Question 1

Which of the following correctly describes the relationship between Payment Banks and Small Finance Banks licensed by RBI in 2015?

Accepted Answer

Both Payment Banks and Small Finance Banks were licensed by RBI in 2015 as part of financial inclusion initiatives. However, they have different operational mandates: Payment Banks can accept deposits up to ₹1 lakh per customer and cannot lend; Small Finance Banks can accept deposits without limit and must lend at least 75% of adjusted net bank credit to priority sector. Therefore, the answer is B.

Question 2

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 post-2020. Therefore, answer is C.

Question 3

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

Accepted Answer

The State Bank of India was formed on 1 September 1955 through the State Bank of India Act, 1955. It was created by converting the Imperial Bank of India (established 1921) into the State Bank of India and integrating it with the Reserve Bank of India's banking functions. The Imperial Bank itself was formed in 1921 through the merger of the Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843). Therefore, answer is B.

Question 4

In which year were the first 14 banks nationalised in India, and what was the minimum deposit threshold for banks to be included in this nationalisation?

Accepted Answer

The first nationalisation of banks in India occurred on 19 July 1969. The Government of India nationalised 14 commercial banks that had deposits exceeding ₹50 crore at that time. This was a landmark event in Indian banking history, aimed at ensuring credit flow to priority sectors and expanding banking services to rural areas. Therefore, answer is A.

Question 5

Which of the following appointments represents a recent senior leadership change in a major Indian bank as part of banking sector reforms?

Accepted Answer

This question tests candidate awareness of recent banking appointments and leadership transitions. However, without a specific date anchor in the question stem, and given that banking appointments change frequently, the most reliable approach is to test knowledge of structural appointments tied to regulatory reforms. A well-documented example is the appointment of senior officials to lead the newly merged entities post-2019–2020 consolidation. For instance, Dinesh Kumar Khara was appointed as Chairman of SBI in October 2020, succeeding Rajnish Kumar. This represents a significant leadership transition in India's largest bank. Therefore, answer is B.

Question 6

Under which of the following acts was the State Bank of India established, and what is the primary regulatory authority overseeing SBI's operations?

Accepted Answer

The State Bank of India was established under the State Bank of India Act, 1955. The Reserve Bank of India (RBI), established under the Reserve Bank of India Act, 1934, is the primary regulatory and supervisory authority overseeing SBI's operations. SBI is a scheduled commercial bank and is subject to all RBI regulations, including those pertaining to capital adequacy, reserve requirements, lending norms, and prudential standards. Therefore, answer is A.

Question 7

In the major consolidation of Public Sector Banks announced by the Government of India in 2019–2020, which three banks were merged to form Punjab National Bank (PNB)?

Accepted Answer

The Government of India announced a historic consolidation of 10 PSBs into 4 mega-banks during 2019–2020. One of the key mergers involved Oriental Bank of Commerce (OBC) and United Bank of India (UBI) being merged with Punjab National Bank (PNB) with effect from April 1, 2020. This was done to create stronger, globally competitive banking entities. Therefore, the answer is B.

Question 8

Which of the following statements regarding the appointment of the RBI Governor is correct under the RBI Act, 1934?

Accepted Answer

The RBI Governor is appointed by the Central Government (Government of India) on the recommendation of the Finance Ministry and the RBI Board. The appointment is made under Section 8 of the RBI Act, 1934. The Governor holds office for a term of 6 years or until the age of 65 years, whichever is earlier. The current Governor (as of 2024) is Sanjay Malhotra, who was appointed in December 2023. Therefore, the answer is B.

Question 9

In the 2019–2020 mega-bank consolidation exercise, which of the following mergers was NOT part of the RBI-mandated PSB (Public Sector Bank) amalgamation?

Accepted Answer

The RBI announced a mega-consolidation of 10 PSBs into 4 entities 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. Dena Bank was merged into Bank of Baroda in a separate 2018 consolidation. Therefore, the answer is D.

Question 10

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

Accepted Answer

The Imperial Bank of India was formed in 1921 through the merger of the Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843). On 1 September 1955, the Imperial Bank of India was renamed and reconstituted as the State Bank of India (SBI) under the State Bank of India Act, 1955. Therefore, the answer is B.

Question 11

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

Accepted Answer

The first bank nationalisation in India took place on 19 July 1969 under the Banking Regulation Act, 1949 (as amended). The Government of India nationalised 14 commercial banks with deposits exceeding ₹50 crore. This was done by amending the Banking Regulation Act through an Ordinance. Therefore, the answer is A.

Question 12

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 (which came into force on 2 October 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 weaker sections, particularly in rural areas. Therefore, the answer is C.

Question 13

During the second wave of bank nationalisation in 1980, six additional banks were brought under government control. Which of the following banks was NOT part of the 1980 nationalisation but was merged into a larger PSB during the 2019–2020 consolidation exercise?

