RBI Grade B Officer Finance and Management (FM) Syllabus

Finance and Management (FM) syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Finance and Management (FM) in RBI Grade B Officer, not a summary of it.

1. 1

   Financial System and Regulators

   4 topics

   • Structure of the Indian Financial System
     • Money market vs capital market
     • Financial intermediaries and instruments
   • Regulators of the Financial System
     • RBI, SEBI, IRDAI, PFRDA roles
     • Financial Stability and Development Council (FSDC)
   • Banking and Non-Banking Institutions
     • Scheduled and non-scheduled banks
     • NBFCs and their classification
   • Financial Sector Reforms
     • Narasimham Committee recommendations
     • Banking sector consolidation
2. 2

   Financial Markets and Instruments

   4 topics

   • Money Market Instruments
     • Treasury bills, commercial paper, certificates of deposit
     • Call money and repo market
   • Capital Market Instruments
     • Equity shares, debentures, bonds
     • Derivatives: futures, options, swaps
   • Risk Management in Financial Sector
     • Credit, market, operational, liquidity risk
     • Basel I, II, III frameworks
   • Recent Developments in Financial Sector
     • Fintech, UPI, digital payments
     • Cryptocurrency and CBDC (e-Rupee)
3. 3

   Corporate Governance and Banking Functions

   4 topics

   • Corporate Governance in Banks
     • Role of board, audit committees
     • Disclosure and transparency norms
   • Factors Affecting Banking Sector
     • Asset-liability management
     • Non-performing assets (NPA) and resolution
   • Union Budget and Fiscal Concepts
     • Budget components: revenue and capital
     • Fiscal deficit, FRBM Act
   • Inflation and Monetary Policy Tools
     • CPI, WPI and inflation targeting
     • CRR, SLR, repo, reverse repo
4. 4

   Management Theory and Behaviour

   4 topics

   • Nature and Scope of Management
     • Management functions: POSDCORB
     • Scientific and administrative management theories
   • Motivation Theories
     • Maslow's hierarchy of needs
     • Herzberg's two-factor theory
     • McGregor's Theory X and Y
   • Leadership and Organisational Behaviour
     • Leadership styles and theories
     • Group dynamics and conflict management
   • Communication
     • Channels and barriers to communication
     • Role of IT in communication
5. 5

   Ethics and Corporate Governance Context

   3 topics

   • Emergence of Corporate Governance
     • Ethical foundations of governance
     • Business ethics and CSR
   • Human Resource Development
     • Concept and goals of HRD
     • Performance appraisal and training
   • Corporate Social Responsibility
     • CSR provisions under Companies Act 2013
     • Stakeholder theory

Finance and Management (FM) flashcards for RBI Grade B Officer

25 of 51 cards from the Finance and Management (FM) deck — real questions with worked answers.

1. What are the four main components of the Indian Financial System?

   Financial Institutions (banks, NBFCs), Financial Markets (money & capital markets), Financial Instruments (shares, bonds, deposits), and Financial Services (broking, insurance, leasing).

2. How are financial markets classified by the maturity of instruments traded?

   Money Market (short-term funds, maturity up to 1 year) and Capital Market (long-term funds, maturity over 1 year).

3. What is the difference between the primary market and the secondary market?

   The primary market is where new securities are issued for the first time (e.g., IPOs), while the secondary market is where existing securities are traded among investors (e.g., stock exchanges).

4. Which body is the apex regulator of the banking system and monetary policy in India?

   The Reserve Bank of India (RBI), established in 1935 and nationalized in 1949.

5. Name the four main financial-sector regulators in India and their domains.

   RBI (banking & money market), SEBI (securities/capital market), IRDAI (insurance), and PFRDA (pension funds).

6. What does SEBI stand for and what is its primary mandate?

   Securities and Exchange Board of India; it protects investor interests and regulates and develops the securities market. It gained statutory status under the SEBI Act, 1992.

7. What is the role of IRDAI in the financial system?

   The Insurance Regulatory and Development Authority of India regulates and develops the insurance sector and protects policyholders' interests.

