Banking at Independence and the State Bank of India

Introduction

At independence in 1947, India inherited a banking system that was unevenly developed, regionally concentrated and poorly aligned with the requirements of a newly sovereign economy. Modern commercial banking existed, but its benefits were distributed mainly among urban centres, trading communities and organised industry. Large parts of rural India remained dependent on moneylenders, landlords, traders and informal credit networks. The banking system also carried the legacy of colonial priorities: financing trade, government transactions and selected commercial activity was more important than providing broad-based developmental credit.

The central institutional response to this situation was the transformation of the Imperial Bank of India into the State Bank of India (SBI) in 1955. This was not simply a change of name. It represented an attempt to create a stronger public banking institution capable of expanding branches, mobilising savings, supporting agriculture and small industry, and serving as an instrument of planned economic development.

This chapter examines the inherited banking structure, bank failures, rural credit shortages and the logic of institutional consolidation. It then explains the transformation of the Imperial Bank into SBI, its organisational design and its national role during the early planning period.

Learning Objectives

After studying this chapter, the learner should be able to:

1. Describe the principal features of India’s banking structure at independence.
2. Explain why bank failures weakened public confidence and encouraged regulation and consolidation.
3. Analyse the causes of rural credit shortages and the limitations of informal finance.
4. Explain the policy rationale for converting the Imperial Bank of India into the State Bank of India.
5. Assess SBI’s contribution to branch expansion, financial inclusion, development finance and nation-building.
6. Distinguish the 1955 creation of SBI from the later nationalisation of major commercial banks in 1969.

1. The Banking System Inherited at Independence

1.1 A fragmented institutional structure

India’s banking system in 1947 was not a unified national network. It consisted of several overlapping categories of institutions:

• the Reserve Bank of India (RBI), established in 1935 as the central bank;
• the Imperial Bank of India, formed in 1921 by merging the three Presidency Banks of Bengal, Bombay and Madras;
• exchange banks, many with foreign ownership, serving international trade and metropolitan business;
• Indian joint-stock banks, ranging from sound institutions to weak and undercapitalised entities;
• cooperative banks and societies, whose development was uneven across regions; and
• indigenous bankers, moneylenders, traders and other informal financiers.

The Imperial Bank was the largest Indian commercial bank and performed important government and banking functions. Nevertheless, it was fundamentally a commercial institution. It operated primarily in major towns and commercial centres and did not possess the branch density or institutional mandate required to provide universal banking services.

The system was therefore characterised by concentration. Banking resources were concentrated geographically in presidencies, provincial capitals, ports and business districts. They were also concentrated functionally: credit flowed more readily to trade, government business, plantations and established commercial firms than to small cultivators, artisans and rural households.

1.2 Colonial inheritance and developmental mismatch

Colonial banking arrangements were designed within an economy whose major commercial links ran towards ports, export markets and the administrative state. This did not mean that all banks were ineffective or that commercial banking had no productive role. It meant that the institutional structure did not match the priorities of independent India, which included:

• agricultural development;
• industrialisation;
• employment generation;
• regional balance;
• mobilisation of domestic savings; and
• reduction of dependence on exploitative informal credit.

A bank may be financially sound while still failing to meet wider developmental needs. Commercial profitability and social access are related but not identical objectives. In 1947, Indian policymakers increasingly viewed banking as an institution with public consequences, not merely as a private business.

2. Bank Failures and the Search for Stability

2.1 Why bank failures mattered

A bank accepts deposits that are generally withdrawable on demand or at short notice but invests a substantial portion of those funds in loans and securities with longer maturities. This maturity transformation makes banking economically useful, but it also creates vulnerability. If depositors lose confidence and withdraw funds simultaneously, even a bank holding valuable assets may face a liquidity crisis.

Bank failures in the pre-independence and early post-independence period were associated with several factors:

• inadequate paid-up capital and reserves;
• weak governance and inexperienced management;
• excessive lending to connected persons or affiliated businesses;
• concentration in a few industries or regions;
• speculative lending and poor credit appraisal;
• inadequate supervision and disclosure;
• fraud and misappropriation; and
• economic downturns that impaired borrowers’ repayment capacity.

The failure of one bank could produce effects beyond its depositors. It could interrupt payments, damage confidence in other banks and encourage a general withdrawal of deposits. Since ordinary depositors often lacked information about bank balance sheets, a rumour could become self-fulfilling.

