Question 1

Regional Rural Banks (RRBs) were established in India under which act?

Accepted Answer

Regional Rural Banks were established in 1975 under the Regional Rural Banks Act, 1976 (also referred to as the RRB Act). The first RRB, Prathama Bank, was established on 2 October 1975 in Uttar Pradesh. RRBs were created to provide credit and other banking facilities to the rural and semi-urban areas, particularly to agricultural and small-scale industrial sectors. Therefore, the answer is B.

Question 2

Which of the following mergers was NOT part of the 2019–2020 mega-bank consolidation in India?

Accepted Answer

During 2019–2020, the Government of India merged 10 public sector banks into 4 mega-banks. The key mergers were: (1) Oriental Bank of Commerce + United Bank of India + Punjab National Bank → PNB; (2) Syndicate Bank + Canara Bank → Canara Bank; (3) Andhra Bank + Corporation Bank + Union Bank of India → Union Bank of India; and (4) Indian Bank + Allahabad Bank → Indian Bank. The merger of State Bank of India with any other bank was not part of this consolidation, as SBI was already the largest PSB. Therefore, the answer is D.

Question 3

In which year was the State Bank of India (SBI) formed from the Imperial Bank of India?

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 (which itself was created in 1921 from the merger of Bank of Bengal, Bank of Bombay, and Bank of Madras) into the State Bank of India. This marked a significant step in the nationalization and reorganization of India's banking system. Therefore, the answer is C.

Question 4

Payment Banks were first licensed in India in which year?

Accepted Answer

Payment Banks were first licensed in India in 2015. The Reserve Bank of India issued guidelines for the licensing of Payment Banks on 19 November 2014, and the first Payment Banks commenced operations in 2015. Payment Banks are permitted to accept deposits up to ₹1 lakh per customer and are not allowed to extend credit. They can offer services such as remittance, bill payments, and mobile/digital banking. Therefore, the answer is C.

Question 5

In which year were 14 commercial banks with deposits exceeding ₹50 crore nationalized in India?

Accepted Answer

The first phase of bank nationalization in India occurred in 1969 when the Government of India nationalized 14 major commercial banks. This was a landmark event in Indian banking history, aimed at bringing banking services under state control and ensuring credit availability to priority sectors. The second phase of nationalization followed in 1980 when 6 more banks were nationalized. Therefore, the answer is B.

Question 6

Which of the following statements about Payment Banks licensed in India is CORRECT?

Accepted Answer

Payment Banks were licensed by the RBI in 2015 as a new category of banks. Payment Banks can accept deposits up to ₹1 lakh per customer and offer payment and settlement services, but they cannot offer credit (loans). They must maintain a minimum of 75% of their deposits in government securities and other approved liquid assets. Examples include Paytm Payments Bank, Airtel Payments Bank, and Google Pay (ICICI Bank). Therefore, answer is B.

Question 7

Which of the following statements regarding the first nationalisation of banks in India is CORRECT?

Accepted Answer

The first nationalisation of banks in India occurred on 19 July 1969 under Prime Minister Indira Gandhi. A total of 14 banks with deposits exceeding ₹50 crore were nationalised. This was a landmark event in Indian banking history. The second nationalisation followed in 1980, when 6 additional banks were nationalised. Therefore, answer is B.

Question 8

In the 2019–2020 PSB (Public Sector Bank) consolidation exercise, 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. The merger of Central Bank of India with any other bank was NOT part of this consolidation exercise. Central Bank of India remained independent. Therefore, answer is C.

Question 9

Which of the following banks was formed as a result of the merger of the Bank of Bengal, Bank of Bombay, and Bank of Madras?

Accepted Answer

The Bank of Bengal (established 1806), Bank of Bombay (established 1840), and Bank of Madras (established 1843) were the three Presidency Banks of India. These three banks merged in 1921 to form the Imperial Bank of India. The Imperial Bank of India later became the State Bank of India (SBI) in 1955 following the State Bank of India Act, 1955. Therefore, answer is A.

Question 10

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

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). The first RRB, Prathama Bank, was established on 2 October 1975 in Uttar Pradesh. RRBs were created to provide credit and other facilities to the weaker sections of society in rural areas. Therefore, answer is C.

Question 11

Under the RBI's 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 allocated to priority sector lending?

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 requirement is stipulated under the Priority Sector Lending guidelines issued by RBI. Within this 40%, there are sub-targets for specific segments such as agriculture (minimum 18% of ANBC) and weaker sections (minimum 10% of ANBC). The option stating '35%' represents a common misconception among candidates who may confuse PSL requirements with other regulatory ratios. Therefore, answer is B.

Question 12

Which of the following statements about Regional Rural Banks (RRBs) established under the RRB Act is CORRECT?

Accepted Answer

Regional Rural Banks were established in India under the Regional Rural Banks Act, 1976 (not 1975, though the first RRB was established in 1975). RRBs are scheduled commercial banks designed to serve rural areas with a focus on agricultural and allied activities. They are jointly owned by the Government of India, the concerned State Government, and a Sponsor Bank (usually a public sector bank). The statement 'RRBs were established in 1975 under the RRB Act 1976' is technically correct in spirit — the first RRB (Prathama Bank) was established on 2 October 1975, and the RRB Act was formally enacted in 1976 to provide the legal framework. The option stating 'RRBs are wholly owned by the Government of India' is incorrect because RRBs have a tripartite ownership structure. Therefore, answer is A.

Question 13

Which of the following statements regarding the first and second waves of bank nationalisation in India is INCORRECT?

Accepted Answer

The first wave of bank nationalisation occurred on 19 July 1969, when 14 banks with deposits exceeding ₹50 crore were nationalised. The second wave occurred on 15 April 1980, when 6 additional banks were nationalised. The statement 'The first nationalisation in 1969 included Imperial Bank of India' is factually incorrect because Imperial Bank of India had already been nationalised and converted into the State Bank of India in 1955 — nearly 14 years before the 1969 nationalisation. Therefore, answer is C.

Question 14

In the context of recent banking sector appointments and regulatory changes, which of the following statements regarding Payment Banks and Small Finance Banks (SFBs) is INCORRECT?

Accepted Answer

Payment Banks and Small Finance Banks were both licensed by RBI in 2015 as part of the financial inclusion initiative. Payment Banks are permitted to accept deposits up to ₹1 lakh per customer and focus on payments and remittances. Small Finance Banks are permitted to accept deposits without limit and must allocate 75% of their lending to priority sector (agriculture, micro and small enterprises, weaker sections). The statement 'Payment Banks and Small Finance Banks were licensed in 2015 with identical deposit limits and lending mandates' is incorrect because they have fundamentally different operational parameters. Payment Banks have a ₹1 lakh deposit limit per customer, while SFBs have no deposit limit. Additionally, SFBs have a 75% PSL mandate, while Payment Banks do not have a PSL requirement. Therefore, answer is C.

Question 15

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 public sector banks 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. A fourth merger involved Indian Bank + Allahabad Bank. The option stating 'Bank of Baroda merged with IDBI Bank' is factually incorrect — IDBI Bank (a development financial institution converted to a scheduled bank in 2018) was not part of the 2019–2020 PSB consolidation announced by RBI. Therefore, answer is C.

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