Indian Banking - Best 50 MCQ

This article provides 50 multiple choice questions on Indian Banking, covering the historical background, banking services and products, banking regulations and policies, and current trends in the Indian banking industry. Each question is accompanied by a detailed explanation of the correct answer. This resource can be useful for students, professionals, and anyone interested in learning more about the banking sector in India.

Indian Banking

Indian Banking MCQ

MCQ.1 When was the first bank established in India?
a. 1865
b. 1770
c. 1806
d. 1921
Answer: c. 1806

Explanation: The Bank of Hindustan was established in 1806 in Calcutta (now Kolkata) and is considered as the first bank in India. However, it failed in just two years of its operation.

MCQ.2 Which of the following banks is the oldest public sector bank in India?
a. Bank of India
b. State Bank of India
c. Punjab National Bank
d. Union Bank of India
Answer: b. State Bank of India

Explanation: State Bank of India (SBI) is the oldest public sector bank in India, having been founded in 1955. It was previously known as the Imperial Bank of India, which was established in 1921.

MCQ.3 Which of the following is not a scheduled commercial bank in India?
a. HDFC Bank
b. Yes Bank
c. ICICI Bank
d. LIC Housing Finance Limited
Answer: d. LIC Housing Finance Limited

Explanation: LIC Housing Finance Limited is not a scheduled commercial bank in India. It is a subsidiary of Life Insurance Corporation of India and primarily provides home loans.

MCQ.4 Which of the following banks was nationalized in the second phase of bank nationalization in India?
a. Canara Bank
b. Central Bank of India
c. Bank of Baroda
d. Punjab and Sind Bank
Answer: c. Bank of Baroda

Explanation: Bank of Baroda was nationalized in the second phase of bank nationalization in India in 1980. The first phase of nationalization occurred in 1969, when 14 major banks were nationalized.

MCQ.5 Which of the following is not a type of banking service in India?
a. Retail banking
b. Corporate banking
c. Agriculture banking
d. Luxury banking
Answer: d. Luxury banking

Explanation: Luxury banking is not a type of banking service in India. Retail banking, corporate banking, and agriculture banking are some of the major types of banking services offered in India.

MCQ.6 What is the maximum amount insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) in case of a bank failure?
a. Rs. 1 lakh
b. Rs. 2 lakhs
c. Rs. 5 lakhs
d. Rs. 10 lakhs
Answer: a. Rs. 1 lakh

Explanation: The maximum amount insured by the DICGC in case of a bank failure is Rs. 1 lakh per depositor, per bank.

MCQ.7 Which of the following banks is not a payment bank in India?
a. Airtel Payments Bank
b. India Post Payments Bank
c. Paytm Payments Bank
d. IDFC First Bank
Answer: d. IDFC First Bank

Explanation: IDFC First Bank is not a payment bank in India. A payment bank is a type of bank that can accept deposits up to a certain limit, provide payment and remittance services, and issue prepaid payment instruments.

MCQ.8 Which of the following is a primary function of the Reserve Bank of India (RBI)?
a. Providing loans to the general public
b. Regulating the credit system of the country
c. Providing insurance to depositors
d. Managing the tax collection system
Answer: b. Regulating the credit system of the country

Explanation: Regulating the credit system of the country is a primary function of the Reserve Bank of India (RBI). The RBI is the central bank of India and is responsible for formulating and implementing monetary policy.

MCQ.9 Which of the following is a recent initiative by the Reserve Bank of India (RBI) to promote financial inclusion in India?
a. PMJDY
b. Swachh Bharat Abhiyan
c. Digital India
d. Make in India
Answer: a. PMJDY

Explanation: PMJDY (Pradhan Mantri Jan Dhan Yojana) is a recent initiative by the RBI to promote financial inclusion in India. Under this scheme, bank accounts are opened for every household in the country, with the aim of providing access to financial services to everyone, especially the poor and marginalized.

MCQ.10 Which of the following is a major challenge facing the banking sector in India?
a. Low penetration of banking services in rural areas
b. Lack of competition among banks
c. Excessive regulation by the government
d. Over-reliance on foreign capital
Answer: a. Low penetration of banking services in rural areas

Explanation: Low penetration of banking services in rural areas is a major challenge facing the banking sector in India. Despite the government’s efforts to promote financial inclusion, a large section of the rural population still lacks access to basic banking services. This hampers their ability to participate in the formal economy and hinders the overall growth of the country.

