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a) Financial System
1. Regulators of Banks and Financial Institutions
2. Reserve Bank of India- functions and conduct of monetary policy
3. Banking System in India – Structure and concerns, Financial Institutions – SIDBI, EXIM Bank, NABARD, NHB, etc,
Changing landscape of banking sector.
4. Impact of the Global Financial Crisis of 2007-08 and the Indian response
b) Financial Markets
Primary and Secondary Markets (Forex, Money, Bond, Equity, etc.), functions, instruments, recent developments.
c) General Topics
1. Risk Management in Banking Sector
2. Basics of Derivatives
3. Global financial markets and International Banking – broad trends and latest developments.
4. Financial Inclusion
5. Alternate source of finance, private and social cost-benefit, Public-Private Partnership
6. Corporate Governance in Banking Sector, role of e-governance in addressing issues of corruption and inefficiency
in the government sector.
7. The Union Budget – Concepts, approach and broad trends
8. Inflation: Definition, trends, estimates, consequences, and remedies (control): WPI, CPI - components and trends;
striking a balance between inflation and growth through monetary and fiscal policies.
9. FinTech
 Reserve Bank of India

• The Reserve Bank of India was established

on April 1, 1935 in accordance with the
provisions of the Reserve Bank of India Act,
1934.
• Though originally privately owned, since
nationalization in 1949, the Reserve Bank is
fully owned by the Government of India.
 Functions of RBI
1. Monetary Authority

• Monetary Policy Committee

• It was created in 2016.
• It was created to bring transparency and accountability in deciding monetary
policy.
• MPC determines the policy interest rate required to achieve the inflation target or
maintaining price stability.
• Current inflation target is pegged at 4% with -2/+2.
• Committee comprises of six members where Governor RBI acts as an ex-officio
chairman. Three members are from RBI and three are selected by government
with veto power is given to Governor.
• Inflation target is to be set once in a five year. It is set by the Government of India,
in consultation with the Reserve Bank.
• Section 45ZB of the amended RBI Act, 1934
 Functions of RBI
2. Regulator and Supervisor of the Financial System
• RBI prescribes broad parameters of banking operations within which the country's
banking and financial system functions such as issuing licenses, branch
expansion, liquidity of assets, amalgamation of banks etc.
• Objective is to maintain public confidence in the system, protect depositors' interest
and provide cost-effective banking services to the public.

3. Manager of Foreign Exchange

• To keep the value of currency at a fixed rate and keep the market steady.
• To increase exports by keeping value of the currency lower than the US Dollar.
• To maintain liquidity in case of an economic crisis.
• To ensure that country is meeting its foreign obligations and liabilities.
 Functions of RBI
4. Issuer of Currency
• Bank notes are printed at four currency presses, two of which are owned by the
Government of India through its Corporation, Security Printing and Minting
Corporation of India Ltd. (SPMCIL) and two are owned by the Reserve Bank, through
its wholly owned subsidiary, Bharatiya Reserve Bank Note Mudran Private Ltd.
(BRBNMPL).
• The currency presses of SPMCIL are at Nasik (Western India) and Dewas (Central
India). The two presses of BRBNMPL are at Mysuru (Southern India) and Salboni
(Eastern India).
• Coins are minted in four mints owned by SPMCIL. The mints are located at Mumbai,
Hyderabad, Kolkata and NOIDA. The coins are issued for circulation only through the
Reserve Bank in terms of Section 38 of the RBI Act.
• RBI issues and exchanges or destroys currency and coins not fit for circulation. It is
duty of RBI to give the public adequate quantity of supplies of currency notes and
coins and in good quality.
 Functions of RBI
5. Financial Inclusion and Development
1.No Frills Accounts – account either with nil or very low minimum balance as well
as charges that would make such accounts accessible to vast sections of population.
2.Credit Delivery to SHGs, SC/ST community and Minority Communities: To enhance flow
of credit to individuals, Self Help Groups, persons belonging to SC/ST category and
Minority Communities through select Government Sponsored Schemes.
3.Credit flow to agriculture: Providing broad guidelines for easy access to finance to
farmers and assistance measures for farmers in natural calamity affected areas.
4.Credit flow to MSME: Stepping up credit flow to MSME sector and provide a simpler and
faster mechanism to address the stress in the accounts of MSMEs
5.Use of Technology – devices such as ATMs, hand held devices to identify user accounts
through a card and biometric identifier, Deposit taking machines and Internet banking
and Mobile banking facility to provide the banking services to all sections of society with
more ease.
 Functions of RBI
6. Priority Sector lending: Commercial banks lend loans to small-scale industrial
units and agriculture as per the directives (Priority Sector Lending) issued by the
Reserve Bank of India.

