Tag: nationalisation and privatisation of banks

Questions Related to nationalisation and privatisation of banks

The number of banks nationalized in 1980 was ______.

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. 12

  2. 10

  3. 8

  4. 6

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Correct Option: D

The number of bank nationalized in 1969 was ________.

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. 8

  2. 10

  3. 14

  4. 16

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Correct Option: C

After nationalisation, there has been massive deposit mobilisation in which state?

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. Maharashtra

  2. Uttar Pradesh

  3. J & K

  4. Punjab

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Correct Option: A

Reasons for nationalisation of banks was _______________.

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. Neglect of priority sectors

  2. Urban bias

  3. Profit motive

  4. All of the above

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Correct Option: D

What is the total number of banks nationalized in India?

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. 20

  2. 14

  3. 6

  4. 40

Show answer
Correct Option: A

That portion of total deposit which a commerical bank has to keep with itself in the form of eligible securities is called _________.

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. CRR

  2. SLR

  3. OMO

  4. Bank Rate

Show answer
Correct Option: B
Explanation:

Statutory Liquidity Ratio (SLR) refers to liquid assets that the commercial banks must hold on daily basis as a percentage of their total deposits. SLR is determined by the central bank and is a legal requirement to be fulfilled by the commercial banks. It includes 

1. Cash 
2. Gold 
3. Unencumbered approved securities 

Banks were nationalized in 1969 and 1980 for all the following reasons except ______________.

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. that the Government of India wanted to take over the control of all the essential services

  2. to reduce concentration of wealth and economic power

  3. to empower the village industries

  4. to make more useful use of funds of banks

Show answer
Correct Option: A
Explanation:

Banks were nationalized because of the following reasons:

Private banking saw its introduction in India around mid 19th century and was predominant till Independence.

Commercial banks were under private sectors and were more businessmen friendly.

They lacked the tenacity to serve the poorer section of the spectrum majorly from agro and allied-agro contingent. 

Agriculture was the back bone of Indian economy and lack of financial empathy towards them was deemed reckless and thus a reform was required.

Hence bank nationalisation was sought:

·         To reduce concentration of wealth and economic power

·         To empower the village industries

·         To make more useful use of funds of banks

The recent global financial turmoil has adverse impact on the Indian financial markets, particularly the equity market and the foreign sector, however, Indian banks have not been significantly impacted by these developments. Which one among the following is the main reason behind this?

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. Comfortable capital adequacy ratio, asset quality, profitability indicators and lower non-performing assets.

  2. Fiscal stimulation package by the Central Government for some select industries.

  3. Strong foreign exchange reserves of the Reserve Bank of India.

  4. More credit by the banks to the housing and real estate sector.

Show answer
Correct Option: A
Explanation:

Indian Banks have strong balance sheets, are well capitalised and well regulated. The capital adequacy ratio of every Indian bank is well above the basel norms and those stipulated by the RBI. Not a single Indian bank has had to be rescued in the aftermath of the crisis. India has a long history of working with Public Sector Banks.

Match the items of List-I with List-II:

List-I List-II
(a) RBI Nationalization (i) $1964$
(b) Imperial Bank Nationalization (ii) $1949$
(c) Nationalization of $14$ commercial Banks (iii) $1955$
(d) Establishment of IDBI (iv) $1969$

Identify the correct combination:

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. $(a) - (i), (b) - (ii), (c) - (iii), (d) - (iv)$

  2. $(a) - (ii), (b) - (iii), (c) - (i), (d) - (iv)$

  3. $(a) - (iii), (b) - (ii), (c) - (iv), (d) - (i)$

  4. $(a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)$

Show answer
Correct Option: D
Explanation:

(a) In 1949, Reserve Bank of India(RBI) which is an apex bank that controls the entire banking system of India was nationalized to be the central bank of India. It is the sole agency of note issuing and controls the supply of money in the economy. 

(b) In 1955, the Imperial Bank of India which was one of the oldest and the largest commercial bank of the Indian subcontinent was nationalized into the State Bank of India. 
(c) In 1969, fourteen major private commercial bank of India were nationalized which included Indian bank, Indian Overseas bank, Canara bank etc in order to increase the efficiency of public sector. 
(d) In 1964, Industrial Development Bank of India (IDBI) was established by an Act to provide short term as well as long term credits and other financial facilities for the development of the Indian industry. 

The effect of increase in CRR will be reduced or nullified if _________.

history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

  1. bank rate is reduced

  2. securities are sold in the open market

  3. SLR is increased

  4. people do not borrow from non-banking institutions

Show answer
Correct Option: A
Explanation:

The effect of increased CRR will be reduced or nullified if bank rate is reduced because both are inverse functions. If CRR will increase it contracts credit and if bank rate reduced it expands credit.