MCQ.11 Which committee recommended the establishment of Regional Rural Banks (RRBs) in India?
a. Narasimham Committee
b. Rangarajan Committee
c. Gadgil Committee
d. Narsimha Rao Committee
Answer: c. Gadgil Committee

Explanation: The Gadgil Committee, appointed in 1969, recommended the establishment of Regional Rural Banks (RRBs) in India to provide banking services in rural areas.

MCQ.12 Which of the following is a recent technology-based initiative by the Reserve Bank of India (RBI) to improve the efficiency of the payment system?
a. National Electronic Funds Transfer (NEFT)
b. Real Time Gross Settlement (RTGS)
c. Unified Payments Interface (UPI)
d. Immediate Payment Service (IMPS)
Answer: c. Unified Payments Interface (UPI)

Explanation: Unified Payments Interface (UPI) is a recent technology-based initiative by the RBI to improve the efficiency of the payment system in India. It enables users to transfer money between bank accounts instantly using a mobile phone.

MCQ.13 Which of the following is the first Indian bank to introduce credit cards?
a. State Bank of India
b. ICICI Bank
c. Axis Bank
d. HDFC Bank
Answer: a. State Bank of India

Explanation: State Bank of India (SBI) is the first Indian bank to introduce credit cards, with the launch of its SBI Gold Card in 1981.

MCQ.14 Which of the following banks is not a private sector bank in India?
a. HDFC Bank
b. Axis Bank
c. ICICI Bank
d. State Bank of India
Answer: d. State Bank of India

Explanation: State Bank of India (SBI) is not a private sector bank in India. It is a public sector bank, owned by the government.

MCQ.15 Which of the following banks is not a foreign bank operating in India?
a. Citibank
b. Standard Chartered Bank
c. DBS Bank
d. HDFC Bank
Answer: d. HDFC Bank

Explanation: HDFC Bank is not a foreign bank operating in India. It is an Indian private sector bank.

MCQ.16 Which of the following is a specialized bank in India?
a. State Bank of India
b. Punjab National Bank
c. National Bank for Agriculture and Rural Development (NABARD)
d. Oriental Bank of Commerce
Answer: c. National Bank for Agriculture and Rural Development (NABARD)

Explanation: National Bank for Agriculture and Rural Development (NABARD) is a specialized bank in India, primarily focused on providing finance and other support services to the agriculture sector and rural development.

MCQ.17 Which of the following is the first bank to introduce internet banking in India?
a. ICICI Bank
b. HDFC Bank
c. Axis Bank
d. State Bank of India
Answer: a. ICICI Bank

Explanation: ICICI Bank is the first bank to introduce internet banking in India, with the launch of its Infinity internet banking platform in 1998.

MCQ.18 Which of the following is the first bank to introduce mobile banking in India?
a. HDFC Bank
b. ICICI Bank
c. Axis Bank
d. State Bank of India
Answer: d. State Bank of India

Explanation: State Bank of India (SBI) is the first bank to introduce mobile banking in India, with the launch of its State Bank FreedoM mobile banking platform in 2008.

MCQ.19 Which of the following is a recent initiative by the Reserve Bank of India (RBI) to promote digital payments in India?
a. Jan Dhan Yojana
b. MUDRA Yojana
c. BHIM-UPI
Answer: c. BHIM-UPI

Explanation: BHIM-UPI (Bharat Interface for Money – Unified Payments Interface) is a recent initiative by the RBI to promote digital payments in India. It is a mobile payment platform that enables users to transfer money between bank accounts instantly using a mobile phone.

MCQ.20 Which of the following is not a major source of funds for banks in India?
a. Deposits from customers
b. Borrowings from other banks
c. Government grants
d. Issuance of bonds and debentures
Answer: c. Government grants

Explanation: Government grants are not a major source of funds for banks in India. Banks primarily raise funds through deposits from customers, borrowings from other banks, and issuance of bonds and debentures.

MCQ.21 Which of the following is the regulatory body for non-banking financial companies (NBFCs) in India?
a. Reserve Bank of India (RBI)
b. Securities and Exchange Board of India (SEBI)
c. Ministry of Finance
d. National Company Law Tribunal (NCLT)
Answer: a. Reserve Bank of India (RBI)

Explanation: The Reserve Bank of India (RBI) is the regulatory body for non-banking financial companies (NBFCs) in India. It regulates and supervises the activities of NBFCs to ensure financial stability and protect the interests of depositors.

