysis, basic filter concepts, two-port networks, three phase circuits, Magnetically coupled circuits, Gauss Theorem, electric field and potential due to point, line, plane and spherical charge distributions, Ampere’s and Biot-Savart’s laws; inductance, dielectrics, capacitance; Maxwell’s equations.3. Electrical and Electronic Measurements: Principles of measurement, accuracy, precision and standards; Bridges and potentiometers; moving coil, moving iron, dynamometer and induction type instruments, measurement of voltage, current, power, energy and power factor, instrument transformers, digital voltmeters and multi-meters, phase, time and frequency measurement, Q-meters, oscilloscopes, potentiometric recorders, error analysis, Basics of sensors, Transducers, basics of data acquisition systems.4. Computer Fundamentals: Number systems, Boolean algebra, arithmetic functions, Basic Architecture, Central Processing Unit, I/O and Memory Organisation; peripheral devices, data representation and programming, basics of Operating system and networking, virtual memory, file systems; Elements of programming languages, typical examples.5. Basic Electronics Engineering: Basics of Semiconductor diodes and transistors and characteristics, Junction and field effect transistors (BJT, FET, and MOSFETs), different types of transistor amplifiers, equivalent circuits and frequency response; oscillators and other circuits, feedback amplifiers.6. Analog and Digital Electronics: Operational amplifiers – characteristics and applications, combinational and sequential logic circuits, multiplexers, multi-vibrators, sample and hold circuits, A/D and D/A converters, basics of filter circuits and applications, simple active filters; Microprocessor basics- interfaces and applications, basics of linear integrated circuits; Analog communication basics, Modulation and demodulation, noise and bandwidth, transmitters and receivers, signal to noise ratio, digital communication basics, sampling, quantizing, coding, frequency and time domain multiplexing, power line carrier communication systems.7. Systems and Signal Processing: Representation of continuous and discrete-time signals, shifting and scaling operations, linear, time-invariant and causal systems, Fourier series representation of continuous periodic signals, sampling theorem, Fourier and Laplace transforms, Z transforms, Discrete Fourier transform, FFT, linear convolution, discrete cosine transform, FIR filter, IIR filter, bilinear transformation.8. Control Systems: Principles of feedback, transfer function, block diagrams and signal flow graphs, steady-state errors, transforms and their applications; Routh-Hurwitz criterion, Nyquist techniques, Bode plots, root loci, lag, lead and lead-lag compensation, stability analysis, transient and frequency response analysis, state space model, state transition matrix, controllability and observability, linear state variable feedback, PID and industrial controllers.9. Electrical Machines: Single phase transformers, three phase transformers – connections, parallel operation, auto-transformer, energy conversion principles, DC machines – types, windings, generator characteristics, armature reaction and commutation, starting and speed control of motors, Induction motors – principles, types, performance characteristics, starting and speed control, Synchronous machines – performance, regulation, parallel operation of generators, motor starting, characteristics and applications, servo and stepper motors.10. Power Systems: Basic power generation concepts, steam, gas and water turbines, transmission line models and performance, cable performance, insulation, corona and radio interference, power factor correction, symmetrical components, fault analysis, principles of protection systems, basics of solid state relays and digital protection; Circuit breakers, Radial and ring-main distribution systems, Matrix representation of power systems, load flow analysis, voltage control and economic operation, System stability concepts, Swing curves and equal area criterion. HVDC transmission and FACTS concepts, Concepts of power system dynamics, distributed generation, solar and wind power, smart grid concepts, environmental implications, fundamentals of power economics.11. Power Electronics and Drives: Semiconductor power diodes, transistors, thyristors, triacs, GTOs, MOSFETs and IGBTs – static characteristics and principles of operation, triggering circuits, phase control rectifiers, bridge converters – fully controlled and half controlled, principles of choppers and inverters, basic concepts of adjustable speed dc and ac drives, DC-DC switched mode converters, DC-AC switched mode converters, resonant converters, high frequency inductors and transformers, power supplies.SEBI Grade A – Preparation StrategyThe overall level of SEBI Grade A exam is on a higher side when compared with other examinations. You should have a proper study program in place whilst preparing for this exam. Overall and sectional strategy for this exam will eventually help you to score better.I have discussed a detailed approach and strategy for cracking SEBI Grade A examination in one of my videos on my YouTube Channel. In the video, I have also discussed all the IMPORTANT BOOKS which one should follow to crack SEBI Grade A 2018 Examination. You can check my video by clicking on the Video below:

