Banking Awareness Study Material – Origin and Development of Banking in India

Banking Awareness Study Material – Origin and Development of Banking in India

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A bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides Fundamental Banking Services such as accepting deposits and providing loans.

History of Banking in India
Banking system has been existing in India since ancient times. Though it was not in organised form before the arrival of Britishers, various banking activities were performed. After the arrival of Britishers in 17th century foreign bani- -ng system started declining. Mayser’s Alexander and company established the first European bank The Bank of Hindustan in 1770.
The development of Banking system in India can be understood with the help of following choronology. We can summarise the origin of banking in India in the following ways

Early Phase of Indian Banks before 1935
The pre-independence period was largely characterised by the existence of private banks organised as joint stock companies. Most banks were small and had private shareholding of the closely held variety. They were largely localised and many of them failed.

• The first bank in India, the General Bank of India, was setup in 1786. Bank of Hindustan and Bengal Bank followed.
• The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called them Presidency banks. These three banks were amalgamated in 1920 to form Imperial Bank of India, a bank of private shareholders, mostly Europeans.
• Allahabad Bank was established, exclusively by Indians, in 1865.
• Awadh Commercial Bank was the first bank established in 1981 and governed by exclusively the Indians on the basis of extending loans.
• Punjab National Bank was setup in 1894 with headquarters in Lahore.
• Between 1906 and 1913, Bank of India (1906), Central Bank of India (1911), Bank of Baroda (1909), Canara Bank, Indian Bank (1907) and Bank of Mysore (1913) were setup.
• To streamline the functioning and activities of commercial banks, the Government of In^ia came up with the Banking Companies Act, 1949, which was later changed to the Banking Regulation Act, 1949.

Organisation of RBI Banking crisis during 1913-1917 and failure of 588 l banks in various parts of the country underlined the need for regulating and controlling the commercial banks. RBI was established as regulator of banking system of India. It was established in 1935. The Head Office of the RBI was established in Calcutta (now Kolkata, but was moved to Bombay (now Mumbai) in 1937.

The general functions of the banks are as follows:

• To provide security to the savings of customers.
• To control the supply of money and credit.
• To encourage public confidence in the working of the financial system increase savings speedily and efficiently.
• To avoid focus of financial powers in the hands of a few individuals and institutions.
• To set equal norms and conditions (i.e. rate interest, period of lending, etc) to all types of customers.

Banking Sector Reforms till 1991

• In 1955, government nationalised the Imperial Bank of India and gave the name ‘State Bank of India’ to act as the principal agent of the RBI and to handle banking transactions of the Union Government and State Governments all over the country.
• 7 banks owned by the Princely states were nationalised in 1959 and they became subsidiaries of the State Bank of India. In 1969,14 commercial banks in the country were nationalised.
• In the phase of banking sector reforms, 7 more banks were nationalised in 1980. With this, 80% of the banking sector in India came under the government ownership.

New Phase of Indian Banking System, Reforms after 1991

• This phase has introduced many more products and facilities in the banking sector as part of the reforms process.
• In 1991, under the chairmanship of M Narasimham, a committee was setup, which worked for the liberalisation of banking practices.
• In this phase, the country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers.
• Phone banking and net banking are introduced. The entire system became more convenient and swift.

Nationalisation of Banks
The nationalisation of commercial banks took place with an aim to achieve Social Welfare, Controlling Private Monopolies, Expansion of Banking, Reducing Regional Imbalance, Priority Sector Lending and Developing Banking Habits. In order to have more control over banks, on 19th July, 1969 Mrs Indira Gandhi, the then Prime Minister nationalised 14 large commercial banks whose reserves were more than Rs 50 crore. Following is the list of banks, which got nationalised at that time

• Allahabad Bank
• Bank of Baroda
• Bank of India Bank of Maharashtra
• Central Bank of India
• Canara Bank
• Dena Bank
• Indian Bank
• Indian Overseas Bank
• Punjab National Bank
• Syndicate Bank
• UCO Bank
• Union Bank
• United Bank of India

On 15th April, 1980 the banks with more than Rs 200 crore of reserves got nationalised.
Those six banks which got nationalised are the following:

• Andhra Bank
• Corporation Bank
• New Bank of India
• Oriental Bank of Commerce
• Punjab and Sindh Bank
• Vijaya Bank

Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalised banks. Now, total nationalised banks were 19.

Indian Banking Structure
An outline of the Indian banking structure may be presented as follows :

• Indian banking industry has been divided into two parts, organised sectors and unorganised
• The organised sector consists of Reserve Bank of India, Commercial Banks, Co-operative Banks and Specialised Financial Institutions (ICICI, EFC, etc).

Scheduled Banks
Scheduled banks are those banks whose minimum paid up capital and reserve amounts to Rs 25 lakh.
These bank have to submit details of their activities to the Reserve Bank of India every week. All Indian and foreign commercial banks, RRBs and co-operative banks are scheduled banks.

Non-Scheduled Banks
Non-scheduled banks are depository or lending institutions that do not meet the Second Schedule of Reserve Bank of India Act.
These banks may be legal entities, but they do not have procedural endorsement of the government. The bank has to pay compulsorily a reserve capital of Rs 5 lakh to the RBI and this capital must be maintained throughout their operational period. It is an important condition for Non-scheduled bank.

Tit-Bits

• IDBI Bank Ltd. merged with IDBI Ltd. on 2nd April, 2005.
•  Bank of Punjab Ltd. merged with Centurian Bank Ltd. on 1st Oct, 2005.
• On 13th August, 2010, The Bank of Rajasthan merged with ICICI Bank Ltd.
• Kotak Mahindra Bank merged with INQ Vyasa  Bank in 2014.

