Feature Post

NEO Banking - A Future Digital Banking, Development Scope, Threat and Challenges

What is Neo Banking? NEO banks are the banks which has no physical branches. NEO Banks are digital only financial institutions that operate exclusively online through websites and mobile apps.  The financial services industry has undergone massive transformations from manual to Core Banking and now digital without any physical branch. the evolution of banking has been marked by innovations aimed at making financial services more accessible, convenient, and efficient.   NEO Banks offers services like below: Account Management: Account Opening, Checking, Savings, and Money Transfers Loan Services: Quick and seamless loan approvals Low Fees: Minimal or no fees due to lower operational costs Tech Features: Budget tools, instant payments, and real-time alerts Why Are Neo Banks becoming popular now? Convenience : 24/7 mobile banking—no waiting in lines. Lower Fees : No hidden charges, free international transfers, and zero maintenance fees. User-Friendly Apps : Seamless, f...
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Repo Rate , Reverse Repo Rate, CRR and SLR

Repo Rate

  • Interest Rate at which the central bank i.e. Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds to maintain liquidity. 
  • Used by monetary authorities to control inflation
  • Home loan rates are linked to RBI Repo Rate.
  • Banks use Repo rate to determine deposit rate, lending rates and base rates.

Reverse Repo Rate

  • Rate at which Banks deposit their excess funds with the RBI. 
  • It is lower than Repo rate
  • It is used to control the cash flow in financial market
  • Increase of Reverse Repo Rate leads to more deposit by Bank with RBI to earn more interest and vice versa.


CRR (Cash Reserve Ratio)


  • Legal provisions - section 42(1) RBI Act.
  • Rate - Fixed by RBI
  • Average Fortnightly balance on reporting Friday in a current a/c with RBI.
  • Min.daily balance should not < 90% of the average fortnightly balance
  • Default in maintain CRR- bank has to pay interest to RBI at   
    • bank rate +3% - first day 
    • bank rate +5% - subsequent days
  • No interest paid by RBI.

SLR (Statutory Liquidity Ratio)


  • Legal provisions - Section 24 of BR Act.
  • Rate RBI can fix up to 40% of net demand and time liabilities as on last Friday of preceding fortnight.
  • From of SLR investment .
    • Cash Balance 
    • Balance with bank and excess CRR balance with RBI
    • Investment in Gold.
    • Investment in unencumbered approved securities (govt. security/trustee security including purchase under LAF)
  • Default - Interest payment as in CRR.
  • No min 
  • Max 40%   

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