The Reserve Bank of India (RBI) is India's central banking institution, which controls the issuance and supply of the Indian rupee. Until the Monetary Policy Committee was established in 2016, it also controlled monetary policy in India.[6]It commenced its operations on 1 April 1935 in accordance with the Reserve Bank of India Act, 1934.[7]The original share capital was divided into shares of 100 each fully paid, which were initially owned entirely by private shareholders.[8]Following India's independence on 15 August 1947, the RBI was nationalised on 1 January 1949.[9]The RBI plays an important part in the Development Strategy of the Government of India. It is a member bank of the Asian Clearing Union. The general superintendence and direction of the RBI is entrusted with the 21-member central board of directors: the governor; four deputy governors; two finance ministry representatives (usually the Economic Affairs Secretary and the Financial Services Secretary); ten government-nominated directors to represent important elements of India's economy; and four directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and the capital New Delhi. Each of these local boards consists of five members who represent regional interests, the interests of co-operative and indigenous banks.The central bank was an independent apex monetary authority which regulates banks and provides important financial services like storing of foreign exchange reserves, control of inflation, monetary policy report till August 2016. A central bank is known by different names in different countries. The functions of a central bank vary from country to country and are autonomous or quasi-autonomous body and perform or through another agency vital monetary functions in the country. A central bank is a vital financial apex institution of an economy and the key objects of central banks may differ from country to country still they perform activities and functions with the goal of maintaining economic stability and growth of an economy.[10]The bank is also active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion (AFI). The bank is often referred to by the name Mint Street.[11]RBI is also known as banker's bank.Contents1 Preamble2 History 2.1 1935–1949 2.2 1950–1960 2.3 1961–1968 2.4 1969–1984 2.5 1985–1990 2.6 1991–1999 2.7 Since 20003 Structure4 Branches and support bodies5 Functions 5.1 Financial Supervision 5.2 Regulator and supervisor of the financial system 5.3 Regulator and Supervisor of the Payment and Settlement Systems 5.4 Banker and Debt Manager to Government 5.5 Managing foreign exchange 5.6 Issue of currency 5.7 Banker's bank 5.8 Regulator of the Banking System 5.9 Detection of fake currency 5.10 Developmental role 5.11 Related functions 5.12 Custodian to foreign exchange6 2016 Demonetisation 6.1 Cash crunch and effects7 Policy Rates and Reserve Ratios 7.1 Repo Rate 7.2 Reverse Repo Rate (RRR) 7.3 Statutory liquidity ratio (SLR) 7.4 Bank Rate 7.5 Liquidity Adjustment Facility (LAF) 7.6 Cash Reserve Ratio (CRR) 7.7 Open Market Operation (OMO) 7.8 Marginal Standing Facility (MSF)8 Qualitative Tools 8.1 Margin Requirements or LTV 8.2 Selective credit control 8.3 Moral Suasion9 Limitations of Monetary Policy10 Publications11 References12 Further reading13 External linksPreambleThe preamble of the Reserve Bank of India describes the basic functions of the reserve bank as:"to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth."HistoryA 2010 stamp dedicated to the 75th anniversary of the Reserve Bank of IndiaThe Reserve Bank of India was established following the Reserve Bank of India Act of 1934.[12]Though privately owned initially, it was nationalised in 1949 and since then fully owned by Government of India (GoI).1935–1949Reserve Bank of India-10 Rupees (1938), first year of banknote issue.The Reserve Bank of India was founded on 1 April 1935 to respond to economic troubles after the First World War.[13]The Reserve Bank of India was conceptualized based on the guidelines presented by the Central Legislative Assembly which passed these guidelines as the RBI Act 1934.[14]RBI was conceptualized as per the guidelines, working style and outlook presented by Dr. B. R. Ambedkar in his book titled “The Problem of the Rupee – Its origin and its solution” and presented to the Hilton Young Commission. The bank was set up based on the recommendations of the 1926 Royal Commission on Indian Currency and Finance, also known as the Hilton–Young Commission.[15]The original choice for the seal of RBI was The East India Company Double Mohur, with the sketch of the Lion and Palm Tree. However, it was decided to replace the lion with the tiger, the national animal of India. The Preamble of the RBI describes its basic functions to regulate the issue of bank notes, keep reserves to secure monetary stability in India, and generally to operate the currency and credit system in the best interests of the country. The Central Office of the RBI was established in Calcutta (now Kolkata) but was moved to Bombay (now Mumbai) in 1937. The RBI also acted as Burma's (now Myanmar) central bank until April 1947 (except during the years of Japanese occupation (1942–45)), even though Burma seceded from the Indian Union in 1937. After the Partition of India in August 1947, the bank served as the central bank for Pakistan until June 1948 when the State Bank of Pakistan commenced operations. Though set up as a shareholders’ bank, the RBI has been fully owned by the Government of India since its nationalization in 1949.