1.
BANKING
INTRODUCTION TO BANKING(2)
Banking is a financial system that facilitates the safekeeping, lending, and transferring of
money. It includes services like deposits, loans, payments, and investments. Banks act as
intermediaries between savers and borrowers, ensuring economic stability and growth.
Modern banking also offers digital services, enhancing convenience and accessibility for
customers worldwide.
1. Commercial Banks
• Public Sector Banks (PSBs) – Government-owned (e.g., SBI, Punjab National Bank).
• Private Sector Banks – Privately owned (e.g., HDFC Bank, ICICI Bank).
• Foreign Banks – International banks operating in India (e.g., Citibank, Standard
Chartered).
2. Small Finance Banks (SFBs)
• Focus on financial inclusion (e.g., AU Small Finance Bank, Ujjivan SFB).
3. Payments Banks
• Offer limited services like deposits & payments (e.g., Airtel Payments Bank, India
Post Payments Bank).
4. Cooperative Banks
• Urban Cooperative Banks (UCBs) – Serve local communities.
• Rural Cooperative Banks – Support agriculture & rural credit.
Other Key Institutions:
• Reserve Bank of India (RBI) – Central bank regulating monetary policy.
• NABARD, SIDBI – Development banks for agriculture & SMEs
BANK SURVEY(12)(3 PG-1 BANK)
1. State Bank of India (SBI)
Fixed Deposit (FD) Interest Rates (Effective May 16, 2025):
General Public: 3.00% to 6.50% p.a., depending on the tenure.
Senior Citizens: 4.00% to 7.50% p.a., offering an additional 0.50% over the general rates.
Special Scheme: "Amrit Vrishti" (444 days) at 6.85% for general public and 7.35% for
senior citizens.
Recurring Deposit (RD) Interest Rates:
General Public: 5.00% to 5.40% p.a., depending on the tenure.
Senior Citizens: Additional 0.50% over the general rates.
Personal Loan Interest Rates:
Interest Rate Range: 10.30% to 15.30% p.a., based on the borrower's credit profile.
Mean Rate of Interest: 12.68% p.a. for Q4 FY25.
Features: Minimal documentation, no guarantor required, and loan amounts up to ₹35
lakhs.
Share Price (As of May 23, 2025):
Current Price: ₹790.45
Market Capitalization: ₹7,05,446.59 Crores
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2. Punjab National Bank (PNB)
Fixed Deposit (FD) Interest Rates (Effective May 1, 2025):
General Public: 3.50% to 7.30% p.a., varying with the deposit tenure.
Senior Citizens: Additional 0.50% over the general rates.
Super Senior Citizens: Additional 0.80% over the general rates.
Recurring Deposit (RD) Interest Rates:
General Public: 6.35% to 7.25% p.a., depending on the tenure.
Senior Citizens: 7.00% to 7.75% p.a., offering an extra 0.50%.
Super Senior Citizens: 7.15% to 8.05% p.a., with an additional 0.80%.
Paisabazaar
Personal Loan Interest Rates:
Interest Rate Range: 11.25% to 13.25% p.a., based on the customer's profile.
Special Rates: 11.25% p.a. for pensioners.
Share Price (As of May 23, 2025):
Current Price: ₹100.40
Market Capitalization: ₹1,15,389.15 Crores
3. Bank of Baroda (BoB)
Fixed Deposit (FD) Interest Rates (Effective April 7, 2025):
General Public: 4.25% to 7.15% p.a., depending on the tenure.
Senior Citizens: Additional 0.50% over the general rates.
Special Scheme: "Square Drive Deposit Scheme" (444 days) at 7.15% for general public
and 7.65% for senior citizens.
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Recurring Deposit (RD) Interest Rates:
General Public: 5.75% to 7.15% p.a., based on the tenure.
Senior Citizens: 6.25% to 7.65% p.a., offering an additional 0.50%.
Personal Loan Interest Rates:
Interest Rate Range: 10.70% to 18.00% p.a., depending on the borrower's credit profile.
Loan Amount: Up to ₹15 lakhs.
Features: Flexible repayment options and minimal documentation.
Share Price (As of May 23, 2025):
Current Price: ₹243.05
Market Capitalization: ₹1,25,663.92 Crores
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4. Canara Bank
Fixed Deposit (FD) Interest Rates (Effective May 21, 2025):
General Public: 4.00% to 7.40% p.a., varying with the deposit tenure.
Senior Citizens: 4.50% to 7.90% p.a., offering an additional 0.50%.
Special Scheme: "444-Day FD" at 7.40% for general public and 7.90% for senior citizens.
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Recurring Deposit (RD) Interest Rates:
General Public: 6.15% to 7.25% p.a., depending on the tenure.
