Banking System of India Notes for SSC Exams
Rahul Kumar
SSC Exam Expert & Content Editor
In this note
- 1.Structure of the Banking System
- 2.History and Nationalisation
- 3.Types of Banks
- 4.Development Banks
- 5.Payment Systems
- 6.Other Important Facts
- 7.Types of Bank Accounts
- 8.Quick Tips
- 9.Quick Revision Points
- 10.Practice Questions With Answers
- 11.How to Practise This Chapter
- 12.Frequently Asked Questions
PDF Notes: Banking System of India Notes for SSC Exams
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The banking system of India is the backbone of the economy, and it is a high-scoring topic in SSC General Awareness. Questions are asked about the types of banks, the nationalisation, the special banks like NABARD and SIDBI and the payment systems like UPI. These banking system of India notes for SSC explain the structure in simple tables with practice questions.
Structure of the Banking System
| Level | Institutions |
|---|---|
| Apex | Reserve Bank of India (RBI), the central bank |
| Scheduled commercial banks | Public sector banks, private sector banks, foreign banks, regional rural banks, small finance banks and payment banks |
| Cooperative banks | Urban cooperative banks, state and district cooperative banks, primary agricultural credit societies |
| Development banks | NABARD, SIDBI, EXIM Bank, NHB |
| Non-banking financial companies (NBFCs) | Give loans but cannot accept demand deposits |
History and Nationalisation
| Event | Year |
|---|---|
| Imperial Bank of India became the State Bank of India (SBI) | 1955 (on 1 July) |
| Nationalisation of 14 major commercial banks | 1969 (19 July), under Indira Gandhi |
| Nationalisation of 6 more banks | 1980 |
| Regional Rural Banks started | 1975 (RRB Act in 1976) |
| Narasimham Committee on financial sector reforms | 1991 |
| Entry of new private sector banks | 1993 onwards |
| Payment banks and small finance banks | 2015 |
- The oldest bank of India is the Bank of Hindustan (1770), and the Presidency Banks were formed in the 19th century.
- SBI has its headquarters in Mumbai and is the largest public sector bank of India.
- Many public sector banks were merged in 2019 and 2020 to make fewer and bigger banks.
Types of Banks
| Bank | Meaning or main work |
|---|---|
| Public sector banks | Government owns the majority share, such as SBI, Punjab National Bank and Bank of Baroda |
| Private sector banks | Private owners hold the majority share, such as HDFC Bank, ICICI Bank and Axis Bank |
| Regional Rural Banks (RRBs) | Give loans to farmers and rural workers; owned by the Centre, the state and a sponsor bank |
| Small finance banks | Serve small borrowers, such as small businesses and farmers |
| Payment banks | Accept deposits up to a limit and give payment services, but cannot give loans |
| Cooperative banks | Work on the cooperative principle for members |
Development Banks
| Bank | Year | Purpose |
|---|---|---|
| NABARD | 1982 | Credit for agriculture and rural development |
| SIDBI | 1990 | Credit for small-scale industries |
| EXIM Bank | 1982 | Financing of foreign trade |
| NHB (National Housing Bank) | 1988 | Regulation and support of housing finance |
Payment Systems
| System | Meaning |
|---|---|
| NEFT | National Electronic Funds Transfer; money moves in batches; available 24 hours a day |
| RTGS | Real Time Gross Settlement; for large payments, with a minimum of Rs 2 lakh; instant |
| IMPS | Immediate Payment Service; instant payment 24 hours a day |
| UPI | Unified Payments Interface; instant mobile payments, developed by the NPCI |
| NPCI | National Payments Corporation of India, set up in 2008 by the RBI and banks |
Other Important Facts
- Deposit insurance: the DICGC insures the deposits of each depositor in a bank up to Rs 5 lakh.
- Priority sector lending: banks must give a fixed share of loans to farming, small industries, education and housing.
- KYC: Know Your Customer rules to check the identity of customers.