[16]RBI has monopoly of note issue.1950–1960In the 1950s, the Indian government, under its first Prime Minister Jawaharlal Nehru, developed a centrally planned economic policy that focused on the agricultural sector. The administration nationalized commercial banks[17]and established, based on the Banking Companies Act, 1949 (later called the Banking Regulation Act), a central bank regulation as part of the RBI. Furthermore, the central bank was ordered to support economic plan with loans.[18]1961–1968As a result of bank crashes, the RBI was requested to establish and monitor a deposit insurance system. Meant to restore the trust in the national bank system, it was initialized on 7 December 1961. The Indian government founded funds to promote the economy, and used the slogan "Developing Banking". The government of India restructured the national bank market and nationalized a lot of institutes. As a result, the RBI had to play the central part in controlling and supporting this public banking sector.1969–1984In 1969, the Indira Gandhi-headed government nationalized 14 major commercial banks. Upon Indira Gandhi's return to power in 1980, a further six banks were nationalized.[15]The regulation of the economy and especially the financial sector was reinforced by the Government of India in the 1970s and 1980s.[19]The central bank became the central player and increased its policies a lot for various tasks like interests, reserve ratio and visible deposits.[20]These measures aimed at better economic development and had a huge effect on the company policy of the institutes. The banks lent money in selected sectors, like agricultural business and small trade companies.[21]The Banking Commission was established on Wednesday, 29 January 1969, to analyze banking costs, effects of legislations and banking procedures, including non banking financial intermediaries and indigenous banking on Government of India economy; with Mr. R.G. Saraiya as the chairman.[22][23][24]The branch was forced to establish two new offices in the country for every newly established office in a town.[25]The oil crises in 1973 resulted in increasing inflation, and the RBI restricted monetary policy to reduce the effects.[26]1985–1990A lot of committees analysed the Indian economy between 1985 and 1991. Their results had an effect on the RBI. The Board for Industrial and Financial Reconstruction, the Indira Gandhi Institute of Development Research and the Security & Exchange Board of India investigated the national economy as a whole, and the security and exchange board proposed better methods for more effective markets and the protection of investor interests. The Indian financial market was a leading example for so-called "financial repression" (Mckinnon and Shaw).[20]The Discount and Finance House of India began its operations in the monetary market in April 1988; the National Housing Bank, founded in July 1988, was forced to invest in the property market and a new financial law improved the versatility of direct deposit by more security measures and liberalisation.[27]1991–1999The national economy contracted in July 1991 as the Indian rupee was devalued.[28]The currency lost 18% of its value relative to the US dollar, and the Narsimham Committee advised restructuring the financial sector by a temporal reduced reserve ratio as well as the statutory liquidity ratio. New guidelines were published in 1993 to establish a private banking sector. This turning point was meant to reinforce the market and was often called neo-liberal.[19]The central bank deregulated bank interests and some sectors of the financial market like the trust and property markets.[29]This first phase was a success and the central government forced a diversity liberalisation to diversify owner structures in 1998.[20]The National Stock Exchange of India took the trade on in June 1994 and the RBI allowed nationalized banks in July to interact with the capital market to reinforce their capital base. The central bank founded a subsidiary company—the Bharatiya Reserve Bank Note Mudran Private Limited—on 3 February 1995 to produce banknotes.[30]Since 2000The Foreign Exchange Management Act, 1999 came into force in June 2000. It should improve the item in 2004–2005 (National Electronic Fund Transfer).[31]The Security Printing & Minting Corporation of India Ltd., a merger of nine institutions, was founded in 2006 and produces banknotes and coins.[32]The national economy's growth rate came down to 5.8% in the last quarter of 2008–2009[33]and the central bank promotes the economic development.[34]In 2016, the Government of India amended the RBI Act to establish the Monetary Policy Committee (MPC) to set . This limited the role of the RBI in setting interest rates, as the MPC membership is evenly divided between members of the RBI (including the RBI governor) and independent members appointed by the government. However, in the event of a tie, the vote of the RBI governor is decisive.[6]StructureRBI runs a monetary museum in MumbaiThe central board of directors is the main committee of the central bank. The Government of India appoints the directors for a four-year term. The Board consists of a governor, and not more than four deputy governors; four directors to represent the regional boards;[35]2 — usually the Economic Affairs Secretary and the Financial Services Secretary — from the Ministry of Finance and 10 other directors from various fields. The Reserve Bank — under Raghuram Rajan's governorship — wanted to create a post of a chief operating officer (COO), in the rank of deputy governor and wanted to re-allocate work between the five of them (four deputy governor and COO).[36][37]The bank is headed by the governor, currently Shaktikanta Das.