Accepted Answer

The second wave of nationalisation in 1980 brought six banks under government control: Andhra Bank, Corporation Bank, Dena Bank, Indian Bank, New Bank of India, and Oriental Bank of Commerce. However, Oriental Bank of Commerce (OBC), though nationalised in 1980, was later merged with PNB and UBI in 2020. New Bank of India was merged with Punjab National Bank in 1993 (pre-consolidation). Among the options, if one lists a bank that was nationalised in 1980 but NOT involved in the 2019–2020 consolidation, that would be the correct answer. For instance, Dena Bank was nationalised in 1980 and was merged with Bank of Baroda in 2019 (as part of the consolidation). Therefore, the answer depends on the specific options provided, but the question tests the distinction between the 1980 nationalisation cohort and the 2019–2020 consolidation participants.

Question 14

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 four-bank consolidation plan in August 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. Dena Bank was merged into Bank of Baroda in a separate 2018 consolidation. Therefore, the merger of Dena Bank into Bank of Baroda occurred outside the 2019–2020 mega-bank consolidation framework, making it the correct answer.

Question 15

Which of the following statements regarding the appointment of the SBI Chairman is INCORRECT under the current governance framework?

Accepted Answer

The SBI Chairman is appointed by the Central Government on the recommendation of the Department of Financial Services (DFS), Ministry of Finance. The appointment is made from among the Managing Directors of SBI or, in exceptional cases, from officers of the Indian Administrative Service (IAS) or equivalent cadre. The tenure is typically three years or until age 60, whichever is earlier. The statement that the SBI Chairman must be appointed exclusively from among serving Managing Directors of SBI is incorrect because the DFS guidelines permit appointments from IAS officers as well, though MD appointments are the standard practice. Therefore, option stating exclusive MD-only appointment is the incorrect statement.

Question 16

Under the Banking Regulation Act, 1949, which section governs the Statutory Liquidity Ratio (SLR) requirement for scheduled commercial banks?

Accepted Answer

The Statutory Liquidity Ratio (SLR) is prescribed under Section 24 of the Banking Regulation Act, 1949. This section empowers the RBI to prescribe the minimum percentage of net demand and time liabilities (NDTL) that scheduled commercial banks must maintain in the form of liquid assets, including government securities, cash, and gold. The current SLR requirement is 18% of NDTL. Section 24 is the foundational regulatory provision that gives RBI the authority to set and enforce SLR norms. Therefore, answer is B.

Question 17

Which of the following appointments represents a significant change in the governance structure of the Reserve Bank of India in recent years?

Accepted Answer

In December 2022, Shaktikanta Das completed his term as RBI Governor, and Shri Sanjay Malhotra was appointed as the 25th Governor of the RBI, effective December 12, 2022. This appointment was notable because it marked a shift in the RBI's leadership transition process and reflected the government's confidence in internal promotion. However, the most structurally significant recent governance change was the introduction of the RBI Board's reconstitution framework under the RBI Act amendments, which expanded the Board's composition to include more independent directors and enhanced oversight mechanisms. The appointment of Sanjay Malhotra as RBI Governor in 2022 is the most recent high-profile appointment, making it the correct answer for 'recent years' context.

Question 18

In the context of the 2019–2020 PSB consolidation, which bank was NOT merged with any other bank but instead received mergers from other institutions?

Accepted Answer

In the 2019–2020 PSB consolidation, four banks served as 'anchor' or 'receiving' banks that absorbed other institutions: (1) Punjab National Bank received Oriental Bank of Commerce and United Bank of India; (2) Canara Bank received Syndicate Bank; (3) Union Bank of India received Andhra Bank and Corporation Bank; (4) Bank of Baroda had previously received Dena Bank in 2018. Among the options, Union Bank of India is the correct answer because it received two banks (Andhra Bank and Corporation Bank) and was not itself merged into another institution. Therefore, answer is C.

Question 19

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 19 July 1969, when 14 banks with deposits exceeding ₹50 crore were nationalised. The second phase occurred on 15 April 1980, when 6 additional banks were nationalised. These two phases brought the total number of nationalised banks to 20. Therefore, the answer is B.

Question 20

Under the current regulatory framework, what is the minimum Priority Sector Lending (PSL) target as a percentage of Adjusted Net Bank Credit (ANBC) for domestic scheduled commercial banks?

Accepted Answer

The Reserve Bank of India mandates that domestic scheduled commercial banks must lend a minimum of 40% of their Adjusted Net Bank Credit (ANBC) to the priority sector. This is prescribed under the Priority Sector Lending (PSL) guidelines issued by 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.

SBI PO Bank Mergers & Appointments

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Bank Mergers & Appointments — Practice Questions

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