2.2 Institutional lessons from failures

Repeated bank failures strengthened the argument for a more regulated and consolidated banking structure. The major lessons were as follows:

1. Capital matters. A bank requires a sufficient loss-absorbing base. Very small banks could be disproportionately vulnerable to a few bad loans.
2. Liquidity management matters. Banks must maintain enough liquid assets to meet withdrawals without forced sales of long-term assets.
3. Governance matters. Lending decisions should not be dominated by owners or related parties.
4. Diversification matters. Excessive exposure to one borrower, sector or locality increases risk.
5. Supervision matters. Rules are ineffective unless a supervisory authority can inspect, intervene and require corrective action.
6. Public confidence matters. Banking is a trust-based activity; institutional credibility is an economic asset.

The RBI’s regulatory role consequently became increasingly important. Regulation alone, however, could not solve the structural problem of a dispersed and weak banking network. Policymakers also needed institutions with adequate scale, managerial capacity and a national orientation.

2.3 Consolidation as a policy response

Institutional consolidation means combining or reorganising banking entities so that the resulting institutions possess greater financial strength, wider operational capacity and improved governance. Consolidation may occur through merger, acquisition, conversion or the creation of a larger public institution from existing entities.

In the Indian context, consolidation was not pursued solely to reduce the number of banks. Its wider purposes included:

• strengthening the deposit base;
• improving professional management;
• reducing duplication;
• increasing the capacity to open branches;
• enabling larger-scale lending; and
• creating institutions capable of supporting national economic plans.

The conversion of the Imperial Bank into SBI was therefore a form of institutional consolidation with a developmental purpose. It retained the advantages of an established bank while changing its ownership, mandate and geographical orientation.

3. Rural Credit Shortages

3.1 The nature of the problem

Rural credit shortage did not mean that rural people never obtained loans. It meant that reliable, affordable and appropriately structured institutional credit was insufficient in relation to rural needs. Farmers borrowed for seeds, livestock, irrigation, land improvement, household consumption, education, health emergencies and repayment of earlier debt. These needs varied by season and by the type of agricultural activity.

Formal banks were often absent from villages or were reluctant to lend to small cultivators. Rural borrowers commonly lacked:

• documented and transferable land titles;
• regular wage or business income;
• accounting records;
• conventional collateral;
• familiarity with banking procedures; and
• the ability to bear delays in loan processing.

Agricultural income is also uncertain because it depends on rainfall, prices, pests, disease and access to irrigation. From a banker’s perspective, agricultural lending involved high information and monitoring costs. From the farmer’s perspective, a delay of several weeks could make a loan useless if sowing season had passed.

3.2 Dependence on informal lenders

Moneylenders and traders remained important because they offered speed, local knowledge and flexibility. Their loans might be available without formal documentation, but the cost could be high. Interest could be charged through explicit rates, deductions from the loan amount, compulsory sales of produce, tied transactions or repeated rollover of unpaid debt.

Informal finance should not be understood only as an irrational or purely exploitative arrangement. It performed functions that formal institutions did not yet provide, including rapid assessment of borrowers and enforcement through local relationships. However, the unequal bargaining position between lender and borrower could produce excessive interest, debt dependence and loss of assets or produce.

3.3 Institutional credit and the cooperative movement

Cooperative credit was designed to provide collective access to finance. Primary agricultural credit societies could mobilise local savings and lend to members, while central cooperative banks and state cooperative banks could provide higher-level support. Cooperatives were potentially suitable for rural areas because they were locally rooted and based on member participation.

Their performance, however, varied considerably. Problems included inadequate capital, weak administration, political interference, poor recovery and uneven coverage. Cooperatives were important but could not, by themselves, meet the entire rural credit requirement. A broader banking network and stronger linkage between commercial banks, cooperatives and public policy were necessary.

3.4 Why rural credit became a national concern

Rural credit was not merely a sectoral issue. It affected agricultural productivity, food security, rural employment and social stability. If farmers could not finance inputs or investment, agricultural output remained low. If rural households relied on costly debt, their capacity to save and invest declined. Consequently, the expansion of banking into rural areas came to be viewed as part of economic development and nation-building.

4. Policy Thinking Before the Creation of SBI

The post-independence state adopted economic planning and assigned public institutions a significant role in development. Banking policy gradually moved from a narrow concern with monetary stability towards a broader concern with resource mobilisation and credit allocation.

