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Q29 (IAS/2016) Economy › Money, Banking & Inflation › Banking operations services Official Key

The term 'Core Banking Solutions' is sometimes seen in the news. Which of the following statements best describes/describe this term? 1. It is a networking of a bank's branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts. 2. It is an effort to increase. RBI's control over commercial banks through computerization. 3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank. Select the correct answer using the code given below.

Result
Your answer: —  ·  Correct: A
Explanation

The correct answer is option A (1 only).

Core Banking Solutions (CBS), where Core stands for 'Centralised Online Real-time Exchange', is a network of branches which enables account holders to operate their accounts and avail banking services from any branch of the Bank on CBS network, regardless of where they maintain their account.[1] Under this system, the customer is no more the customer of a Bank's Branch but becomes the overall Bank's Customer.[1] This accurately describes statement 1, making it correct.

Statement 2 is incorrect because CBS is not an effort to increase RBI's control over commercial banks through computerization. Rather, it is a technological solution adopted by individual banks to improve customer service and operational efficiency. E-Kuber is the Core Banking Solution (CBS) platform of RBI[1], but this is RBI's own CBS system for conducting G-Sec auctions, not a control mechanism over commercial banks.

Statement 3 is completely incorrect as CBS has nothing to do with the takeover of banks with non-performing assets. It is purely a technology platform for banking operations, not a procedure for bank resolution or merger.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > Core Banking Solution > p. 227
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Q. The term 'Core Banking Solutions' is sometimes seen in the news. Which of the following statements best describes/describe this term? 1. …
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 3.3/10 · 3.3/10
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This is a classic 'Definition Question' disguised as Current Affairs. While the term appears in news, it is a static concept found in every standard Economy textbook (Singhania, Vivek Singh). If you know the basic definition of CBS, the distractors (RBI control, NPA takeover) are easily identified as absurd.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Is "Core Banking Solutions" the networking of a bank's branches that enables customers to operate their accounts from any branch of the bank regardless of where they opened their accounts?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > Core Banking Solution > p. 227
Presence: 5/5
“Under Core Banking Solution (CBS), Core stands for 'Centralised Online Real-time Exchange'. CBS is a network of branches which enables account holders to operate their accounts and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account. The customer is no more the customer of a Bank's Branch. He becomes the overall Bank's Customer. E-Kuber: It is the Core Banking Solution (CBS) platform of RBI which is used by RBI to conduct auctioning of G-Secs. Commercial Banks, Scheduled UCBs, Primary Dealers, Insurance Companies and Provident Funds who maintain Current Account and Securities Accounts with RBI are the members of E-Kuber and can take part in auction.”
Why this source?
  • Directly defines CBS as a network of branches enabling account holders to operate accounts and avail services from any branch on the CBS network.
  • Explicitly states the customer becomes the overall bank's customer rather than a branch-level customer.
  • Gives the expansion of 'Core' as 'Centralised Online Real-time Exchange', supporting the centralised network function.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > How will e-Rupee work? > p. 78
Presence: 3/5
“And the requirement of inter-bank settlement would disappear.• Transactions can be both person to person and person to merchant (payments to merchants can be made using QR Codes)• Users will be able to transact with e-rupee through a digital wallet offered by the participating banks and stored on mobile phones and other devices• Just like we withdraw cash from our bank deposits in the same way we can transfer our bank deposits to a CBDC wallet and this transaction is recorded in Core Banking Solution (CBS) of the bank.• But when transactions are made from one CBDC wallet to another CBDC wallet then this transaction is not recorded in the CBS of the bank and remains anonymous.”
Why this source?
  • States that bank transactions (including transfers to/from digital wallets) are recorded in the bank's Core Banking Solution, showing CBS's role in transaction routing/recording.
  • Links CBS to digital payment infrastructure (e‑rupee), reinforcing CBS as the centralised system enabling inter-branch/online operations.
Statement analysis

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Statement analysis

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