MCQ.22 Which of the following is a type of bank account that is meant for individuals who do not have a permanent address?
a. Current account
b. Savings account
c. Fixed deposit account
d. Basic Savings Bank Deposit Account (BSBDA)
Answer: d. Basic Savings Bank Deposit Account (BSBDA)

Explanation: Basic Savings Bank Deposit Account (BSBDA) is a type of bank account that is meant for individuals who do not have a permanent address. It is a no-frills account that can be opened with minimum documentation and no minimum balance requirement.

MCQ.23 Which of the following is a program launched by the government of India to provide financial services to the unbanked population in India?
a. Jan Dhan Yojana
b. MUDRA Yojana
c. Pradhan Mantri Awas Yojana
d. Swachh Bharat Abhiyan
Answer: a. Jan Dhan Yojana

Explanation: Jan Dhan Yojana is a program launched by the government of India to provide financial services to the unbanked population in India. The program aims to provide a bank account, a debit card, and insurance cover to every household in the country.

MCQ.24 Which of the following is a type of loan that is granted to farmers for agricultural purposes?
a. Personal loan
b. Business loan
c. Housing loan
d. Kisan Credit Card (KCC) loan
Answer: d. Kisan Credit Card (KCC) loan

Explanation: Kisan Credit Card (KCC) loan is a type of loan that is granted to farmers for agricultural purposes. The loan is offered by banks and other financial institutions and is meant to provide financial assistance to farmers for the purchase of agricultural inputs and other farming-related expenses.

MCQ.25 Which of the following is the largest bank in India by market capitalization?
a. State Bank of India
b. HDFC Bank
c. ICICI Bank
d. Axis Bank
Answer: b. HDFC Bank

Explanation: HDFC Bank is the largest bank in India by market capitalization. It is a private sector bank that has consistently ranked among the top banks in India in terms of profitability, asset quality, and customer satisfaction.

MCQ.26 Which of the following is the first Indian bank to introduce online banking in India?
a. ICICI Bank
b. HDFC Bank
c. State Bank of India
d. Axis Bank
Answer: c. State Bank of India

Explanation: State Bank of India (SBI) is the first Indian bank to introduce online banking in India, with the launch of its online banking platform in 1996.

MCQ.27 Which of the following is the first Indian bank to introduce a mobile banking app?
a. HDFC Bank
b. ICICI Bank
c. Axis Bank
d. State Bank of India
Answer: b. ICICI Bank

Explanation: ICICI Bank is the first Indian bank to introduce a mobile banking app, with the launch of its iMobile app in 2008.

MCQ.28 Which of the following is a program launched by the government of India to provide credit to small and micro enterprises?
a. Pradhan Mantri Mudra Yojana
b. Swachh Bharat Abhiyan
c. Digital India program
d. Make in India initiative
Answer: a. Pradhan Mantri Mudra Yojana

Explanation: Pradhan Mantri Mudra Yojana is a program launched by the government of India to provide credit to small and micro enterprises. The program aims to encourage entrepreneurship and promote the growth of small businesses by providing them with easy access to credit.

MCQ.29 Which of the following is a type of credit facility offered by banks to their customers to withdraw more money than what is available in their account?
a. Overdraft
b. Term loan
c. Cash credit
d. Letter of credit
Answer: a. Overdraft

Explanation: Overdraft is a type of credit facility offered by banks to their customers to withdraw more money than what is available in their account. The customer can withdraw up to a certain limit, and interest is charged only on the amount withdrawn.

MCQ.30 Which of the following is a type of insurance policy that covers a borrower’s outstanding loan amount in case of his/her death or disability?
a. Health insurance
b. Life insurance
c. Motor insurance
d. Home insurance
Answer: b. Life insurance

Explanation: Life insurance is a type of insurance policy that covers a borrower’s outstanding loan amount in case of his/her death or disability. It provides financial protection to the borrower’s family and ensures that the outstanding loan amount is repaid to the bank in case of the borrower’s untimely demise.

