MPSC 2022 Prelims Paper-I · Question 84 of 100

Correct — option (2), the State Bank of India. SBI opened an office at 420 Collins Street in Melbourne on 30 September 2019, and the Government of Victoria announced it in those terms, welcoming the State Bank of India as the first Indian bank to set up operations in Victoria. Read the stem precisely, because the whole question lies in two words. It does not ask which Indian bank first opened in Australia — Indian banks had been present in the country for decades — it asks about Victoria, one of the six States of the Australian federation, whose capital is Melbourne. An Indian bank in Sydney is in New South Wales and does not answer this question. The distinction matters because two of the three wrong options here have had representative offices in Sydney at one time or another, so a candidate who reads 'Australia' and stops reading has three defensible answers in front of him and no way to choose. SBI is the natural bank to have taken the step. It is the largest commercial bank in India and the one with the widest foreign network, and its own history is worth carrying: it descends from the Bank of Calcutta established on 2 June 1806, which with the Bank of Bombay and the Bank of Madras formed the three Presidency banks; those three were amalgamated into the Imperial Bank of India in 1921; and under the State Bank of India Act, 1955 the Reserve Bank of India acquired a controlling interest, so that on 1 July 1955 the Imperial Bank of India became the State Bank of India. In 2008 the Government of India bought out the Reserve Bank's shareholding, removing the anomaly of the banking regulator owning the largest bank it regulated. Note finally the printing of the stem: the English column reads 'Which bank has became', which is not grammatical, and the same sentence in the Marathi column is unremarkable. It is a misprint and nothing more; it carries no information about the answer, and the question is answered exactly as though it read 'has become'. The answer to be marked is option (2).

• (1)Dena Bank — Dena Bank could not have opened an office in Victoria in the second half of 2019 because by then it no longer existed as a bank. Founded on 26 May 1938 by the sons of Devkaran Nanjee as the Devkaran Nanjee Banking Company and renamed Dena Bank when it became a public company in 1939, it was nationalised in 1969 and remained a mid-sized public sector bank headquartered in Mumbai with about 1,874 branches. In September 2018 the Government proposed amalgamating Dena Bank and Vijaya Bank into Bank of Baroda; the boards and the Union Cabinet approved on 2 January 2019 and the amalgamation took effect on 1 April 2019, making Bank of Baroda the third largest bank in the country. SBI's Melbourne office opened on 30 September 2019, six months after Dena Bank had ceased to be a separate entity. The lesson generalises: the wave of public sector bank amalgamations between 2017 and 2020 removed a number of familiar names, and a bank that no longer exists cannot be the answer to a question about a recent first.
• (3)BOB — Bank of Baroda is a plausible answer for the wrong reason, and it is worth understanding exactly why it fails. BoB was founded on 20 July 1908 by Maharaja Sayajirao Gaekwad III of Baroda, was nationalised in 1969, and became the Indian bank most identified with overseas expansion, opening branches in Kenya, Uganda and Tanzania from 1953 onwards and reaching Bahrain, Mauritius, Hong Kong and the United Kingdom in later decades. It did have an Australian presence: a representative office opened in Sydney in 1980, which the bank closed in 1992. Sydney, however, is in New South Wales, not Victoria, and a representative office that was shut in 1992 is in any case no answer to a question about a first office in Victoria in 2019. This is exactly the trap the question is built on — a candidate who converts 'Victoria State' into 'Australia' will find Bank of Baroda a strong answer and will be wrong on geography rather than on banking.
• (4)PNB — Punjab National Bank is likewise present in Australia, and likewise in the wrong State. Founded in May 1894 at Lahore and registered under the Indian Companies Act on 19 May 1894 with its office in Anarkali Bazaar, PNB was conceived as a genuinely national bank; it lost its Lahore premises at Partition, moved its registered office to Delhi, and was nationalised in 1969. Its overseas structure today mixes branches, subsidiaries and representative offices — a subsidiary in the United Kingdom, branches in Hong Kong, Kowloon, Dubai and Kabul, and representative offices in Almaty, Dubai, Shanghai, Oslo and Sydney. The Sydney presence is a representative office, in New South Wales, and it is worth knowing the difference between the forms: a representative office may market the bank and liaise with customers but cannot take deposits or lend, whereas a branch does full banking business under the host country's licence. Neither form was in Victoria before SBI opened at Melbourne in September 2019.

Indian banks go abroad in three forms, and the difference between them explains a good deal of news of this kind. A representative office is the lightest form: it may promote the bank's business, gather information and serve as a point of contact for the diaspora and for trade, but it may not accept deposits or make loans. A branch is the full form, licensed by the host regulator to do banking business. A subsidiary is a separately incorporated bank in the host country, wholly or partly owned by the Indian parent, which is what Punjab National Bank operates in the United Kingdom. The pattern of Indian overseas banking followed the pattern of Indian migration: Bank of Baroda opened in Mombasa and Kampala in the 1950s to serve East African Indian communities, and Indian banks later concentrated on the Gulf, Britain, Hong Kong and Singapore for the same reason. Australia entered the picture late and lightly — representative offices in Sydney, the largest city and the financial centre of New South Wales — and the State of Victoria, whose capital is Melbourne, had no Indian bank at all until the State Bank of India opened at 420 Collins Street on 30 September 2019. The Australian federation has six States and two mainland territories, and questions of this kind depend on knowing that a fact about Sydney is not a fact about Victoria.

