UPSC Prelims Practice Questions — Public Sector Banks (PSBs) record an all-time high net profit of ₹1.98 lakh crore in FY 2025–26, marking the fourth straight year of profitability

Q1. With reference to Public Sector Banks (PSBs) in India as constituted after the 2019–20 consolidation, consider the following banks: 1. Bank of Maharashtra 2. IDBI Bank 3. Indian Overseas Bank 4. State Bank of Bikaner & Jaipur Which of the above is/are correctly identified as a Public Sector Bank at present?

  1. Bank of Maharashtra
  2. IDBI Bank
  3. Indian Overseas Bank
  4. State Bank of Bikaner & Jaipur
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 2 and 4 only
  • D. 1, 3 and 4

Q2. With reference to the two phases of bank nationalisation in India, consider the following statements: 1. The 1969 nationalisation covered banks having deposits of not less than ₹50 crore, whereas the 1980 nationalisation covered banks having deposits of not less than ₹200 crore. 2. Both rounds of nationalisation were carried out exclusively under the provisions of the Banking Regulation Act, 1949. 3. The 1980 nationalisation, unlike that of 1969, resulted in no bank ever being subsequently merged with another public sector bank. Which of the statements given above is/are correct?

  1. The 1969 nationalisation covered banks having deposits of not less than ₹50 crore, whereas the 1980 nationalisation covered banks having deposits of not less than ₹200 crore.
  2. Both rounds of nationalisation were carried out exclusively under the provisions of the Banking Regulation Act, 1949.
  3. The 1980 nationalisation, unlike that of 1969, resulted in no bank ever being subsequently merged with another public sector bank.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q3. Which one of the following provided the direct statutory basis for the transfer of the undertakings of the fourteen major commercial banks nationalised in India in July 1969 to the Central Government?

  • A. The Banking Regulation Act, 1949
  • B. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
  • C. The Reserve Bank of India Act, 1934
  • D. The State Bank of India Act, 1955

Q4. Within the Union Government, the administrative matters concerning Public Sector Banks — including the post-2019 mega-consolidation that reduced their number from 27 to 12 — are handled exclusively by which one of the following?

  • A. Department of Economic Affairs, Ministry of Finance
  • B. Department of Expenditure, Ministry of Finance
  • C. Department of Financial Services, Ministry of Finance
  • D. Department of Revenue, Ministry of Finance

Q5. With reference to the Reserve Bank of India's Prompt Corrective Action (PCA) Framework, consider the following statements comparing the revised 2021 framework (effective 1 January 2022) with the earlier 2017 framework: 1. Return on Assets (RoA), which was a trigger indicator under the 2017 framework, has been retained as a key monitorable parameter under the revised 2021 framework. 2. The revised 2021 framework has introduced Tier 1 Leverage Ratio as a trackable indicator in place of the indicator dropped from the 2017 framework. 3. The revised 2021 framework applies to all banks operating in India, including foreign banks operating through branches or subsidiaries, but does not apply to Regional Rural Banks. Which of the statements given above is/are correct?

  1. Return on Assets (RoA), which was a trigger indicator under the 2017 framework, has been retained as a key monitorable parameter under the revised 2021 framework.
  2. The revised 2021 framework has introduced Tier 1 Leverage Ratio as a trackable indicator in place of the indicator dropped from the 2017 framework.
  3. The revised 2021 framework applies to all banks operating in India, including foreign banks operating through branches or subsidiaries, but does not apply to Regional Rural Banks.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q6. With reference to the Reserve Bank of India's prudential norms on Income Recognition and Asset Classification (IRAC), consider the following descriptions of categories used in classifying bank advances: 1. Substandard Asset — an asset that has remained a Non-Performing Asset for a period less than or equal to 12 months. 2. Doubtful Asset — an asset that has remained in the substandard category for more than 12 months. 3. Special Mention Account — an account where principal or interest is overdue, which is always classified as a sub-category of Non-Performing Assets under the IRAC norms. 4. Loss Asset — an asset where loss has been identified by the bank, its auditor, or an RBI inspection, but the amount has not been wholly written off. Which of the above is/are NOT correctly described?

  1. Substandard Asset — an asset that has remained a Non-Performing Asset for a period less than or equal to 12 months.
  2. Doubtful Asset — an asset that has remained in the substandard category for more than 12 months.
  3. Special Mention Account — an account where principal or interest is overdue, which is always classified as a sub-category of Non-Performing Assets under the IRAC norms.
  4. Loss Asset — an asset where loss has been identified by the bank, its auditor, or an RBI inspection, but the amount has not been wholly written off.
  • A. 1 and 3
  • B. 2 and 4
  • C. 1, 2 and 4
  • D. 3 only

Q7. In the Government of India's October 2017 PSB recapitalisation plan of approximately ₹2.11 lakh crore, which one of the following constituted the single largest component?

  • A. Recapitalisation bonds issued by the Government
  • B. Budgetary support from the Union Budget
  • C. Capital raised by PSBs from the equity market
  • D. Loans extended by the Reserve Bank of India to PSBs

Q8. The 'Indradhanush' plan launched in August 2015 to revamp Public Sector Banks is built around how many pillars/elements?

