⚡ Quick Revision — Part 2: Banking | Payment & Settlement Systems
🗺️ Chapter Map
🏦 Banking Structure
📊 Key Numbers — Flashcard
| Metric | Value |
|---|
| PSBs | 12 |
| PVBs | 21 |
| RRBs | 28 (One State One RRB: May 2025) |
| RRB Ownership | 50:15:35 (Centre:State:Sponsor) |
| SFB PSL | 60% (reduced from 75%) |
| RRB PSL | 75% |
| Payment Banks | 5 (Airtel, Fino, Jio, NSDL, IPPB) |
| GNPA | 2.15% (historic low) |
| CRAR | 17.5% |
| ROA / ROE | 1.37% / 14% |
| DICGC | ₹5 lakh per depositor per bank |
| Gold Loan LTV | 75% |
| IBC Min Default | >₹1 crore |
| NARCL Threshold | ≥₹500 crore |
| UPI Countries | 8 |
| Digital Payments | 97.6% of total |
🏗️ Universal vs Differentiated Banks
| Universal Bank | SFB | Payment Bank |
|---|
| Services | All financial services | Savings + credit (unserved) | Small savings + payments |
| Loans | ✅ Yes | ✅ Yes (50% ≤₹25L) | ❌ No |
| PSL | 40% | 60% | N/A |
| Min Capital | ₹1,000 cr | ₹200 cr | ₹200 cr |
| Debit Card | ✅ | ✅ | ✅ |
| Credit Card | ✅ | ✅ | ❌ |
| Committee | — | Nachiket Mor | Nachiket Mor |
SFB → Universal Bank Criteria
- ✅ Scheduled + 5 years track record
- ✅ Listed + net worth ₹1,000 cr
- ✅ Net profit last 2 FYs + GNPA ≤3% + NNPA ≤1%
🏛️ Banks vs NBFCs
| Feature | Banks | NBFCs |
|---|
| CRR | ✅ Yes | ❌ No |
| SLR | ✅ Yes | Only NBFC-D |
| Demand Deposits | ✅ Yes | ❌ No |
| DICGC Insurance | ✅ Yes | ❌ No |
| Chequebook | ✅ Yes | ❌ No |
| Credit Card | ✅ Yes | ✅ Yes |
NBFCs — Scale-Based Regulation
Base (< ₹1000 cr) → Middle (> ₹1000 cr) → Upper → Top (extreme risk)
SRO for NBFCs: FIDC | SRO for UCBs: NUCFDC
📉 NPA Framework
Recovery Mechanisms
| DRT (1993) | SARFAESI (2002) | IBC (2016) |
|---|
| For | Debt recovery | Secured loans only | Time-bound resolution |
| Court | DRT/DRAT | No court needed | NCLT |
| Key | Appeal at DRAT | 60-day notice → seize | Min default >₹1 cr |
| Excludes | — | Unsecured, agri land, <₹1L | — |
Bad Bank: NARCL (51% PSB, 49% PVB) acquires NPAs ≥₹500 cr → IDRCL (49% PSB, 51% PVB) resolves
🏗️ BASEL III — Capital
| Risk Weight | Asset |
|---|
| 0% | G-Secs |
| 35-50% | Home loans |
| 100% | Corporate loans |
| 150% | Project finance (raised by RBI) |
LCR = HQLA / 30-day outflows × 100 (Min: 100%)
📋 PSL Targets
| Domestic + FB (≥20) | RRB | SFB / UCB |
|---|
| Target | 40% | 75% | 60% |
Weaker Sections (12%) + Agri-SM (10%) + Agri-Other (8%) + Micro (7.5%) + Others (2.5%) = 40%
- Shortfall → deposited in RIDF/UIDF
- PSL Certificates: Tradable on e-Kuber (transfers obligation, NOT loan/risk)
💳 NRI Accounts
| NRE | NRO | FCNR(B) |
|---|
| Currency | INR | INR | Foreign |
| Source | Foreign earnings | India income | Foreign earnings |
| Repatriable | Fully | Restricted ($1M/FY) | Fully |
| Tax | Free | Taxable | Free |
| Type | All | All | Only Term Deposit |
🔧 Key Banking Concepts
| Concept | One-Liner |
|---|
