IMPORTANT LANDMARKS IN INDIAN BANKING & STRUCTURE OF INDIAN BANKING SECTOR
BANKING IN HISTORICAL PERSPECTIVE :
The origin of banking in India can be traced back to almost the Vedic period. The transformation from pure money lending to proper banking appears to have taken place before the times of Manu. Manu, a great Hindu jurist, has devoted a section of his work explaining the deposits and advances and he even laid down certain rules on rates of interest.
Through out Mauryan period and later on desi bankers played some role in the economy of the country. However, it was during the Moghul period that indigenous bankers started playing a vital role in lending money and financing of the foreign trade and commerce.
BANKING DURING BRITISH PERIOD BEFORE INDEPENDENCE :
The first joint stock bank, namely The General Bank of India was established in 1786.
Later on Bank of Hindustan and Bengal Bank also came into existence. Bank of Hindustan carried on the business till 1906.
East India Company established the following three banks, namely The Bank of Bengal in 1809, The Bank of Bombay in 1840, and Bank of Madras in 1843. They were collectively called Presidency Banks and were well functioning independent units.
The three banks established by the East India Company were amalgamated in 1920 and a new bank called Imperial Bank of India was established.
A number of private banks had been established by the businessmen from mid of the 19th century onwards. In the surchanged atmosphere of Swadeshi movement, a number of banks with Indian management, namely, Punjab National Bank Ltd., Bank of India Ltd., Canara Bank Ltd, Indian Bank Ltd. etc. were established.
The Reserve Bank of India was established as the Central bank of the country in 1935 under an act called Reserve bank of India Act. Later on with the passage of the Banking Regulation Act passed in 1949, RBI was brought under government control. Under this Act, RBI was conferred with supervision and control of the banks and licensing powers and the authority to conduct inspections was also given to it.
AFTER INDEPENDENCE :
In 1955, the Imperial Bank of India was nationalised and was given the name "State Bank of India". It was established under State Bank of India Act, 1955.
In 1960, RBI was empowered to force the compulsory merger of the weak banks with the strong ones. This led to reduction in the number of banks from 566 in 1951 to about 89 in 1969.
On July 19, 1969, 14 major banks were nationalised.
In 1980, another six banks were nationalised, and thus raising the number of nationalised banks to 20.
On the suggestions of Narsimham Committee, the Banking Regulation Act was amended in 1993 and thus the gates for the new private sector banks were opened.
PRESENT STRUCTURE OF INDIAN BANKING SYSTEM
Reserve Bank of India (RBI) is the Central Bank and all Banks in India are required to follow the guidelines issued by RBI. The present structure of Indian Banking System is as follows :-
|
A) |
PUBLIC SECTOR BANKS | |
| 1 | State Bank of India and its 7 associate Banks, together called State Bank Group | |
| 2 | Nationalised Banks (20 in number) | |
| 3 | Regional Rural Banks sponsored by Public sector Banks | |
|
B) |
PRIVATE SECTOR BANKS | |
| 1 | Old Generation Private Banks | |
| 2 | New Generation Private Banks | |
| 3 | Foreign Banks in India | |
| 4 | Scheduled Co-operative Banks | |
| 5 | Non Scheduled Banks | |
|
C) |
CO-OPERATIVE SECTOR BANKS | |
| 1 | Central Co-operative Banks | |
| 2 | State Co-operative Banks | |
| 4 | Land Development Banks | |
| 3 | Primary agriculture Credit Societies | |
| 5 | Urban Co-operative Banks | |
| 6 | State Land Development Banks | |
|
D) |
DEVELOPMENT BANKS | |
| 1 | Export-Import Bank of India (EXIM Bank) | |
| 2 | Industrial Finance Corporation of India (IFCI) | |
| 3 | Industrial Development bank of India (IDBI) | |
| 4 | National Bank for Agriculture & Rural Development (NABARD) | |
| 5 | Industrial Investment Bank of India (IIBI) | |
| 6 | Small Industries Development Bank of India (SIDBI) | |