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Indian Banking Structure & Commercial Banks GK Questions & Answers
India’s organized banking architecture is governed by the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949. Commercial banks listed in the Second Schedule of the RBI Act, 1934 are classified as Scheduled Commercial Banks (SCBs), satisfying minimum paid-up capital and reserve criteria while maintaining operations protective of depositor interests. The modern sector was transformed by two phases of bank nationalization in 1969 (fourteen banks with deposits exceeding ₹50 crore) and 1980 (six banks with deposits exceeding ₹200 crore). Subsequent market-oriented modernization followed the landmark recommendations of the M. Narasimham Committee on Financial System (1991) and Banking Sector Reforms (1998), which instituted prudential asset classification, reduced high statutory reserve requirements, and phased in international capital adequacy ratios. The institutional framework spans Public Sector Banks, Private Sector Banks, Foreign Banks, Regional Rural Banks established under the RRB Act, 1976, and differentiated entities including Small Finance Banks and Payments Banks. To preserve systemic resilience against non-performing assets, the Reserve Bank enforced Basel III norms formulated by the Basel Committee on Banking Supervision, mandating a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 9% alongside a 2.5% Capital Conservation Buffer, reinforced by resolution frameworks under the Insolvency and Bankruptcy Code (IBC), 2016.
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Scheduled Commercial Banks (SCBs) are financial institutions included in the Second Schedule of the Reserve Bank of India Act, 1934.
Under the RBI Act 1934, scheduled bank status requires paid-up capital and reserves of at least ₹5 lakh and conducting operations without prejudicing depositor interests.
The Banking Regulation Act, 1949 regulates bank licensing under Section 22 and mandates maintenance of the Statutory Liquidity Ratio (SLR) under Section 24.
The Government of India nationalized 14 major commercial banks on July 19, 1969, having deposit bases exceeding ₹50 crore each.
A second phase of nationalization occurred on April 15, 1980, bringing six additional commercial banks with deposit bases over ₹200 crore under public ownership.
The Narasimham Committee I (1991) recommended reducing high statutory reserve ratios (CRR and SLR), deregulating interest rates, and establishing transparent asset classification.
The Narasimham Committee II (1998) advocated bank consolidation, introducing tighter capital adequacy ratios and establishing asset reconstruction companies.
Regional Rural Banks (RRBs) were established under the Regional Rural Banks Act, 1976 following recommendations of the Narasimham Working Group of 1975.
The shareholding structure of RRBs is apportioned as 50% by the Central Government, 15% by the State Government, and 35% by the Sponsor Bank.
Under Priority Sector Lending (PSL) guidelines, domestic commercial banks must allocate 40% of Adjusted Net Bank Credit (ANBC) to mandated sectors like agriculture.
Non-Performing Assets (NPAs) are advances where interest or principal installments remain overdue for more than 90 days in commercial lending.
Basel III guidelines issued by the Basel Committee on Banking Supervision require Indian commercial banks to maintain a minimum CRAR of 9%.
Under Basel III in India, a Capital Conservation Buffer (CCB) of 2.5% common equity tier-1 raises total regulatory capital requirements to 11.5%.
The Insolvency and Bankruptcy Code (IBC), 2016 established a time-bound corporate insolvency resolution process overseen by the National Company Law Tribunal.
The National Asset Reconstruction Company Limited (NARCL) serves as India's bad bank to acquire and resolve stressed commercial bank assets.
On 19 July 1969, how many major Indian commercial banks with deposits exceeding ₹50 crore were nationalised through an ordinance promulgated by the Government of India?
Verified Explanation
On 19 July 1969, Prime Minister Indira Gandhi nationalised 14 major private commercial banks holding 85 percent of bank deposits across India under the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance.
2ID: GK-BANK-00017
easyCommercial Banks, Payment Banks & SFBs
How many commercial banks were nationalised by the Government of India during the second phase of bank nationalisation on 15 April 1980?
Verified Explanation
On 15 April 1980, the Government of India nationalised 6 commercial banks having demand and time liabilities exceeding ₹200 crore.
3ID: GK-BANK-00037
mediumCommercial Banks, Payment Banks & SFBs
What overall Priority Sector Lending (PSL) target is mandated by the RBI for domestic Scheduled Commercial Banks?
Verified Explanation
Domestic Scheduled Commercial Banks (excluding RRBs and SFBs) are mandated to achieve a minimum overall PSL target of 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE).
4ID: GK-BANK-00398
easyCommercial Banks, Payment Banks & SFBs
On 19 July 1969, how many major commercial banks with aggregate deposits exceeding Rs 50 crore were nationalised in the first round of bank nationalisation?
Verified Explanation
On 19 July 1969, the Government of India promulgated the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, nationalising 14 major commercial banks with deposits over Rs 50 crore.
5ID: GK-BANK-00399
easyCommercial Banks, Payment Banks & SFBs
In the second round of bank nationalisation on 15 April 1980, how many commercial banks with demand and time liabilities exceeding Rs 200 crore were nationalised?
Verified Explanation
On 15 April 1980, the Government nationalised six more commercial banks: Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank, and Vijaya Bank.
6ID: GK-BANK-00461
easyCommercial Banks, Payment Banks & SFBs
How many major commercial banks were nationalised in the first round of bank nationalisation on July 19, 1969?
Verified Explanation
On July 19, 1969, the Government of India under Prime Minister Indira Gandhi nationalised 14 major commercial banks having deposits of ₹50 crore or more through an ordinance.
7ID: GK-BANK-00462
easyCommercial Banks, Payment Banks & SFBs
How many commercial banks were nationalised in the second round of bank nationalisation on April 15, 1980?
Verified Explanation
In the second round of nationalisation on April 15, 1980, 6 private commercial banks with demand and time liabilities of ₹200 crore or more were nationalised.
8ID: GK-BANK-00519
easyCommercial Banks, Payment Banks & SFBs
How many commercial banks were nationalised in the second wave of bank nationalisation on April 15, 1980?
Verified Explanation
On April 15, 1980, the Government nationalised a second tranche consisting of 6 commercial banks (Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank, and Vijaya Bank).
9ID: GK-BANK-00002
mediumCommercial Banks, Payment Banks & SFBs
What rate of interest does the Reserve Bank of India charge when commercial banks borrow funds overnight against eligible government securities under the Liquidity Adjustment Facility (LAF)?
Verified Explanation
Repo Rate (Repurchase Option Rate) is the policy interest rate at which the RBI lends money to commercial banks against pledged government securities under the Liquidity Adjustment Facility.
10ID: GK-BANK-00008
easyCommercial Banks, Payment Banks & SFBs
Which monetary policy tool mandates commercial banks to invest a specified percentage of their NDTL in liquid assets such as government securities and gold?
Verified Explanation
Statutory Liquidity Ratio (SLR) is the proportion of NDTL that commercial banks are legally mandated to maintain in safe and liquid assets like approved government securities, cash, and gold.
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