Commercial Banks
This is a financial institution providing services for businesses, organisations and individuals. Services include offering current, deposit and saving accounts as well as giving out loans to businesses. A commercial bank is defined as a bank whose main business is deposit-taking and making loans. Commercial bank may be Scheduled Commercial and Non-Scheduled Commercial Bank.

Functions of Commercial Banks
The main functions of commercial banks are as follows:

1. Receive Deposits: The most important activity of a Commercial Bank is to mobilise deposits from the public. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. Some of the important deposit accounts are as given below.
2. Current Account: Current account is a type of deposit account that caters to the need of professionals and businessmen alike. These deposits are the most liquid deposits and there are no limits for numbers of transaction or amount of transactions in a day.
3. Saving Account: It is generally opened in bank by salaried persons or by the persons who have a fixed regular income. This facility is also given to students, senior citizens, pensioners and so on. The saving account holder is allowed to withdraw money from the account as and when required. The interest which is given on saving accounts is sometime attractive, but often nominal.
4. Fixed Account: A deposit of money that pays higher interest than a savings account, but imposes conditions on the amount, frequency, and/or period of withdrawals is called fixed account.
   Difference between Savings Account and Current Account

   Basis of Difference	Savings Account	Current Account
   Purpose	To encourage saving	Many transaction
   Ideal for	Salaried person	Business person
   Minimum Amount	Less amount	Higher amount (depending on the bank)
   Interest Rates	4% – 6%	Normally, no interest is paid
   Overdraft	Not Allowed	Allowed

5. Cash Credit Account: It can be opened as per terms and conditions of sanction of given credit limits. The rules prescribed for the current accounts is applicable to Cash Credit accounts, in addition to the sanctioned terms and conditions.
6. Recurring Deposit Account: In banking terminology, the term recurring deposit refers to the periodic placement of a fixed sum of funds with a bank or financial institution into a special term account, with a specified tenure, generally between 1 and 5 years.
   At the end of the tenure, the funds with accrued interest are typically withdrawn by the depositor.
7. To Lend Money: Another important function of a Commercial Bank is to grant loans and advances. Such loans and advances are given to the public and business community at a higher rate of interest than allowed by banks on various deposit accounts.Types of loans of commercial bank are given below
   • Overdraft
   • Debt and loan
   • Retrenchment of exchange bills
   • Cash credit
   • Investment in public securities
8. Agency Functions: Agency functions include the following
   • Collection of cheques, dividends and interests
   • Payment of rent, insurance premiums
   • Dealing in foreign exchange
   • Purchase and sale of securities
   • Act as trustee, executor, attorney, etc
   • Act as correspondent
   • Preparations of Income Tax returns
9. Miscellaneous Functions: Issuing letters of credit, travellers cheques, circular notes, etc.
   • Undertaking safe custody of valuables, important documents and securities by providing safe deposit vaults or lockers.
   • Underwriting of share, debentures, etc.
   • Underwriting loans floated by government and public bodies.

Non Performing Asset (NPA) It is a classification used by financial institutions that refers to loans that are in jeopardy of default. Once i the borrower has failed to make interest or principal payments for 90 days the loan is considered to be a non performing asset. (Also known as ‘non performing loan’.) Non performing assets are problematic for financial institutions since they depend on interest payments for income.

Private Banks
Private Banks are banks owned by either an individual or a general partner(s) with limited partner(s). But licence is provided by Reserve Bank of India.
Private Sector Banks

Bank	Place
Kotak Mahindra Bank, (1985)	Mumbai
ICICI Bank, (1994)	Vadodara
AXIS Bank, (1994) (UTI renamed in 30th July, 2007)	Ahmedabad
Indusland Bank, (199’4)	Pune
Global Trust Bank, (1994)	Secunderabad
HDFC Bank, (1995)	Mumbai
Times Bank, (1995)	Faridabad
Centurion Bank, (1995)	Panji
Bank of Punjab, (1995)	Chandigarh
Development Credit Bank Ltd. (1995)	Mumbai
Yes Bank, (2004)	Mumbai
Bandhan Bank, (2015)	Kolkata
IDFC Bank, (2015)	Mumbai

Types of Banks on the Basis of Function
Following are the types of banks classified on the basis of their functions.

Agricultural Banks
An agricultural bank may, in particular undertake the following types of business

1. granting short term credit to buy seeds, fertilizers and other inputs, and
2. granting long term credit to purchase land, to make permanent improvements on land, to purchase agricultural machinery and equipment, etc.

Post Office Saving Banks
It is a bank which accepts deposit of small amount only and provide the withdrawal facilities to their customers. ATM facility is also available in this bank.

Foreign Exchange Banks
Foreign Exchange Bank is the bank which is involved in sale and purchase of the foreign exchange bill and exchange of one currency for another or the conversion at one currency into another currency. The foreign exchange banks work through financial institutions and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as ‘dealers,’ who are actively involved in large quantities of foreign exchange trading. Payment of International Loans, Export-Import of securities and forward exchange trade are also done by these banks.

Foreign Banks
These banks are registered and have their headquarters in a foreign country but operate their branches in our country.

