Banking Awareness for Bank PO Interview 2026: 60 Concepts Explained in Plain English

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Banking awareness at an SBI PO or IBPS PO board is not a quiz. Candidates report that panels ask a concept, listen to the first sentence, and then ask "why" or "so what" until the candidate runs out. The sixty concepts below are the ones that come up most, each explained in two or three plain sentences with the follow-up a panel tends to ask. They are grouped by theme so you can learn a theme a day and see how the pieces connect. We give a figure only where we read it on an official page this week, and we name the page; for everything else we tell you where the current number lives, because a mechanism learnt now plus a figure read on the morning of the interview beats a table memorised in October. The interview is 30 marks per the SBI PO 2026-27 advertisement and 100 marks with a 40% qualifying floor (35% for SC, ST, OBC and PwBD) per the IBPS CRP PO/MT-XVI notification; banking questions are where those marks are won.

RBI and monetary policy (12 concepts)

Start here. Almost every banking question a panel asks eventually touches the RBI, and a candidate who can explain how a repo rate change reaches a home loan has answered six questions at once.

1. The Reserve Bank of India

India's central bank, established on 1 April 1935 under the Reserve Bank of India Act, 1934, per the RBI's own account. Its site lists its functions as monetary authority, regulator and supervisor of the financial system, manager of foreign exchange, issuer of currency, regulator of payment systems, banker to the government and banker to banks, plus a developmental role. Panel follow-up: "Which of these functions does a branch officer actually meet?" (regulation, currency, payments.)

2. The Monetary Policy Committee (MPC)

The committee that sets the policy repo rate, made up of RBI members and external members appointed by the government, chaired by the RBI Governor. It meets through the year and publishes a statement and minutes after each meeting on the RBI site. Follow-up: "What did the last statement say about inflation?" Read it the week before your board.

3. Repo rate

The rate at which the RBI lends short-term money to banks against government securities under the liquidity adjustment facility. It is the main policy signal: when it rises, banks' cost of funds rises and lending rates follow. The RBI home page showed it at 5.50% on 20 October 2026. Follow-up: "If repo goes up, what happens to my home loan EMI?"

4. Reverse repo and the standing deposit facility (SDF)

The reverse repo rate is the rate at which banks lend surplus money to the RBI against securities. The SDF, introduced in 2022, lets banks park surplus with the RBI without collateral and now acts as the floor of the rate corridor; the RBI home page showed it at 5.25% on 20 October 2026. Follow-up: "Why would a bank park money with RBI instead of lending it?"

5. Marginal standing facility (MSF) and Bank Rate

The MSF is an overnight window at which banks can borrow from the RBI above the repo rate in an emergency, forming the ceiling of the corridor; the Bank Rate is the rate at which the RBI rediscounts bills and is aligned with the MSF. Both stood at 5.75% on the RBI home page on 20 October 2026. Follow-up: "Draw the corridor." (SDF at the bottom, repo in the middle, MSF at the top.)

6. Cash reserve ratio (CRR)

The share of a bank's net demand and time liabilities that it must keep as cash balances with the RBI, earning no interest. Raising CRR pulls money out of the system; cutting it releases lending capacity. It was 3.00% on the RBI home page on 20 October 2026. Follow-up: "Why does CRR hurt banks more than SLR?" (It earns nothing.)

7. Statutory liquidity ratio (SLR)

The share of net demand and time liabilities a bank must hold in approved liquid assets such as government securities, gold and cash, kept with the bank itself rather than the RBI. It protects depositors and gives the government a captive buyer for its bonds. It was 18.00% on the RBI home page on 20 October 2026. Follow-up: "What is NDTL?" (Deposits and other liabilities payable on demand or at term.)

8. Liquidity adjustment facility (LAF)

The daily mechanism through which the RBI lends to or borrows from banks at the repo and reverse repo or SDF rates, smoothing day-to-day shortages and surpluses of cash in the system. It is the pipe through which the policy rate actually reaches banks. Follow-up: "What is a variable rate repo auction?" (A longer-tenor LAF operation where banks bid for the rate.)