[1]There are four deputy governors BP Kanungo,[38]N S Vishwanathan, Viral Acharya and Mahesh Kumar Jain.[39]Two of the four deputy governors are traditionally from RBI ranks and are selected from the Bank's Executive Directors. One is nominated from among the Chairpersons of public sector banks and the other is an economist. An Indian Administrative Service officer can also be appointed as deputy governor of RBI and later as the governor of RBI as with the case of Y. Venugopal Reddy and Duvvuri Subbarao. Other persons forming part of the central board of directors of the RBI are Dr. Nachiket Mor, Y C Deveshwar, Prof Damodar Acharya, Ajay Tyagi and Anjuly Duggal.Uma Shankar, chief general manager (CGM) in charge of the Reserve Bank of India's financial inclusion and development department has taken over as executive director (ED) in the central bank.[citation needed]Sudha Balakrishnan, a former vice president at National Securities Depository Limited, assumed charge as the first chief financial officer (CFO) of the Reserve Bank on 15 May 2018; she was given the rank of an executive director.[40]Branches and support bodiesRBI Headquarters in Mumbai[41]The Reserve Bank building as seen from the Chennai Suburban Railway linesThe RBI has four regional representations: North in New Delhi, South in Chennai, East in Kolkata and West in Mumbai. The representations are formed by five members, appointed for four years by the central government and with the advice of the central board of directors serve as a forum for regional banks and to deal with delegated tasks from the Central Board.[42]It has two training colleges for its officers, viz. Reserve Bank Staff College, Chennai and College of Agricultural Banking, Pune. There are three autonomous institutions run by RBI namely National Institute of Bank Management (NIBM), Indira Gandhi Institute of Development Research (IGIDR), Institute for Development and Research in Banking Technology (IDRBT).[43]There are also four Zonal Training Centres at Mumbai, Chennai, Kolkata and New Delhi.The Board of Financial Supervision (BFS), formed in November 1994, serves as a CCBD committee to control the financial institutions. It has four members, appointed for two years, and takes measures to strength the role of statutory auditors in the financial sector, external monitoring and internal controlling systems. The Tarapore committee was set up by the Reserve Bank of India under the chairmanship of former RBI deputy governor S. S. Tarapore to "lay the road map" to capital account convertibility. The five-member committee recommended a three-year time frame for complete convertibility by 1999–2000.On 8 December 2017, Surekha Marandi, Executive Director (ED) of Reserve Bank of India, said RBI will open an office in the north-eastern state of Arunachal Pradesh[44]FunctionsReserve Bank of India regional office, Delhi entrance with the Yakshini sculpture depicting "Prosperity through agriculture".[45]The regional office of RBI (right) in front of GPO (left) at Dalhousie Square, Kolkata.The central bank of any country executes many functions such as overseeing monetary policy, issuing currency, managing foreign exchange, working as a bank for government and as a banker of scheduled commercial banks. It also works for overall economic growth of the country. The preamble of the Reserve Bank of India describes its main functions as:..to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.Financial SupervisionThe primary objective of RBI is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies.The Board is constituted by co-opting four Directors from the Central Board as members for a term of two years and is chaired by the governor. The deputy governors of the reserve bank are ex-officio members. One deputy governor, usually, the deputy governor in charge of banking regulation and supervision, is nominated as the vice-chairman of the board. The Board is required to meet normally once every month. It considers inspection reports and other supervisory issues placed before it by the supervisory departments.BFS through the Audit Sub-Committee also aims at upgrading the quality of the statutory audit and internal audit functions in banks and financial institutions. The audit sub-committee includes deputy governor as the chairman and two Directors of the Central Board as members. The BFS oversees the functioning of Department of Banking Supervision (DBS), Department of Non-Banking Supervision (DNBS) and Financial Institutions Division (FID) and gives directions on the regulatory and supervisory issues.Regulator and supervisor of the financial systemThe institution is also the regulator and supervisor of the financial system and prescribes broad parameters of banking operations within which the country's banking and financial system functions. Its objectives are to maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective addressing of complaints by bank customers. The RBI controls the monetary supply, monitors economic indicators like the gross domestic product and has to decide the design of the rupee banknotes as well as coins.