Important Foreign Bank in India
Name of Bank	Country of Incorporation
AB Bank Ltd.	Bangladesh
KBC Bank NV	Belgium
Industrial and Commercial Bank of China Ltd.	China
Deutsche Bank	Germany
HSBC Ltd	Hong Kong
The Royal Bank of Scotland NV	Netherlands
Doha Bank	Qatar
DBS Bank Ltd.	Singapore
Shinhan Bank	South Korea
Korea Exchange Bank	South Korea
Bank of Ceylon	Sri Lanka
UBS AG	Switzerland
Abu Dhabi Commercial Bank Ltd.	UAE
Barclays Bank Pic.	United Kingdom
Standard Chartered Bank	United Kingdom
American Express Banking Corporation	USA
Bank of America	USA

Co-operative Banks
Co-operative banks operate in both urban and rural areas. All banks registered under the Co-operative Societies Act, 1912 are considered co-operative banks.
Commercial banks, are driven by profit while co-operative banks work on a “no profit, no loss” basis. These are regulated by the Reserve Bank of India under the Banking Regulation Act, 1949 and Banking Laws (Application to Co-operative Societies) Act, 1965.
There are two types of co-operative banks.

1. State Co-operative Banks: SCBs mean the principal co-operative society in a state, the primary object of which is the financing of other co-operative societies in the state.
2. District/Central Urban Co-operative: Banks UCBs are registered under the Co-operative Societies Act of the respective State Governments. UCBs having a multi-state presence are registered under the Multi-State Co-operative Societies Act and are regulated by the Central Government.

Development Banks
Development banks are specialised financial institutions. To promote economic development, development banks provide medium term and long term loans to the entrepreneurs at relatively low rate of interest rates. Some examples of development banks in India are Industrial Development Banks of India (IDBI), Industrial Financial Corporation of India (IFCI), etc.

Retail Banks
A retail bank is a bank that works with customers, offering basic banking services. Examples include savings banks, savings and loan associations, and recurring and fixed deposits. Products and services include safe deposit boxes, checking and savings accounting, certificates of deposit (CDs), mortgages, personal, consumer and car loans.

Central Banks
Central banks are bankers’ banks. They guarantee stable monetary and financial policy from country to country and play an important role in the economy of the country. Typical functions include implementing monetary policy, managing foreign exchange and gold reserves, making decisions regarding official interest rates, acting as banker to the government and other banks, and regulating and supervising the banking industry. These banks buy government debt, have a monopoly on the issuance of paper money, and often act as a lender of last resort to commercial banks. It controls and coordinates currency and credit policies of any country. The Reserve Bank of India is the central bank of India.

Investment Banks
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting’and/or acting as the client’s agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Investment banks aid companies in acquiring funds and they provide advice for a wide range of transactions.

Online Banks
Online banking gives you the ability to manage your money online – over the internet – so you do not have to visit a bank branch. Operate entirely online – there are no physical branch locations to talk with a teller or personal banker. Many brick-and-mortar banks also offer online services, such as the ability to view accounts and pay bills online, but internet only banks are different: they often offer competitive rates on saving accounts and they’re likely to offer free checking.

Types of Banking in India on the Basis of the Organisation

Branch Banking
Branch banking is the most common type of banking and still an integral part of Indian banking system as most Indians still believe in cash transactions and prefer to visit banks in person for routine banking operations. Banks branches are the face of the banks where customers can visit and talk to the officials for getting better insights into new policies, investment schemes, other banking services, etc.

Unit Banking
Unit banking, which originated in US, is a limited way of banking where banks operate only from a single branch (or a few branches in the same area) taking care of local community.

Mixed Banking
When the banks undertake activities of commercial and investment banking together; it is called mixed banking. Mixed banking promotes rapid industrialisation.

Chain Banking
Chain banking system is involved when a group of persons came together to own and control three or more independently chartered banks. Individuals secure enough stocks to get the controlling interest in the banking corporations involved. The management can also be established via a board of directors.

Wholesale Banking
Wholesale banking involves banking services for high net-worth clients like corporate, commercial banks, mid-size companies, etc. The services which come under the net of wholesale banking involves wholesaling, underwriting, market making, consultancy, mergers and acquisitions, joint ventures, fund management, etc.

Relationship Banking
Relationship banking involves going beyond the normal banking services and understanding customer’s needs before offering him any special product. The knowledge about existing and potential clients is essential for all banks.

Correspondent Banking
Correspondent banks are financial institutions that provide banking or financial services on behalf of other equal or unequal financial institution. These are used to conduct banking operations in foreign countries as the domestic banks have limited access to foreign markets and cannot directly reach clients. The services which come under the blanket of correspondent banking are cash/fund management; international fund transfers, clearance of cheques, drawing of demand drafts, etc.

Rural Banking
Rural banking has become integral to the Indian financial markets with a majority of Indian population still living in rural or semi-urban areas.

Universal Banking 
Universal banking is a system of banking under which big banks undertake a variety of banking services like commercial banking, investment banking, mutual funds, merchant banking, insurance, etc. In simple words, Universal Banking means that Financial Institutions (FIs) and Banks are allowed to undertake all kinds of activity of banking, financing and related businesses.

Narrow Banking
The Narrow Banking is very much an antonym to the Universal Banking. Narrow Banking means Narrow in the sense of engagement of funds and not in activity. The Tarapore Committee had recommended that to bring down the Non Performing Assets (NPAs), the incremental sources of the banks (called narrow banks) should be restricted only to investments in Government Securities. Thus, Tarapore Committee is best known for giving Concept of Narrow Banking as a solution to the problem of Non Performing Assets.

Social Banking
The concept of social banking was to provide banking for the poor population, working for their developmental needs, providing them with easy formal credit, minimal requirements to open accounts, ease of access and friendly staff etc.

