ZESTEXAM

IBPS Clerk Types of Banks & NBFCs

Study Material · Concept Notes · Shortcuts

This page covers IBPS Clerk Types of Banks & NBFCs with complete concept notes, 23 graded practice MCQs, key points and exam-specific tips. Free to study.

0 PYQs

none yet

23 Practice

MCQs

10 Key Points

to remember

Free

no login needed

Take Free Mock →Full Practice Set

Also for:IBPS PO SBI PO SBI Clerk RBI Gr B

PYQs

0

Practice

23

Key Points

10

Access

Free

Concept Notes

Types of Banks & NBFCs— Rules & Concept

1.Core Concept

Read this first — the foundation of the topic

Based on Ownership

* - Public Sector Banks: Government owns majority stake (>51%)

Examples

SBI, PNB, BOB - Private Sector Banks: Private ownership

Examples

HDFC, ICICI, Axis - Foreign Banks: Headquarters outside India

Examples

Citibank, Standard Chartered - Regional Rural Banks: Joint venture of Central Govt (50%) + State Govt (15%) + Sponsor Bank (35%) *2

Based on Functions

* - Commercial Banks: Accept deposits, provide loans - Cooperative Banks: Serve specific communities - Development Banks: Long-term financing for industries *3

Based on Operations

* - Scheduled Banks: Listed in RBI's Second Schedule, minimum capital Rs 5 lakh - Non-Scheduled Banks: Not in RBI's Second Schedule NBFC Classification NBFCs are categorized as: - Asset Finance Companies (AFC) - Investment Companies (IC) - Loan Companies (LC) - Infrastructure Finance Companies (IFC) - Microfinance Institutions (MFI) - Housing Finance Companies (HFC) Key Differences: Banks vs NBFCs - Banks can accept demand deposits; NBFCs cannot - Banks are part of payment system; NBFCs are not - Banks have deposit insurance; NBFCs don't - Minimum capital for banks: Rs 500 crore; NBFCs: Rs 2 crore **

2.Exam Patterns

What examiners ask — read before attempting PYQs

Recognition Questions focus on: ownership patterns, regulatory differences, capital requirements, and specific examples of each category. Shortcut Formula RRB Ownership Split: Remember '50-15-35' (Central-State-Sponsor Bank) PSB Identification: If government stake >51% = PSB

3.Worked Example

Solve this step-by-step before moving on

1

Step 1

Check government ownership = 52% + 8% = 60%

2

Step 2

Since total government ownership >51%, it's a Public Sector Bank

3

Step 3

Since it involves Central + State + Private bank, it could be RRB structure Answer: Regional Rural Bank (RRB) Worked Example 2 Question: A financial company accepts fixed deposits for 2 years minimum, provides car loans, but cannot issue cheques. What is it? Solution:

1

Step 1

Accepts deposits - financial service ✓

2

Step 2

Cannot issue cheques - Not a bank

3

Step 3

Provides specific loans (car) - Lending function

4

Step 4

Fixed deposits only (no demand deposits) - NBFC characteristic Answer: Non-Banking Financial Company (NBFC) - Asset Finance Company Exam Tricks 1. PSB Quick Check: Government ownership >51% = PSB 2. NBFC vs Bank: If 'demand deposits' or 'cheques' mentioned → Bank; otherwise NBFC 3. RRB Pattern: Always involves three entities (Central, State, Commercial Bank) **Most

4.Exam Traps

Common mistakes students make — avoid these

** Students confuse 'Private Sector Bank' with 'Foreign Bank'. Remember: Private banks are Indian companies with private ownership (HDFC, ICICI). Foreign banks have headquarters outside India (Citibank, HSBC).

Ownership location, not operational location, determines the category. **

5.Memory Hook

Remember this — never confuse the two again

** Use 'COPS' for bank types: Commercial, Cooperative, Public, Scheduled. For NBFCs, remember 'AILS': Asset, Investment, Loan, Specialized companies.

Key Points to Remember

Public Sector Banks have government ownership >51%, Private banks have private majority ownership
RRB ownership formula: Central Govt (50%) + State Govt (15%) + Sponsor Bank (35%)
NBFCs cannot accept demand deposits or issue cheques, unlike commercial banks
Scheduled banks need minimum capital of Rs 5 lakh and RBI Second Schedule listing
Foreign banks have headquarters outside India, not just foreign operations
Quick NBFC identification: No demand deposits + No cheque facility = NBFC
Cooperative banks serve specific communities or groups with common interests
Development banks focus on long-term industrial and infrastructure financing
Minimum capital for new banks: Rs 500 crore; for NBFCs: Rs 2 crore
PSB memory trick: Government stake >51% = Always Public Sector Bank

