Bank Nationalisation and Mergers in India: 1949 to 2020

The correct answer is C, 1955. The All India Rural Credit Survey Committee found that rural credit needed a bank with a nationwide branch network, so Parliament passed the State Bank of India Act, 1955, and the Imperial Bank of India was taken over and renamed the State Bank of India with effect from 1 July 1955. The Imperial Bank itself had been formed in 1921 by joining the presidency banks of Bengal, Bombay and Madras.

Option A, 1947, is the year of independence and of no banking statute of this kind. Option B, 1965, is far too late; by then the State Bank already had its associate banks under the Act of 1959. Option D, 1950, is the year the Constitution came into force, and candidates pick it by association. Note also that 1949 was the year the Reserve Bank was nationalised, which is a different event from the creation of the State Bank.

The correct answer is A, 1990. SIDBI was set up under the Small Industries Development Bank of India Act, 1989 and began operations in 1990 as the principal financial institution for the promotion, financing and development of micro, small and medium enterprises. It started as a subsidiary of IDBI and its head office is at Lucknow, which is itself a frequently asked detail.

Option B, 1988, is the year before the Act and is a common trap. Option C, 1992, is the year the Securities and Exchange Board of India became a statutory body, and Option D, 1994, is the year the first new generation private banks were licensed after the Narasimham Committee report. Keeping the development institutions in order helps: NABARD in 1982, SIDBI in 1990, and the National Housing Bank in 1988, each set up by its own Act of Parliament.

The correct answer is C, Fourteen. On 19 July 1969 the government promulgated an ordinance nationalising fourteen major commercial banks, each of which held deposits of fifty crore rupees or more. The list included Central Bank of India, Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India, Allahabad Bank, Indian Bank, Indian Overseas Bank, Syndicate Bank, Dena Bank, United Bank of India, United Commercial Bank and Bank of Maharashtra.

Option A, six, is the number nationalised in the second round of 15 April 1980. Option B, eight, matches no round, although the State Bank group once had seven associate banks. Option D, twenty, is the sum of the two rounds, fourteen plus six, and is the distractor that catches most candidates. Remember the pairs as fourteen in 1969 with fifty crore rupees, and six in 1980 with two hundred crore rupees.

The correct answer is B, Six. On 15 April 1980 six private banks whose deposits were two hundred crore rupees or more were nationalised: Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab and Sind Bank, and Vijaya Bank. With these, public ownership covered the greater part of bank deposits in the country.

Option A, four, is the number of anchor banks in the amalgamation that took effect on 1 April 2020. Option C, seven, was the number of associate banks of the State Bank of India under the Act of 1959. Option D, eleven, matches no event in this sequence. Note that five of these six banks were themselves later merged away: New Bank of India into Punjab National Bank, Vijaya Bank into Bank of Baroda, Oriental Bank of Commerce into Punjab National Bank, and Andhra Bank with Corporation Bank into Union Bank of India.

The correct answer is B, 1 January 1949. The Reserve Bank of India began as a shareholders' institution in 1935 and was taken into full government ownership from 1 January 1949 under the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. From that date the entire share capital of the central bank has been held by the Union government.

Option A, 1 April 1935, is the day the Reserve Bank began operations under the RBI Act, 1934, following the recommendation of the Hilton Young Commission, but it was then privately held. Option C, 1 July 1955, is the day the Imperial Bank became the State Bank of India. Option D, 19 July 1969, is the date of the first round of commercial bank nationalisation. All four dates belong to this topic, which is why the question is set as a list of them.

The correct answer is A, New Bank of India. New Bank of India, one of the six banks nationalised in 1980, ran into heavy losses and was amalgamated with Punjab National Bank in 1993. It was the first time one nationalised bank was merged into another, and for years it stood alone as an example of consolidation in the public sector.

Option B, Oriental Bank of Commerce, was indeed merged into Punjab National Bank, but in the round that took effect on 1 April 2020, not in 1993. Option C, United Bank of India, was merged into Punjab National Bank in that same 2020 round. Option D, Nedungadi Bank, was a small private bank of Kerala that was merged into Punjab National Bank in 2003. All three wrong options did eventually join Punjab National Bank, so only the year decides the answer.