Virtual Banking
Virtual or internet banking is a system where all the transactions of the bank are done online and there are no physical branches of the banks.

India’s Key Banks

State Bank of India
On the recommendation of All India Rural Credit Survey Committee, Imperial Bank was nationalised to become State Bank of India on 1st July, 1955.

Shareholding
Government of India held around 62% equity shares in SBI. Over 800000 individual shareholders hold approx. 5.7% of its shares. Life Insurance Corporation of India is the largest non-promoter shareholder in the company with 10.9% shareholding.

Shareholders	Shareholding
Promoters Government of India	62.31%
Insurance Companies	11.90%
Foreign Institutional Investors	09.79%

Functions of State Bank of India
The functions of SBI can be grouped under two categories, viz., the Central banking functions and Ordinary banking functions. The SBI acts as an agent of the RBI at the places where the RBI has no branch. Accordingly, it renders the following functions

• Banker to the government
• Banker to banks in a limited way
• Maintenance of currency chest
• Acts as clearing house
• Renders promotional functions

General/Ordinary Banking Functions
Besides the above specialised functions, the SBI renders the following functions

• Accepting deposits from the public under current, savings, fixed and recurring deposit accounts.
• Advancing and lending money and opening cash credits upon the security of stocks, securities, etc.
• Drawing, accepting, discounting, buying and selling of bills of exchange and other negotiable instruments.
• Investing funds, in specified kinds of securities.
• Advancing and lending money to court of wards with the previous approval of State Government.
• Issuing and circulating letters of credit, etc.
• The State Bank may (with the sanction of the Central Government) enter into negotiations for acquiring the business of any other Banking Institutions.

SBI Agriculture Loan
SBI provides SBI Agriculture loan (term loan) for asset (bullocks, farm machinery, sheep, etc.) purchase as well as asset creation (poultry, orchard development, dairy development, etc.) which are connected with activities in rural areas.
The rate of interest varies from 8.5% to 12.75% depending on the loan amount and in the extreme cases of very high loan amounts, credit risk assessment is required. Repayment period varies from 5-15 years and is based on the income generation of activity for which loan was taken

Merging of SBI and Mahila Bank
The Union Cabinet, on 15th June, 2016, approved the merger of five associate banks as well as Bharatiya Mahila Bank with State Bank of India. It is the first move to consolidate the country’s struggling Public Sector Banks. The country’s largest lender, State Bank of India (SBI), has decided to merge its five associate Public Sector Banks (PSBs) and the Bharatiya Mahila Bank (BMB) with itself.
In this regard, the SBI has informed the Bombay Stock Exchange (BSE) that it is seeking in-principle approval for acquistior from the Union government.

5 subsidiary banks are

• State Bank of Bikaner & Jaipur (founded in 1943)
• State Bank of Hyderabad (founded in 1941)
• State Bank of Mysore (founded in 1913)
• State Bank of Patiala (founded in 1917)
• State Bank of Travancore (founded in 1945)

Associate Banks of SBI and their Merger
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act. Under this Act, 8 SBI subsidiaries were made. Three of them had already merged with SBI. State Bank of Saurashtra, State Bank of Indore (founded in 1920). In 1963, SBI merged State Bank of Jaipur (founded in 1943) and State Bank of Bikaner (founded in 1944) to form State Bank of Bikaner and Jaipur. State Bank of Saurshtra merged with SBI in 2008. Then in 2010, the State Bank of Indore (founded in 1920) also merged with SBI leaving the associate banks of SBI to 5 in number.
At present, the SBI has 14 regional hubs and 57 Zonal Offices that are located at important cities throughout India. It has more than 17000 branches in India presently, of which 9851 (66%) are in Rural and Semi-urban areas. It has 190 overseas branches spread over 36 countries.

Other Important Banks in India

United Bank of India

Headquarters:      Kolkata, West Bengal, India
Founded:                 1950, India
Nationalisation:  1969
Punch Line:           The Bank that begins with ‘U’
Regional Rural Bank sponsored by UBI are:

• Tripura Gramin Bank
• Assam Gramin Vikash Bank
• Bangiya Gramin Vikash Bank
• Manipur Rural Bank

UCO Bank

Headquarters:    Kolkata
Founded:               6 jauanry, 1943
Nationalisation: 1969
Punch Line:          Honors Your Trust
Regional Rural Bank sponsored by UCO Bank are

• Bihar Kalpatharu Gramin Bank
• Jaipur Thar Gramin Bank
• Kalinga Gramin Bank
• Mahakaushal Kshetriya Gramin Bank
• Paschim Banga Gramin Bank

Union Bank of India

Headquarters:      Mumbai
Founded:                 11 November, 1919
Nationalisation:   1969
Punch Line:            Good People to Bank With
Regional Rural Bank sponsored by Union Bank are

• Rewa Sidhi Gramin Bank
• Kashi Gomti Samyut Gramin Bank

Central Bank of India

Headquarters:     Mumbai
Founded:               21 Decembar, 1911
Nationalisation:  1969
Punch Line:           Build A Better Life Around Us
Regional Rural Bank sponsored by CBI are

• Ballia Etawah Gramin Bank
• Satpura Narmada Kshetriya Gramin Bank
• Surguja Kshetriya Gramin Bank
• Uttar Banga Kshetriya Gramin Bank
• Uttar Bihar Gramin Bank
• Vidharha Kshetriya Gramin Bank
• Hadoti Kshetriya Gramin Bank .