Senior Citizens: 6.65% to 7.75% p.a., offering an additional 0.50%.
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Personal Loan Interest Rates:
Interest Rate Range: 11.75% to 16.15% p.a., based on the borrower's credit score and
employment profile.
Special Rates: 9.25% p.a. for salaried individuals with salary tie-up and BSNL employees.
Loan Amount: Up to ₹3 lakhs.
Features: Competitive rates with flexible repayment options.
Share Price (As of May 23, 2025):
Current Price: ₹243.04
Market Capitalization: ₹1,25,663.92 Crores
2. GST
INTRODUCTION(1)
The Goods and Services Tax (GST), implemented on 1st July 2017, is India’s unified
indirect tax system replacing multiple cascading taxes like VAT, excise, and service tax. It
follows a multi-tiered rate structure (0%, 5%, 12%, 18%, 28%) and is divided into CGST,
SGST, and IGST for inter/intra-state transactions. GST aims to simplify taxation, reduce
evasion, and create a single national market, boosting economic efficiency and
compliance.
IMPACT (3)
1. Manufacturing
o Reduced tax cascading (input tax credit) lowered production costs.
o Simplified compliance but increased initial adaptation challenges.
2. Automobiles
o Lower taxes on small cars (18% vs. earlier 31%) boosted demand.
o Luxury vehicles taxed higher (28% + cess).
3. Real Estate
o Increased transparency with input tax credits.
o Residential projects under 5% GST (without ITC), while commercial properties
taxed at 12%.
4. FMCG & Retail
o Reduced logistics costs due to uniform taxation.
o Lower GST on essentials (5%) vs. luxury items (28%).
5. Logistics & Transport
o Eliminated state checkpoints, cutting delivery time.
o GST on services streamlined operations.
6. IT & Telecom
o Services taxed at 18% (vs. 15% earlier), raising costs.
o Input tax credits helped offset expenses.
7. Textiles & Apparel
o Initial rate hikes (5% → 12% for fabrics) hurt SMEs; later revised to 5%.
8. Healthcare & Pharma
o Medicines taxed at 5-12%, but healthcare services remained exempt.
o Input costs rose for non-exempt supplies.
9. Agriculture
o Fertilizers & machinery taxed at 5-12%, increasing input costs.
o Unprocessed farm goods remained exempt.
10. E-Commerce
• Simplified interstate sales but introduced TCS (Tax Collected at Source).
• Increased compliance burden for sellers.
11. Hospitality & Tourism
• Luxury hotels (room tariffs above ₹7,500/night) taxed at 28%, while budget hotels
pay 12-18%.
• Restaurants under AC/5-star charged 18%, others at 5% (no ITC)
12. Banking & Financial Services
• GST on banking fees, ATM charges, and financial services increased from 15% to
18%, raising costs for customers.
• No input credit on exempt services (e.g., loans), leading to higher operational
expenses.
• Digital transactions benefited from streamlined tax compliance
ADVANTAGES AND DISADVANTAGES(2)
Advantages of GST
1. Single Unified Tax – Replaced multiple indirect taxes (VAT, excise, service tax),
reducing complexity.
2. Elimination of Cascading Effect – Input Tax Credit (ITC) prevents "tax on tax,"
lowering costs.
3. Boost to Formal Economy – Increased tax compliance and reduced cash
transactions.
4. Easier Interstate Trade – IGST simplified logistics by removing state entry barriers.
5. Digital & Transparent – GSTN portal streamlined filings, reducing manual
intervention.
6. Lower Tax Burden for SMEs – Composition scheme for small businesses (1-6% tax).
7. Consumer Benefits – Reduced prices on many goods due to efficient taxation.
Disadvantages of GST
1. Initial Compliance Burden – Complex filings (GSTR-1, 2, 3B) were challenging for
small businesses.
2. Higher Costs for Some Services – Banking, telecom, and hospitality saw tax hikes
(15% → 18%).
3. ITC Restrictions – Blocked credits on certain expenses (e.g., employee benefits).
4. Frequent Rate Changes – Multiple revisions created confusion (e.g., textiles shifted
from 5% → 12% → back to 5%).
5. Impact on Real Estate – Higher effective tax due to denial of ITC in affordable
housing.
6. Technology Dependency – Small traders struggled with digital compliance.
7. Sector-Specific Issues – Some industries (e.g., MSMEs, agriculture) faced higher
input costs.
