History• Banking in India originated in the last decadesof the 18th century.• The first banks were The General Bank ofIndia, which started in 1786, and Bank ofHindustan, which started in 1770.• The bank of Bengal,Bank of Bombay,Bank ofMadras all three were established undercharters from the British East India Company.
Post-Independence• The Reserve Bank of India, Indias centralbanking authority, was established in April1934, but was nationalized on January 1, 1949.• The Banking Regulation Act also provided thatno new bank or branch of an existing bankcould be opened without a license from theRBI.• According to RBI ACT no two banks couldhave common directors.
Contd…..• By the 1960s, the Indian banking industry hadbecome an important tool to facilitate thedevelopment of the Indian economy.• 14 largest commercial banks have Nationalizedwith effect from July 19, 1969.• A second dose of nationalization of 6 morecommercial banks followed in 1980.• Until the 1990s, the Nationalized banks grew at apace of around 4%,closer to the average growthrate of the Indian economy.
Post Libralization• In 1988, the RBI set up Committee onComputerisation in Banks.• In 1994, Committee on Technology Issuesrelating to Payments System, Cheque Clearingand Securities Settlement in the Banking Industrywas set up.• Committee also proposing Legislation OnElectronic Funds Transfer and other ElectronicPayments emphasized on EFT system in te year1995.
New phase of Indian BankingSystem
Bank• A bank is a financial institution and a financialintermediary that accepts deposits andchannels those deposits into lendingactivities, either directly or through capitalmarkets.
Central Bank ofIndiaReserve Bank ofIndiaBecome operational 1st April , 1935Chairman
Regulate the issue ofbanknoteOperate currencysystem of the countryMaintain reserves tosecure monetarystabilityOperate the credit
Functions Of RBIIssuecurrencynotesFightagainsteconomiccrisisMaintainvalue ofcurrencyGrantinglicense toBanksControltheNBFC