Allahabad Bank of India

Headquarters:    Kolkata
Founded:              1865
Nationalisation: 1969
Punch Line:         Tradition of Trust
Regional Rural Bank sponsored by Allahabad Bank are

• Sharda Gramin Bank
• Allahabad UP Gramin Bank

Andhra Bank

Headquarters:     Hyderabad
Founded:               20 November, 1923
Nationalisation:  1980
Punch Line:           Much More to do with You in Focus
Regional Rural Bank sponsored by Andhra Bank are

• Chhattisgarh Gramin Bank
• Rushikulya Gramin Bank

Bank of Baroda

Headquarters:      Baroda
Founded:                20 July, 1908  
Nationalisation:   1969
Punch Line:           India’s International Bank
Regional Rural Bank sponsored by Bank of Baroda are

• Nainital Almora Kshetriya Bank
• Baroda Gujarat Gramin Bank
• Baroda UP Gramin Bank
• Baroda Rajasthan Gramin Bank
• Jhabua Dhar Kshetriya Gramin Bank

Bank of India

Headquarters:     Mumbai
Founded:               7 September, 1906
Nationalisation: 1969
Punch Line:         Relationships Beyond Banking
Regional Rural Bank sponsored by Bank of India are

• Narmada Malwa Gramin Bank
• Wainganga Krishna Gramin Bank
• Aryavat Gramin Bank

Bank of Maharashtra

Headquarters:     Pune
Founded:               16 September, 1935
Nationalisation:  1969
Punch Line:           One Family One Bank
Regional Rural Bank sponsored by Bank of Maharashtra is

• Maharashtra Gramin Bank

Canara Bank 

Headquarters:      Bengaluru
Founded:                1906
Nationalisation:  4969
Punch Line:           It’s easy to Change for those who you love; Together we can
Regional Rural Bank sponsored by Canara Bank are

• Shreyas Gramin Bank
• South Malabar Gramin Bank

Indian Bank

Headquarters:       Chennai
Founded:                 5 March, 1907
Nationalisation:    1969
Punch Line:           Taking Banking Technology to Common man, your tech-friendly bank
Regional Rural Bank sponsored by Indian Bank are

• Pallavan Grama Bank
• Puduvai Bharthiar Grama Bank
• Saptagiri Gramin Bank

Corporation Bank

Headquarters:       Mangalor
Founded:                 12 March, 1906
Nationalisation:   1980
Punch Line:           Prosperity for All
Regional Rural Bank sponsored by Corporation Bank is

• Chikmagalur Kodagu Gramin Bank

Dena Bank 

Headquarters:      Mumbai
Founded:                26 May, 1938   
Nationalisation:  1969
Punch Line:          Bank sponsored by Dena Bank arc
Regional Rural Bank sponsored by Dena Bank are

• Dena Gujarat Gramin Bank
• Durg Rajnadgaon Gramin Bank

Punjab National Bank

Headquarters:      New Delhi
Founded:                1895
Nationalisation:  1969
Punch Line:          The Name you can Bank Upon
Regional Rural Bank sponsored by PNB are

• Punjab Gramin Bank
• Rajasthan Gramin Bank
• Sarva UP Gramin Bank
• Haryana Gramin Bank » Himachal Gramin Bank
• Madhya Bihar Gramin Bank

Indian Overseas Bank

Headquarters:      Chennai
Founded:                1937
Nationalisation:  1969
Punch Line:          Good People to Grow -with
Regional Rural Bank sponsored by Overseas Bank are

• Neelachal Gramin Bank
• Pandyan Gramin Bank

Oriental Bank of Commerce

Headquarters:       New Delhi
Founded:                 1943
Nationalisation:   1980
Punch Line:            Where Every Individual is Committed

Punjab and Sindh Bank

Headquarters:      New Delhi
Founded:                24 June,1908
Nationalisation:  1980
Punch Line:           Where Service is a Way of Life
Regional Rural Bank sponsored by PSB is – Sutlej Gramin

Vijaya Bank

Headquarters:      Bengaluru
Founded:                1931
Nationalisation:  1980
Punch Line:           A Friend you can Bank Upon
Regional Rural Bank sponsored by Vijaya Bank is

• visveshvaraya Gramin Bank

Syndicate Bank

Headquarters:       Manipal
Founded:                 1925
Nationalisation:    1969
Punch Line:             Yaur Faithful and Friendly Financial Partner
Regional Rural Bank sponsored by Syndicate Bank are

• Andhra Pragathi Gramin Bank
• Gurgaon Gramin Bank
• Karnataka Vikas Gramin Bank

IDBI Bank

Headquarters:       Mumbai
Founded:                 July, 1964
Punch Line:            Banking for all, not just for big boys, Aao Sochein Bada.

• In September 2004, the Reserve Bank of India incorporated IDBI as a ‘scheduled bank’ under the RBI Act, 1934.