Exam-Specific Tips

RBI Second Schedule listing requires minimum capital of Rs 5 lakh for scheduled banks
New commercial bank license requires minimum capital of Rs 500 crore
NBFC registration requires minimum capital of Rs 2 crore
RRB ownership structure: 50% Central Government, 15% State Government, 35% Sponsor Bank
SBI is India's largest public sector bank with government holding majority stake
Scheduled Commercial Banks are governed by Banking Regulation Act, 1949
NBFCs are regulated under RBI Act, 1934 and Companies Act, 2013
Foreign banks in India include Citibank, Standard Chartered, HSBC, and DBS Bank

Practice MCQs

Types of Banks & NBFCs — Practice Questions

23graded MCQs · easy to hard · full solution & trap analysis · showing 20 of 23

All MCQs →

Practice 1medium

A Regional Rural Bank (RRB) is established under which of the following acts and is primarily designed to serve which segment?

Practice 2medium

Which of the following statements about Cooperative Banks in India is correct?

Practice 3medium

Under RBI guidelines, which of the following activities is NOT permitted for Non-Banking Financial Companies (NBFCs)?

Practice 4medium

Which of the following statements correctly distinguishes between Scheduled Commercial Banks and Non-Banking Financial Companies (NBFCs) under RBI regulation?

Practice 5medium

Under RBI classification, a Primary Dealer (PD) in the Indian securities market is typically which type of institution, and what is its primary regulatory obligation?

Practice 6medium

Which category of NBFC is specifically permitted to accept public deposits under RBI guidelines?

Practice 7medium

Which of the following statements correctly describes the relationship between a Bank and an NBFC in terms of regulatory oversight?

Practice 8medium

Which of the following is a key distinguishing feature between Scheduled Commercial Banks and Non-Scheduled Banks in India?

Practice 9medium

Under the Banking Regulation Act, 1949, which of the following correctly defines the scope of 'banking' in India?

Practice 10medium

Which of the following is NOT a characteristic that distinguishes a Non-Banking Financial Company (NBFC) from a Scheduled Commercial Bank?

Practice 11medium

Which of the following best describes the primary regulatory difference between a Public Sector Bank (PSB) and a Private Sector Bank in India?

Practice 12hard

Under the Banking Regulation Act, 1949, which of the following correctly distinguishes between a Scheduled Bank and a Non-Scheduled Bank in India?

Practice 13hard

Which of the following statements correctly defines the regulatory distinction between a Bank and a Non-Banking Financial Company (NBFC) under RBI guidelines?

Practice 14hard

Under the Banking Regulation Act, 1949, which of the following best distinguishes a Scheduled Bank from an unscheduled bank in India?

Practice 15hard

Which of the following statements correctly describes the regulatory difference between a Commercial Bank and a Non-Banking Financial Company (NBFC) under RBI guidelines?

Practice 16hard

A Small Finance Bank (SFB) in India is primarily regulated under which act, and what is its key operational mandate as defined by RBI?

Practice 17hard

Which of the following correctly describes the regulatory framework and primary function of a Payment Bank as defined by RBI?

Practice 18hard

Under RBI's regulatory framework, which of the following statements accurately describes the distinction between a Payments System Operator (PSO) and a bank in terms of their licensing and operational scope?

Practice 19hard

Which of the following statements correctly distinguishes between a Scheduled Commercial Bank and a Non-Scheduled Bank under the Banking Regulation Act, 1949?

Practice 20hard

An NBFC (Non-Banking Financial Company) is prohibited from accepting deposits under RBI guidelines unless it holds a specific certificate. Which of the following correctly identifies the regulatory framework and the certificate required?

3 more practice questions in the Study Panel

Difficulty-graded, bookmarkable, with timed mode. Free account — no credit card.

Create Free Account →Browse Questions

60-Second Revision — Types of Banks & NBFCs

Remember: Government ownership >51% = Public Sector Bank classification
Formula: RRB structure = 50-15-35 (Central-State-Sponsor Bank ownership)
Trap: Private banks are Indian private companies, Foreign banks have overseas headquarters
Key difference: Banks accept demand deposits and issue cheques, NBFCs cannot do both
Quick check: Scheduled banks must be in RBI Second Schedule with Rs 5 lakh minimum capital
NBFC types: Asset, Investment, Loan, Infrastructure, Microfinance, Housing Finance Companies
Remember: All scheduled commercial banks have deposit insurance, NBFCs do not

RBI Functions & Monetary Policy→

Studied the notes? Now test yourself

See how Types of Banks & NBFCs appears in the real IBPS Clerk paper

Full timed mock · Instant All-India percentile · Free

Start Free Mock →Practice Panel

✓ Free forever for basic prep✓ No app download✓ Real exam-pattern questions

Test Types of Banks & NBFCs under exam conditions

Free IBPS Clerk mock · instant rank · no login

Free Mock →