Bank Mergers — Set 5
Banking · बैंक विलय · Questions 41–50 of 50
The P.J. Nayak Committee (2014) recommended which of the following regarding public sector banks?
Correct Answer: C. Reducing government stake to below 50%
The P.J. Nayak Committee recommended that the government should reduce its stake in banks to allow more autonomy. It also suggested the creation of a Bank Board Bureau. These ideas eventually supported the push for stronger, consolidated banking units.
Which act provides the legal framework for the amalgamation of banking companies in India?
Correct Answer: D. Banking Regulation Act, 1949
Section 44A of the Banking Regulation Act, 1949, deals with the procedure for the merger of banking companies. It empowers the RBI to sanction schemes of amalgamation. This ensures that the process remains legally sound and protects all stakeholders.
What happens to the 'Asset Quality' of an anchor bank immediately after merging with a weak bank?
Correct Answer: B. It usually deteriorates due to the absorption of bad loans
The correct answer is 'It usually deteriorates due to the absorption of bad loans'. When a strong bank absorbs a weak bank, it also takes on the non-performing assets (NPAs) of the latter. This often leads to a temporary rise in the overall NPA ratio of the merged entity. However, the goal is long-term stability through better recovery processes.
Which bank was merged with Bank of Baroda along with Dena Bank in 2019?
Correct Answer: B. Vijaya Bank
Vijaya Bank and Dena Bank were the two entities that merged into Bank of Baroda. This was a strategic move to create a banking giant with a balanced geographical presence. Vijaya Bank was known for its strong performance and Southern roots.
Which city-based bank was merged into Punjab National Bank in 2020?
Correct Answer: B. United Bank of India (Kolkata)
United Bank of India was headquartered in Kolkata before merging with PNB. This gave PNB a significantly stronger presence in Eastern and North-Eastern India. Oriental Bank of Commerce (Gurgaon) was the other bank in this three-way merger.
In a bank merger, what happens to the IFSC codes of the branches of the bank that is being absorbed?
Correct Answer: A. They are usually changed to new codes of the anchor bank
Post-merger, the absorbed bank's branches are integrated into the anchor bank's system, leading to new IFSC codes. Customers are notified well in advance to update their records for electronic transfers. This is part of the technical integration process.
The term 'Amalgamation' in banking is most commonly used as a synonym for?
Correct Answer: A. Merger
The correct answer is 'Merger'. Amalgamation refers to the process of combining two or more entities into a single one. In the banking sector, it describes the consolidation of multiple banks into an anchor bank. The term is widely used in legal and regulatory documents regarding bank consolidations.
Which bank was formed in 1955 after the nationalization of the Imperial Bank of India?
Correct Answer: D. State Bank of India
The State Bank of India was established on July 1, 1955, by taking over the Imperial Bank. This followed the recommendations of the All India Rural Credit Survey Committee. It was designed to provide banking facilities to rural and semi-urban areas.
Which of the following is a potential disadvantage of bank mergers for customers?
Correct Answer: D. Closure of overlapping branches
To achieve operational efficiency, merged banks often close or relocate branches that are too close to each other. This can cause inconvenience to customers who prefer a specific location. However, it helps the bank in reducing unnecessary rental and administrative costs.
Which committee is also known as the 'Banking Sector Reforms Committee' (1998)?
Correct Answer: D. Narasimham Committee II
The Narasimham Committee II focused specifically on banking sector reforms after the 1991 changes. It emphasized the need for capital adequacy and the creation of strong, globally competitive banks. Many of today's merger policies are based on its second report.