Evolution of banking

We either step forward into growth or back

into safety
Maslow

Origin of Banking

1. Babylonians developed banking systems during
2000 B C
2. Jews of Lombardy transacted on bancus or
banque
3. Credit delivery were prevalent in ancient Greece
and Rome
4. References are found in the old sanskrit texts of
Manu about Deposits ,Pledges ,loans etc
5. Bank of Hindostan, set up in 1770, was the first
Indian Bank
6. The Carnatic Bank - 1788
Evolution of Banking In India
Presidency Banks

Bank of Bengal -1806

Bank of Bombay -1840

Bank of Madras -1843

Imperial Bank of India _1920

Reserve Bank Of India _ 1935

State Bank of India _ 1955
Evolution of Banking in India
Banking regulation act 1949

Social control of Banks 1968

Nationalisation of 14 major banks 19
th
July 1969

Nationalisation of 6 Banks 15
th
April 1980

Setting up of Regional Rural banks (RRBs) 1975
Statutes Governing Banks
Reserve Bank Of India Act 1934

Banking Regulation Act 1949

Banking companies (acquisition and transfer Of Undertaking) Act
1970 / 1980

Negotiable Instrument Act 1881

Negotiable Instruments (Amendment and Misc Provisions)Act 2002

Limitation Act 1963
Statutes Applied To Banking
Indian Contract Act 1872

Indian Partnership Act 1932

Indian Companies Act 1956

Bankers Book Evidence Act 1891

Indian Registration Act 1908
Statutes Applied To Banking
Transfer Of Properties Act 1882

Indian Stamp Act 1899

Hindu Succession Act 1956

The Micro, Small and Medium Enterprises Development
Act 2006

Right To Information Act 2005

Private Sector Banks
Post recommendation of the Narasimhan committee on
liberalisation, set up in 1991

First Bank, IndusInd Bank, Apr 16, 1994

Global Trust Bank(30 Oct 1994), amalgamated with
Oriental Bank Of Commerce, UTI Bank (now Axis Bank),
ICICI Bank, IDBI Bank

Registered as Public Ltd Companies, initial paid up
capital Rs 200 crores
Banking Structure
Scheduled Commercial Banks

Public Sector Banks

Private Sector Banks (old/new generation)

Foreign Banks

Co-operative Banks
Categories of Banks
Branch Banking

Unit Banking

Investment Banking

Universal banking

Merchant Banking

Virtual Banking
Functions of the Central Bank
Monopoly of note issue

Banker to the government

Bankers Banker and lender of the last resort

Monetary Control and managing public debt

Supervision of Banks and financial Institutions
Functions of the Central Bank
Management of Foreign Exchange reserves and
exchange control authority


Managing public debt


Discretionary control of refinance and rediscounting
Monetary control by RBI
Purpose

Controlling inflation


Encouraging growth


Financial stability


Monetary control by RBI
Cash Reserve Ratio (CRR)

Statutory Reserve Ratio (SLR)

Open Market Operations

Repo Rate

Reverse Repo Rate
Exercises


State Bank of India : Head office in Mumbai and have
14000 branches spread throughout the country


Pune peoples co-operative bank, Pune, the only branch
of the bank has a deposit base of Rs 200 crores


Goldman Sach arranges a foreign currency syndicated
loan of USD 500 million in acquisition of a British steel
co, by Tata Steel.
Exercises
Standard Chartered Bank, New Delhi accepts foreign
currency deposits, arranges sydicated loans and
external commercial borrowings to corporates, provides
working capital finance to industries, sells various
insurance products of Max Newyork, sells the balanced
fund of stanchart mutual fund etc.

Exercises
Indbank merchant banking services, Chennai manages
the share issue of Tamilnadu cements of Rs 120 crores,
lead managers.


HDFC Bank provides faster transfer of funds of Rs 5
lakhs from Pune to Jodhpur, through RTGS ( real time
gross settlement system ).