INDIAN BANKING SYSTEM

OBJECTIVE

 To Make an account of Indian banking

evolution,
 To evaluate the intervention of state in
banking sector over year , and
 To apprise the entry foreign banks.
 Overview of Banking IN INDIA

• In 1786 : the first decade of 18th century with The

General Bank of India coming into existence,

• Followed by Bank of Hindustan

• The oldest bank in existence in India is the

State Bank of India being established as "The Bank of
Bengal" in Calcutta in June 1806
Overview ……..
• The first fully Indian owned bank :Allahabad Bank
which was established in 1865.

• Reserve Bank of India : after independence, on 1st April

1935 was opened and in1949 nationalized and given
broader powers.

• Currently India has 88 scheduled commercial banks

(SCBs):
Overview ….

 28 public sector bank (75 % of total assets of the banking

industry
 29 private banks : ( 18.2% of total assets of the banking
industry
 31 foreign banks : 6.5% respectively

 Total combined network of over 53,000 branches and 17,000

ATMs
The journey of Indian Banking System

PHASE 1:
Early phase from 1786 to 1969 of Indian Banks ,
PHASE 2:
Nationalization of Indian Banks (up to 1991)
PHASE 3:
New phase of Indian Banking System with the advent of Indian
Financial & Banking Sector Reforms after 1991.
 PHASE 1
Early phase from 1786 to 1969 of Indian Banks

• The General Bank of India was set up in the year 1786. Next
came Bank of Hindustan and Bengal Bank ,
• The East India Company established Bank of Bengal (1809),
• Bank of Bombay (1840) and Bank of Madras (1843) as
independent units and called it Presidency Banks
• Between 1906 and 1913, Bank of India, Central Bank of India,
Bank of Baroda, Canara Bank, Indian Bank, and Bank of
Mysore were set up.
Importance of phase 1….

 Public has lesser confidence in the banks

 Deposit process was slow
 the savings bank facility provided by the Postal department
 1100 bank, mostly small (1913-48)
 Growth was very slow
 The Government of India came up with The Banking
Companies Act, 1949
 PHASE 2
Nationalization of Indian Banks (up to 1991)

• specially focused in rural and semi-urban areas.

• formed State Bank of India to act as the principal agent of RBI
• to handle banking transactions of the Union and State
Governments all over the country
• 7 banks forming subsidiary of State Bank of India was
nationalized in 1960 on 19th July
• 14 major commercial banks in the country was nationalized.
Importance of phase 2….
• Taken some steps by the Government of India to Regulate Banking Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955 : Nationalization of State Bank of India.

1959 : Nationalization of SBI subsidiaries.

1961 : Insurance cover extended to deposits.

1969 : Nationalization of 14 major banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalization of seven banks with deposits over 200 crore

Importance of phase 2….

• 800% in deposit and 11000% in advance ,

jumped in public banking sector in India.
 PHASE 3:
New phase of Indian Banking System with the advent of Indian Financial & Banking Sector
Reforms after 1991 .

• This phase has introduced many more products and facilities in

the banking sector in its reforms measure.
• The country is flooded with foreign banks and their ATM stations.
• Phone banking and Net banking is introduced.
• Time is given more importance than money.
• The chairmanship of M Narasimham, (1991) a committee was set
up by his name which worked for the liberalization of banking
practices.
BANKING SYSTEMS IN INDIA
Services given by banks….
 Demat account
 Lockers
 Cash management
 Insurance product
 Mutual fund product
 loans
 Main competitors for banking
sector

• Post office
• Mutual funds
• Share market
• Insurance
• Many lenders
• Family & friends
• Foreign bank.
 Ways ahead….
• Technological Advancement
• Rural banking
• Improving risk management and
• Developing a flexible model for rapid scale-up
at optimal cost scale-up at optimal cost.
 Fact & figures
• Indian banking sector has 6th rank in the world
• SBIs have more than 6500 ATMs all over the country.
• RBI had printed 6,39,948 lakhs crore notes till 6th Nov 2008.
• Inspite of it India has 23+ ATMs per million people,
• China has 55+ ATMs and
• South Korea has 1600+ ATMs per million people.
• Transaction done through ATMs is around 70,000 crore in a
year
 Foreign bank in India
• New policies are introduced by RBI for them
–The policy conveys that foreign banks in India may not acquire
Indian ones (except for weak banks identified by the RBI, on
its terms) and their Indian subsidiaries will not be able to
open branches freely
 List of foreign bank
• ABN-AMRO Bank
• Abu Dhabi commercial bank
• American express bank
• Barclays bank
• Citi bank
• HSBC bank
• State bank of Mauritius
Thank You
Mr. vikas sir

By:
Amit kumar Jha
7th batch
BITM