UPSC Indian Economy – Chapter 11: Banking System and Reforms (32 MCQs)

A loan is classified as a non-performing asset when interest or principal is overdue for more than:

How many public sector banks have there been in India since 1 April 2020?

Which one of the following is a liability of a commercial bank?

In 1969, how many banks were nationalised?

Payments banks in India:

The deposit insurance cover per depositor per bank under DICGC is:

The minimum capital to risk-weighted assets ratio required of banks in India, including the capital conservation buffer, is:

According to the RBI's Financial Stability Report of June 2026, the gross NPA ratio of scheduled commercial banks in March 2026 was:

Which body replaced the Banks Board Bureau in 2022?

The SARFAESI Act, 2002 mainly enables banks to:

A bank has gross advances of Rs 1,000 crore and gross NPAs of Rs 18 crore, with provisions of Rs 13.5 crore. Its provision coverage ratio is:

After the "One State, One RRB" amalgamation of 2025, the number of regional rural banks is:

Under the Banking Laws (Amendment) Act, 2025, a depositor can nominate up to:

The Asset Quality Review that forced banks to recognise hidden bad loans was carried out by the RBI in:

Consider the following statements about regional rural banks:
1. They were set up under the RRB Act, 1976.
2. The Centre, the sponsor bank and the State hold shares in the ratio 50 : 35 : 15.
3. In 2025-26 their gross NPA ratio fell to 5.3 per cent.
Which of the statements given above are correct?

The Banking Laws (Amendment) Act, 2025 raised the "substantial interest" threshold in a bank from Rs 5 lakh to:

Assertion (A): Indian banks hold more capital than the Basel III global minimum requires.
Reason (R): The RBI prescribes a minimum CRAR of 9 per cent against the Basel minimum of 8 per cent.

Which of the following are tools used to resolve bad loans in India?
1. Insolvency and Bankruptcy Code, 2016
2. National Asset Reconstruction Company Ltd
3. Asset reconstruction companies under SARFAESI
Select the correct answer:

Arrange the following in chronological order:
1. Imperial Bank of India formed
2. State Bank of India formed
3. Nationalisation of 14 banks
4. Nationalisation of 6 banks

Which public sector bank absorbed Allahabad Bank in the consolidation of 1 April 2020?

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements:
1. There is no minimum capital requirement for wholly owned banking subsidiaries in India.
2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.
Which of the statements given above is/are correct?

With reference to the 'Banks Board Bureau (BBB)', which of the following statements are correct?
1. The Governor of RBI is the Chairman of BBB.
2. BBB recommends for the selection of heads for Public Sector Banks.
3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.
Select the correct answer using the code given below:

With reference to 'Urban Cooperative Banks' in India, consider the following statements:
1. They are supervised and regulated by local boards set up by the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.
Which of the statements given above is/are correct?

Consider the following statements:
1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
Which of the statements given above is/are correct?

What is the importance of the term "Interest Coverage Ratio" of a firm in India?
1. It helps in understanding the present risk of a firm that a bank is going to give loan to.
2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to.
3. The higher a borrowing firm's level of Interest Coverage Ratio, the worse is its ability to service its debt.
Select the correct answer using the code given below:

Which of the following is not included in the assets of a commercial bank in India?

The Chairmen of public sector banks are selected by the:

Consider the following statements:
1. Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account holders fail to repay dues.
2. CAR is decided by each individual bank.
Which of the statements given above is/are correct?

What is the purpose of setting up of Small Finance Banks (SFBs) in India?
1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:

The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
2. Payment Banks can issue both credit cards and debit cards.
3. Payment Banks cannot undertake lending activities.
Select the correct answer using the code given below.

'Basel III Accord' or simply 'Basel III', often seen in the news, seeks to:

Priority Sector Lending by banks in India constitutes the lending to: