Question 1

In 2019–2020, the Government of India initiated a major consolidation of Public Sector Banks (PSBs) to create four mega-banks. Which of the following mergers was NOT part of this consolidation?

Accepted Answer

The 2019–2020 PSB merger exercise consolidated 10 banks into 4 mega-banks. The three key mergers were: (1) Oriental Bank of Commerce + United Bank of India merged into Punjab National Bank (PNB); (2) Syndicate Bank merged into Canara Bank; (3) Andhra Bank + Corporation Bank merged into Union Bank of India. Bank of Baroda, HDFC Bank, ICICI Bank, and Axis Bank were not part of this PSB consolidation exercise. Therefore, the answer is D.

Question 2

Under which of the following acts was the first nationalisation of banks in India carried out in 1969?

Accepted Answer

The first nationalisation of banks in India took place on 19 July 1969 under the Banking Regulation Act, 1949 (as amended). Fourteen commercial banks with deposits exceeding ₹50 crore were nationalised. This was done by invoking Section 45 of the Banking Regulation Act, 1949, which gave the Government the power to acquire the undertaking of any banking company. Therefore, the answer is A.

Question 3

In which year were Regional Rural Banks (RRBs) established in India, and under which act?

Accepted Answer

Regional Rural Banks (RRBs) were established in 1975 under the Regional Rural Banks Act, 1976. The first RRB, Prathama Bank, was set up on 2 October 1975 in Moradabad, Uttar Pradesh. The RRB Act, 1976 was subsequently enacted to provide the statutory framework for the establishment and operation of RRBs. RRBs were created to provide credit and other facilities to weaker sections in rural areas. Therefore, the answer is C.

Question 4

Which of the following was a key objective behind the 2019–2020 consolidation of Public Sector Banks into four mega-banks?

Accepted Answer

The 2019–2020 PSB consolidation was undertaken to create globally competitive, large-sized banks capable of competing in the international market and to improve operational efficiency through economies of scale. The merger of 10 PSBs into 4 mega-banks was designed to strengthen the banking sector, reduce fragmentation, and enable PSBs to compete with large private and foreign banks. The consolidation also aimed to improve profitability and asset quality by eliminating overlapping operations. Therefore, the answer is B.

Question 5

In the 2019–2020 banking sector consolidation in India, which of the following mergers was NOT part of the 10 PSBs → 4 mega-banks restructuring?

Accepted Answer

The 2019–2020 PSB merger exercise consolidated 10 public sector banks into 4 mega-banks. The key mergers were: (1) Oriental Bank of Commerce + United Bank of India merged into Punjab National Bank; (2) Syndicate Bank merged into Canara Bank; (3) Andhra Bank + Corporation Bank merged into Union Bank of India. The fourth mega-bank, State Bank of India, remained standalone. Bank of Baroda was not part of this consolidation exercise as it had already undergone a merger with Vijaya Bank and Dena Bank in 2019 (prior to the main 10-bank consolidation). Therefore, answer is D.

Question 6

Under which Act was the first bank nationalisation in India carried out in 1969, and how many banks were nationalised in that exercise?

Accepted Answer

The first bank nationalisation in India took place on 19 July 1969 under the Banking Regulation Act, 1949 (as amended). A total of 14 major commercial banks with deposits exceeding ₹50 crore were nationalised in this exercise. These banks included Central Bank of India, Bank of India, Bank of Baroda, Punjab National Bank, Syndicate Bank, Canara Bank, Indian Bank, Indian Overseas Bank, Allahabad Bank, United Commercial Bank, Dena Bank, Union Bank of India, Vijaya Bank, and Oriental Bank of Commerce. Therefore, answer is C.

Question 7

In which year were Regional Rural Banks (RRBs) established in India, and under which Act are they governed?

Accepted Answer

Regional Rural Banks (RRBs) were established in India in 1975 under the Regional Rural Banks Act, 1976 (which came into force in 1976, though the first RRBs were set up in 1975). RRBs were created to serve the credit needs of the rural population, particularly farmers, agricultural labourers, and small businesses in rural areas. They operate under the supervision of the RBI and the respective state governments. Therefore, answer is A.

Question 8

Which of the following statements about Payment Banks and Small Finance Banks (SFBs) licensed in India is correct?

Accepted Answer

Payment Banks and Small Finance Banks were both licensed by the RBI in 2015 as part of the banking sector reforms to promote financial inclusion. Payment Banks are permitted to accept deposits up to ₹1 lakh per customer and offer payment and settlement services, but they cannot advance loans or accept demand deposits. Small Finance Banks, on the other hand, are permitted to accept deposits without a limit and can advance loans up to ₹25 lakh to individuals and ₹5 crore to small businesses, with a focus on lending to unbanked and underbanked populations. Therefore, answer is B.

Question 9

In the recent wave of PSB (Public Sector Bank) consolidation (2019–2020), which of the following mergers was NOT part of the mega-bank restructuring announced by the Government of India?

Accepted Answer

The Government of India announced a major consolidation of 10 PSBs into 4 mega-banks in 2019–2020. The three key mergers were: (1) Oriental Bank of Commerce (OBC) + United Bank of India (UBI) merged into Punjab National Bank (PNB); (2) Syndicate Bank merged into Canara Bank; (3) Andhra Bank + Corporation Bank merged into Union Bank of India. Dena Bank was merged into Bank of Baroda in an earlier phase (2018). Therefore, the merger of Dena Bank into Bank of Baroda occurred outside the 2019–2020 consolidation wave and is the correct answer. Option A is correct.

Question 10

Which of the following statements about the merger of Andhra Bank and Corporation Bank is CORRECT?