MPSC's current-affairs questions on banking usually take one of three forms: a first of some kind, an amalgamation or renaming, or a change in a regulatory number such as the repo rate or the deposit insurance limit. All three reward the same preparation, which is a running list of banking events with dates attached, and all three are marked on a single detail. The value of this particular question for a student is less the name of the bank than the habit of reading the qualifier in a stem. Three of the four options are large public sector banks with substantial foreign networks; what separates them here is a sub-national geography — Victoria as against New South Wales — and a date, 30 September 2019, against which one option is already extinct. A candidate who trains himself to underline the limiting words in a stem, here 'first', 'Indian' and 'Victoria', will convert questions of this shape reliably. It is also worth noticing that the same amalgamation wave that removed Dena Bank in April 2019 removed Vijaya Bank at the same moment and, in April 2020, merged ten public sector banks into four more; a candidate who has that sequence in mind can eliminate defunct names on sight in any question about a recent event.

• The State Bank of India opened an office at 420 Collins Street, Melbourne, on 30 September 2019, and the Victorian government announced it as the first Indian bank to establish an office in the State of Victoria.
• SBI descends from the Bank of Calcutta of 1806 through the Imperial Bank of India; under the State Bank of India Act, 1955 the Reserve Bank of India acquired a controlling interest and the Imperial Bank became the State Bank of India on 1 July 1955, the Government buying out the RBI's stake in 2008.
• Dena Bank, founded on 26 May 1938 and nationalised in 1969, was amalgamated into Bank of Baroda together with Vijaya Bank with effect from 1 April 2019, and so had ceased to exist before the Melbourne office opened.
• Bank of Baroda, founded on 20 July 1908 by Sayajirao Gaekwad III of Baroda, opened a representative office in Sydney in 1980 and closed it in 1992; Sydney is in New South Wales, not Victoria.
• Punjab National Bank, founded at Lahore in May 1894, maintains a representative office in Sydney along with offices in Almaty, Dubai, Shanghai and Oslo, and a banking subsidiary in the United Kingdom.

• Reading 'Victoria State' as simply 'Australia', which makes Bank of Baroda and Punjab National Bank look like defensible answers because both have had a Sydney presence in New South Wales
• Overlooking that Dena Bank was amalgamated into Bank of Baroda with effect from 1 April 2019 and so could not have opened an office in September 2019
• Treating a representative office as equivalent to a branch, when the first may not take deposits or lend
• Being distracted by the printed grammar of the English stem, 'has became', which is a misprint and carries no meaning for the answer

Banking questions in MPSC papers come in a predictable range: the year of a bank's founding or nationalisation, the anchor bank in a merger, the current value of a policy rate or a statutory ratio, the regulator responsible for a named function, and current-affairs firsts of the kind asked here. What unites them is that each is decided by a single verifiable detail, so preparation should be a table rather than reading: bank, year founded, headquarters, nationalisation round, merger history. Firsts in particular are worth collecting through the year with the date and the exact qualifier attached, because the Commission reproduces the qualifier in the stem and it is usually the qualifier — first Indian bank, first in a named State, first to be licensed for a named activity — that decides the answer. A candidate who has the amalgamation table can also strike out defunct bank names instantly, which in this question removes one option before any thought about Australia is required.

No directly related past PYQ was found.

• practice — not a real PYQ

  Dena Bank and Vijaya Bank were amalgamated into which bank, and with effect from which date ?

  • (a)State Bank of India, with effect from 1 April 2017
  • (b)Bank of Baroda, with effect from 1 April 2019
  • (c)Punjab National Bank, with effect from 1 April 2020
  • (d)Canara Bank, with effect from 1 April 2019

  Answer(b) Bank of Baroda, with effect from 1 April 2019. The amalgamation was proposed by the Finance Ministry in September 2018 and approved by the Union Cabinet and the banks' boards on 2 January 2019, taking effect on 1 April 2019 and making Bank of Baroda the third largest bank in India. The 2017 date belongs to the merger of the associate banks of SBI with the parent, and the 2020 round is the one in which Punjab National Bank absorbed Oriental Bank of Commerce and United Bank of India.

• practice — not a real PYQ

  Under the State Bank of India Act, 1955, which institution acquired a controlling interest in the Imperial Bank of India, and what happened to that holding later ?

  • (a)The Ministry of Finance acquired it and later transferred it to the Reserve Bank of India in 2008
  • (b)The Reserve Bank of India acquired it and the Government of India bought out that stake in 2008
  • (c)The Life Insurance Corporation acquired it and retains it to this day
  • (d)The Industrial Development Bank of India acquired it and transferred it to the Government in 1980

  Answer(b) The Reserve Bank of India acquired it and the Government of India bought out that stake in 2008. The Imperial Bank of India became the State Bank of India on 1 July 1955 after the RBI acquired a controlling interest under the 1955 Act. The arrangement left the banking regulator as the owner of the largest bank it regulated, and that conflict of interest was removed in 2008 when the Government purchased the Reserve Bank's shareholding.