9. Open market operations (OMO)

The RBI buying or selling government securities in the open market to inject or absorb money. Buying bonds puts rupees into banks; selling takes them out. Follow-up: "How is an OMO different from a repo?" (A repo reverses after a fixed period; an OMO is outright.)

10. Inflation targeting

Since 2016 the RBI has had a legal mandate to keep consumer price inflation within a band around a target set by the government, and the MPC's decisions are explained against that target. The current target and band are stated in every monetary policy statement on the RBI site. Follow-up: "Why target CPI and not WPI?" (CPI is what households pay.)

11. Monetary transmission

The speed and extent to which a change in the repo rate shows up in the rates banks actually charge and pay. Transmission is slow when banks have fixed-rate deposits or weak competition, which is why the RBI moved retail lending to external benchmarks. Follow-up: "What is the EBLR?" (See concept 33.)

12. Stance of policy

Alongside the rate, the MPC states a stance such as accommodative, neutral or withdrawal of accommodation, which signals the direction of future moves. The stance is often more market-moving than the rate itself. Follow-up: "What is the current stance and why?" Read the last statement.

Banking structure and regulation (12 concepts)

13. Scheduled commercial banks

Banks listed in the Second Schedule of the RBI Act, which makes them eligible for RBI facilities and subject to its reserve requirements. The group includes public sector, private sector, foreign, regional rural and small finance banks. Follow-up: "Which schedule, which Act?"

14. Public sector versus private sector banks

In a public sector bank the central government holds the majority of shares; in a private bank it does not. SBI is governed by its own Act; the other public sector banks were nationalised in 1969 and 1980 and have been consolidated through mergers since. Follow-up: "Why join a public sector bank when private banks pay more?"

15. Regional rural banks (RRBs)

Banks set up to serve rural areas, owned jointly by the central government, the state government and a sponsoring public sector bank. They lend mainly to farmers, artisans and small rural businesses and have been merged within states to cut costs. Follow-up: "Who sponsors the RRB in your state?"

16. Cooperative banks

Banks owned by their members, from urban cooperative banks to the state and district central cooperative structure that funds farm credit. They are regulated by the RBI for banking functions and by registrars of cooperatives for governance, a dual control the Banking Regulation (Amendment) Act of 2020 tightened in the RBI's favour. Follow-up: "Why do cooperative banks fail more often?"

17. Small finance banks and payments banks

Two licence types created to deepen inclusion. A small finance bank can take deposits and lend, with a focus on small borrowers; a payments bank can take small deposits and offer payments but cannot lend. Follow-up: "Why can a payments bank not lend?" (Its licence limits it to low-risk uses of deposits.)

18. Banks versus NBFCs

A non-banking financial company lends and invests but cannot accept demand deposits, is not part of the payment system and cannot issue cheques on itself. Depositors in a bank have deposit insurance; lenders to an NBFC do not. Follow-up: "Why did the RBI tighten NBFC rules?" (Because large NBFCs fund themselves from banks, so their failure spreads.)

19. Capital adequacy and Basel norms

Basel III is the international framework that requires banks to hold capital in proportion to the riskiness of their assets, expressed as the capital to risk-weighted assets ratio (CRAR), plus liquidity buffers. The RBI's required ratios are in its master circular on Basel III capital regulations. Follow-up: "Why does capital matter to a depositor?" (It absorbs losses before deposits do.)

20. Priority sector lending (PSL)

RBI directions that require banks to lend a set share of their adjusted net bank credit to sectors such as agriculture, micro and small enterprises, education, housing within limits, and weaker sections. Banks that fall short buy PSL certificates or deposit with development funds. The current targets are in the RBI Master Directions on Priority Sector Lending. Follow-up: "Why force banks to lend to agriculture?"

21. Know your customer (KYC) and anti-money-laundering (AML)

Rules under the Prevention of Money Laundering Act and RBI's KYC master direction that require a bank to verify a customer's identity and address, re-verify periodically, and report suspicious and large cash transactions to the Financial Intelligence Unit. Follow-up: "A big customer refuses to update KYC. What do you do?"

22. The Banking Regulation Act, 1949

The law that gives the RBI power to license, regulate and inspect banks, approve their boards and, if needed, place them under moratorium. Together with the RBI Act it is the legal base of bank supervision. Follow-up: "What is a moratorium on a bank?"

