Bank Mergers — Set 4

Correct Answer: D. 1949

• **1949** = the RBI was nationalised on January 1, 1949, under the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 — passed by Parliament the year before. • **Originally private** — RBI was founded on April 1, 1935, as a privately owned shareholders' bank with a paid-up capital of ₹5 crore; nationalisation transferred ownership to the Government of India. • Nationalisation ensured the central bank worked toward independent India's developmental and monetary goals rather than private profit. • 💡 1947 is wrong — that is India's independence year, not RBI nationalisation; 1948 is wrong — that is when the Act was passed, not when it took effect; 1950 is wrong — the Constitution came into force in 1950, not RBI nationalisation.

Correct Answer: A. Harmonization of IT systems

• **Harmonization of IT systems** = merging two banks means combining different core banking software, data formats, IFSC codes, and customer databases — the single most complex operational challenge post-merger. • **Real impact** — mismatched IT platforms can cause transaction failures, duplicate accounts, and service disruptions; India's 2020 PSB mergers took 12–18 months to fully integrate IT infrastructure. • Until IT integration is complete, staff must operate two parallel systems, increasing costs and error risk. • 💡 Increased competition is wrong — mergers reduce competition, not increase it; reduction in gold prices is wrong — unrelated to merger operations; lowering of tax rates is wrong — tax policy is set by the government, not triggered by bank mergers.

Correct Answer: C. The large bank into which smaller banks are merged

• **The large bank into which smaller banks are merged** = the anchor bank is the surviving entity that retains its name, brand, and license while absorbing the weaker or smaller banks. • **2020 examples** — PNB was anchor for OBC + United Bank; Canara Bank for Syndicate Bank; Union Bank for Andhra Bank + Corporation Bank; Indian Bank for Allahabad Bank. • The anchor bank inherits all assets, liabilities, employees, and branch networks of the absorbed banks. • 💡 A bank that manages RBI's gold is wrong — no such role exists; smallest bank in a merger deal is the opposite — it is the largest; a bank that only operates in coastal areas is completely unrelated to the merger term.

Correct Answer: C. Bank of Maharashtra

• **Bank of Maharashtra** = it was among the six PSBs left independent after the August 2019 mega-merger announcement — it continues to operate as a standalone nationalised bank headquartered in Pune. • **The 10 banks that did merge** — OBC + United Bank → PNB; Syndicate → Canara; Andhra + Corporation → Union Bank; Allahabad → Indian Bank (effective April 1, 2020). • The six banks kept independent were: Bank of Maharashtra, Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab & Sind Bank. • 💡 Allahabad Bank is wrong — it merged into Indian Bank; Andhra Bank is wrong — it merged into Union Bank; Syndicate Bank is wrong — it merged into Canara Bank.

Correct Answer: A. Bank of Bengal, Bank of Bombay, and Bank of Madras

• **Bank of Bengal, Bank of Bombay, and Bank of Madras** = these three Presidency Banks — each established in the early 1800s under British charters — were amalgamated in 1921 to form the Imperial Bank of India. • **Imperial Bank → SBI** — the Imperial Bank was later nationalised and renamed the State Bank of India on July 1, 1955, under the SBI Act, 1955. • This 1921 merger was the foundation event of India's largest public sector bank, which today has over 22,000 branches. • 💡 Bank of India and Bank of Baroda is wrong — these are separate nationalised banks, never merged with each other; Punjab National Bank and United Bank is wrong — PNB absorbed United Bank in 2020, not 1921; Alliance Bank of Simla is wrong — it was a small Punjab-based bank unrelated to the Presidency Bank merger.

Correct Answer: C. Bharatiya Mahila Bank

• **Bharatiya Mahila Bank** = established on November 19, 2013 (on Indira Gandhi's birth anniversary) as India's first bank exclusively for women, it merged into SBI on April 1, 2017. • **The full 2017 SBI merger** — five associate banks (SB of Bikaner & Jaipur, SB of Hyderabad, SB of Mysore, SB of Patiala, SB of Travancore) plus Bharatiya Mahila Bank were all absorbed into SBI simultaneously. • After the 2017 merger, SBI became one of the top 50 banks globally by assets. • 💡 Axis Bank is wrong — it is a private sector bank, never merged with SBI; Bandhan Bank is wrong — it is a private bank that converted from an NBFC and has no SBI merger; IDBI Bank is wrong — it is under LIC's control and remains a separate entity.

Correct Answer: A. Global Trust Bank

• **Global Trust Bank** = a Hyderabad-based private bank whose net worth turned negative due to massive exposure to stock market badla financing and bad loans — RBI forced its emergency merger into OBC on August 14, 2004. • **Why forced** — Global Trust Bank had huge NPAs linked to the Ketan Parekh stock scam (2001); RBI intervened to protect depositors and merged it with OBC overnight without any monetary consideration. • This was one of the first forced amalgamations of a private bank into a public sector bank in India's post-reform era. • 💡 United Western Bank is wrong — it was merged into IDBI Bank in 2006, not OBC; Nedungadi Bank is wrong — it was merged into Punjab National Bank in 2003; Sangli Bank is wrong — it was merged into ICICI Bank in 2007.

Correct Answer: D. 12

• **12** = the April 1, 2020 mega-merger consolidated 10 banks into 4, reducing the total PSB count from 27 (pre-2017) to 12 — comprising SBI, PNB, Bank of Baroda, Canara Bank, Union Bank, Indian Bank, Bank of India, Central Bank, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab & Sind Bank. • **How we got there** — pre-merger there were 27 PSBs; SBI absorbed 6 banks in 2017 (→21); BoB absorbed Dena+Vijaya in 2019 (→19); the 2020 round merged 10 into 4 (→12). • The goal was to create fewer but stronger, globally competitive banks rather than many fragmented smaller ones. • 💡 27 is wrong — that was the pre-reform count before 2017; 10 is wrong — that is how many banks were merged in 2020, not how many remained; 15 is wrong — there is no point in PSB history where exactly 15 remained.

Correct Answer: A. Allahabad Bank

• **Allahabad Bank** = founded in 1865 in Allahabad, it was India's oldest joint-stock bank; its merger into Indian Bank (headquartered in Chennai) on April 1, 2020 combined a strong North Indian presence with South Indian banking roots. • **Scale after merger** — the combined entity became the seventh-largest PSB in India with a business mix of about ₹8 lakh crore. • Indian Bank gained a vast network of branches across Uttar Pradesh, Bihar, and West Bengal through this merger. • 💡 United Bank of India is wrong — it merged into PNB, not Indian Bank; Dena Bank is wrong — it merged into Bank of Baroda in 2019; Andhra Bank is wrong — it merged into Union Bank of India in 2020.

Correct Answer: C. State Bank of Saurashtra

• **State Bank of Saurashtra** = it was the first SBI associate bank to be merged into SBI, effective August 13, 2008 — marking the beginning of the modern SBI consolidation drive. • **What followed** — State Bank of Indore was merged next in August 2010; the remaining five associates and Bharatiya Mahila Bank were all merged simultaneously on April 1, 2017. • State Bank of Saurashtra was headquartered in Rajkot and had its roots in the former Saurashtra region of Gujarat. • 💡 State Bank of Mysore is wrong — it merged in April 2017, not 2008; State Bank of Indore is wrong — it merged in 2010, second after Saurashtra; State Bank of Hyderabad is wrong — it merged in April 2017 along with the remaining associates.