6. Act as a Banker
• Banker to the Government: performs merchant banking function for the central and
the state governments. It is entrusted with central govt.’s money, remittances,
exchange and manages its public debt as well.

• Banker to banks: maintains banking accounts of all scheduled banks. It also acts
as lender of last resorts by providing fund to banks.
 Publications by RBI

• Financial Stability Report

• Monetary Policy Report
• Report on Financial Review
• Annual Report
• Trends and progress of banking in India
• Consumer Confidence Survey
National Bank for Agriculture and Rural Development
• The Reserve Bank of India (RBI) at the insistence of the
Government of India, constituted a Committee to Review the
Arrangements for Institutional Credit for Agriculture and Rural
Development (CRAFICARD) in 1979, under the Chairmanship
of Shri B. Sivaraman.
• It resulted in foundation of NABARD (National Bank for
Agriculture and Rural Development) in 1982 as a statutory body
under Parliamentary act-National Bank for Agriculture and Rural
Development Act, 1981.
• NABARD came into existence by transferring the refinance
functions of (1) the Agricultural Credit Department (ACD),
(2) Rural Planning and Credit Cell (RPCC), (3) and Agricultural
Refinance and Development Corporation (ARDC) of RBI.
National Bank for Agriculture and Rural Development

• Reserve Bank of India is the central bank of the country

with sole right to regulate the banking industry and
supervise the various institutions/banks that also include
NABARD defined under Banking Regulation Act of 1949.
• NABARD provides recommendations to Reserve Bank of
India on issue of licenses to Cooperative Banks, opening
of new branches by State Cooperative Banks and Regional
Rural Banks (RRBs).
• NABARD is a development bank focusing primarily on the
rural sector of the country. It is the apex banking institution
to provide finance for Agriculture and rural development.
 NABARD’s Functions and Contributions
• Refinance - Short Term Loans: Crop loans are extended to farmers for crop production
by financial institutions, which support in ensuring food security in the country.
• Long-Term Irrigation Fund (LTIF): The LTIF in NABARD was setup with an initial corpus
of Rs 20,000 crore for funding 99 irrigation projects during 2016-17 following
announcement in the Union Budget.
• Pradhan Mantri Awaas Yojana - Grameen (PMAY-G) - NABARD supports rural housing
by refinancing to scheduled commercial banks and RRBs for this scheme.
• Warehouse Infrastructure Fund (WIF): Union government created WIF in the year
2013- 14 with NABARD with a corpus of Rs 5,000 crore for providing loans to meet the
requirements for scientific warehousing infrastructure for agricultural commodities in
the country.
• Rural Infrastructure Development Fund (RIDF): It was set up with NABARD in 1995-96
by the RBI for supporting rural infrastructure projects.
• NABARD Infrastructure Development Assistance (NIDA): NIDA has been designed to
complement RIDF.
 NABARD’s Functions and Contributions

