The National Bank for Agriculture and Rural Development (NABARD) was established in which year?

The correct answer is A, 1969. On 19 July 1969 the Government of India issued an ordinance taking over the fourteen largest Indian scheduled commercial banks, those whose deposits stood at ₹50 crore or more. Indira Gandhi held the Finance portfolio along with the Prime Minister's office at the time, and the stated purpose was to direct credit to agriculture, small industry and the unbanked districts.

Option B, 1970, is the year the Banking Companies (Acquisition and Transfer of Undertakings) Act was passed to replace the ordinance after the Supreme Court struck it down, which is why the year is a favourite distractor. Option C, 1972, belongs to no step in the nationalisation story. Option D, 1950, is far too early; in that year the Reserve Bank had been in public ownership for barely a year and commercial banking was still entirely private. The second round of nationalisation, of six banks, came on 15 April 1980.

The correct answer is A, Allahabad Bank. It was founded in 1865 and is remembered as the oldest joint stock bank in India, a joint stock bank being one owned by shareholders rather than by a partnership of agency houses. The presidency banks were older but were chartered institutions of the East India Company rather than ordinary joint stock companies.

Option B, Bank of Baroda, was founded in 1908 by Maharaja Sayajirao Gaekwad III of Baroda, more than forty years later. Option C, Yes Bank, belongs to the generation of private banks licensed after the reforms of the 1990s and began business in 2004, so it cannot be the oldest anything. Option D, Punjab National Bank, was registered in 1894 and opened at Lahore; it holds a different distinction, that of the first bank floated with wholly Indian capital and Indian management, and examiners often swap the two claims in the options.

The correct answer is C, 1949. The Reserve Bank opened in 1935 as a shareholders' bank with privately held share capital. Parliament passed the Reserve Bank of India (Transfer to Public Ownership) Act in 1948, and the transfer took effect from 1 January 1949, since when the Bank has been wholly owned by the Government of India.

Option A, 1947, is the year of independence, when the Reserve Bank was still privately owned and was in fact acting as the common central bank for both India and Pakistan until mid-1948. Option B, 1948, is the year the enabling Act was passed and is the trap in this question: the Act is of 1948, the nationalisation of 1949. Option D, 1950, is the year the Constitution came into force and the Planning Commission was set up, neither of which touches the ownership of the Bank. The Banking Regulation Act also dates from 1949.

The correct answer is A, 1975. The rupee was tied to the pound sterling from colonial times and stayed pegged to it after independence. In 1975 the link was cut and the rupee was tied instead to a basket of currencies of India's major trading partners, with the Reserve Bank fixing the daily rate. The step was taken because the pound itself had become unstable after the breakdown of the fixed exchange rate system in the early 1970s.

Option B, 1947, is independence, when the sterling link was retained. Option D, 1963, belongs to no exchange rate change; the two devaluations students confuse it with are 1949 and 1966. Option C, 1982, is the year NABARD and the EXIM Bank were set up, not an exchange rate landmark. The basket peg lasted until the reforms of 1991 to 1993, when India moved to a market determined exchange rate.

The correct answer is B, the Hilton Young Commission. Formally the Royal Commission on Indian Currency and Finance, it reported in 1926 that the control of currency and of credit should not be split between the Government and the Imperial Bank but placed in one central bank. Its recommendation led to the Reserve Bank of India Act of 1934 and the Bank commenced operations on 1 April 1935.

Option A, the Narasimham Committee, comes much later: the working group on rural banks that led to Regional Rural Banks, and then the reform committees of 1991 and 1998. Option C, the Chelliah Committee, reported on reform of the tax system in the early 1990s and has nothing to do with central banking. Option D, the Sivaraman Committee, recommended the National Bank for Agriculture and Rural Development, which was set up on 12 July 1982. Examiners pair each committee with its institution, so learn them as pairs.