[46]Regulator and Supervisor of the Payment and Settlement SystemsPayment and settlement systems play an important role in improving overall economic efficiency. The Payment and Settlement Systems Act of 2007 (PSS Act)[47]gives the Reserve Bank oversight authority, including regulation and supervision, for the payment and settlement systems in the country. In this role, the RBI focuses on the development and functioning of safe, secure and efficient payment and settlement mechanisms. Two payment systems National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) allow individuals, companies and firms to transfer funds from one bank to another. These facilities can only be used for transferring money within the country.NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place for all transactions received till a particular cut-off time. It operates in hourly batches — there are 12 settlements from 8 am to 7 pm on weekdays and SIX between 8 am and 1 pm on Saturdays.[48]Any transaction initiated after the designated time would have to wait till the next settlement time. In RTGS, transactions are processed continuously, all through the business hours. RBI's settlement time is 9 am to 4:30 pm on weekdays and 9 am to 2:00 pm on Saturdays.[49]Banker and Debt Manager to GovernmentJust like individuals need a bank to carry out their financial transactions effectively & efficiently, Governments also need a bank to carry out their financial transactions. RBI serves this purpose for the Government of India (GoI). As a banker to the GoI, RBI maintains its accounts, receive payments into & make payments out of these accounts. RBI also helps GoI to raise money from public via issuing bonds and government approved securities.Managing foreign exchangeThe central bank manages to reach different goals of the Foreign Exchange Management Act, 1999. Their objective is to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.With increasing integration of the Indian economy with the global economy arising from greater trade and capital flows, the foreign exchange market has evolved as a key segment of the Indian financial market and RBI has an important role to play in regulating & managing this segment. RBI manages forex and gold reserves of the nation.On a given day, the foreign exchange rate reflects the demand for and supply of foreign exchange arising from trade and capital transactions. The RBI's Financial Markets Department (FMD) participates in the foreign exchange market by undertaking sales / purchases of foreign currency to ease volatility in periods of excess demand for/supply of foreign currency.Issue of currencyReserve bank of India is the sole body who is authorized to issue currency in India. The bank also destroys the same when they are not fit for circulation. All the money issued by the central bank is its monetary liability, i.e., the central bank is obliged to back the currency with assets of equal value, to enhance public confidence in paper currency. The objectives are to issue bank notes and give public adequate supply of the same, to maintain the currency and credit system of the country to utilize it in its best advantage, and to maintain the reserves. RBI maintains the economic structure of the country so that it can achieve the objective of price stability as well as economic development because both objectives are diverse in themselves. For printing of notes, the Security Printing and Minting Corporation of India Limited (SPMCIL), a wholly owned company of the Government of India, has set up printing presses at Nashik, Maharashtra and Dewas, Madhya Pradesh. The Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), also has set up printing presses in Mysore in Karnataka and Salboni in West Bengal. In all, there are four printing presses.[50]And for the minting of coins, SPMCIL has four mints at Mumbai, Noida (UP), Kolkata and Hyderabad for coin production.[50]While coins and one rupee notes are minted by Government of India (GoI), the RBI works as an agent of GoI for distributing and handling of coins. RBI also works to prevent counterfeiting of currency by regularly upgrading security features of currency. For printing currency, RBI has four facilities at Dewas, Nasik, Mysore and Salboni. The RBI is authorized to issue notes up to value of Rupees ten thousands and coin up to one thousands. New notes of Rupees 500 and 2000 have been issued on 8 November 2016. The old series note of Rupees 1000 and 500 are considered illegal and just paper from midnight on 8 November 2016. Earlier 1000 notes have been discarded by RBI.Banker's bankNagpur branch holds most of India's gold deposits.[51][52][53][54]Reserve Bank of India also works as a central bank where commercial banks are account holders and can deposit money. RBI maintains banking accounts of all scheduled banks.[55]Commercial banks create credit. It is the duty of the RBI to control the credit through the CRR, bank rate and open market operations. As banker's bank, the RBI facilitates the clearing of cheques between the commercial banks and helps the inter-bank transfer of funds. It can grant financial accommodation to schedule banks. It acts as the lender of the last resort by providing emergency advances to the banks. It supervises the functioning of the commercial banks and takes action against it if the need arises. The RBI also advises the banks on various matters for example Corporate Social Responsibility.Regulator of the Banking SystemRBI has the responsibility of regulating the nation's financial system. As a regulator and supervisor of the Indian banking system it ensures financial stability & public confidence in the banking system. RBI uses methods like On-site inspections, off-site surveillance, scrutiny & periodic meetings to supervise new bank licenses, setting capital requirements and regulating interest rates in specific areas. RBI is currently focused on implementing norms.Detection of fake currencyIn order to curb the fake currency problem, RBI has launched a website to raise awareness among masses about fake notes in the market. www.paisaboltahai.rbi.org.in provides information about identifying fake currency.