- Basel norms: international rules about the capital that banks must keep.
- Jan Dhan Yojana: started in 2014 for a bank account of every household.
Types of Bank Accounts
| Account | Features |
|---|---|
| Savings account | For saving money; gives interest; limited withdrawals |
| Current account | For businesses; no interest; unlimited transactions |
| Fixed deposit | Money is kept for a fixed period at a fixed interest rate |
| Recurring deposit | Fixed amount is deposited every month |
Quick Tips
- Learn the dates: 1955 (SBI), 1969 (14 banks), 1980 (6 banks), 1982 (NABARD) and 1990 (SIDBI).
- Remember that payment banks cannot give loans.
- Remember the minimum limit of RTGS: Rs 2 lakh.
- Learn the full forms of NABARD, SIDBI, NPCI, RRB and DICGC.
Quick Revision Points
- The RBI is the apex bank of India.
- 14 banks were nationalised in 1969 and 6 in 1980.
- NABARD was set up in 1982 for agriculture.
- UPI was developed by the NPCI.
- Payment banks cannot give loans.
Practice Questions With Answers
- How many banks were nationalised in 1969?
Answer: 14 - In which year was the SBI formed?
Answer: 1955 - Which bank was set up in 1982 for agriculture and rural development?
Answer: NABARD - Which bank was set up in 1990 for small industries?
Answer: SIDBI - Who developed UPI?
Answer: NPCI - What is the minimum amount for RTGS?
Answer: Rs 2 lakh - Which banks cannot give loans?
Answer: Payment banks - Up to what amount are the bank deposits insured?
Answer: Rs 5 lakh per depositor per bank - In which year were the Regional Rural Banks started?
Answer: 1975 - What is the apex bank of India?
Answer: Reserve Bank of India
How to Practise This Chapter
Make a table of the banking dates and the development banks and revise it daily. Then solve questions from our practice papers, the free SSC quizzes and the previous year papers page. Read the earlier chapters, RBI and Monetary Policy and Five Year Plans and NITI Aayog, and the next chapter, Taxes in India and GST. See all topics on the Indian Economy notes page.
Frequently Asked Questions
What is the apex bank of India?
The Reserve Bank of India (RBI) is the central and the apex bank of India.
When were the banks nationalised in India?
Fourteen major banks were nationalised on 19 July 1969, and six more banks in 1980.
What is a scheduled bank?
A scheduled bank is a bank included in the Second Schedule of the RBI Act. It gets facilities from the RBI.
What is NABARD?
NABARD is the National Bank for Agriculture and Rural Development, set up in 1982 to give credit for agriculture and rural development.
What is SIDBI?
SIDBI is the Small Industries Development Bank of India, set up in 1990 to help small industries.
What are Regional Rural Banks?
They are banks started in 1975 to give loans to farmers, rural artisans and small workers in rural areas.
What are payment banks?
Payment banks accept small deposits and give payment services, but cannot give loans or issue credit cards.
What is the difference between NEFT and RTGS?
NEFT is for payments of any amount and works in batches. RTGS is for large payments of at least Rs 2 lakh and is settled instantly.
What is UPI?
UPI is the Unified Payments Interface, a system for instant mobile payments, run by the NPCI.
What is the DICGC?
The Deposit Insurance and Credit Guarantee Corporation insures the deposits of each depositor in a bank up to Rs 5 lakh.
What is priority sector lending?
It means that banks must give a fixed part of their loans to priority areas like agriculture, small industries, education and housing.
How many questions come from banking in SSC exams?
Usually one or two questions come from banking in SSC General Awareness papers, but the number changes from year to year.
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Rahul Kumar
SSC Exam Expert & Content Editor
Rahul is a senior SSC exam strategist with 8+ years of experience helping aspirants crack CGL, CHSL and MTS exams. He writes in-depth notification breakdowns, exam pattern guides and preparation strategies.