Several policy ideas shaped the move towards SBI:

4.1 Mobilising scattered savings

Household savings existed throughout the country, but without nearby and trusted banking outlets they often remained in cash, gold, informal savings groups or unproductive assets. Branch expansion could convert scattered savings into deposits. These deposits could then support investment in agriculture, industry, infrastructure and public services.

4.2 Extending banking beyond major cities

A national banking institution could use its established reputation, staff and systems to open branches in smaller towns and rural locations. The objective was not simply physical expansion. It was to create regular contact between households, firms and formal financial institutions.

4.3 Supporting planned development

The First Five-Year Plan, launched in 1951, placed substantial emphasis on agriculture, irrigation and community development. Later planning gave greater weight to industrialisation. A development-oriented bank was expected to support these priorities while maintaining financial discipline.

4.4 Balancing commercial viability and social responsibility

SBI was not intended to become an institution that ignored financial prudence. It had to protect depositors, maintain sound banking practices and earn sufficient income. At the same time, its public ownership and mandate required it to serve areas and sectors that might not initially appear commercially attractive.

This balance remains a central issue in public banking: social objectives require purposeful intervention, but persistent losses can weaken the institution’s capacity to serve society.

5. From the Imperial Bank of India to the State Bank of India

5.1 The Imperial Bank’s historical position

The Imperial Bank of India was created in 1921 through the amalgamation of the Presidency Banks of Bengal, Bombay and Madras. It combined commercial banking with important government banking functions. By independence, it possessed an established branch network, trained personnel, payment systems and public recognition.

Its limitations were equally significant. Its network was not sufficiently rural, its orientation was largely commercial, and its ownership and governance structure did not fully reflect the priorities of a democratic developmental state. Replacing it entirely would have meant discarding valuable organisational capacity. Transforming it offered a more practical alternative.

5.2 The State Bank of India Act, 1955

The State Bank of India Act, 1955 provided the legal basis for the transfer of the undertaking of the Imperial Bank of India to SBI. The State Bank of India commenced operations on 1 July 1955. The new institution was established as a public-sector bank with a national mandate.

The transformation involved three connected changes:

1. Ownership and control: the institution moved into public ownership under a statutory framework.
2. Mandate: it was expected to promote banking access and support economic development, not merely serve established commercial customers.
3. Network strategy: it was directed towards expansion into underserved regions, especially rural and semi-urban areas.

The change was therefore institutional, legal and developmental at the same time.

5.3 Relationship with the Reserve Bank of India

The RBI remained the central bank, responsible for monetary authority and banking regulation. SBI was a commercial banking institution, although a public one with special historical responsibilities. This distinction is important:

• the RBI regulates and supervises the banking system and manages monetary policy;
• SBI accepts deposits, provides loans, operates payment services and performs commercial banking functions.

The relationship between the two institutions reflected the broader architecture of Indian finance: an autonomous monetary authority working alongside a major public commercial bank.

6. The National Role of SBI

6.1 Branch expansion and financial access

One of SBI’s most visible contributions was the expansion of banking outlets. Branches performed several functions simultaneously:

• accepting deposits;
• providing agricultural and commercial credit;
• enabling remittances and payments;
• financing local trade;
• distributing government payments and development funds; and
• introducing rural households to formal financial practices.

Branch expansion reduced geographical distance, which is a real component of the cost of financial services. A farmer who must travel a day to reach a bank faces transport expenses, lost work time and uncertainty. A nearby branch can reduce these barriers, although physical presence alone does not guarantee effective access.

6.2 Agricultural and rural finance

SBI contributed to the institutionalisation of rural lending by developing procedures for agricultural credit, financing local enterprises and working with government development programmes. It could provide both short-term production loans and longer-term loans for assets such as pumps, wells, tractors and other equipment, subject to eligibility and risk assessment.

Public banking also made it possible to pursue directed lending priorities. However, directed credit required careful design. If lending decisions were based only on political instruction, repayment discipline could deteriorate. If they were based only on conventional collateral, the poorest borrowers could remain excluded. Effective rural banking therefore required local knowledge, suitable loan products, monitoring and borrower support.

6.3 Financing small business and local development

Small traders, artisans and local manufacturers often lacked access to capital markets. SBI’s branch network enabled it to assess and finance some of these enterprises. Credit to small businesses could generate employment and strengthen local supply chains.