[56]On 22 January 2014; RBI gave a press release stating that after 31 March 2014, it will completely withdraw from circulation of all banknotes issued prior to 2005. From 1 April 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication. The reserve bank has also clarified that the notes issued before 2005 will continue to be legal tender. This would mean that banks are required to exchange the notes for their customers as well as for non-customers. From 1 July 2014, however, to exchange more than 15 pieces of `500 and `1000 notes, non-customers will have to furnish proof of identity and residence as well as show aadhar to the bank branch in which she/he wants to exchange the notes.This move from the reserve bank is expected to unearth black money held in cash. As the new currency notes have added security features, they would help in curbing the menace of fake currency.[57]Developmental roleThe central bank has to perform a wide range of promotional functions to support national objectives and industries.[18]The RBI faces a lot of inter-sectoral and local inflation-related problems. Some of these problems are results of the dominant part of the public sector.[58]Key tools in this effort include Priority Sector Lending such as agriculture, micro and small enterprises (MSE), housing and education. RBI work towards strengthening and supporting small local banks and encourage banks to open branches in rural areas to include large section of society in banking net.Related functionsThe RBI is also a banker to the government and performs merchant banking function for the central and the state governments. It also acts as their banker. The National Housing Bank (NHB) was established in 1988 to promote private real estate acquisition.[59]The institution maintains banking accounts of all scheduled banks, too. RBI on 7 August 2012 said that Indian banking system is resilient enough to face the stress caused by the drought-like situation because of poor monsoon this year.[60]Custodian to foreign exchangeThe Reserve Bank has custody of the country's reserves of international currency, and this enables the Reserve Bank to deal with crisis connected with adverse balance of payments position.2016 DemonetisationPeople gathered at ATM of Axis Bank in Mehsana, Gujarat to withdraw cash following deposit of demonetised currency notes in bank on 15 November 2016.Main article: 2016 Indian banknote demonetisationOn 8 November 2016, the Government of India announced the demonetisation of all ₹500 (US$7.00) and ₹1,000 (US$14) banknotes of the Mahatma Gandhi Series on the recommendation of the Reserve Bank of India (RBI).[61]The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.[62][63]The Reserve Bank of India laid down a detailed procedure for the exchange of the demonetised banknotes with new ₹500 and ₹2,000 banknotes of the Mahatma Gandhi New Series and ₹100 banknotes of the preceding Mahatma Gandhi Series. Following are the key points:Long queue in front of SBI ATM at Paravur near the city of Kollam in Kerala, 19 November 2016.Citizens will have until 30 December 2016 to tender their old banknotes at any office of the RBI or any bank branch and credit the value into their respective bank accounts.Cash withdrawals from bank accounts were restricted to ₹10,000 per day and ₹20,000 per week per account from 10 to 13 November 2016. This limit was increased to ₹24,000 per week from 14 November.[64][65]For immediate cash needs, the old banknotes could be exchanged for the new ₹500 and ₹2,000 banknotes as well as ₹100 banknotes over the counter of bank branches by filling up a requisition form along with a valid ID proof. It was announced that this facility would be available until 30 December 2016. Initially, the limit was fixed at ₹4,000 per person from 8 to 13 November 2016. This limit was increased to ₹4,500 per person from 14 to 17 November 2016.[64][65] The limit was reduced to ₹2,000 per person from 18 November 2016.[66] All exchange of banknotes was abruptly stopped from 25 November 2016.[67]Initially, all ATMs were dispensing banknotes of only ₹50 and ₹100 denominations and cash withdrawals from ATMs were restricted to ₹2000 per day.[68] From 14 November onwards, ATMs recalibrated to dispense new ₹500 and ₹2000 notes will allow a maximum withdrawal of ₹2,500 per day, while other ATMs dispensing banknotes of only ₹50 and ₹100 denominations will allow a maximum withdrawal of ₹2000 per day.[64][65]However, exceptions were given to petrol, CNG and gas stations, government hospitals, railway and airline booking counters, state-government recognised dairies and ration stores, and crematoriums to accept the old ₹500 and ₹1,000 banknotes until 11 November 2016, which was later extended to 14 November 2016 and once again to 24 November 2016.[69][70]International airports were also instructed to facilitate an exchange of notes amounting to a total value of ₹5,000 for foreign tourists and out-bound passengers.[71]Under the revised guidelines issued on 17 November 2016, families were allowed to withdraw ₹250,000 for wedding expenses from one account provided it was KYC compliant. The rules were also changed for farmers who are permitted to withdraw ₹25,000 per week from their accounts against crop loan.