Bharatiya Mahila Bank

Headquarters:      New Delhi, India
Founded:                19 November, 1913
Punch Line:           Empowering Women, Empowering India

• State Ownership Bank

Question Bank 

1. Which one of the following banks can be included in the Scheduled Commercial Banking System of India?

1. Regional Rural Banks
2. Private Sector Banks
3. Foreign Banks in India
4. All of the above
5. None of the above

2. Which of the following Public Sector Bank’s emblem figures a dog and the words ‘faithful friendly’ in it?

1. Punjab National Bank
2. Syndicate Bank
3. Oriental Bank of India
4. State Bank of India
5. Central Bank of India

3. In India, the first bank of limited liabilities managed by Indians and founded in 1881 was

1. Hindustan Commercial Bank
2. Oudh Commercial Bank
3. Punjab National Bank
4. Punjab and Sind Bank
5. National Bank

4. How many banks were first nationalised?

1. 10
2. 12
3. 14
4. 16
5. 24

5. When was the second phase of nationalisation done?

1. 9th July, 1969
2. 10th July, 1968
3. 16th August, 1985
4. 15th April, 1980
5. None of these

6. How many banks were there in second phase of nationalisation?

1. 4
2. 5
3. 6
4. 7
5. 9

7. Who will act as the banker to the Government of India?

1. State Bank of India
2. Reserve Bank of India
3. NABARD
4. Nationalised Banks
5. Central Bank of India

8. ‘Good people to grow with’ is the tagline of

1. Punjab National Bank
2. Indian Overseas Bank
3. Oriental Bank of Commerce
4. Union Bank of India
5. UCO Bank

9. The second phase of bank nationalisation took place in 1980 during the prime ministerial tenure of Indira Gandhi. Which bank was nationalised in this period?

1. Indian Overseas Bank
2. Central Bank of India
3. Canara Bank
4. Vijaya Bank
5. Dena Bank

10. Where is the headquarter of Reserve Bank of India?

1. Mumbai
2. Delhi
3. Kolkata
4. Ahmedabad
5. Noida

11. A scheduled bank is the one which is included in the

1. II Schedule of Banking Regulation Act
2. II Schedule of Constitution
3. II Schedule of RBI Act
4. None of the above
5. All of the above

12. What is the animal of the insignia of the RBI?

1. Lion
2. Tiger
3. Panther
4. Elephant
5. Horse

13. Which of the following Indian Banks is not a Nationalised Bank?

1. Corporation Bank
2. Dena Bank
3. Federal Bank
4. Vijaya Bank
5. Oriental Bank of Commerce

14. Choose the one which is incorrectly matched.

1. Allahabad Bank-A Tradition of Trust
2. Andhra Bank-Where India Banks
3. Bank of Baroda-Hum Hai Na, Khyal Apka
4. Bank of India-Relationship beyond banking
5. Bhartiya Mahila Bank-Empowering Women

15. Who regulates the money circulation in India?

1. State Bank of India
2. Reserve Bank of India
3. NABARD
4. Commercial Banks
5. None of the above

16.  Which of the following is not an organised sector in India?

1. Nationalised Banks
2. Regional Rural Banks
3. Cooperative Banks
4. Chits and Money Lenders
5. Industrial Bank

17. Who will settle the grievances of customers of banks? 

1. Reserve Bank of India
2. State Bank of India
3. Local Courts
4. Ombudsman
5. Governor of RBI

18. Who introduced the Banking Ombudsman Scheme?

1. RBI
2. SBI
3. Ministry of Finance
4. NABARD
5. None of these

19. When was Ombudsman Scheme first introduced?

1. November, 2006
2. October, 1981
3. June, 1995
4. January, 1998
5. All of these

20. Which was the first Bank corporated by the Indians? (1881)

1. Imperial Bank of India
2. State Bank of India
3. Avadh Commercial Bank
4. Reserve Bank of India
5. National Bank

21. When was Reserve Bank of India established?

1. 1920
2. 1925
3. 1935
4. 1948
5. 1968

22. When was Reserve Bank of India Nationalised?

1. 1947
2. 1948
3. 1949
4. 1950
5. 1960

23. When did Indian Banking Act come into force?

1. 1948
2. 1949
3. 1950
4. 1951
5. 1940

24. Imperial Banks were amalgamated and changed as…..

1. Reserve Bank of India
2. State Bank of India
3. Subsidiary Banks
4. Union Bank of India
5. Corporation Bank

25. When was Imperial Bank changed as State Bank of India?

1. 1st January, 1935
2. 26th February, 1947
3. 1st July, 1955
4. 1st July, 1959
5. 26th February, 1955

26. How many banks which were nationalised in 1980’s are currently working?

1. 4
2. 5
3. 6
4. 8
5. 9

27. The first wholly Indian Bank was setup in

1. 1794
2. 1894
3. 1896
4. 1902
5. 1918

28. Traveller’s cheques are valid for…….

1. Three months
2. Six months
3. One year _t
4. No limit are valid till encashed
5. None of the above

29. When was HDFC bank established?

1. 1935
2. 1969
3. 1975
4. 1995
5. 2014

30. Presently, the number of the public sector banks in India is

1. 8
2. 20
3. 28
4. 14
5. None of these

31. Which of the following is popular ‘saving bank’ among the poor children?

1. Core banking
2. Credit banking
3. Debit banking
4. Merchant banking
5. Piggy banking

32. The origin of the State Bank of India goes back to the first decade of the 19th century with the establishment of

1. Bank of Calcutta
2. Bank of Bengal
3. Bank of Bombay
4. Bank of Madras
5. None of these

33. Which bank came into existence in 1921 when three banks namely, Bank of Bengal (1806), Bank of Bombay (1840) and Bank of Madras (1843) were reorganised and amalgamated to form a single banking entity?

