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Types of Banks — Banking Questions & Practice

Practise 11 Types of Banks questions from Banking for competitive exams such as UPSC, Banking, SSC and Railway. Read the worked questions below, check every answer with an explanation, and track what you get wrong.

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Practice questions on Types of Banks — with answers

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1. Which of the following best describes 'Payments Banks'?

AFinancial institutions that provide medium and long-term finance for industrial and infrastructure development, such as NABARD and SIDBI
BBanks included in the Second Schedule of the RBI Act, 1934, that meet certain criteria and are eligible for facilities like loans from the RBI at bank rate
CA restricted type of bank that can accept deposits up to a specified limit and offer payment/remittance services but cannot lend
DBanks that accept deposits and provide loans to individuals and businesses for profit, regulated under the Banking Regulation Act, 1949

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Answer: C

'Payments Banks': A restricted type of bank that can accept deposits up to a specified limit and offer payment/remittance services but cannot lend.

2. Which of the following best describes 'Non-Banking Financial Companies (NBFCs)'?

ABanks established to provide banking services in rural areas, sponsored jointly by the Central Government, State Government, and a sponsor bank
BFinancial institutions that provide banking-like services such as loans and credit but do not hold a banking licence and cannot accept demand deposits
CBanks set up to provide basic banking services to underserved sections like small businesses, marginal farmers, and micro industries
DBanks not included in the Second Schedule of the RBI Act, 1934

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Answer: B

'Non-Banking Financial Companies (NBFCs)': Financial institutions that provide banking-like services such as loans and credit but do not hold a banking licence and cannot accept demand deposits.

3. Which type of bank is described as: 'Banks that accept deposits and provide loans to individuals and businesses for profit, regulated under the Banking Regulation Act, 1949'?

ANon-Scheduled Banks
BPayments Banks
CCommercial Banks
DDevelopment Banks

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Answer: C

This describes Commercial Banks.

4. Which type of bank is described as: 'Banks organized on a cooperative basis, primarily serving rural and semi-urban areas, registered under state cooperative societies acts'?

ASmall Finance Banks
BRegional Rural Banks (RRBs)
CCooperative Banks
DNon-Scheduled Banks

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Answer: C

This describes Cooperative Banks.

5. Which type of bank is described as: 'Banks established to provide banking services in rural areas, sponsored jointly by the Central Government, State Government, and a sponsor bank'?

ACommercial Banks
BRegional Rural Banks (RRBs)
CPayments Banks
DSmall Finance Banks

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Answer: B

This describes Regional Rural Banks (RRBs).

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Types of Banks — Banking Questions & Practice

Practice questions on Types of Banks — with answers

1. Which of the following best describes 'Payments Banks'?

2. Which of the following best describes 'Non-Banking Financial Companies (NBFCs)'?

3. Which type of bank is described as: 'Banks that accept deposits and provide loans to individuals and businesses for profit, regulated under the Banking Regulation Act, 1949'?

4. Which type of bank is described as: 'Banks organized on a cooperative basis, primarily serving rural and semi-urban areas, registered under state cooperative societies acts'?

5. Which type of bank is described as: 'Banks established to provide banking services in rural areas, sponsored jointly by the Central Government, State Government, and a sponsor bank'?

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