•NABARD set up Producer Organizations Development Fund (PODF) with an initial corpus
of Rs 50 crore to support and finance Producer Organizations (POs) and Primary
Agriculture Credit Societies (PACS.
•Producer Organisation (PO): it is a legal entity formed by primary producers, viz. farmers,
milk producers, fishermen, weavers, rural artisans, craftsmen. A PO can be a producer
company, a cooperative society or any other legal form which provides for sharing of
profits/benefits among the members.
•Primary Agricultural Credit Society (PACS) is a basic unit and smallest co-operative credit
institution in India. It works on the grassroots level (gram panchayat and village level). It
provides credit to farmers in the form of term loans and recovers the amount after
harvesting of crop from the cultivator.
•Long Term Loans: NABARD's long-term refinance provides credit to financial
institutions for a wide gamut of activities encompassing farm and non-farm activities with
tenors of 18 months to more than 5 years.
 Securities Exchange Board of India
• Before SEBI came into existence, Controller of Capital Issues was the regulatory
authority. In April, 1988 the SEBI was constituted as the regulator of capital
markets in India under a resolution of the Government of India.
• It became autonomous on April 12, 1992 and given statutory powers by SEBI Act
1992.
• The basic functions of the Securities and Exchange Board of India is to protect the
interests of investors in securities and to promote and regulate the securities
market. SEBI deals with the following –
• Issuers – By providing a marketplace in which the issuers can increase their
finance.
• Investors – By ensuring safety and supply of precise and accurate information.
• Intermediaries – By enabling a competitive professional market for intermediaries
like stock exchanges, merchant banks, brokers, debenture trustees, and portfolio
managers
 Functions of SEBI

• SEBI is a quasi-legislative and quasi-judicial body which can draft regulations,

conduct inquiries, pass rulings and impose penalties.
• SEBI Chairman has the authority to order "search and seizure operations". SEBI
board can also seek information, such as telephone call data records, from any
persons or entities in respect to any securities transaction being investigated by it
• SEBI perform the function of registration and regulation of the working of venture
capital funds and collective investment schemes including mutual funds and chit
funds.
• A Securities Appellate Tribunal (SAT) has been constituted to protect the interest of
entities that feel aggrieved by SEBI’s decision.
 Small Industries development Bank of India

• Small Industries Development Bank of India (SIDBI)

is an independent financial institution aimed at
aiding the growth and development of Micro, Small
and Medium Enterprises (MSMEs) which contribute
significantly to the national economy in terms of
production, employment and exports.
• It is a statutory body set up under an act of the
Indian Parliament in 1990. It’s headquarters in
Lucknow UP.
 Functions of SIDBI
• It is involved in the promotion and development of the MSME sector.
• It aims at emerging as a single-window to meet the financial needs of MSMEs in
order to make them globally competitive, strong, vibrant and to protect the
institution as a customer-friendly financial body.
• It is the principal institution for the development, promotion and financing of the
MSME sector and for coordination of functions of the institutions engaged in similar
activities.
• SIDBI also functions as a Nodal/Implementing Agency to various ministries of the
Government of India viz., Ministry of MSME, Ministry of Commerce and Industry,
Ministry of Food Processing and Industry, etc.
• Types of financing provided by SEBI are –
• Direct financing is type of financing provided by SIDBI where MSME account holder
approach SIDBI for finance.
• Indirect financing is done by way of refinancing the banks, refinancing financial
institutions for onward lending to MSMEs.
Insurance Regulatory & Development Authority of India
• The Insurance Regulatory and Development Authority of
India or the IRDAI is the apex body responsible for
regulating and developing the insurance industry in India.
• It is an autonomous body. It was established by an act of
Parliament known as the Insurance Regulatory and
Development Authority Act, 1999. The IRDAI is
headquartered in Hyderabad in Telangana.

Functions
• Its primary purpose is to protect the rights of the policyholders in India.
• It also creates regulations to protect policyholders’ interests in India.
• It gives the registration certificate to insurance companies in the country.
• It also engages in the renewal, modification, cancellation, etc. of this registration.
Pension Fund Regulatory & Development Authority
• The Government of India had, in the year 1999,
commissioned a national project titled “OASIS” (an
acronym for old age social & income security) to examine
policy related to old age income security in India.
• Based on the recommendations of the OASIS report,
Government of India introduced a new Defined
Contribution Pension System for the new entrants to
Central/State Government service, except to Armed
Forces, replacing the existing system of Defined Benefit
Pension System.
• On 23rd August, 2003, Interim Pension Fund Regulatory &
Development Authority (PFRDA) was established through
a resolution by the Government of India to promote,
develop and regulate pension sector in India.
Pension Fund Regulatory & Development Authority