The bank also supported public-sector and development-related activities indirectly by financing contractors, suppliers, employees and households associated with expanding infrastructure and public investment.

6.4 Mobilising savings and creating financial habits

A bank branch did more than lend. It encouraged the use of deposit accounts, regular savings and formal payment instruments. Mobilised deposits provided a stable funding base for lending and reduced reliance on unregulated financial channels.

Financial habits develop gradually. Trust in the institution, predictable service, clear documentation and protection of deposits are essential. SBI’s public status helped strengthen confidence, although public ownership did not eliminate the need for sound management.

6.5 Government banking functions

SBI inherited and expanded important government banking functions. These included handling government receipts and payments, servicing public accounts and supporting the distribution of public funds. Such functions connected the state’s administrative system with the public’s financial system.

This relationship produced efficiencies but also required safeguards. A bank handling public money must maintain accurate records, prevent misuse, preserve confidentiality and follow statutory controls. Public banking therefore involves both developmental opportunity and heightened governance responsibility.

7. Institutional Design and the Associate Banks

The SBI structure later incorporated a group of associated banks, historically connected with the former princely states. These institutions became known as the State Bank group and extended the reach of public banking in several regions. Over time, the group was reorganised, and several associate banks were eventually merged into SBI in the twenty-first century.

The important historical point for this chapter is that the SBI model combined central coordination with regional presence. Such a structure could preserve local knowledge while providing access to a larger balance sheet, common systems and public support. The trade-off was organisational complexity: multiple entities could create duplication, inconsistent procedures and coordination costs.

Consolidation can therefore improve scale, but scale alone does not guarantee efficiency. The results depend on governance, technology, staff capability, risk systems and the quality of integration.

8. A Framework for Assessing SBI’s Early National Role

SBI’s contribution can be assessed through five dimensions.

This framework also reveals possible tensions. Rapid expansion may increase operating costs. Directed lending may create credit risk. Public responsibility may produce non-commercial obligations. A successful public bank must manage these tensions rather than deny them.

9. Illustrative Case: A Rural Branch and the Transition to Institutional Credit

This is an illustrative case based on the types of conditions faced during the early expansion of public banking; it is not a single historical event.

Background

A farming block in eastern India in the late 1950s has no commercial bank branch. Farmers obtain seasonal loans from a trader who also purchases their crops. The trader provides quick credit but deducts interest at the time of disbursement and requires borrowers to sell produce at a price below the prevailing market price.

Problem

Farmers face high effective borrowing costs, limited bargaining power and repeated debt rollover. They also lack funds for improved seeds and irrigation equipment. A cooperative society exists but has insufficient capital and weak administrative capacity.

Analysis

The absence of a bank creates both a price problem and an information problem. The trader’s loan is expensive, but the trader knows the borrowers personally and can enforce repayment through the produce market. A new bank branch cannot simply offer loans and assume that demand will immediately shift. It must build information about borrowers, design seasonal repayment schedules and coordinate with local institutions.

Approach

An SBI branch is opened in a nearby market town. Its staff:

• accept small savings deposits;
• work with the cooperative society;
• classify borrowers according to landholding, crop and repayment capacity;
• offer production loans timed to the agricultural cycle;
• finance selected irrigation and equipment investments; and
• use repayment records to improve future credit decisions.

The bank also educates customers about account operation and documentation. It does not eliminate the trader immediately, because informal finance still provides emergency liquidity. Instead, it gradually creates an alternative source of institutional credit.

Outcome

Over time, some farmers reduce dependence on the trader, savings deposits increase and cooperative operations improve. The branch acquires local knowledge and can expand lending cautiously. Nevertheless, drought in one year causes repayment stress. The bank must reschedule viable loans, distinguish temporary difficulty from deliberate default and preserve its own financial soundness.

Learning points

1. A branch is an institutional platform, not merely a building.
2. Access must be combined with suitable products and borrower understanding.
3. Rural banking involves both credit risk and social responsibility.
4. Formal and informal finance may coexist during a transition.
5. Developmental banking requires local information and disciplined management.

10. Limitations and Critical Evaluation

The creation of SBI did not immediately solve all banking problems. Several limitations remained.

10.1 Uneven regional coverage

Branch expansion took time and was influenced by infrastructure, population density and administrative capacity. Remote and economically weaker areas remained difficult to serve.