8. What is the difference between a bank and an NBFC?

   A bank holds a banking license, can accept demand deposits and issue cheques, and is part of the payment system; an NBFC cannot accept demand deposits, cannot issue cheques drawn on itself, and depositors lack deposit insurance (DICGC) cover.

9. Into which categories are Scheduled Commercial Banks classified?

   Public Sector Banks, Private Sector Banks, Foreign Banks, Regional Rural Banks (RRBs), and Small Finance Banks; with Payments Banks as a distinct differentiated category.

10. What makes a bank a 'Scheduled Bank' in India?

    A bank included in the Second Schedule of the RBI Act, 1934, which must have paid-up capital and reserves of at least Rs. 5 lakh and satisfy RBI that its affairs are not conducted to the detriment of depositors.

11. What are the restrictions placed on Payments Banks in India?

    They can accept deposits up to Rs. 2 lakh per customer, offer payments/remittance services, but cannot lend (issue loans) or issue credit cards.

12. What is the difference between SLR and CRR?

    CRR (Cash Reserve Ratio) is the share of net demand and time liabilities (NDTL) banks must keep as cash with the RBI (earns no interest); SLR (Statutory Liquidity Ratio) is the share of NDTL banks must hold in liquid assets like cash, gold, or approved securities with themselves.

13. What were the key recommendations of the Narasimham Committee I (1991) on financial sector reforms?

    Reduction of SLR and CRR, deregulation of interest rates, introduction of prudential norms (capital adequacy, income recognition, asset classification), and greater autonomy for public sector banks.

14. What is financial inclusion and name two major schemes promoting it in India.

    Financial inclusion is providing affordable access to financial services for all sections of society; key schemes include Pradhan Mantri Jan Dhan Yojana (PMJDY) and the JAM trinity (Jan Dhan-Aadhaar-Mobile).

15. What is a Treasury Bill (T-Bill) and what are its standard maturities?

    A T-Bill is a short-term money market instrument issued by the Government of India at a discount and redeemed at face value; standard maturities are 91-day, 182-day, and 364-day.

16. What is Commercial Paper (CP)?

    An unsecured, short-term promissory note issued by highly rated corporates, primary dealers, and financial institutions to raise short-term funds, typically at a discount to face value, with maturity from 7 days to 1 year.

17. What is a Certificate of Deposit (CD)?

    A negotiable, unsecured money market instrument issued by banks and financial institutions against funds deposited, for maturities of 7 days to 1 year (banks) at a discount to face value.

18. What is the Call Money Market?

    A segment of the money market for borrowing and lending of funds for one day (overnight); 'notice money' refers to funds borrowed for 2-14 days.

19. What is a repo (repurchase agreement) in the money market?

    A transaction where one party sells securities to another with an agreement to repurchase them at a future date at a fixed price; it is a collateralized short-term borrowing instrument, central to RBI's liquidity operations.

20. What is the difference between equity shares and preference shares?

    Equity shares carry voting rights and variable dividends with residual claims; preference shares carry a fixed dividend and priority over equity in dividend payment and capital repayment, usually without voting rights.

21. What is a debenture and how does it differ from a share?

    A debenture is a debt instrument representing borrowed money with a fixed interest (coupon), making the holder a creditor; a share represents ownership making the holder an owner with dividends. Debenture interest is paid before dividends.

22. What is the difference between an IPO and an FPO?

    An IPO (Initial Public Offering) is the first sale of shares by a company to the public; an FPO (Follow-on Public Offering) is the issue of additional shares by an already-listed company.

23. What are mutual funds and how are open-ended and close-ended funds different?

    Mutual funds pool money from investors to invest in securities. Open-ended funds allow entry/exit anytime at NAV with no fixed maturity; close-ended funds have a fixed maturity and a fixed number of units traded on exchanges.

24. What is a derivative and name its four main types?

    A derivative is a contract whose value is derived from an underlying asset; the four main types are Forwards, Futures, Options, and Swaps.

25. What is credit risk in banking?

    The risk that a borrower or counterparty will fail to meet its obligations (default), causing loss to the lender; it is the most significant risk for banks.

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