1. Imperial Bank of India
2. State Bank of India
3. Reserve Bank of India
4. Punjab National Bank
5. None of the above

34. The Bank of India was constituted on 

1.  1911
2. 1949
3. 1955
4. 1956
5. None of these

35. The government passed the State Bank of India (Subsidiary Banks) Act in

1. 1934
2. 1949
3. 1955
4. 1959
5. None of these

36. Which bank became the State Bank of India in 1955?

1. General Bank of India
2. Bank of Hindustan
3. Imperial Bank of India
4. Federal Bank of India
5. None of the above

37. SBI day is observed on

1. 1st January
2. 1st April
3. 1st July
4. 1st August
5. None of these

38. SBI Act was passed in Parliament in

1. 1935
2. 1949
3. 1955
4. 1969
5. 1980

39. Generally, the minimum rate below which the banks do not lend is known as

1. floor rate
2. repo rate
3. highest rate
4. base rate
5. All of these

40. Which of the following banks has acquired the title ‘Centurion Bank of Punjab’?

1. ICICI Bank
2. IDBI Bank
3. HDFC Bank
4. AXIS Bank
5. None of these

41.What was the deposits criteria of 14 banks nationalised on 19th July, 1969?

1. Rs 1000 crore
2. Rs 500 crore
3. Rs 100 crore
4. Rs 50 crore
5. None of these

42. Board for Financial Supervision (BFS) was constituted in 1994 by RBI to undertake consolidated supervision of

1. commercial banks
2. financial institutions
3. non-banking finance companies
4. None of the above
5. AH of the above

43. Who is a very senior citizen?

1. A person who is 65 yr and above
2. A person who is 75 yr and above
3. A person who is 80 yr and above
4. A person who is 90 yr and above
5. A person who completed 100 yr of age

44. The first nationalisation of banks exercise was done on

1. 19th June, 1969
2. 19th June, 1970
3. 19th June, 1967
4. 15th July, 1967
5. None of these

45. Kotak Mahindra Bank merged with……… bank in 2014.

1. ING Vyasa Bank
2. IDBI £td.
3. Bank of Rajasthan
4. Bank of Punjab Ltd.
5. AXIS Bank

46. In the year 1980, the second phase of nationalisation of Indian banks took place. Choose the correct statement.

1. 7 more banks were nationalised with deposits over 200 crores.
2. The Government of India held a control over 91% of the banking industry in India.
3. After the nationalisation of banks there was a huge jump in the deposits and advances with the banks.
4. All of the above
5. None of the above

47. Which bank is called Apex Bank?

1. Development Bank of India
2. NABARD
3. Reserve Bank of India
4. SBI
5. EXIM Bank

48. First Indian appointed as the Governor of Reserve bank of India………….

1. Sir C D Deshmukh
2. Sir Senegal Rama Rau
3. M Narasimham
4. Dr C Rangarajan
5. Shanmugam Chettiar

49. Which bank is not in Private Sector?

1. AXIS Bank
2. ICICI Bank
3. Repco Bank
4. HDFC Bank
5. South Indian Bank Ltd

50. Tagline of’Bank of India

1. Relationship beyond banking
2. One family one bank
3. A Premiere Public Sector Bank
4. Trusted Family Bank
5. Where India Banks

51. Consider the following statements regarding Bank of Baroda.
I. The bank was founded by the Maharaja of Baroda, Maharaja Sayajirao Gaekwad III on 20th July, 1908.
II. Headquarter of BoB in Vadodara (earlier known as Baroda), Gujarat.
III. It was nationalised on 19th July, 1969. Codes

1. I and II
2. II and III
3. I and III
4. I, II and III
5. Only III

52. Canara Bank sponsors regional rural banks (RRB)
I. Kerala Gramin Bank
II. Pragathi Krishna Gramin Bank
III. Kerala Bank of rural
Codes

1. I and II
2. II and III
3. I and III
4. III and III
5. Only III

53. Which of the following statements is/are correct?
I. Corporation Bank is a public sector banking company headquartered in Mangalore, India.
II. Corporation Bank completed hundred and ten years of existence on 12th March, 2015.
III. The bank was nationalised in 1969.
Codes

1. I and II
2. II and III
3. I and III
4. I, II and III
5. Only III

54. Consider the following statements regarding Co-operative bank.
I. These banks are controlled, owned, managed and operated by co-operative societies.
II. Came into existence under the Co-operative Societies Act in 1912.
III. These banks are located in the urban as well in the rural areas.
Codes

1. I and H
2. II and III
3. I, n and m
4. I and III
5. Only III

55. Consider the following statements.
I. In Indian Commercial Banking System, the number of the Non-Scheduled Bank is more than the Scheduled Banks.
II. The Non-Scheduled Banks in Indian Commercial Banking System are even less than a dozen in number.
III. Which of the statement(s) given above is/are correct?

1. Only I
2. Only II
3. Both I and II
4. Neither I nor II
5. Can’t say

56. Consider the following statements.
I. Scheduled Commercial Banks are those which have been included in the First Scheduled of RBI Act, 1934.
II. Non-Scheduled Commercial Banks are those which have been included in the Second Scheduled of RBI Act, 1934.
III. Which of the statement(s) given above is/are correct?

1. Only I
2. Only II
3. Both I and II
4. Neither I nor II
5. Can’t say

57. Consider the following statements.
I. Allahabad Bank was the first bank to be established exclusively by Indians.
II. Seven banks forming subsidiary of State Bank of India was nationalised in 1960.
III. Which of the statements) given above is/are correct?