10.2 Persistent credit exclusion

The existence of a branch did not ensure that landless labourers, tenants, women or marginal farmers could obtain loans. Documentation and collateral requirements could continue to exclude vulnerable groups.

10.3 Administrative and operational costs

Serving remote areas involved high costs and sometimes low transaction volumes. A public bank needed mechanisms to manage these costs without abandoning its mandate.

10.4 Risk of politicisation

Because SBI was publicly owned, lending could be influenced by political priorities. Developmental lending is legitimate, but arbitrary loan waivers, interference in appraisal or weak recovery can undermine the institution and ultimately harm depositors and future borrowers.

10.5 The limits of banking alone

Credit cannot substitute for irrigation, roads, market access, education, health services or land reform. A loan may increase productivity only when complementary conditions exist. Banking must therefore be integrated with wider development policy.

11. Governance, Ethics and Regulation

Public banking creates special ethical obligations. SBI’s managers and employees must protect depositors, treat borrowers fairly, prevent discrimination and avoid conflicts of interest. Important governance principles include:

• transparent lending criteria;
• proper documentation and audit trails;
• prevention of related-party abuse;
• confidentiality of customer information;
• responsible recovery practices;
• accurate reporting of stressed assets; and
• accountability for public funds.

The bank must also reconcile two forms of accountability. It is accountable as a financial institution to depositors, regulators and shareholders or the state. It is also accountable as a public institution to citizens and development programmes. Clear mandates and professional decision-making are necessary to prevent these responsibilities from becoming confused.

12. Contemporary Relevance

The historical creation of SBI continues to influence Indian banking. Its later development into a large universal bank, its extensive branch network and its role in government-linked financial programmes can be traced partly to the institutional choice made in 1955.

Contemporary banking has added digital channels, mobile payments, biometric identification, automated credit assessment and data-driven monitoring. These technologies can reduce the cost of reaching rural customers, but they do not remove the need for trust, consumer protection and human support. Digital exclusion, cyber fraud, data misuse and algorithmic bias can create new forms of inequality.

The historical lesson remains relevant: banking institutions must be designed around the economic and social conditions of the population they serve. Scale is valuable, but inclusion depends on appropriate products, fair procedures, reliable infrastructure and accountable governance.

Chapter Summary

At independence, India inherited a fragmented and urban-centred banking system. The Imperial Bank of India was important but commercially oriented and insufficiently equipped to meet the needs of a developing, predominantly rural economy. Bank failures revealed weaknesses in capital, governance, liquidity management, diversification and supervision, strengthening the case for regulation and institutional consolidation.

Rural households faced serious shortages of formal credit. Informal lenders supplied speed and local knowledge but could impose high costs and unequal conditions. Cooperative institutions offered an alternative but were uneven in strength and coverage. Rural credit therefore became a national development concern because it affected agricultural productivity, savings, employment and social welfare.

The State Bank of India Act, 1955 transformed the Imperial Bank into SBI, which began operations on 1 July 1955. The transformation changed ownership, mandate and network strategy. SBI was expected to mobilise savings, expand branches, support agriculture and small industry, perform government banking functions and contribute to planned economic development.

SBI’s creation illustrates how institutional consolidation can preserve organisational capability while redirecting it towards national objectives. It also demonstrates that public banking involves continuing tensions between financial soundness and social responsibility. SBI became a major instrument of nation-building, but banking alone could not overcome weaknesses in infrastructure, markets, landholding, education and rural administration.

Key Terms

Bank failure: The inability of a bank to meet obligations to depositors and other creditors.

Branch expansion: The opening of banking outlets in new geographical or customer areas.

Commercial bank: A bank that accepts deposits and provides loans and other financial services.

Consolidation: The combination or reorganisation of institutions to achieve greater strength, scale or coordination.

Cooperative credit: Credit provided through member-owned cooperative institutions.

Development finance: Finance directed towards economic and social development priorities.

Financial inclusion: Access to useful, affordable and responsible financial services.

Imperial Bank of India: A major colonial-era commercial bank formed in 1921 from the Presidency Banks.

Institutional credit: Finance supplied by regulated or formally organised financial institutions.

Informal finance: Credit and savings arrangements outside the formal regulated banking system.

Liquidity: The ability to meet payment and withdrawal obligations when they fall due.

Maturity transformation: The banking function of using relatively short-term deposits to finance longer-term assets.