MCQ.31 Which of the following is the first Indian bank to be fully owned by Indians?
a. Allahabad Bank
b. Bank of India
c. Punjab National Bank
d. Union Bank of India
Answer: c. Punjab National Bank

Explanation: Punjab National Bank (PNB) is the first Indian bank to be fully owned by Indians. It was founded in 1894 by Lala Lajpat Rai, Lala Harkishan Lal, and Dyal Singh Majithia.

MCQ.32 Which of the following is a type of bank account that can be operated jointly by two or more individuals?
a. Savings account
b. Current account
c. Fixed deposit account
d. Joint account
Answer: d. Joint account

Explanation: Joint account is a type of bank account that can be operated jointly by two or more individuals. The account holders can make transactions and operate the account jointly, and the account can be held as either “either or survivor” or “both or survivor.”

MCQ.33 Which of the following is a type of banking service that allows customers to access their bank account information and make transactions through their mobile phone?
a. Internet banking
b. Mobile banking
c. ATM banking
d. Phone banking
Answer: b. Mobile banking

Explanation: Mobile banking is a type of banking service that allows customers to access their bank account information and make transactions through their mobile phone. Customers can use their smartphones or tablets to check account balances, transfer funds, pay bills, and more.

MCQ.34 Which of the following is a type of loan that is granted to businesses for the purchase of machinery or equipment?
a. Personal loan
b. Business loan
c. Housing loan
d. Machinery loan
Answer: d. Machinery loan

Explanation: Machinery loan is a type of loan that is granted to businesses for the purchase of machinery or equipment. The loan is offered by banks and other financial institutions and is meant to provide financial assistance to businesses for the purchase of new machinery or to upgrade existing equipment.

MCQ.35 Which of the following is the first Indian bank to introduce a credit card?
a. State Bank of India
b. ICICI Bank
c. HDFC Bank
d. Axis Bank
Answer: a. State Bank of India

Explanation: State Bank of India (SBI) is the first Indian bank to introduce a credit card, with the launch of its SBI Gold Card in 1981.

MCQ.36 Which of the following is a type of banking service that allows customers to access their bank account information and make transactions through the internet?
a. Internet banking
b. Mobile banking
c. ATM banking
d. Phone banking
Answer: a. Internet banking

Explanation: Internet banking is a type of banking service that allows customers to access their bank account information and make transactions through the internet. Customers can use their desktop or laptop computers to check account balances, transfer funds, pay bills, and more.

MCQ.37 Which of the following is a program launched by the government of India to promote entrepreneurship and innovation in the country?
a. Digital India program
b. Swachh Bharat Abhiyan
c. Make in India initiative
d. Startup India program
Answer: d. Startup India program

Explanation: Startup India is a program launched by the government of India to promote entrepreneurship and innovation in the country. The program aims to provide a conducive environment for startups to grow and flourish by providing them with access to funding, mentorship, and other support.

MCQ.38 Which of the following is a type of bank account that offers a higher rate of interest than a regular savings account?
a. Current account
b. Savings account
c. Fixed deposit account
d. Recurring deposit account
Answer: c. Fixed deposit account

Explanation: A fixed deposit account is a type of bank account that offers a higher rate of interest than a regular savings account. In a fixed deposit account, the customer deposits a certain amount of money for a fixed period of time, and the bank pays a predetermined rate of interest on the deposit. The rate of interest on fixed deposits is generally higher than that on savings accounts, and the interest rate remains fixed for the entire term of the deposit.

MCQ.39 Which of the following is a type of loan that is granted to businesses to finance their day-to-day operations?
a. Personal loan
b. Business loan
c. Housing loan
d. Working capital loan
Answer: d. Working capital loan

Explanation: A working capital loan is a type of loan that is granted to businesses to finance their day-to-day operations. The loan is meant to provide short-term financing to businesses to meet their working capital requirements, such as funding for inventory, accounts payable, and other operational expenses.

MCQ.40 Which of the following is a type of banking service that allows customers to withdraw cash and perform other banking transactions through a machine?
a. Internet banking
b. Mobile banking
c. ATM banking
d. Phone banking
Answer: c. ATM banking

Explanation: ATM (Automated Teller Machine) banking is a type of banking service that allows customers to withdraw cash and perform other banking transactions through a machine. ATMs are available 24/7 and provide customers with the convenience of accessing their bank accounts and performing transactions at any time.

