Professional Documents
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East India Co. Established Three Presidency Banks Viz
East India Co. Established Three Presidency Banks Viz
Bengal 1806
Bombay 1840
Madras 1842
Birth of RBI
By 1930 India had more than 1000 banks working solely on companys law
In October 24, 1929, the stock market bubble finally burst, as investors began dumping
shares en masse.
A record 12.9 million shares were traded that day, known as Black Thursday.
Finally in 1934, to check this kind of situation in future RBI as bankers bank was
institutionalized.
Hence to cater the needs of rural banks Government began nationalizing the banks
Bank Nationalization problems
Political interference loan for government nepotism Rise in NPA Burden on Civil
Courts
Narsimhan Committee I was formed to overhaul banking sector of India & to overcome its problems
viz.
Rising NPA
Bank Nationalization
Recommendation Result
Setup Debt recovery tribunals, so loan defaulters cannot get Debt recovery tribunal setup in 1993 Later came
stay orders from courts. SARFAESI act in 2002 with more powers
Reduce CRR and SLR so banks are left with more money to
lend. Gradually reduced from (15,40) (4, 21.5)
NBFC regulatory framework Implemented
Allow entry of private sector banks and foreign banks. Done, leads to first round of bank licenses
RBI does NOT fix the base rate. It has issued broad guidelines to bank as to how they should
arrive at the base rate.
In case of BPLR, Banks normally used to take into consideration the factors like cost of funds,
administrative costs and a margin over it.
However, such parameters were neither disclosed by banks nor were same for all the banks
6 Running ICICI, HDFC, UTI (became Axis bank (2007)), IDBI, Indusind, DCB (Development
Credit Bank)
4 Closed Global Trust Bank merged with Oriental bank of Commerce, Bank of Punjab
merged with Centurion bank, Centurion bank merged with HDFC bank, Times Bank merged
with HDFC bank
Older Classification
NBFI Banks
This time RBI gave license only two strongest contenders viz.
Kotak Mahindra
Yes Bank
Get its shares listed on stock exchange within 3 years; bring down voting rights to 15%
within 12 years.
foreign shareholding must not be more than 49% (for the first five years)
50% of directors should be independent & such bank must not invest in shares/bonds of its
parent group.
Must open at-least 25% branches in the unbanked rural areas & Have to comply with PSL
norms
Based on committees recommendations RBI gave license only two strongest contenders viz.
Bandhan Microfinance
IDFC