Public-sector bank: A bank substantially owned or controlled by the government.

RBI: The Reserve Bank of India, India’s central bank and banking regulator.

Rural credit: Finance required by farmers, rural households and rural enterprises.

State Bank of India: The public banking institution created from the Imperial Bank under the State Bank of India Act, 1955.

Directed lending: Credit allocation influenced by public policy priorities.

Deposit mobilisation: The process of collecting savings from the public through deposit accounts.

Review Questions

Short Answer Questions

1. What were the main features of India’s banking structure at independence?
2. Why could bank failures damage confidence beyond the failed institution’s depositors?
3. Identify four reasons for rural credit shortages.
4. Distinguish the roles of the RBI and SBI.
5. When did SBI commence operations, and which institution did it replace?

Long Answer Questions

1. Explain how the colonial inheritance shaped the structure and limitations of Indian banking at independence.
2. Analyse the causes and policy consequences of bank failures in the pre-independence and early post-independence period.
3. Discuss the role of informal lenders and cooperative institutions in rural credit.
4. Explain the legal, organisational and developmental significance of the State Bank of India Act, 1955.
5. Evaluate SBI’s national role in branch expansion, savings mobilisation and development finance.

Analytical / Application Questions

1. A rural district has a bank branch, but marginal farmers still borrow from moneylenders. Analyse why physical access has not produced full financial inclusion and recommend practical measures.
2. Suppose a public bank is instructed to expand agricultural lending rapidly. What controls should it use to balance developmental objectives with credit risk and depositor protection?
3. Compare the likely effects of maintaining many small weak banks with those of creating a larger consolidated public bank. Discuss benefits, risks and the conditions required for success.

Multiple Choice Questions with Answers

Question 1

Which institution was transformed into the State Bank of India in 1955?

A. Reserve Bank of India

B. Imperial Bank of India

C. Bank of Bengal

D. Central Bank of India

Correct Answer: B. Imperial Bank of India

Question 2

SBI commenced operations under the 1955 reform on:

A. 1 January 1947

B. 15 August 1947

C. 1 July 1955

D. 19 July 1969

Correct Answer: C. 1 July 1955

Question 3

Which was a major characteristic of banking at independence?

A. Universal rural coverage

B. Concentration in urban and commercial centres

C. Complete government ownership

D. Exclusive dependence on cooperatives

Correct Answer: B. Concentration in urban and commercial centres

Question 4

Why were informal lenders able to remain important in rural areas?

A. They were always cheaper than banks

B. They offered speed, local knowledge and flexible procedures

C. They were regulated by the RBI

D. They accepted only government securities

Correct Answer: B. They offered speed, local knowledge and flexible procedures

Question 5

Which factor commonly contributed to bank failures?

A. Excessive diversification

B. Strong supervision

C. Connected lending and weak governance

D. Excessive rural branch coverage

Correct Answer: C. Connected lending and weak governance

Question 6

The principal developmental purpose of SBI’s branch expansion was to:

A. Reduce access to formal finance

B. Serve only foreign trade

C. Extend banking and credit to underserved regions

D. Replace the RBI as central bank

Correct Answer: C. Extend banking and credit to underserved regions

Question 7

Which statement correctly distinguishes the RBI from SBI?

A. RBI is a commercial bank and SBI is the central bank

B. RBI regulates and conducts monetary functions, while SBI provides commercial banking services

C. Both are identical institutions

D. SBI regulates all banks while RBI accepts household deposits

Correct Answer: B. RBI regulates and conducts monetary functions, while SBI provides commercial banking services

Question 8

A key limitation of rural institutional credit was that many borrowers lacked:

A. Any demand for finance

B. Land records, collateral or regular documented income

C. Agricultural activities

D. Access to informal lenders

Correct Answer: B. Land records, collateral or regular documented income

Question 9

Institutional consolidation is best described as:

A. Closing every bank branch

B. Combining or reorganising institutions to improve strength and capacity

C. Removing all banking regulation

D. Replacing deposits with cash payments

Correct Answer: B. Combining or reorganising institutions to improve strength and capacity

Question 10

Which statement best captures the significance of the 1955 SBI reform?

A. It was only a change in the bank’s name

B. It changed ownership, mandate and national development orientation

C. It abolished the RBI

D. It ended all informal lending immediately

Correct Answer: B. It changed ownership, mandate and national development orientation