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    Banking Sector in India

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    jaamss
    The banking sector in India originated in the late 18th century. The Reserve Bank of India was nationalized in 1949 and serves as the central bank. It regulates, controls credit, and issues licenses for all banks operating in India. There are several types of banks in India including public sector banks, private sector banks, cooperative banks, and regional rural banks. Public sector banks are government owned, private sector banks were established after economic liberalization policies, and cooperative banks were set up to specifically serve rural populations and agricultural credit needs. Today India has a diverse banking sector serving both rural and urban customers through various branches of scheduled commercial banks.

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    Banking Sector in India

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    jaamss
    104 views5 pages
    The banking sector in India originated in the late 18th century. The Reserve Bank of India was nationalized in 1949 and serves as the central bank. It regulates, controls credit, and issues licenses for all banks operating in India. There are several types of banks in India including public sector banks, private sector banks, cooperative banks, and regional rural banks. Public sector banks are government owned, private sector banks were established after economic liberalization policies, and cooperative banks were set up to specifically serve rural populations and agricultural credit needs. Today India has a diverse banking sector serving both rural and urban customers through various branches of scheduled commercial banks.

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    The banking sector in India originated in the late 18th century. The Reserve Bank of India was nationalized in 1949 and serves as the central bank. It regulates, controls credit, and issues licenses for all banks operating in India. There are several types of banks in India including public sector banks, private sector banks, cooperative banks, and regional rural banks. Public sector banks are government owned, private sector banks were established after economic liberalization policies, and cooperative banks were set up to specifically serve rural populations and agricultural credit needs. Today India has a diverse banking sector serving both rural and urban customers through various branches of scheduled commercial banks.

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    Download as docx, pdf, or txt
    104 views5 pages

    Banking Sector in India

    Uploaded by

    jaamss
    The banking sector in India originated in the late 18th century. The Reserve Bank of India was nationalized in 1949 and serves as the central bank. It regulates, controls credit, and issues licenses for all banks operating in India. There are several types of banks in India including public sector banks, private sector banks, cooperative banks, and regional rural banks. Public sector banks are government owned, private sector banks were established after economic liberalization policies, and cooperative banks were set up to specifically serve rural populations and agricultural credit needs. Today India has a diverse banking sector serving both rural and urban customers through various branches of scheduled commercial banks.

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    of 5

    BANKING

    SECTOR IN
    INDIA

    Priyanka Deshpande
    MBA 2ND YEAR
    HISTORY OF BANKING SECTOR IN INDIA
    Banking in India originated in the last decades of the 18th century. The first
    banks were The General Bank of India which started in 1786, and the Bank of
    Hindustan, both of which are now defunct. The oldest bank in existence in India is the
    State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost
    immediately became the Bank of Bengal.

    The Government of India initiated measures to play an active role in the


    economic life of the nation, and the Industrial Policy Resolution adopted by the
    government in 1948 envisaged a mixed economy. This resulted into greater
    involvement of the state in different segments of the economy including banking and
    finance. The major steps to regulate banking included:

     In 1948, the Reserve Bank of India, India's central banking authority, was
    nationalized, and it became an institution owned by the Government of India.
     In 1949, the Banking Regulation Act was enacted which empowered the Reserve
    Bank of India (RBI) "to regulate, control, and inspect the banks in India."
     The Banking Regulation Act also provided that no new bank or branch of an
    existing bank could be opened without a license from the RBI, and no two banks
    could have common directors.

    The RBI was nationalized on January 1, 1949 in terms of the Reserve Bank
    of India Act, 1948. RBI is the central bank of the country since 1934. It regulates,
    controls credit, issue licenses and functions as banker of all banks and the government.

    TODAY’S POSITION:
    In India the banks are being segregated in different groups. Each group
    has their own benefits and limitations in operating in India. Each has their own
    dedicated target market. Few of them only work in rural sector while others in both rural
    as well as urban. Many even are only catering in cities. Some are of Indian origin and
    some are foreign players.

    With the advancement of technology, banking sector has become more


    easy, fast, accurate and also time saving. ATMs, Mobile Banking, SMS Banking and
    Net Banking is only the tip of an ice-berg.
    TYPES OF BANKS IN INDIA:
    In India the banking sector is segregated as public or private sector banks,
    cooperative banks and regional rural banks. Foreign banks has been given a different
    head followed by upcoming foreign banks in this section.

    A. Scheduled Banks

    Scheduled Banks in India constitute those banks which have been included
    in the Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes
    only those banks in this schedule which satisfy the criteria laid down vide section 42 (6)
    (a) of the Act. The banks included in this schedule list should fulfil two conditions.

    1. The paid capital and collected funds of bank should not be less than Rs. 5 lac

    2.Any activity of the bank will not adversely affect the interests of depositors.

    Every Scheduled bank enjoys the following facilitiess.


    1. Such bank becomes eligible for debts/loans on bank rate from the RBI
    2. Such bank automatically acquire the membership of clearing house

    a) Commercial bank

    Commercial banking can also refer to a bank or a division of a bank that


    mostly deals with deposits and loans from corporations or large businesses, as opposed
    to normal individual members of the public .

    Commercial banks engage in the following activities:

     Processing of payments by way of telegraphic transfer, EFTPOS, internet


    banking, or other means
     Issuing bank drafts and bank cheques
     Accepting money on term deposit
     Lending money by overdraft, installment loan, or other means
     Providing documentary and standby letter of credit, guarantees, performance
    bonds, securities underwriting commitments and other forms of off balance sheet
    exposures
     Safekeeping of documents and other items in safe deposit boxes
     Sale, distribution or brokerage, with or without advice, of insurance, unit trusts
    and similar financial products as a “financial supermarket”
     Cash management and treasury services

     Public sector banks in India –

    All government owned banks fall in this variety. Besides the Reserve Bank of
    India, the State Bank of India and its associate banks and about 20 nationalized banks,
    all comprises of the public sector banks. Many of the regional rural banks that are
    funded by the government banks can also be clubbed in this genre.

    1.      State Bank of India (SBI)


    2.      State Bank of Bikaner & Jaipur
    3.      State Bank of Hyderabad

     Private sector banks in India –

    A new wave in the banking industry came about with the private sector banks
    in India. With policies on liberalization being generously taken up, these private banks
    were established in the country that also contributed heavily towards the growth of the
    economy and also offering numerous services to its customers.

    1.      HDFC Bank


    2.      ICICI Bank

    b) Cooperative banks in India –


    With the aim to specifically cater to the rural population, the cooperative
    banks in India were set up through the country. Issues like agricultural credit and the
    likes are taken care of by these banks.

    . The corporative banks are devided in to 2 types i.e.

     Urban Cooperative Bank

     State Cooperative Bank


    B. Non scheduled Banks

    The banks which are not under the purview of second schedule of RBI Act. Since May
    1997, No non-scheduled commercial bank exists in India

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