[66][72]Cash crunch and effectsQueue at an ATM for ₹100 banknotes in Howrah, on 8 November 2016, 22:23 (IST)People queue outside a private bank to deposit and exchange old ₹500 and ₹1000 banknotes in Kolkata on 10 November 2016.The scarcity of cash due to demonetisation led to chaos, and most people holding old banknotes faced difficulties exchanging them due to endless lines outside banks and ATMs across India, which became a daily routine for millions of people waiting to deposit or exchange the ₹500 and ₹1000 banknotes since 9 November.[73][74][75][76]ATMs were running out of cash after a few hours of being functional, and around half the ATMs in the country were non-functional.[74]Sporadic violence was reported in New Delhi, but there were no reports of any grievous injury,[77]people attacked bank premises and ATMs,[78][79][80][81][82][83]and a ration shop was looted in Madhya Pradesh after the shop owner refused to accept ₹500 banknotes.[84][85][86][87]Policy Rates and Reserve RatiosRates as of 6th bi-monthly (7 February 2019) monetary policy meet of FY1819[88]Policy ratesPolicy Repo Rate6.25%Reverse Repo Rate6.00%Marginal Standing Facility Rate6.50%Bank Rate6.50%Reserve ratiosCash Reserve Ratio (CRR)4%Statutory Liquidity Ratio (SLR)19.50%Lending and deposit rates[89]Base Rate8.95%–9.45%MCLR (overnight)8.15%–8.45%Savings Deposit Rate3.50%–4.00%Term Deposit Rate for > 1year6.25%–7.50%Repo RateRepo (Repurchase) rate also known as the benchmark interest rate is the rate at which the RBI lends money to the commercial banks for a short-term (max. 90 days). When the repo rate increases, borrowing from RBI becomes more expensive. If RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate similarly, if it wants to make it cheaper for banks to borrow money it reduces the repo rate. If the repo rate is increased, banks can't carry out their business at a profit whereas the very opposite happens when the repo rate is cut down. Generally, repo rates are cut down whenever the country needs to progress in banking and economy.If banks want to borrow money (for short term, usually overnight) from RBI then banks have to charge this interest rate. Banks have to pledge government securities as collateral. This kind of deal happens through a re-purchase agreement. If a bank wants to borrow Rs. 100 crores, it has to provide government securities at least worth Rs. 100 crore (could be more because of margin requirement which is 5%–10% of loan amount) and agree to repurchase them at Rs. 106.5 crore at the end of borrowing period. So the bank has paid Rs. 6.5 crore as interest. This is the reason it is called repo rate. The government securities which are provided by banks as collateral can not come from SLR quota (otherwise the SLR will go below 19.5% of NDTL and attract penalty). Banks have to provide these securities additionally.To curb inflation, RBI increases Repo rate which will make borrowing costly for banks. Banks will pass this increased cost to their customers which make borrowing costly in whole economy. Fewer people will apply for loan and aggregate demand will get reduced. This will result in inflation coming down. RBI does the opposite to fight deflation. Although when RBI reduce Repo rate, banks are not legally required to reduce their base rate.The RBI increased the Repo rate from 6% to 6.25% in June 2018.[90]Reverse Repo Rate (RRR)As the name suggest, reverse repo rate is just the opposite of repo rate. Reverse Repo rate is the short term borrowing rate at which RBI borrows money from banks. The reserve bank uses this tool when it feels there is too much money floating in the banking system. An increase in the reverse repo rate means that the banks will get a higher rate of interest from RBI. As a result, banks prefer to lend their money to RBI which is always safe instead of lending it to others (people, companies etc.) which is always risky.Repo Rate signifies the rate at which liquidity is injected into the banking system by RBI, whereas Reverse Repo rate signifies the rate at which the central bank absorbs liquidity from the banks. Currently, Reverse Repo Rate is pegged to be 0.25% below Repo Rate.Statutory liquidity ratio (SLR)Apart from the CRR, banks are required to maintain liquid assets in the form of gold, cash and approved securities. Higher liquidity ratio forces commercial banks to maintain a larger proportion of their resources in liquid form and thus reduces their capacity to grant loans and advances, thus it is an anti-inflationary impact. A higher liquidity ratio diverts the bank funds from loans and advances to investment in government and approved securities. In well-developed economies, central banks use open market operations—buying and selling of eligible securities by the central bank in the money market—to influence the volume of cash reserves with commercial banks and thus influence the volume of loans and advances they can make to the commercial and industrial sectors. In the open money market, government securities are traded at market-related rates of interest. The RBI is resorting more to open market operations in the more recent years. Generally, RBI usesMinimum margins for lending against specific securities.Ceiling on the amounts of credit for certain purposes.The discriminatory rate of interest charged on certain types of advances.Direct credit controls in India are of three types:Part of the interest rate structure, i.e., on small savings and provident funds, are administratively set.Banks are mandatory required to keep 19.50% of their NDTL (Net Demand and Time Liabilities) in the form of liquid assets.Banks are required to lend to the priority sectors to the extent of 40% of their advances.The share of net demand and time liabilities that banks must maintain in safe and liquid assets, such as government securities, cash and gold. Here it would be pertinent to mention the gold swap of July 2014.