23. Deposit insurance (DICGC)

The Deposit Insurance and Credit Guarantee Corporation, an RBI subsidiary, insures bank deposits up to a limit per depositor per bank, so that a bank failure does not wipe out small savers. The current limit is stated on the DICGC website; we could not re-check the figure this week, so read it there before your board. Follow-up: "Is the limit per account or per depositor?" (Per depositor, per bank.)

24. Banking ombudsman and consumer protection

RBI's integrated ombudsman scheme lets a customer escalate an unresolved complaint against a bank, NBFC or payment system operator to the RBI free of charge. The RBI also issues charters on customer rights and limits a customer's liability for unauthorised electronic transactions reported promptly. Follow-up: "A customer loses money to a UPI fraud; who bears it?"

Loans and asset quality (10 concepts)

25. Non-performing asset (NPA)

A loan on which interest or principal has stayed overdue beyond the period set by RBI's income recognition and asset classification norms. Once a loan is an NPA the bank stops booking its interest as income and must provide against it. The day count for each loan type is in the RBI master circular on those norms. Follow-up: "What are the stages after NPA?" (Sub-standard, doubtful, loss.)

26. Provisioning

Money a bank sets aside from profit against loans that may not be repaid, in proportions that rise as a loan ages through the NPA categories. High provisioning is why a bank with rising NPAs reports falling profit even when its business grows. Follow-up: "What is the provision coverage ratio?" (Provisions held as a share of gross NPAs.)

27. Special mention accounts (SMA)

RBI's early-warning buckets for loans that are overdue but not yet NPAs, numbered by how many days the payment is late. They force banks to act before a loan turns bad. Follow-up: "What can a branch do at SMA-0?" (Call, visit, restructure.)

28. Restructuring and resolution

Changing a loan's terms, such as tenure or interest, to help a borrower in genuine difficulty repay, under RBI's prudential framework for resolution of stressed assets. Restructuring is distinct from write-off, which removes the loan from the books without forgiving the debt. Follow-up: "What is the difference between write-off and waiver?"

29. The Insolvency and Bankruptcy Code (IBC)

The 2016 law that lets creditors take a defaulting company to the National Company Law Tribunal, where a resolution professional runs a time-bound process to find a buyer or liquidate. It shifted power from promoters to lenders. Follow-up: "Why do banks take haircuts under IBC?"

30. Asset reconstruction companies and the bad bank

An ARC buys bad loans from banks at a discount and tries to recover them; the National Asset Reconstruction Company Limited (NARCL) is the government-backed ARC set up to take large legacy NPAs off public sector bank books. Follow-up: "Does selling to an ARC solve the problem?" (It cleans the bank; recovery still has to happen.)

31. Wilful defaulter

A borrower who can repay but does not, or who diverts or siphons off loan funds, as defined in RBI's directions. The label brings penalties such as a bar on fresh credit and publication of the name. Follow-up: "How is a wilful defaulter different from a fraud?"

32. Credit information and credit scores

Credit information companies licensed by the RBI, such as CIBIL, collect repayment histories from lenders and produce a score that banks use to price and approve loans. A missed EMI lowers it; a long clean record raises it. Follow-up: "Can a customer with no history get a loan?"

33. MCLR and external benchmark lending rate (EBLR)

MCLR is the internal cost-based floor at which a bank may lend; the EBLR links retail and small-business loans to an external benchmark such as the repo rate so that policy changes pass through quickly. New floating-rate retail loans at banks are on the external benchmark. Follow-up: "Why did RBI move away from MCLR?" (Slow transmission.)

34. Collateral, margin and security

Collateral is the asset a borrower pledges; margin is the share of the asset's value the bank will not lend against, giving a cushion if prices fall. Secured loans cost less than unsecured ones because the bank can recover the asset. Follow-up: "What is a collateral-free loan scheme?" (See Mudra, concept 42.)

Deposits, accounts and products (8 concepts)

35. CASA

Current account and savings account deposits, on which a bank pays little or no interest, as a share of its total deposits. A high CASA ratio means cheap funds and is why banks chase salary accounts and small businesses. Follow-up: "Why do public sector banks have high CASA?" (Trust and reach.)