The correct answer is A, Canara Bank. Under the amalgamation notified with effect from 1 April 2020, Syndicate Bank was merged into Canara Bank. Both banks had their roots in coastal Karnataka, Canara Bank at Mangaluru and Syndicate Bank at Udupi, so the merged bank kept a strong base in the same region.

Option B, Union Bank of India, absorbed Andhra Bank and Corporation Bank in the same round. Option C, Indian Bank, absorbed Allahabad Bank. Option D, Bank of Baroda, had already absorbed Vijaya Bank and Dena Bank a year earlier, from 1 April 2019. The four anchor banks of the 2020 round were Punjab National Bank, Canara Bank, Union Bank of India and Indian Bank, and remembering which six banks went into which of the four is the whole of this question.

The correct answer is B, Indian Bank. Allahabad Bank, founded in 1865 and one of the fourteen banks nationalised in 1969, was amalgamated into Indian Bank with effect from 1 April 2020. Indian Bank, founded in 1907 at Madras, was the anchor bank, so the older institution disappeared into the younger one, which is the detail examiners like about this pair.

Option A, Punjab National Bank, absorbed Oriental Bank of Commerce and United Bank of India in the same round. Option C, Canara Bank, absorbed Syndicate Bank. Option D, Bank of India, was not an anchor bank in this round at all and continues as a separate public sector bank. After this round the number of public sector banks came down from twenty-seven in 2017 to twelve.

The correct answer is B, Bank of Baroda. With effect from 1 April 2019, Vijaya Bank of Karnataka and Dena Bank of Gujarat were merged into Bank of Baroda. It was the first three way amalgamation of public sector banks in India, and the merged entity became one of the largest public sector banks by branch network.

Option A, Punjab National Bank, took in Oriental Bank of Commerce and United Bank of India a year later. Option C, Union Bank of India, took in Andhra Bank and Corporation Bank in the same 2020 round. Option D, State Bank of India, had completed its own merger in 2017 by absorbing five associate banks and Bharatiya Mahila Bank. Note that Dena Bank was one of the fourteen banks of 1969 and Vijaya Bank one of the six of 1980.

The correct answer is B, Rupees 50 crore. The cut off used in the first round of nationalisation was deposits of fifty crore rupees or more as on the relevant date, and fourteen banks crossed it. The purpose stated in the preamble was to control the commanding heights of the economy and to direct credit to agriculture, small industry, exports and the weaker sections.

Option A, twenty-five crore rupees, matches no round. Option C, one hundred crore rupees, is a figure candidates invent as a midpoint. Option D, two hundred crore rupees, is the threshold of the second round in 1980, when six banks were nationalised. The pair to memorise is fifty crore rupees with fourteen banks in 1969 and two hundred crore rupees with six banks in 1980; papers often give the year and ask the amount, or give the amount and ask the number.

The correct answer is B, the Bank Nationalisation case. R. C. Cooper, a shareholder and director of one of the affected banks, challenged the law of 1969, and an eleven judge bench of the Supreme Court struck it down because the compensation provided for the acquired undertakings was not adequate and the banks were barred from carrying on business. Parliament then enacted a fresh law, so nationalisation stood.

Option A, the Privy Purse case, is Madhav Rao Scindia v. Union of India, about the derecognition of the princes. Option C, the Fundamental Rights case, is Kesavananda Bharati v. State of Kerala of 1973, which laid down the basic structure doctrine. Option D, the Judges Transfer case, is S. P. Gupta v. Union of India. All four are landmark cases of the same period, which is why they appear together as options.

The correct answer is A, Bharatiya Mahila Bank. From 1 April 2017 the State Bank of India absorbed its five remaining associate banks, the State Bank of Bikaner and Jaipur, the State Bank of Hyderabad, the State Bank of Mysore, the State Bank of Patiala and the State Bank of Travancore, together with Bharatiya Mahila Bank, which had been set up in 2013 as a bank focused on women customers.

Option B, Dena Bank, was merged into Bank of Baroda in 2019. Option C, Corporation Bank, went into Union Bank of India in 2020. Option D, United Bank of India, went into Punjab National Bank in 2020. Note that two associate banks had been merged into the State Bank earlier, the State Bank of Saurashtra in 2008 and the State Bank of Indore in 2010, which is why only five were left in 2017.