[91][92][93]The present SLR is 19.5%.Bank RateIt is defined in Sec 49 of RBI Act of 1934 as the ‘standard rate at which RBI is prepared to buy or rediscount bills of exchange or other commercial papers eligible for purchase'. When banks want to borrow long term funds from RBI, it is the interest rate which RBI charges to them. It is currently set to 6.75%[94](Second Bi-monthly Monetary Policy Statement, 2018–19). The bank rate is not used to control money supply these days. Although penal rates are linked to bank rate. If a bank fails to keep SLR or CRR then RBI will impose penalty & it will be 300 basis points above bank rate.Liquidity Adjustment Facility (LAF)Liquidity Adjustment facility was introduced in 2000. LAF is a facility provided by the Reserve Bank of India to scheduled commercial banks to avail of liquidity in case of need or to park excess funds with the RBI on an overnight basis against the collateral of Government securities. RBI accept application for a minimum amount of Rs.5 crore and in multiples of Rs. 5 crore thereafter. LAF enables liquidity management on a day-to-day basis. The operations of LAF are conducted by way of repurchase agreements called Repos & Reverse Repos.Cash Reserve Ratio (CRR)CRR refers to the ratio of bank's cash reserve balances with RBI with reference to the bank's net demand & time liabilities to ensure the liquidity & solvency of the scheduled banks. The share of net demand and time liabilities that banks must maintain as cash with RBI. The RBI has set CRR at 4%. 1% change in it today affects the economy with Rs. 1000000 crores. An increase sucks this amount from the economy, while a decrease injects this amount into the economy.So - Crazy Domains if a bank has 200 Crore of NDTL then it has to keep Rs. 8 Crore in cash with RBI. RBI pays no interest on CRR.Let's assume economy is showing inflationary trends & RBI wants to control this situation by adjusting SLR & CRR. If RBI increases SLR to 50% and CRR to 20% then bank will be left only with Rs. 60 crore for operations. Now it will be very difficult for bank to maintain profitability with such small capital. Bank will be left with no choice but to raise interest rate which will make borrowing costly. This will in turn reduce the overall demand & hence price will come down eventually.Open Market Operation (OMO)Open market operation is the activity of buying and selling of government securities in open market to control the supply of money in banking system. When there is excess supply of money, central bank sells government securities thereby sucking out excess liquidity. Similarly, when liquidity is tight, RBI will buy government securities and thereby inject money supply into the economy.Marginal Standing Facility (MSF)This scheme was introduced in May 2011 and all the scheduled commercial bank can participate in this scheme. Banks can borrow up to 2.5%[95]percent of their respective Net Demand and Time Liabilities. RBI receive application under this facility for a minimum amount of Rs. One crore and in multiples of Rs. One crore thereafter. The important difference with repo rate is that bank can pledge government securities from SLR quota (up to one percent). So even if SLR goes below 20.5%(RBI/2014-15/445 DBR.Ret.BC.70/12.02.001/2014-15, dt. 16 October 2016) by pledging SLR quota securities under MSF, bank will not have to pay any penalty. The MSF rate is set to 100 basis point above bank rate and currently is at 6.50% as of 1.6.17.[96][better source needed]Qualitative ToolsMargin Requirements or LTVLoan to Value is the ratio of loan amount to the actual value of asset purchased. RBI regulates this ratio so as to control the amount bank can lend to its customers. For example, if an individual wants to buy a car from borrowed money and the car value is Rs. 10 Lac, he can only avail a loan amount of Rs. 7 Lac if the LTV is set to 70%. RBI can decrease or increase to curb inflation or deflation respectively.Selective credit controlUnder this measure, RBI can specifically instruct banks not to give loans to traders of certain commodities e.g. sugar, edible oil, etc. This prevents speculations/ hoarding of commodities using money borrowed from banks.Moral SuasionUnder this measure RBI try to persuade bank through meetings, conferences, media statements to do specific things under certain economic trends. For example, when RBI reduces repo rate, it asks banks to reduce their base rate as well. Another example of this measure is to ask banks to reduce their Non-performing assets (NPAs).Limitations of Monetary PolicyIn developing countries like India, Monetary Policy fails to show immediate or no results because of below factors:People do not employ alternative investment options. A large section of society still depends on saving accounts, fixed deposits, Public Provident Fund for investment. Commercial banks have large deposits. RBI is not the main or even prominent money supplier for these banks. So whatever monetary action central bank takes has little or late impact on the economy.Many people in rural areas are out of banking net and whatever RBI does has no impact on their financial activities.Monsoon uncertainty adversely affects food production and thereby cause food inflation. Monetary Policy has no impact on food inflation.