GENERAL AWARENESS · INDIAN ECONOMY SERIES

Indian Economy: Banking, Money, Taxation and the Budget

The RBI and the banking system, money and digital payments, taxes and GST, and the Union Budget — the money-and-banking facts the exam repeats, with photos and real past questions.

Punjab PolicePSSSBSSC15 MIN READਪੰਜਾਬੀ ਵਿੱਚ ਪੜ੍ਹੋ

The economy section is mostly facts about institutions and terms: when the RBI was set up and what it does, how banks were nationalised, the full forms of payment systems (NEFT, RTGS, IMPS, IFSC), the difference between direct and indirect taxes and what GST is, and a few budget words. These are fixed facts — learn the dates and the full forms and the section becomes easy marks.

1935
RBI established
Nationalised in 1949
2017
GST rolled out
'One Nation, One Tax' (1 July)
15
Languages on a currency note
On the note's language panel

The RBI and the banking system

India's central bank, and how banks are organised.

The Reserve Bank of India, Mumbai
The RBI (set up 1935, headquarters Mumbai) is India's central bank — it issues currency, sets the repo rate and regulates all banks. Image: Pinakpani · CC BY-SA 4.0
FactDetail
RBI established1935 (on the Hilton Young Commission); HQ Mumbai
RBI nationalised1949
Bank nationalisation14 banks in 1969, 6 more in 1980
First Regional Rural Bank1975
NABARD established1982 (for rural/agri credit)
SEBI (markets regulator)1988; statutory in 1992
RBI 1935 (nationalised 1949); banks nationalised 1969 & 1980; NABARD 1982.
QUICK CHECK
PYQ · SSC — In which year was the Reserve Bank of India established?
Tap an option to answer
QUICK CHECK
PYQ · SSC — In which year was the RBI nationalised?
Tap an option to answer
QUICK CHECK
PYQ · SSC — The first Regional Rural Bank in India was established in which year?
Tap an option to answer
QUICK CHECK
PYQ · SSC — In which year was NABARD established?
Tap an option to answer
QUICK CHECK
PYQ · SSC — What is 'collateral' in the banking system?
Tap an option to answer

Money, currency and payment systems

Who prints what, and the full forms you must know.

Indian currency
Image
AbbreviationFull form
NEFTNational Electronic Funds Transfer
RTGSReal-Time Gross Settlement (large amounts)
IMPSImmediate Payment Service (instant, 24x7)
IFSCIndian Financial System Code (identifies a bank branch)
GSTINGoods and Services Tax Identification Number
IMPS = instant; RTGS = large amounts in real time; IFSC = the branch code.
QUICK CHECK
PYQ · SSC — In banking, what is the full form of IMPS?
Tap an option to answer
QUICK CHECK
PYQ · SSC — Which alphanumeric code uniquely identifies a bank branch in the NEFT system?
Tap an option to answer
QUICK CHECK
PYQ · SSC — How many languages are there on the language panel of an Indian currency note?
Tap an option to answer
QUICK CHECK
PYQ · SSC — The place where bankers meet and settle their mutual claims is known as the:
Tap an option to answer

Inflation, taxes and the Budget

Price rise, how taxes work, and GST.

TermMeaning
InflationA general rise in prices; money buys less
Direct taxPaid directly to govt (income tax, corporate tax)
Indirect taxPaid on goods/services (GST, customs)
Progressive taxHigher income → higher tax rate
GST (2017)'One Nation, One Tax'; GST Council has 33 members
Fiscal deficitWhen govt spending exceeds its income
GST & customs are indirect; income tax is direct; progressive = higher income pays more.
QUICK CHECK
PYQ · SSC — If money-supply growth is faster than real GDP growth, it results in:
Tap an option to answer
QUICK CHECK
PYQ · SSC — A tax that collects a greater share of income from high earners than low earners is a:
Tap an option to answer
QUICK CHECK
PYQ · SSC — What is the full form of GSTIN?
Tap an option to answer
QUICK CHECK
PYQ · SSC — How many members are there in the GST Council?
Tap an option to answer

Stock market and national income

Where shares trade, and a national-income identity.

The Bombay Stock Exchange, Mumbai
The BSE (Asia's oldest stock exchange, 1875; index SENSEX) and the NSE (index NIFTY) are regulated by SEBI. Image: Niyantha Shekhar · CC BY 2.0
QUICK CHECK
PYQ · SSC — Personal Income − Personal tax payments − Non-tax payments equals:
Tap an option to answer
COMMON TRAPS
  • RBI: established 1935, nationalised 1949 — don't mix the two dates.
  • Bank nationalisation: 14 banks in 1969, 6 in 1980; RRBs from 1975; NABARD 1982.
  • IMPS = Immediate Payment Service (not 'Instant'); IFSC identifies a branch.
  • GST & customs = indirect tax; income tax = direct tax. GST Council = 33 members.
  • A currency note's language panel has 15 languages (plus Hindi & English).
FLASHCARDS
Quick revision
RBI established / nationalised
1935 / 1949
First bank nationalisation
1969 (14 banks)
NABARD established
1982
IMPS
Immediate Payment Service
GST rollout
1 July 2017
Markets regulator
SEBI
CHECK YOURSELF

Income tax is an example of which kind of tax? (a) Indirect tax (b) Direct tax (c) Value-added tax (d) Customs duty

Show answer

(b) Direct tax. Income tax is paid directly by a person to the government; GST and customs are indirect taxes on goods and services.

Frequently Asked Questions

When was the RBI established and nationalised?

Established in 1935 and nationalised in 1949; its headquarters are in Mumbai.

Who issues currency notes and coins in India?

The RBI issues all notes except the ₹1 note; the ₹1 note and all coins are issued by the Government of India.

When were banks nationalised in India?

14 major banks in 1969 and 6 more in 1980.

What is the difference between direct and indirect tax?

A direct tax (income tax) is paid straight to the government; an indirect tax (GST, customs) is charged on goods and services.

When was GST introduced?

On 1 July 2017, as 'One Nation, One Tax'; the GST Council has 33 members.

What is inflation?

A sustained general rise in prices, which reduces the purchasing power of money.

What do NEFT, RTGS and IMPS mean?

NEFT = National Electronic Funds Transfer; RTGS = Real-Time Gross Settlement (large amounts); IMPS = Immediate Payment Service (instant, 24x7).

What is NABARD?

The National Bank for Agriculture and Rural Development (set up 1982), the apex body for rural and farm credit.

Which body regulates the stock market in India?

SEBI (the Securities and Exchange Board of India) regulates the BSE, NSE and other markets.

What is a fiscal deficit?

The gap when the government's total spending is more than its total income (excluding borrowings) in a year.

More in Economy

← All Economy notes