Nationalization — Set 2

Correct Answer: B. New Bank of India

• **New Bank of India** = it was merged with Punjab National Bank in 1993, reducing the count of nationalised banks from 20 to 19 — the only merger among nationalised banks before the 2019-2020 consolidation round. • **Why New Bank of India?** — it was declared financially weak and the RBI recommended merger; this was the first and only pre-2000 case of one nationalised bank being absorbed into another. • New Bank of India had been nationalised in the 1980 wave (one of the 6 banks); after the 1993 merger, PNB became one of the larger PSBs. • 💡 Oriental Bank of Commerce is wrong — it was merged with PNB only in 2020 (not 1993); Corporation Bank is wrong — it was merged with Union Bank of India in 2020; United Bank of India is wrong — it was merged with PNB in 2020, not 1993.

Correct Answer: D. 20

• **20 banks total** = 14 nationalised in July 1969 + 6 nationalised in April 1980 = 20, not counting SBI (nationalised 1955) or RBI (nationalised 1949). • **After 1993 merger** — New Bank of India merged into PNB in 1993, reducing the active count to 19; further mergers in 2019-2020 reduced it to 12 PSBs. • SBI and its associate banks (later merged into SBI in 2017) form a separate group from these 20 nationalised commercial banks. • 💡 14 is wrong — that is only the first phase (1969); 22 is wrong — no such total exists; 18 is wrong — this does not correspond to either phase or combination.

Correct Answer: B. A.D. Gorwala (Rural Credit Survey) Committee

• **A.D. Gorwala Committee** = formally the All India Rural Credit Survey Committee (1951–54), chaired by A.D. Gorwala; it recommended nationalising the Imperial Bank and transforming it into a state-partnered bank to extend rural credit. • **Outcome** — acting on this recommendation, the government passed the State Bank of India Act, 1955, nationalising Imperial Bank on July 1, 1955 as SBI. • The committee found that rural credit needs were massively unmet by private banking; SBI was seen as the vehicle to reach villages where no private bank operated. • 💡 Verma Committee is wrong — it dealt with weak banks restructuring (1999); Narasimham Committee is wrong — it recommended liberalisation and banking sector reforms (1991 and 1998), not SBI's creation; Hilton Young Commission is wrong — it recommended establishing the Reserve Bank of India (1926).

Correct Answer: C. Mass Banking

• **Mass Banking** = Indira Gandhi coined the shift from 'Class Banking' (serving only the wealthy elite and large corporations) to 'Mass Banking' (accessible to farmers, labourers, small traders, and the rural poor). • **Practical result** — after nationalisation, priority sector lending targets were introduced (40% of advances for agriculture, small industry, etc.), and 'Lead Bank Scheme' was launched to assign each district to a bank for branch expansion. • This was directly tied to the broader political slogan 'Garibi Hatao' (Abolish Poverty) and the goal of inclusive economic growth. • 💡 Digital Banking is wrong — it did not exist as a concept in 1969; Corporate Banking is wrong — that is precisely what 'Class Banking' represented, which nationalisation was moving away from; Elite Banking is wrong — same as Corporate Banking, it is the opposite of what was intended.

Correct Answer: D. Andhra Bank

• **Andhra Bank** = one of the 6 banks nationalised on April 15, 1980 in the second wave; its deposits had crossed the ₹200 crore threshold, making it eligible. • **The full 1980 list**: Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank, Vijaya Bank. • Andhra Bank was later merged into Union Bank of India in April 2020 as part of the government's PSB consolidation that reduced 10 banks to 4. • 💡 Bank of India is wrong — it was nationalised in 1969 (one of the 14); Syndicate Bank is wrong — it was nationalised in 1969 and later merged into Canara Bank (2020); Central Bank of India is wrong — it was nationalised in 1969 and continues as an independent PSB.

Correct Answer: A. Bank of Baroda

• **Bank of Baroda** = it is a nationalised bank under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969 — part of the 14-bank wave — not affiliated with the SBI group. • **State Bank Group** — State Bank of Patiala, State Bank of Hyderabad, and State Bank of Bikaner and Jaipur were associate banks of SBI, not separately nationalised commercial banks; all were merged into SBI in 2017. • The distinction matters for exam purposes: 'nationalised banks' = 1969/1980 wave; 'SBI group' = SBI + its former associates. • 💡 State Bank of Patiala is wrong as the answer — it was an SBI associate, not a separately nationalised bank; State Bank of Hyderabad is wrong — same reason; State Bank of Bikaner and Jaipur is wrong — same reason.

Correct Answer: A. Government ownership became 100%

• **100% government ownership** = upon nationalisation, the central government took over 100% of the equity of each bank; original private shareholders received compensation (though the amount was disputed in the R.C. Cooper case). • **Later dilution** — post-1991 liberalisation, PSBs were allowed to raise capital from the public via IPOs, but the government was required to retain at least 51% stake; today most PSBs have government ownership between 55–90%. • This 100% initial takeover was what legally made them 'nationalised banks' distinct from merely regulated private banks. • 💡 RBI took 100% stake is wrong — the central government, not the RBI, holds the ownership stake; Foreign banks took 25% is wrong — nationalisation was specifically to reduce foreign and private control; Public ownership became 51% is wrong — that is the minimum post-liberalisation threshold, not the initial nationalisation position.

Correct Answer: B. State Bank of India

• **State Bank of India** = the Imperial Bank of India became SBI on July 1, 1955; Imperial Bank was itself formed in 1921 by merging the three presidency banks (Bank of Bengal, Bank of Bombay, Bank of Madras). • **Timeline**: Presidency banks (pre-1921) → Imperial Bank of India (1921) → State Bank of India (July 1, 1955) under the SBI Act, 1955. • SBI is the largest public sector bank in India and was kept separate from the 1969 and 1980 nationalisation waves since it was already state-owned. • 💡 Indian Overseas Bank is wrong — it was a privately founded bank nationalised in 1969; Reserve Bank of India is wrong — RBI was nationalised in 1949 and was never called 'Imperial Bank'; Punjab National Bank is wrong — PNB was founded in 1894 in Lahore as a private bank, nationalised in 1969.

Correct Answer: C. Punjab and Sind Bank

• **Punjab and Sind Bank** = it was nationalised in the second phase on April 15, 1980, as one of the 6 banks with deposits exceeding ₹200 crore. • **Punjab and Sind Bank today** — it remains an independent PSB and has its headquarters in New Delhi; it was not merged in the 2019-2020 consolidation round. • The 1980 group: Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank, Vijaya Bank. • 💡 Indian Bank is wrong — it was nationalised in 1969 (one of the 14); UCO Bank is wrong — it was nationalised in 1969; Bank of Maharashtra is wrong — it was nationalised in 1969.

Correct Answer: B. 6

• **6 banks** = exactly six commercial banks were nationalised on April 15, 1980: Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank, and Vijaya Bank. • **Threshold** — these 6 banks all had deposits exceeding ₹200 crore, the criterion set for the second nationalisation wave. • After New Bank of India's merger with PNB in 1993, only 5 of the original 1980 batch remained as independent PSBs (until the 2019-2020 consolidation). • 💡 12 is wrong — no nationalisation wave involved 12 banks; 4 is wrong — no wave nationalised exactly 4 banks; 8 is wrong — total across both phases was 14+6=20, not 8 in 1980.