EVOLUTION OF BANKING SECTOR IN INDIA

Y. M Aditya Teja -1303023 B. Sai Krishna - 1303039

BANK
A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money.

An institution where one can place and borrow money and take care of financial affairs;

The first modern bank was founded in Italy in Genoa in 1406, its name was (Bank of St. George).

History
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. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.

The Central Government entered the banking business with the nationalization of the Imperial Bank Of India in 1955 The seven other state banks became the subsidiaries of the new bank when nationalised on 19 July 1960. The next major nationalisation of banks took place in 1969 when the government of India, nationalised an additional 14 major banks. The next round of nationalisation took place in April 1980. The government nationalised six banks. The objectives behind nationalisation where: To break the ownership and control of banks by a few business families, To prevent the concentration of wealth and economic power, To mobilize savings from masses from all parts of the country, To cater to the needs of the priority sectors.....

In the past 20 years, the RBI has licensed 12 banks in the private sector in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks and fresh applications were invited. Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licenses from the RBI in 2003-04. Now RBI may issue licences for 7-8 new banks in the Indian banking sector.

Market Share

PHASES OF BANKING

Phase-1 Early phase from 1786 to 1969 of Indian Banks

Phase-2 Nationalization of Indian Banks and up to 1991 Phase-3 New phase of Indian Banking System with the advent of Indian Financial & Banking Sector

FIRST GENERATION OF BANKING

GENERAL BANK OF INDIA 1786(FIRST BANK)

Slow growth and periodic failure

RESERVE BANK OF INDIA 1935

THE BANKING COMPANY ACT 1949 People mostly save in postal deposits.

SECOND GENERATION OF BANKING

Nationalization of imperial bank of India and formation of state bank of India(1955)

Nationalization of SBI and Subsidiaries(1960) Insurance cover extended to deposits Creation of credit guarantee corporation

Creation of regional rural banks

THIRD GENERATION OF BANKING

Entry of Foreign Banks

Phone Banking and Net-Banking System become more convenient and swift

TYPES OF BANKS
Commercial

Banks Co-operative Banks Regional Rural Banks

Public sector banks

Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held by a government. The shares of these banks are listed on stock exchanges. There are a total of 26 PSBs in India.. Some Public Sector Banks in India: Central Bank of India Corporation Bank Dena Bank Bank of India

Commercial Banks

Commercial Banks can be divided into Public Sector Banks and Private Sector Banks. In India there are 26 Public sector banks.

In Private Sector Banks we have Foreign Banks and Indian Banks.

Private sector banks

All those banks where greater parts of stake or equity are held by the private shareholders and not by government are called "private-sector banks". These are the major players in the banking sector as well as in expansion of the business activities India. There are two categories of the private-sector banks: "old" and "new". The old private-sector banks have been operating since a long time and may be referred to those banks, which are in operation from before 1991 and all those banks that have commenced their business after 1991 are called as new private-sector banks.

Private sector banks

These banks are mainly used for developing industries and countries Some ExamplesFederal Bank HDFC Bank HSBC ICICI Bank Indian Overseas ING Vysya Bank

Bank

Private Foreign Banks

Foreign Banks of India come under the the Banking company's act.
Abu

Dhabi Commercial Bank Australia and New Zealand Bank Bank Internasional Indonesia Bank of America NA Bank of Bahrain and Kuwait Bank of Ceylon Bank of Nova Scotia

Co-operative banks

They are setup to provide easy loans to farmers or other persons to set up his business. They are non profitable banks. Cooperative banks and RRBS in India finance rural areas under: Farming, Milk, Personal finance Example of co-operative banks are 1. Andhra Pradesh co-operative bank

RRBs
Regional Rural Banks are the banking organizations being operated in different states of India. They have been created to serve the rural areas with banking and financial services. However, RRB's may have branches set up for urban operations and there area of operation may include urban areas too. Examples of RRBS are 1. Chaitanya Godavari grameena bank 2. Deccan grameena bank

DEVELOPMENT BANKS AND FINANCIAL INSTITUTIONS

Development banks in India : IDBI BANK(INDUSTRIAL DEVELOPMENT BANK OF INDIA) IFCI (INDUSTRIAL FINANCE COOPERATION OF INDIA)