• The Pension Fund Regulatory & Development Authority

Act was passed on 19th September, 2013 and the same
was notified on 1st February, 2014. PFRDA is regulating
NPS, subscribed by employees of Govt. of India, State
Governments and by employees of private
institutions/organizations & unorganized sectors.
• Another function of PFRDA is to promote old age
income security by establishing, developing and
regulating pension funds, to protect the interests of
subscribers to schemes of pension funds and for
matters connected there with.
 Export-Import Bank of India
• EXIM Bank or Export-Import Bank of India is India’s leading
export financing institute that engages in integrating
foreign trade and investment with the country’s economic
growth.
• Founded in 1982 by the Government of India, EXIM Bank is
a wholly-owned subsidiary of the Indian Government.

Services Provided
• Buyer’s credit – it is a credit facility program that facilitates exports by offering credit to
overseas buyers to import goods from India.
• Lines of credit – it offers extended a line of credit to Indian exporters to help them
expand to new geographies and uses a line of credit as an effective market-entry tool.
• Overseas investment finance – it offers loans to Indian companies for equity
investments in their overseas joint ventures or wholly-owned subsidiaries.
 Services Provided

• Research and analysis – conducts research in the field of international economics,

trade and investment, country profiles to identify risks, etc.
• Export advisory services – it offers information, advisory, and support services
enabling exporters to evaluate international risks, exploit export opportunities and
improve competitiveness.
• Marketing advisory services – help Indian exporters in their globalization ventures
by assisting in locating overseas distributors/partners, etc. Also, assists in identifying
opportunities abroad for setting up plant projects or acquiring companies.
• Term deposit scheme
 Export Credit Guarantee Corporation

• ECGC Limited, formerly known as Export Credit

Guarantee Corporation of India was founded on the
30th of July, 1957.
• ECGC Ltd. has aim of advancing exports from India by
giving credit risk insurance and related services for
exports. Over the years, it has designed different
export credit risk insurance products to cater to the
needs of Indian exporters.
• The Corporation has introduced various export credit
insurance schemes to meet the requirements of
commercial banks offering export credit.
• ECGC keeps its premium rates at a reasonable level.
 National Housing Bank

• NHB is an All India Financial Institution (AIFl), set

up in 1988, under the National Housing Bank Act,
1987.
• It is an apex agency established to operate as a
principal agency to promote housing finance
institutions both at local and regional levels and
to provide financial and other support incidental
to such institutions and for matters connected
therewith.
 Functions of NHB

• To support an increase in the availability of buildable land or building materials for

homes. Promoting a sound, safe, sustainable and cost-effective mortgage lending
framework which will appeal to all sections of the population and integrating the
housing finance sector with the banking markets overall. And To offer loans for housing
more reasonably priced.
• Focused on the supervisory and regulatory authority derived under the Act, to control
the activities of housing finance companies.
 Financial Stability and development Council
• The recent global economic meltdown has put pressure on
governments and institutions across the globe to regulate
their economic assets.
• The Raghuram Rajan Committee in 2008 mooted the idea
to create super regulator for the first time.
• Finally in 2010, the then Finance Minister of India, Pranab
Mukherjee, decided to set up such an autonomous body
dealing with macro prudential and financial regularities in
the entire financial sector of India.
• It will address inter-regulatory coordination issues. This council is seen as India's
initiative to be better conditioned to prevent such incidents in future.
• The Chairman of the FSDC is the Finance Minister and its members include the heads
of the financial sector regulatory authorities (i.e, SEBI, IRDA, RBI, PFRDA) , Finance
Secretaries and the Chief Economic Adviser.
 Functions of FSDC

•Financial Stability
•Financial Sector Development
•Inter-Regulatory Coordination
•Financial Literacy
•Financial Inclusion
•Macro prudential supervision of the economy including the functioning of large
financial conglomerates.
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