Accepted Answer

In the 2019–2020 PSB consolidation, Andhra Bank and Corporation Bank were both merged into Union Bank of India, effective April 1, 2020. This was one of the three major mergers announced by the Government of India to create mega-banks. Andhra Bank (established 1923) and Corporation Bank (established 1906) ceased to exist as separate entities post-merger. Union Bank of India became the surviving entity and absorbed both banks. Therefore, Option B is correct.

Question 11

Which of the following statements about the formation of the State Bank of India (SBI) is correct?

Accepted Answer

The State Bank of India was established on 1 July 1955 through the State Bank of India Act, 1955. It was formed by converting the Imperial Bank of India (established 1921) into the State Bank of India. The Imperial Bank itself was created through the merger of three presidency banks: Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843). Therefore, the answer is B.

Question 12

The Syndicate Bank–Canara Bank merger was completed in April 2020 as part of the PSB consolidation. Under which of the following governance frameworks was this merger executed, and what was the primary regulatory objective?

Accepted Answer

The Syndicate Bank–Canara Bank merger was executed under the Banking Regulation Act, 1949, and the RBI's supervisory authority. The primary regulatory objective was to create a stronger, more efficient mega-bank capable of competing globally and improving operational efficiency through consolidation. Canara Bank was the anchor (surviving) bank, and Syndicate Bank was merged into it. The merger was part of the Government of India's broader PSB consolidation strategy announced in August 2019 to reduce the number of PSBs from 27 to 12 (later further consolidated). The regulatory framework emphasizes strengthening capital adequacy, improving asset quality, and enhancing the resilience of the banking system — all aligned with Basel III norms and RBI's prudential guidelines. Therefore, answer is B.

Question 13

In the 2019–2020 PSB consolidation exercise, which of the following mergers was NOT part of the RBI-mandated mega-bank formation?

Accepted Answer

The RBI announced a consolidation of 10 PSBs into 4 mega-banks in September 2019. The three major mergers were: (1) Oriental Bank of Commerce + United Bank of India merged into Punjab National Bank; (2) Syndicate Bank merged into Canara Bank; (3) Andhra Bank + Corporation Bank merged into Union Bank of India. The merger of Dena Bank into Bank of Baroda occurred in April 2019, prior to the mega-bank consolidation announcement. Therefore, the answer is D.

Question 14

Which of the following statements regarding the first and second phases of bank nationalisation in India is CORRECT?

Accepted Answer

The first phase of bank nationalisation occurred on July 19, 1969, when 14 banks with deposits exceeding ₹50 crore were nationalised. The second phase occurred on April 15, 1980, when 6 additional banks were nationalised. These two phases brought a total of 20 banks under government ownership. Therefore, the answer is C.

Question 15

The Imperial Bank of India, which later became the State Bank of India, was formed through the merger of three banks. Which of the following correctly identifies those three banks?

Accepted Answer

The Imperial Bank of India was established on January 27, 1921, through the merger of three banks: the Bank of Bengal (established 1806), the Bank of Bombay (established 1840), and the Bank of Madras (established 1843). The Imperial Bank of India later became the State Bank of India on June 1, 1955, following the State Bank of India Act, 1955. Therefore, the answer is B.

Question 16

Under the Priority Sector Lending (PSL) framework applicable to domestic scheduled commercial banks, what is the minimum percentage of Adjusted Net Bank Credit (ANBC) that must be directed towards priority sector lending?

Accepted Answer

The RBI mandates that domestic scheduled commercial banks must direct a minimum of 40% of their Adjusted Net Bank Credit (ANBC) towards priority sector lending (PSL). This requirement is stipulated in the Master Circular on Priority Sector Lending issued by the RBI. Within this 40%, there are sub-targets for agriculture (18%), weaker sections (10%), and micro and small enterprises (7.5%). Therefore, the answer is C.

Question 17

Which of the following statements about Regional Rural Banks (RRBs) is CORRECT?

Accepted Answer

Regional Rural Banks (RRBs) were established in India under the Regional Rural Banks Act, 1976, with the first RRB commencing operations on October 2, 1975. RRBs were created to serve the credit needs of rural areas, particularly agriculture and small-scale industries. They operate under a three-tier structure of ownership: the central government, state government, and a sponsor bank (usually a nationalised bank). Therefore, the answer is A.

Question 18

Which of the following statements regarding the second phase of bank nationalisation in India is CORRECT?

Accepted Answer

The second phase of bank nationalisation occurred in 1980, when 6 additional banks were nationalised. These banks had deposits exceeding ₹200 crore at that time. The first phase in 1969 had nationalised 14 banks with deposits exceeding ₹50 crore. The second phase expanded state control over the banking sector to further strengthen PSBs' reach into priority sectors and rural areas. Therefore, the answer is B.

Question 19

Under the RBI's Priority Sector Lending (PSL) framework, what is the minimum percentage of Adjusted Net Bank Credit (ANBC) that domestic scheduled commercial banks must lend to priority sectors?

Accepted Answer

The RBI mandates that domestic scheduled commercial banks must allocate a minimum of 40% of their Adjusted Net Bank Credit (ANBC) to priority sector lending. This includes sub-targets for agriculture (18% of ANBC), weaker sections (10% of ANBC), and micro and small enterprises. The PSL framework is designed to ensure credit flows to sectors critical for inclusive growth and rural development. Therefore, the answer is C.

Question 20

Which of the following statements about the formation of the Imperial Bank of India is CORRECT?

Accepted Answer

The Imperial Bank of India was formed on 27 January 1921 through the merger of three presidency banks: Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843). The Imperial Bank later became the State Bank of India (SBI) on 1 September 1955 following India's independence and the enactment of the State Bank of India Act, 1955. Therefore, the answer is D.

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