MCQ.41 Which of the following is a type of banking service that allows customers to transfer money to another bank account instantly?
a. NEFT
b. RTGS
c. IMPS
d. UPI
Answer: b. RTGS

Explanation: RTGS (Real-Time Gross Settlement) is a type of banking service that allows customers to transfer money to another bank account instantly. The minimum amount for an RTGS transaction is usually Rs. 2 lakh, and there is no upper limit for the transaction amount.

MCQ.42 Which of the following is a government-backed scheme that provides insurance cover to depositors in case of bank failure?
a. Pradhan Mantri Jan Dhan Yojana
b. Atal Pension Yojana
c. Pradhan Mantri Suraksha Bima Yojana
d. Deposit Insurance Scheme
Answer: d. Deposit Insurance Scheme

Explanation: The Deposit Insurance Scheme is a government-backed scheme that provides insurance cover to depositors in case of bank failure. The scheme covers all commercial banks, including foreign banks operating in India, and provides insurance cover of up to Rs. 5 lakh per depositor per bank.

MCQ.43 Which of the following is the first Indian bank to introduce internet banking?
a. ICICI Bank
b. HDFC Bank
c. Axis Bank
d. State Bank of India
Answer: a. ICICI Bank

Explanation: ICICI Bank is the first Indian bank to introduce internet banking, with the launch of its Infinity internet banking platform in 1998.

MCQ.44 Which of the following is a type of banking service that allows customers to make transactions through a virtual payment address?
a. NEFT
b. RTGS
c. IMPS
d. UPI
Answer: d. UPI

Explanation: UPI (Unified Payments Interface) is a type of banking service that allows customers to make transactions through a virtual payment address. UPI enables instant transfer of money between bank accounts using a mobile phone.

MCQ.45 Which of the following is a type of loan that is granted to individuals for the purchase of a house or apartment?
a. Personal loan
b. Business loan
c. Housing loan
d. Education loan
Answer: c. Housing loan

Explanation: A housing loan is a type of loan that is granted to individuals for the purchase of a house or apartment. The loan is offered by banks and other financial institutions and is meant to provide financial assistance to individuals for the purchase of their own home.

MCQ.46 Which of the following is a type of bank account that is meant for the purpose of saving money for a specific period of time?
a. Current account
b. Savings account
c. Fixed deposit account
d. Recurring deposit account
Answer: c. Fixed deposit account

Explanation: A fixed deposit account is a type of bank account that is meant for the purpose of saving money for a specific period of time. In a fixed deposit account, the customer deposits a certain amount of money for a fixed period of time, and the bank pays a predetermined rate of interest on the deposit.

MCQ.47 Which of the following is a type of banking service that allows customers to deposit and withdraw cash through a machine?
a. Internet banking
b. Mobile banking
c. ATM banking
d. Phone banking
Answer: c. ATM banking

Explanation: ATM (Automated Teller Machine) banking is a type of banking service that allows customers to deposit and withdraw cash through a machine. ATMs are available 24/7 and provide customers with the convenience of accessing their bank accounts and performing transactions at any time.

MCQ.48 Which of the following is a type of loan that is granted to students for the purpose of financing their education?
a. Personal loan
b. Business loan
c. Housing loan
d. Education loan
Answer: d. Education loan

Explanation: An education loan is a type of loan that is granted to students for the purpose of financing their education. The loan is offered by banks and other financial institutions and is meant to provide financial assistance to students who wish to pursue higher education in India or abroad.

MCQ.49 Which of the following is a type of banking service that allows customers to access their bank accounts and perform transactions using their mobile phones?
a. Internet banking
b. Mobile banking
c. ATM banking
d. Phone banking
Answer: b. Mobile banking

Explanation: Mobile banking is a type of banking service that allows customers to access their bank accounts and perform transactions using their mobile phones. Mobile banking provides customers with the convenience of accessing their bank accounts and performing transactions on the go.

MCQ.50 Which of the following is a type of bank account that is meant for the purpose of storing excess funds that are not required for immediate use?
a. Current account
b. Savings account
c. Fixed deposit account
d. Recurring deposit account
Answer: b. Savings account

Explanation: A savings account is a type of bank account that is meant for the purpose of storing excess funds that are not required for immediate use. Savings accounts typically earn interest on the balance, which provides customers with a means of earning passive income on their savings.

Indian Banking - Best 50 MCQ