36. Fixed and recurring deposits

A fixed deposit locks a lump sum for a term at a fixed rate; a recurring deposit takes a fixed instalment each month for a term. Both pay more than savings and both carry a penalty for early withdrawal. Follow-up: "Why do senior citizens get a higher FD rate?" (Banks compete for stable retail funds.)

37. Savings account interest

Interest on savings accounts is deregulated, so each bank sets its own rate, and it is calculated on the daily balance and credited periodically. The rate is small; the account's value to the bank is the float. Follow-up: "What is a basic savings bank deposit (BSBD) account?" (A no-frills account with no minimum balance.)

38. Current account

A business account with no interest, no limit on transactions and overdraft facilities, meant for firms and traders. RBI rules restrict a borrower from opening current accounts at banks other than its lenders, to stop funds leaking away from the lending bank. Follow-up: "Why does the RBI care where a borrower keeps its current account?"

39. Overdraft versus cash credit

Both let a customer draw more than the balance up to a limit and pay interest only on what is used. An overdraft is usually against a deposit, salary or property and is for any purpose; cash credit is against stock and receivables and funds a business's working capital. Follow-up: "What is drawing power?" (The limit after applying margin to the stock statement.)

40. Term loan versus working capital

A term loan funds an asset such as a machine or a building and is repaid in instalments over years; working capital finance funds the day-to-day gap between paying suppliers and being paid by customers, and revolves. Mixing the two is how small businesses get into trouble. Follow-up: "A trader wants a term loan to buy stock. What is wrong?"

41. Kisan Credit Card (KCC)

A revolving credit line for farmers to meet crop and allied expenses, with a limit set from the land holding and crop, and an interest subvention from the government for prompt repayers. It is the main retail product of a rural branch. Follow-up: "Why do KCC accounts turn NPA after a bad monsoon?"

42. Mudra loans and Jan Dhan

Under the Pradhan Mantri Mudra Yojana banks give collateral-free loans to micro enterprises in four size bands: per the Mudra offerings page, Shishu covers loans up to Rs 50,000, Kishore above Rs 50,000 and up to Rs 5 lakh, Tarun above Rs 5 lakh and up to Rs 10 lakh, and Tarun Plus above Rs 10 lakh and up to Rs 20 lakh for borrowers who have repaid a Tarun loan. Under PMJDY, per the scheme page, anyone can open a basic savings bank deposit account with a RuPay debit card, accident cover of Rs 1 lakh (Rs 2 lakh for accounts opened after 28.8.2018), an overdraft of up to Rs 10,000 for eligible holders and no minimum balance. Follow-up: "What was Jan Dhan for?" (A bank account for every household, the base layer for direct benefit transfer.)

Payments and digital banking (10 concepts)

43. NEFT

National Electronic Funds Transfer, run by the RBI, moves money between bank accounts in batches settled through the day and is available at all hours. It is the default for ordinary transfers that do not need to be instant. Follow-up: "Who runs NEFT?" (The RBI, not NPCI.)

44. RTGS

Real Time Gross Settlement, also run by the RBI, settles each transfer individually and immediately in central bank money, and is used for large-value payments. "Gross" means no netting; each payment moves on its own. Follow-up: "Why is there a minimum amount for RTGS?" (It is built for large payments; the current minimum is on the RBI site.)

45. IMPS

Immediate Payment Service, run by NPCI, moves money instantly between accounts at any hour using the account number and IFSC or a mobile number and MMID. It was the first instant retail rail in India and UPI runs over it. Follow-up: "What is NPCI?" (See concept 47.)

46. UPI

Unified Payments Interface, built by NPCI, lets a customer pay from a bank account using a virtual payment address or a QR code through any UPI app, with the bank account as the source of funds. Its growth is the single biggest change in Indian retail banking in a decade and the subject of most "digital banking" GE topics. Follow-up: "If UPI is free, who pays for it?"