1. Only I
2. Only II
3. Both I and II
4. Neither I nor II
5. Can’t say

58. Consider the following statements regarding Indian Overseas Bank (IOB).
I. It is a major public sector bank based in Chennai (Madras).
II. In 1937, Thiru.M. Ct. M. Chidambaram Chettyar established the Indian Overseas Bank (IOB).
III. Good people to grow with is the tagline of this bank.
Codes

1. I and II
2. II and IH
3. I, n and III
4. I and in
5. Only III

59. Which of the following statements is/are correct?
I. On 19th July 1960, SBI’s seven subsidiaries were nationalised with deposits over 200 crores.
II. The major nationalisation of banks happened in 1969 by the then Prime Minister Indira Gandhi.
III. The major objective behind nationalisation was to spread banking infrastructure in rural areas make cheap finance available to Indian farmers.
Codes

1. I and II
2. II and III
3. I and III
4. I, II and III
5. Only III

60. Who amongst the following persons is a Former Governor of RBI? [SBI Clerk 2012]

1. Shri P Chidambaram
2. Shri Yashwant Sinha
3. Shri Pranab Mukherjee
4. Shri Manmohan Singh
5. None of the above

61. Who is the 22nd Governor of Reserve Bank of India?  [SBI Clerk 2012]

1. Dr K C Chakrabarty
2. Dr D Subbarao
3. Dr VY Reddy
4. Dr S Gokarn
5. None of these

62. Which of the following is not a public sector bank? [SBI Clerk 2012]

1. Corporation Bank
2. United Bank of India
3. Vijaya Bank
4. Bank of Maharashtra
5. Federal Bank

63. The Reserve Bank of India Act, 1934 extends to  [RBI Assistant 2013]

1. whole of India
2. whole of India except the State of Jammu and Kashmir
3. whole of India except the State of Jammu and Kashmir and Sikkim
4. whole of India except the State of Jammu and Kashmir, Sikkim and Nagaland
5. None of the above

64. Which of the following statement is correct? [RBI Assistant 2013]

1. The Central Bank is inspired by the spirit of national welfare
2. The Central Bank is inspired exclusively by the profit-motive
3. The Central Bank is inspired by the new technology
4. All of the above
5. None of the above

65. The Reserve Bank of India is [RBI Assistant 2013]

1. a department of Central Government under Ministry of Finance
2. a body corporate, having perpetual succession and a common seal
3. an institution owned by Indian Banks’ Association
4. All of the above
5. None of the above

66. The earliest attempt to set up in India a banking institution with some characteristics of central bank dates back to January, 1773 when Warren Hastings, Governor of Bengal (later Governor General) recommended the establishment of   [RBI Assistant 2013]

1. Presidency Bank
2. Reserve Bank of India
3. Imperial Bank of India
4. General Bank of Bengal and Bihar
5. None of the above

67. The Reserve Bank of India, which was established under the Reserve Bank of India Act, 1934, started functioning from [RBI Assistant 2013]

1. 1st April, 1934
2. 1st April, 1935
3. 1st Sep, 1934
4. 1st July, 1934
5. 1st April, 1936

68. ‘National Institute of Bank Management’ is the institution meant for [SBI Clerk 2014]

1. All those given as options
2. providing management personnel to the banks
3. training of bank employees in banking
4. providing consultancy on best practices in bank management
5. recruitment of bank employees at all levels

69. Who inaugurated the Bharatiya Mahila Bank?  [SBI Clerk 2014]

1. Sonia Gandhi
2. P Chidambaram
3. Manmohan Singh
4. D Subbarao
5. None of the above

70. AXIS Bank was formerly known as [SBI Clerk 2014]

1. YES Bank
2. UTI Bank
3. City Union Bank
4. HDFC Bank
5. Centurian Bank

71. Which of the following institutions has recently been allowed mandate for grant of Banking licence by the RBI? [SBI Clerk 2014]

1. Bandhan Finance
2. IDFC
3. LIC Housing
4. L and T Finance
5. M and M Finance

72. Central Bank of India headquarter is established in  [IBPS PO 2015]

1. Mumbai
2. Kolkata
3. Patna
4. Chennai
5. Hyderabad

73. Indian Bank Association headquarter is established in [IBPS Clerk 2015]

1. Mumbai
2. Hyderabad
3. Chennai
4. Kolkata
5. Pune

74. IDFC was incorporated on 30th Jan, 1997 with its registered office in [IBPS Clerk 2015]

1. Chennai
2. Bengaluru
3. Kolkata
4.  Mumbai
5. Hyderabad

75. As per the recent press reports, RBI has recently conveyed the ‘in-principle’ approval to open new bank. Which of the following entity has received the permission? [IBPS Clerk 2015]

1. Tata Group
2. LIC Housing Finance
3. Anil Ambani Group ,
4. Videocon Group
5. IDFC

76. The private sector banking space witnessed its first consolidation move in four years. Which of the following bank merger took place recently?       [IBPS Clerk 2015]

1. United Western Bank and IDBI Bank
2. Ganesh Bank of Kurundwad and Federal Bank
3. ING Vysya Bank and Kotak Mahindra Bank
4. Bank of Rajasthan and ICICI Bank
5. State Bank of Indore and State Bank of India

77. IDBI headquarter is established in [IBPS Clerk 2015; SBI Clerk 2016]

1. Hyderabad
2. Chennai
3. Bengaluru
4. Kolkata
5. Mumbai

78. Union Bank of India is one of the major public sector banks in India. It is headquartered in [RBI Grade B 2015]

1. Mumbai
2. Bengaluru
3. New Delhi
4. Chennai
5. Kolkata

79. Which of the following former Governors of the Reserve Bank of India has also served as ‘  the Union Finance Minister?[RBI Grade B 2015]

1. Dr C Rangarajan
2. LK Jha
3. B Venkitaraman
4. Dr IG Patel
5. CD Deshmukh

80. Which of the following public sector banks has headquarter in Chennai? [SBI PO 2016]

1. Central Bank of India
2. Corporation Bank
3. Punjab National Bank
4. Indian Bank
5. Dena Bank

 Answer Key