Banking Fundamentals

History of Banking

Trace banking's global evolution and India's journey — from indigenous bankers and Presidency Banks to nationalisation, liberalisation, and today's digital era.

What you'll learn

• Global evolution: from goldsmiths to merchant bankers to modern commercial banking
• Pre-independence India: Bank of Hindustan (1770), Presidency Banks (Bengal, Bombay, Madras), formation of Imperial Bank (1921)
• RBI established 1935 (Hilton Young Commission) → nationalised 1949
• Bank nationalisation: 14 banks in 1969, 6 more in 1980 — to widen credit reach
• Narasimham Committee (1991): liberalisation, entry of new private and foreign banks
• Modern era: payment banks, small finance banks, UPI, account aggregator, digital lending

Banking Laws & Regulations

Understand the regulatory backbone of Indian banking — the laws every banker must know to stay compliant.

What you'll learn

• RBI Act, 1934 — establishes RBI; powers over monetary policy, currency issue, banker to government
• Banking Regulation Act, 1949 — licensing, capital, management, inspection, winding-up
• Negotiable Instruments Act, 1881 — cheques, promissory notes, bills of exchange, dishonour (Sec 138)
• FEMA, 1999 — foreign exchange transactions, current vs capital account
• PMLA, 2002 — Anti-Money Laundering, record-keeping, reporting to FIU-IND
• KYC norms — Customer Identification, due diligence (CDD/EDD), periodic re-KYC
• BCSBI Code, RBI Master Directions, and Fair Practices Code for lenders

Classification of Banking

Banks differ by who they serve and how. Learn the major classifications and where each fits in India's BFSI landscape.

What you'll learn

• Retail Banking — individual customers; CASA, personal loans, cards, wealth (Bhattacharyya, Ch.1)
• Corporate Banking — working capital, term loans, trade finance, cash management
• Investment Banking — capital raising, M&A advisory, underwriting, ECM/DCM
• Treasury & ALM — managing liquidity, interest rate risk, SLR/CRR, money-market operations
• Digital Banking — neo-banks, mobile-first, API banking, video KYC
• Priority Sector Lending — agriculture (18%), MSME, education, housing, weaker sections (overall 40% target)
• Specialised banks: Payments Banks, Small Finance Banks, Regional Rural Banks, Cooperative Banks

RBI Banking Ombudsman

The customer's safety net. Learn the grievance redressal flow under the Integrated Ombudsman Scheme, 2021.

What you'll learn

• Step 1: Raise complaint with the bank, wait 30 days for resolution
• Step 2: Escalate to RBI Ombudsman via cms.rbi.org.in or 14448
• Step 3: Ombudsman reviews, mediates, and issues an Award if needed (binding on the bank)
• Customer rights: fair treatment, transparency, privacy, grievance redressal
• Common case examples: wrong debits, card fraud, mis-selling of insurance/MFs, ATM disputes, service deficiency
• Internal Ombudsman: every bank with 10+ branches must have one for unresolved complaints

Banking & Financial Products

From a bank's perspective, deposits are liabilities and loans are assets. Master the core product suite RMs sell every day.

What you'll learn

• Assets vs Liabilities — deposits fund loans; banks earn on the NIM (Net Interest Margin)
• CASA — Current & Savings Accounts: low-cost float, key cross-sell hook for RMs
• Term Deposits — FD, RD, tax-saver FD (5-yr lock-in), senior-citizen extra rate, auto-sweep
• Retail Loans — Home, LAP, Personal, Auto, Two-wheeler, Education, Gold (Bhattacharyya, Ch.1)
• Corporate Loans — working capital (CC/OD), term loans, LCs, BGs, commercial paper (Bhattacharyya, Ch.2)
• Cards — Debit, Credit, Prepaid; billing cycle, interest-free period, MDR, EMI conversion, risks
• Digital channels — Internet banking, Mobile, UPI, ECS/NACH, BBPS

Basics of Credit Analysis

Before any loan is sanctioned, the banker assesses risk. Learn the framework used across retail and SME lending.

What you'll learn

• 5 Cs of Credit — Character, Capacity, Capital, Collateral, Conditions
• Income assessment — salaried (Form 16, 3-mo payslips, bank statements) vs self-employed (2-yr ITR, GST, P&L)
• Risk profiling — CIBIL/Experian score (>750 healthy), FOIR (<50%), LTV, DSCR (>1.25)
• NPA basics — 90-day overdue rule; SMA-0/1/2 early warning categories (Bhattacharyya, Ch.4)
• Red flags — bounced cheques, frequent enquiries, address mismatch, unverifiable income
• Mini case: ₹50L home loan applicant, ₹1.2L monthly income, ₹25K EMIs running → FOIR check

Audit & Compliance in Banking

Audit and compliance protect the bank, the customer, and the banker personally. Every RM and operations officer is part of the control framework.

What you'll learn

• Three lines of defence: business (you) → risk & compliance → internal audit
• Concurrent Audit — daily/weekly checks at branches: vouchers, KYC, sanctions, locker register
• Internal Audit (RBIA) — risk-based audit of branches and processes, scored & reported to Audit Committee
• Statutory Audit — by RBI-empanelled CA firms; certifies financial statements annually
• RBI Inspection (AFI) — Annual Financial Inspection; Risk Based Supervision under SPARC framework
• Compliance function — independent unit; tracks regulatory changes, files returns, monitors breaches
• AML/CFT — suspicious transaction reporting (STR), cash transaction reporting (CTR ≥ ₹10L), cross-border (CBWTR)
• Fraud risk — staff accountability, whistle-blower policy, reporting to RBI Central Fraud Registry
• Information & cyber security — RBI Cyber Security Framework, customer data protection (DPDP Act, 2023)
• Mis-selling controls — suitability assessment, recorded calls, cooling-off period for insurance