| TReDS | MSME invoice discounting. 3 platforms: RXIL, M1xchange, Invoicemart. RBI regulated. |
| P2P (NBFC-P2P) | Lender max ₹50L; single pair ₹50K; tenure 36 months. RBI crackdown on guaranteed returns. |
| FLDG | Fintech guarantees initial losses. Cap: 5% of portfolio. |
| BNPL | Buy Now Pay Later = digital lending. KYC mandatory. |
| PCR | (Provisions / Gross NPA) × 100. RBI recommends 70%. Moving to ECL approach. |
| LC | Bank guarantees payment to seller. Contingent liability. |
| PCE | Partial Credit Enhancement. Bank guarantees up to 20% of bond issue. |
| Co-lending | Bank + NBFC jointly finance. Both retain ≥10% on balance sheet. |
| PCA | Banks (2002), NBFCs (2022), UCBs (2025). Triggers: CRAR, NPA, ROA, Leverage. |
📱 UPI — Quick Recall
| Metric | Data |
|---|
| Digital share | 97.6% of all payments |
| By volume | UPI largest |
| By value | RTGS largest |
| Countries | 8 (Bhutan, SG, Qatar, Mauritius, Nepal, UAE, SL, France) |
| P2M limit raised | ₹5 lakh (tax, education, health) |
| UPI Intensity | Highest: Telangana |
🏧 Other Payment Systems
| System | Key Fact |
|---|
| CTS | Cheque image-based clearing. Now continuous clearing (multiple times/day). |
| Positive Pay | Cheques ≥₹50,000 — drawer confirms details electronically. |
| AePS | Aadhaar + biometric at BC points. Fraud: silicone fingerprints. Now: liveness detection. |
| MDR | Merchant fee. Zero MDR on UPI/RuPay since 2020. Budget 2026: ₹3,631 cr subsidy. |
| SWIFT | Messaging (NOT money transfer). Belgium. 11,000+ institutions. BRICS Pay alternative. |
⚠️ Top 10 Traps — Part 2
| # | Trap | Reality |
|---|
| 1 | Payment Banks can lend | Cannot lend — no PSL, no credit card |
| 2 | NBFCs accept demand deposits | Cannot — only time deposits |
| 3 | NBFC deposits insured by DICGC | Not insured — only bank deposits |
| 4 | PACS regulated by RBI | State Govt only — not banks under BR Act |
| 5 | NABARD lends directly to farmers | NABARD = refinance to RRBs/co-ops |
| 6 | NPA = 30 days overdue | NPA = >90 days. 30 days = SMA-0 |
| 7 | SARFAESI = all loans | Secured only. Not: unsecured, agri land, <₹1L |
| 8 | SWIFT transfers money | SWIFT = messaging/instructions only |
| 9 | SFB & PB = different committees | Both = Nachiket Mor Committee (2014) |
| 10 | CRR applies to NBFCs | CRR = NOT applicable to NBFCs |
🔄 SHG vs JLG
| SHG | JLG |
|---|
| Size | 10-20 | 4-10 |
| Focus | Savings first | Credit first |
| Guarantee | Group + peer pressure | Joint liability |
| Promoter | NABARD (SHG-BLP) | MFIs, banks |
Last-Minute Recall Strip:
PSBs 12 | PVBs 21 | RRBs 28 | RRB 50:15:35 | GNPA 2.15% | CRAR 17.5% | SFB PSL 60% | RRB PSL 75% | PBs 5 | NPA >90 days | IBC >₹1 cr | NARCL ≥₹500 cr | DICGC ₹5L | LTV Gold 75% | FLDG Cap 5% | P2P Max ₹50L | UPI 8 countries | Digital 97.6% | MDR Zero | CTS continuous | Positive Pay ≥₹50K | Co-lend ≥10% each | AT-1 = perpetual | LCR min 100% | CAR min 9% India
