Understanding the banking structure in India is one of the most important topics in the JAIIB Indian Economy & Indian Financial System (IE & IFS) paper. This topic explains how the Indian banking system evolved, the different types of banks operating in the country, major banking reforms, bank nationalisation, mergers, and the classification of banks under the Reserve Bank of India (RBI).
Since several factual as well as conceptual questions are asked from this area, candidates should have a clear understanding of the banking structure rather than simply memorising facts.
In this blog, we have provided complete details about the JAIIB IE & IFS Banking Structure topic, along with a 50-question practice quiz PDF that includes correct answers and detailed solutions.
What is the banking structure in India?
The banking structure in India refers to the organised system of banks that provide financial services such as accepting deposits, lending money, facilitating payments, and supporting economic development. The Indian banking system has evolved over more than two centuries and is regulated primarily by the Reserve Bank of India (RBI). Today, it includes commercial banks, cooperative banks, regional rural banks, payment banks, and small finance banks, each serving different sections of society.
- It provides organised banking services across the country.
- The RBI is the central regulator of the banking system.
- Banks mobilise savings and provide loans.
- Different types of banks serve different customer groups.
- The banking system supports agriculture, industries, businesses, and individuals.
- Banking plays an important role in India’s economic growth.
Download Practice Quiz on JAIIB IE & IFS Banking Structure
Strengthen your JAIIB IE & IFS preparation with this Banking Structure Practice Quiz PDF. It includes 50 important MCQs covering the history of banking in India, bank nationalisation, types of banks, scheduled and non-scheduled banks, cooperative banks, Regional Rural Banks (RRBs), public sector bank mergers, and other frequently asked Banking Structure concepts, along with correct answers and detailed solutions.
Attempt Quiz on JAIIB IE & IFS Banking Structure
Test your understanding of the Banking Structure topic with this practice quiz featuring important MCQs on the history and evolution of banking in India, bank classifications, public and private sector banks, scheduled and non-scheduled banks, cooperative banks, RRBs, bank mergers, and other key concepts frequently asked in the JAIIB IE & IFS examination.
1. In which year was the Bank of Hindustan established, marking the beginning of formal banking in India?
2. Which three Presidency Banks were amalgamated to form the Imperial Bank of India?
3. In which year was the Imperial Bank of India renamed as the State Bank of India?
4. The State Bank of India is governed under which Act?
5. Which commission recommended the establishment of a central banking regulator in India, leading to the creation of the RBI?
6. The Reserve Bank of India commenced its business operations on which date?
7. The Reserve Bank of India was nationalised in which year?
8. Under which schedule of the RBI Act 1934 are Scheduled Banks included?
9. What is the minimum paid-up capital required for a bank to be classified as a Scheduled Bank under the RBI Act?
10. Which of the following is NOT an example of a Non-Scheduled Bank in India?
11. In which Five Year Plan did the nationalisation of private banks in India take place?
12. How many private banks were nationalised on 19th July 1969?
13. What was the deposit threshold for banks nationalised in the second phase on 16th April 1980?
14. How many banks were nationalised in the second phase of bank nationalisation in 1980?
15. The Lead Bank Scheme was launched by the RBI in which month and year?
16. What is the primary purpose of the Lead Bank Scheme?
17. The Co-operative Movement in India was pioneered by which person?
18. In which year was the Co-operative Societies Act passed in India?
19. Regional Rural Banks (RRBs) were established after which Act was passed?
20. What was the primary aim of establishing Regional Rural Banks (RRBs)?
Quiz Summary
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How did the banking system develop in India?
The Indian banking system has gone through several important stages, beginning during British rule and continuing after Independence. Understanding this timeline helps candidates answer history-based questions in the JAIIB examination.
| Year | Major Event |
| 1770 | Bank of Hindustan established, regarded as the first formal bank in India. |
| 1806 | Bank of Calcutta established. Later renamed Bank of Bengal. |
| 1840 | Bank of Bombay established. |
| 1843 | Bank of Madras established. |
| 1921 | The three Presidency Banks were merged to form the Imperial Bank of India. |
| 1935 | Reserve Bank of India (RBI) started functioning as India’s central bank. |
| 1955 | Imperial Bank of India became the State Bank of India (SBI). |
How was the State Bank of India formed?
The State Bank of India is India’s largest public sector bank. It was formed by transforming the Imperial Bank of India after Independence to strengthen banking services across the country.
| Stage | Description |
| Presidency Banks | Bank of Bengal, Bank of Bombay and Bank of Madras |
| Merger | Combined to form the Imperial Bank of India in 1921 |
| Nationalisation | Imperial Bank was nationalised in 1955 |
| New Name | Renamed as the State Bank of India (SBI) |
Why was the cooperative movement introduced in India?
The cooperative movement was introduced mainly to provide affordable institutional credit to rural people. Before cooperative societies were formed, farmers and small businessmen depended heavily on moneylenders charging high interest rates.
- Provide affordable loans in rural areas.
- Reduce dependence on private moneylenders.
- Encourage savings and self-help.
- Promote cooperation among farmers and artisans.
- Improve rural economic development.
- The Cooperative Credit Societies Act, 1904 laid the foundation for cooperative banking in India.
Also: Check out the detailed JAIIB IE and IFS Syllabus
Which important banks were established before Independence?
Many well-known Indian banks were established before Independence and continue to play an important role in the banking sector today.
| Bank | Year of Establishment |
| Allahabad Bank | 1865 |
| Punjab National Bank (PNB) | 1894 |
| Bank of India | 1906 |
| Canara Bank | 1906 |
| Bank of Baroda | 1908 |
| Central Bank of India | 1911 |
What is the history of bank nationalisation in India?