3. BUDGET
INTRODUCTION(1)
A family budget is a financial plan that tracks income, expenses, and savings to ensure
financial stability. It helps prioritize needs (housing, food, education) over wants
(entertainment, luxury), controls overspending, and builds emergency funds. By
allocating funds wisely, families can avoid debt, save for future goals, and handle
unexpected expenses. Tools like spreadsheets or budgeting apps simplify tracking. A
well-managed budget fosters financial discipline and long-term security
TYPES OF BUDGET(2)
1. Personal/Family Budget – Tracks income & expenses of individuals/households.
2. Corporate Budget – Used by businesses for financial planning & profit
maximization.
3. Government Budget – Annual fiscal plan for public revenue & expenditure.
4. Balanced Budget – Income = Expenses (no deficit/surplus).
5. Deficit Budget – Expenses > Income (common in govt. spending).
6. Surplus Budget – Income > Expenses (savings/investment focus).
7. Zero-Based Budget – Every expense must be justified anew (no carry-over).
8. Flexible Budget – Adjusts based on activity levels (e.g., variable costs).
9. Static Budget – Fixed, unchanged regardless of actual performance.
10. Capital Budget – Plans long-term investments (e.g., infrastructure).
FAMILY BUDGET SURVEY(4)
1. The Sharma Family (Middle-Class, Urban - Delhi)
Background: Dual-income IT professionals with school-going children
Monthly Net Income: ₹75,000 (Combined)
Expense Breakdown:
Category Amount (₹) % of Income Notes
Rent 20,000 26.7% 2BHK apartment in Dwarka
Groceries 12,000 16% Includes organic purchases
Education 15,000 20% CBSE school + coaching classes
Transportation 6,000 8% Car EMI + fuel
Utilities 5,000 6.7% Electricity, WiFi, mobile
Healthcare 3,000 4% Health insurance premiums
Entertainment 4,000 5.3% OTT subscriptions, dining out
Savings 10,000 13.3% Mutual funds + emergency fund
Financial Challenges:
• High education costs (25% of income)
• Rent consumes significant portion
• Planning for children's higher education
2. The Patel Family (Lower-Middle-Class, Rural - Gujarat)
Background: Farmers with seasonal income
Monthly Net Income: ₹35,000 (Variable)
Expense Breakdown:
Category Amount (₹) % of Income Notes
Food 10,000 28.6% Staples + occasional dairy
Category Amount (₹) % of Income Notes
Education 5,000 14.3% Government school + books
Farming Inputs 8,000 22.9% Seeds, fertilizers, equipment
Healthcare 2,000 5.7% Mostly out-of-pocket expenses
Clothing 1,500 4.3% School uniforms + essentials
Miscellaneous 3,500 10% Religious/cultural expenses
Savings 5,000 14.3% Post-harvest lump sum savings
Financial Challenges:
• Irregular income dependent on harvests
• No health insurance coverage
• Children's future education uncertainty
3. The Kapoor Family (Upper-Class, Mumbai)
Background: Business owners with international exposure
Monthly Net Income: ₹2,50,000
Expense Breakdown:
Category Amount (₹) % of Income Notes
Home/Car EMI 80,000 32% Bandra apartment + BMW X1
Child's Education 40,000 16% International IB school
Luxury Expenses 50,000 20% Fine dining, club memberships
Investments 50,000 20% Stocks, real estate
Category Amount (₹) % of Income Notes
Domestic Help 15,000 6% Maid, driver, cook
Vacation Fund 15,000 6% Foreign trips quarterly
Financial Habits:
• Heavy reliance on credit (60% EMI/loan burden)
• Focus on asset accumulation over liquid savings
• Private wealth manager handles investments
4. The Khan Family (Single-Income, Semi-Urban - Lucknow)
Background: Government clerk supporting extended family
Monthly Net Income: ₹45,000
Expense Breakdown:
Category Amount (₹) % of Income Notes
Rent 8,000 17.8% 3-room house in old city
Food 12,000 26.7% Bulk purchases for large family
Education 10,000 22.2% 3 children in private schools
Medical 4,000 8.9% Elderly parents' medications
Debt 5,000 11.1% Personal loan repayment
Savings 6,000 13.3% Post office schemes
Key Concerns:
• Single income supporting 6 members
• Rising education costs for multiple children
• No retirement planning due to immediate needs
Comparative Analysis
Parameter Sharma Patel Kapoor Khan
Savings Rate 13.3% 14.3% 6% 13.3%
Biggest Expense Education Food EMI Food
Debt Burden Low None High Moderate
Financial Stress Medium High Low Very High
Trends Observed:
1. Education costs significant across all classes (15-22% of income)
2. Rural families save more %-wise despite lower income
3. Urban affluent families prioritize assets over liquid savings
4. Single-income families face highest financial stress
Recommendations:
• Sharma: Explore education loans to ease cash flow
• Patel: Government health schemes (Ayushman Bharat)
• Kapoor: Reduce debt exposure
• Khan: Seek additional income sources