Banking in India

Without a sound and efficient banking system in India can not have a healthy economy. The banking system in India should not only be smooth but it should be able to meet new challenges, technology and other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive range. It is no longer restricted to capitals or cosmopolitans in India. Indian banking system has actually reached all the remote corners of the country. This is one of the main reasons for India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks in India.

Not so long ago, an account holder had to wait for hours at the bank counters to get a draft, or to withdraw his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one department to another in two days. Now it is simple as instant messaging or dial a pizza. Money has become commonplace.

The first bank in India, though conservative, was established in 1786th From 1786 to today, the journey of the Indian banking system is divided into three different phases.

They are listed below:

Early phase from 1786 to 1969 by the Indian Banks:

Nationalization of Indian Banks and up to 1991, before the Indian banking sector reforms.

New phase of Indian banking system with the advent of Indian Financial & banking sector reforms of 1991.

The General Bank of India was established in the year the 1786th Then came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Australia (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders, banks, most

Europeans shareholders.

In 1865, Allahabad Bank was established and the first time exclusively by Indians, was the Punjab National Bank Ltd. established in 1894 with headquarters in Lahore. Between 1906 and 1913 were Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank and Bank of Mysore established. Reserve Bank of India came in 1935.

In the first phase of growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline operations and activities of commercial banks, Government of India came up with the bank of the Companies Act 1949, which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with broad powers to supervise banks in India by the Central Banking Authority.

In those days the public has less confidence in banks. As an aftermath of deposit mobilization was slow. Abreast of the savings bank facility, which Postal department was comparatively safe. In addition, funds were largely given to traders.

The government has taken important steps in this Indian banking reform after independence. In 1955, nationalized Imperial Bank of India with extensive banking facilities on a large scale, especially in rural and semi-urban areas. It formed State Bank of India to act as the principal means of RBI and to handle banking transactions in the EU and state governments across the country.

Seven banks, a subsidiary of State Bank of India was nationalized in 1960, 19 July 1969, in a larger process of nationalization was made. It was the efforts of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized.

The second phase of nationalization Indian banking sector reform was implemented in 1980 with seven other banks. This step took 80% of the banking segment in India under government ownership.

The following are the steps taken by the Indian government to regulate financial institutions in the country:

1949: Notice of Banking Regulation Act.

1955: nationalization of the State Bank of India.

1959: nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: nationalization of 14 major banks.

1971: Establishment of Credit Guarantee Corporation.

1975: Creation of regional rural banks.

1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, rose branches of public sector bank in India to about 800% in deposits and advances took a leap of 11,000%.

Banks in the sunshine state ownership gave the public implicit faith and immense confidence in the sustainability of these institutions.

This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the direction of M Narasimham, a committee appointed by his name, working for the liberalization of banking practice.

The country is flooded with foreign banks and their ATM stations. Efforts are set to deliver a satisfactory service to customers. Phone banking and net banking is introduced. The whole system was more convenient and fast. Becoming more important than money.

The financial system in India has shown great resilience. It is protected against any crisis triggered by external macroeconomic shocks, like other East Asian countries suffered.

This is all due to a flexible exchange rate system, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers are limited currency risk.

Nationalization of Banks in India:

Nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then Prime Minister. The 14 nationalized banks thereafter. These banks were mostly owned by businessmen and even managed by them.

• Central Bank of India

• Bank of Maharashtra

• Dena Bank

• Punjab National Bank

• Syndicate Bank

• Canara Bank

• Indian Bank

• Indian Overseas Bank

• Bank of Baroda

• Union Bank

• Allahabad Bank

• United Bank of India

• UCO Bank

• Bank of India

The following are the Scheduled Banks in India (Public Sector):

• State Bank of India

• State Bank of Bikaner and Jaipur

• State Bank of Hyderabad

• State Bank of Indore

• State Bank of Mysore

• State Bank of Patiala

• State Bank of Sourashtra

• State Bank of Travancore

• Andhra Bank

• Allahabad Bank

• Bank of Baroda

• Bank of India

• Bank of Maharashtra

• Canara Bank

• Central Bank of India

• Corporation Bank

• Dena Bank

• Indian Overseas Bank

• Indian Bank

• Oriental Bank of Commerce

• Punjab National Bank

• Punjab and Sind Bank

• Syndicate Bank

• Union Bank of India

• United Bank of India

• UCO Bank

• Vijaya Bank

The following are the Scheduled Banks in India (private sector):

• Vysya Bank Ltd.

• Axis Bank Ltd.

• Indu Sind Bank Ltd

• ICICI Banking Corporation Bank Ltd.

• Global Trust Bank Ltd.

• HDFC Bank Ltd.

• Centurion Bank Ltd.

• Bank of Punjab Ltd.

• IDBI Bank Ltd.

The following are the Scheduled Foreign Banks in India:

• American Express Bank Ltd.

• Gridley's ANZ Bank Plc

• Bank of America NT & SA

• Bank of Tokyo Ltd.

• Banquc Nationale de Paris

• Barclays Bank Plc

• Citi Bank N.C.

• Deutsche Bank A.G.

• Hong Kong and Shanghai Banking Corporation

• Standard Chartered Bank.

• The Chase Manhattan Bank Ltd.

• Dresdner Bank AG.