Bank nationalisation was carried out to ensure that banking services reached all sections of society, especially rural and weaker sections. It also aimed to align banking with national development goals.
- First phase (1969): Banks with deposits exceeding ₹50 crore were nationalised.
- Second phase (1980): Banks with deposits exceeding ₹200 crore were nationalised.
- Bank nationalisation took place during the Fourth Five-Year Plan.
| Year | Event |
| 1949 | RBI was nationalised. |
| 1955 | State Bank of India was nationalised. |
| 1969 | 14 major commercial banks were nationalised. |
| 1980 | 6 more commercial banks were nationalised. |
What is the Lead Bank Scheme?
The Lead Bank Scheme (LBS) was introduced by the Reserve Bank of India in December 1969 to improve banking development at the district level.
The scheme assigns one commercial bank as the lead bank for each district. The lead bank coordinates with other banks and government departments to improve financial inclusion and credit flow.
- Assess district credit needs.
- Coordinate banking activities.
- Promote financial inclusion.
- Monitor government-sponsored schemes.
- Improve lending to priority sectors.
- Support district-level banking development.
Also Check: JAIIB IE and IFS Mind Map PDF
Why were Regional Rural Banks established?
Regional Rural Banks (RRBs) were created to improve banking facilities in rural India and provide affordable credit to farmers and weaker sections.
| Particular | Details |
| Established under | Regional Rural Banks Act, 1976 |
| Act passed | 1976 |
| Main objective | Rural development |
| Target customers | Farmers, labourers, rural entrepreneurs, small businesses |
How did banking change after the 1991 economic reforms?
The economic reforms of 1991 transformed India’s banking sector by introducing competition and allowing new private sector banks.
The recommendations of the Narasimham Committee encouraged banking reforms aimed at improving efficiency, profitability, and customer service.
- Private sector banks were allowed again.
- ICICI Bank started operations in 1994.
- HDFC Bank entered the banking sector.
- Banking competition increased.
- Customer service improved.
- Technology adoption accelerated.
What are payment banks and small finance banks?
To improve financial inclusion, the RBI introduced differentiated banks in 2015. These banks serve specific customer needs rather than offering all banking services like traditional commercial banks.
| Type | Main Purpose |
| Payment Banks | Deposits, payments, remittances, digital banking |
| Small Finance Banks | Banking services for small businesses, farmers, MSMEs and weaker sections |
How are banks classified in India?
Banks in India are broadly divided into Scheduled Banks and Non-Scheduled Banks under the RBI Act, 1934.
| Banking Structure | Types |
| Scheduled Banks | Commercial Banks and Cooperative Banks |
| Non-Scheduled Banks | Banks not included in the Second Schedule of the RBI Act |
What are Scheduled Banks?
Scheduled Banks are banks included in the Second Schedule of the RBI Act, 1934. These banks satisfy certain conditions laid down by the RBI and enjoy additional banking facilities.
- Included in the Second Schedule of the RBI Act, 1934.
- Minimum paid-up capital and reserves of ₹5 lakh.
- Eligible to borrow funds from RBI.
- Members of clearing houses.
- Must maintain CRR and SLR.
- Operate under RBI supervision.
Also Check: JAIIB IE and IFS Study Material
What are the different types of Scheduled Commercial Banks?
Scheduled Commercial Banks are classified into several categories depending on ownership and purpose.
| Category | Purpose |
| Public Sector Banks | Majority ownership with the Government |
| Private Sector Banks | Privately owned commercial banks |
| Foreign Banks | Banks incorporated outside India |
| Regional Rural Banks | Rural banking |
| Local Area Banks | Limited regional operations |
| Payment Banks | Payments and deposits |
| Small Finance Banks | Banking for underserved sectors |
What are the different types of Cooperative Banks?
Cooperative banks are organised on cooperative principles and mainly serve agriculture and rural communities.
| Type | Area Covered |
| State Cooperative Banks | Entire state |
| District Central Cooperative Banks | District level |
| Urban Cooperative Banks | Urban areas |
Which major public sector bank mergers are important for JAIIB?
Bank mergers are a favourite topic in the JAIIB examination. Candidates should remember the major mergers that took place in recent years.
| Merged Bank | Banks Merged |
| Bank of Baroda | Dena Bank + Vijaya Bank |
| Punjab National Bank | Oriental Bank of Commerce + United Bank of India |
| Union Bank of India | Andhra Bank + Corporation Bank |
| Canara Bank | Syndicate Bank |
| Indian Bank | Allahabad Bank |
What are the important facts about Public Sector Banks?
Public Sector Banks continue to dominate India’s banking industry because of their large customer base and branch network.
- India currently has 12 Public Sector Banks, including SBI.
- SBI is the largest public sector bank.
- Public Sector Banks account for a major share of banking business.
- Bank nationalisation occurred in 1969 and 1980.
- SBI’s associate banks were merged into SBI in 2017.
- Public Sector Banks have branches both in India and overseas.
FAQs
The Bank of Hindustan, established in 1770, is regarded as the first formal bank in India.
The Reserve Bank of India (RBI) commenced operations on 1st April 1935.
The State Bank of India (SBI) was formed on 1st July 1955 after the nationalisation of the Imperial Bank of India.
Scheduled Banks are banks included in the Second Schedule of the RBI Act, 1934, and are eligible for various facilities from the RBI.
Scheduled Banks are listed in the Second Schedule of the RBI Act, while Non-Scheduled Banks are not included in that schedule.
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