  • A. Four
  • B. Five
  • C. Seven
  • D. Nine

Q9. Under EASE 8.0 (rechristened 'EASE₹ise'), the reforms agenda for Public Sector Banks is structured around four themes under the acronym R.I.S.E. How many reform indicators does this framework comprise?

  • A. 12
  • B. 16
  • C. 20
  • D. 27

Q10. The first edition (EASE 1.0) of the Enhanced Access & Service Excellence Reforms Agenda for Public Sector Banks was launched in which year?

  • A. 2015
  • B. 2017
  • C. 2018
  • D. 2020

Q11. Among the following key performance indicators of Public Sector Banks reported as on 31 March 2026, which one registered the highest year-on-year growth?

  • A. Aggregate deposits
  • B. Gross advances
  • C. Total business
  • D. Aggregate net profit

Q12. With reference to the performance of Public Sector Banks (PSBs) in FY 2025-26 as compared to FY 2024-25, consider the following statements: 1. The aggregate net profit of PSBs in FY 2025-26 exceeded ₹1.95 lakh crore, higher than that recorded in FY 2024-25. 2. The Gross NPA ratio of PSBs as on 31 March 2026 was lower than that as on 31 March 2025. 3. The Net NPA ratio of PSBs rose above 1 per cent in FY 2025-26 from its level in FY 2024-25. Which of the statements given above is/are correct?

  1. The aggregate net profit of PSBs in FY 2025-26 exceeded ₹1.95 lakh crore, higher than that recorded in FY 2024-25.
  2. The Gross NPA ratio of PSBs as on 31 March 2026 was lower than that as on 31 March 2025.
  3. The Net NPA ratio of PSBs rose above 1 per cent in FY 2025-26 from its level in FY 2024-25.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q13. With reference to the SARFAESI Act, 2002, which one of the following best describes a 'Security Receipt'?

  • A. A receipt issued by an Asset Reconstruction Company to a qualified buyer evidencing the buyer's undivided right, title and interest in the financial asset acquired by the company
  • B. A bond issued by the Reserve Bank of India to secured creditors of a company against which insolvency proceedings have been admitted
  • C. A negotiable instrument issued by the National Company Law Tribunal to operational creditors upon approval of a resolution plan
  • D. A certificate issued by a Debts Recovery Tribunal acknowledging the deposit of a defaulter's secured assets pending auction

Q14. Under which one of the following statutes is the National Company Law Tribunal (NCLT) designated as the Adjudicating Authority for corporate insolvency resolution in India?

  • A. The Companies Act, 2013
  • B. The Insolvency and Bankruptcy Code, 2016
  • C. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993
  • D. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Q15. In the context of the Pradhan Mantri Mudra Yojana (PMMY), the term 'Tarun Plus' refers to which one of the following?

  • A. A sub-category covering collateral-free loans above ₹10 lakh and up to ₹20 lakh, available to entrepreneurs who have previously availed and successfully repaid loans under the Tarun category
  • B. A premium loan tier above ₹20 lakh extended exclusively to women MSME entrepreneurs through the Small Industries Development Bank of India (SIDBI)
  • C. A working-capital sub-category for urban street vendors who have repaid their first loan under the PM SVANidhi scheme
  • D. A refinance window operated by NABARD for primary lending institutions to on-lend to first-time micro-enterprise borrowers in aspirational districts

Q16. With reference to financial-inclusion schemes delivered through Public Sector Banks, consider the following statements: 1. Under the Stand-Up India Scheme, every branch of a Scheduled Commercial Bank is mandated to facilitate a loan of ₹10 lakh to ₹1 crore to at least one Scheduled Caste/Scheduled Tribe borrower and at least one woman borrower for a greenfield enterprise. 2. The Atal Pension Yojana (APY) is open to all citizens of India in the age group of 18 to 60 years having a savings bank account. 3. The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) offers a life cover of ₹2 lakh to subscribers aged 18–50 years at an annual premium of ₹436, auto-debited from the bank account. 4. The 'Tarun Plus' category of the Pradhan Mantri Mudra Yojana covers collateral-free loans above ₹10 lakh and up to ₹20 lakh for entrepreneurs who have previously availed and successfully repaid a loan under the Tarun category. Which of the statements given above are correct?

  1. Under the Stand-Up India Scheme, every branch of a Scheduled Commercial Bank is mandated to facilitate a loan of ₹10 lakh to ₹1 crore to at least one Scheduled Caste/Scheduled Tribe borrower and at least one woman borrower for a greenfield enterprise.
  2. The Atal Pension Yojana (APY) is open to all citizens of India in the age group of 18 to 60 years having a savings bank account.
  3. The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) offers a life cover of ₹2 lakh to subscribers aged 18–50 years at an annual premium of ₹436, auto-debited from the bank account.
  4. The 'Tarun Plus' category of the Pradhan Mantri Mudra Yojana covers collateral-free loans above ₹10 lakh and up to ₹20 lakh for entrepreneurs who have previously availed and successfully repaid a loan under the Tarun category.
  • A. 1 and 3 only
  • B. 2 and 4 only
  • C. 1, 3 and 4 only
  • D. 1, 2, 3 and 4