47. NPCI

The National Payments Corporation of India, a not-for-profit set up by the RBI and the Indian Banks' Association, runs UPI, IMPS, RuPay, AePS, BBPS and the national ATM switch. It is an operator, not a regulator; the RBI regulates it. Follow-up: "Is RuPay a bank?" (No, a card network.)

48. Aadhaar-enabled payment system (AePS)

Lets a customer withdraw cash, check a balance or transfer money at a business correspondent's device using an Aadhaar number and a fingerprint, with no card or phone. It is how direct benefit transfers reach villages without a branch. Follow-up: "What is a business correspondent?" (An agent who offers basic banking on a bank's behalf.)

49. Bharat Bill Payment System (BBPS)

An NPCI platform through which any bill, from electricity to school fees, can be paid at any participating app, bank or agent, with a single receipt standard. Follow-up: "How does this help a rural customer?" (One counter for every bill.)

50. Central bank digital currency (CBDC, the e-rupee)

A digital form of the rupee issued by the RBI itself, held in a wallet, as opposed to a bank deposit, which is a claim on a bank. The RBI has run retail and wholesale pilots; details and participating banks are in its press releases. Follow-up: "How is the e-rupee different from UPI?" (UPI moves bank money; the e-rupee is central bank money.)

51. Card tokenisation and two-factor authentication

Tokenisation replaces a card number stored with a merchant by a unique token, so a data leak at the merchant does not expose the card. Two-factor authentication requires something you have (the card or phone) and something you know or are (a PIN or OTP) for each transaction. Follow-up: "Why do banks still see OTP fraud?" (Customers share the OTP.)

52. Payment aggregators and gateways

A payment aggregator collects payments from customers on behalf of many merchants and settles them, under an RBI authorisation; a gateway is the technology that routes the transaction. RBI licensing brought them under supervision after rapid growth. Follow-up: "Why should the RBI regulate a technology company?" (It holds customer money, however briefly.)

Economy and government (8 concepts)

53. Fiscal deficit

The gap between what the government spends and what it earns excluding borrowing, expressed as a share of GDP, and filled by borrowing, mainly through government bonds that banks buy under SLR. The target for each year is in the Union Budget. Follow-up: "Why does a high fiscal deficit matter to a bank?" (Government borrowing competes with private credit.)

54. GDP and growth

Gross domestic product is the value of everything produced in the country in a year; growth is the change in it after removing inflation. The National Statistical Office publishes it quarterly; the RBI's projection is in every policy statement. Follow-up: "What is the difference between nominal and real GDP?"

55. CPI versus WPI inflation

The consumer price index measures the prices households pay and is the RBI's target; the wholesale price index measures prices at the producer or wholesale stage and moves earlier. They often diverge when food or fuel prices swing. Follow-up: "What is core inflation?" (CPI without food and fuel.)

56. Goods and Services Tax (GST)

A single indirect tax on the supply of goods and services, levied by the centre and states together, with credit for tax paid on inputs so that tax falls only on value added. For a bank, a borrower's GST returns are now the best evidence of real turnover. Follow-up: "How does a branch use GST data in lending?"

57. FDI and FPI

Foreign direct investment is a lasting stake in a business, such as a factory or a majority holding; foreign portfolio investment is money in listed shares and bonds that can leave quickly. Limits on foreign holding in banks are set by government policy and the RBI. Follow-up: "Why does the rupee fall when FPI leaves?"

58. Foreign exchange reserves and the rupee

The foreign currency, gold and other assets the RBI holds, used to pay for imports and to steady the rupee by buying or selling dollars. The weekly figure is in the RBI's statistical supplement. Follow-up: "Does the RBI fix the rupee's rate?" (No; it manages volatility in a market-determined rate.)

59. Current account deficit

The amount by which a country's imports of goods, services and transfers exceed its exports, financed by capital inflows such as FDI, FPI and remittances. India usually runs a deficit because it imports oil and gold. Follow-up: "How do remittances help?"

60. Direct benefit transfer and the JAM trinity

Direct benefit transfer sends subsidies and welfare payments straight to a beneficiary's bank account, cutting out intermediaries; JAM stands for Jan Dhan accounts, Aadhaar identity and mobile phones, the three rails that make it work. Follow-up: "Why do DBT payments fail?" (Account not seeded with Aadhaar, dormant account, name mismatch.) A branch officer fixes these every day.

