Contents

1. Money 23

1.1. Money or Credit Creation Process 23

1.2. Definition of Money 23

1.3. Functions and Significance of Money 24

1.4. Kinds of Money 25

1.4.1. Currency Component 25

1.4.2. Deposit Money Component 26

1.5. Money Supply in India 26

1.5.1. Measures of Money Supply 26

1.5.2. High Powered Money 27

1.6. Factors affecting Money Supply in India 27

2. Banking 28

2.1. Indian Banking System 28

2.1.1. Regional Rural Banks (RRBs) 29

2.1.2. Cooperative Banks 29

2.1.3. Commercial Banks 32

2.2. Indian Banks Abroad 36

2.3. Another way of classification of banks 37

2.4. Banks v/s Non- Banking Financial Companies (NBFCs) 37

2.4.1. What is NBFC? 37

2.4.2. Regulators of NBFC 38

2.4.3. Increasing Influence and Regulatory Problems of NBFCs 39

2.4.4. Usha Thorat Committee 39

2.4.5. Steps Taken by RBI Regarding NBFCs 40

2.5. Banking Reforms in India 40

2.5.1. Narasimham Committee I (1991) 40

2.5.2. Narasimham Committee II 41

2.6. Issue of Non-Performing Assets (NPAs) 42

2.6.1. What are Non-Performing Assets (NPA’s) 42

2.6.2. Categories of NPAs 42

2.6.3. How to Reduce NPAs 43

2.6.4. Recent Initiatives 44

2.6.5. Issues Needing Further Intervention 45

2.6.6. Steps Advised by Finance Standing Committee of the Parliament 46

2.7. Some Important Terms 46

3. GS Mains Test Series Questions 48

4. Previous Years UPSC Mains Questions 56