Connecting concepts to the news without memorising numbers

Panels do not want the repo rate recited; they want to hear that you understand why it moved. The method is simple and takes ten minutes a day. For each news item, ask three questions: which concept above does it belong to, which direction does it push, and who in a branch feels it.

News item (type)	Concept	What to say without a number
MPC changes or holds the repo rate	3, 10, 11, 33	"The committee weighed inflation against growth; a change reaches customers through external-benchmark loans within a quarter, so EMIs on new home loans move first."
RBI changes CRR	6, 8	"This releases or absorbs liquidity for every bank at once; a cut gives banks room to lend without raising deposit rates."
A bank reports results	25, 26, 35	"Look at gross NPA, provisions and CASA, not just profit; profit can rise because provisions fell, which says more about last year than this one."
A bank merger or licence	14, 17, 22	"Consolidation builds scale and capital; the question is whether branch reach in small towns survives it."
Fraud or cyber incident	21, 24, 51	"Most retail fraud is social engineering, not hacking; the branch's job is customer education and fast reporting to limit liability."
Budget announcement on banks or MSMEs	20, 42, 53	"A credit guarantee or PSL change decides what a branch will be asked to push in the next quarter."
A new digital product (CBDC, UPI feature)	46, 47, 50	"Ask who benefits, what rail it runs on and what risk it adds; most new products are a layer on UPI, which is a layer on IMPS."
Rupee falls or reserves change	57, 58, 59	"Capital outflows and oil prices drive most moves; the RBI smooths, it does not fix."

When a panel asks for a figure you do not have, give the structure and the direction: "I do not have today's number, sir, but the repo has been held in the last two statements and the stance is neutral, so..." Candidates report that panels move on. What they do not move on from is a confident wrong number. If you must learn figures, learn six, read them from the RBI home page on the morning of the interview, and say when you read them. Practise saying this aloud in a bank panel mock interview until it comes out calm.

Two personal layers belong with the news. First, your district's economy: its main crops or industries, the banks with the most branches there, the local credit problem (migration, crop loss, a closed mill). Panels ask about it in almost every account we have read, and no coaching site can prepare it for you. Second, the bank you are sitting for: its latest results in two sentences, one product it is known for, and one thing you noticed in its branch. The questions by background page shows how each profile is expected to connect these.

Where to read the latest

Read the originals. They are shorter than the summaries and the panel reads them too.

What	Where	How often
Policy rates (repo, SDF, MSF, Bank Rate, CRR, SLR) and reference exchange rates	The right-hand panel of the RBI home page	The morning of your interview
The MPC's reasoning, inflation and growth projections, stance	Monetary Policy statements and the Governor's statement, linked from the RBI home page under press releases	Once, the week before; re-read if a meeting falls before your date
Bank licences, mergers, penalties, new rules	RBI press releases, daily	Skim the headlines daily from two weeks out
Definitions and limits (NPA day counts, PSL targets, KYC, Basel ratios)	RBI Master Circulars and Master Directions, by topic	Look up the two or three your profile invites
Payment rails and limits	RBI payment-system pages and the NPCI site for UPI, IMPS, AePS, BBPS	Once
Government schemes	The scheme's own site, such as the PMJDY scheme page, not a summary	Once per scheme you plan to mention
Budget measures for banks and MSMEs	The Budget speech on the Union Budget site	Once
Your bank's results	The investor relations or press release page of SBI or the bank concerned	Once, the week before

A fourteen-day reading route that fits around the rest of your preparation: days 1 to 6, one theme a day from this page, saying each concept aloud in your own words; days 7 and 8, the last two monetary policy statements; days 9 and 10, your district and your bank; days 11 and 12, the RBI press releases of the last month; day 13, a full mock board with banking questions only; day 14, the RBI home page and nothing else. The hundred most-asked questions, with model answers that use these concepts, are on our questions and answers page; for SBI candidates, the same concepts are the raw material of the Group Exercise. The vocabulary, for candidates who know the idea but not the English for it, is in our banking and finance vocabulary post. The Bank PO interview hub links every page in the series.