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General Bank of India – 1st bank of India(1786) Reserve Bank of India -was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934 Slow growth and periodic failure In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India.”
1955:-Nationalization of Imperial Bank of India and formation of State Bank of India. 1960:-Nationalization of SBI and subsidiaries 1962:-Deposit Insurance corporation was established with aim to provide insurance cover to depositors, thereby protecting deposits of common man.
1969:-‘Transitory period’- social banking and nationalization(14 banks)
The Government of India First 14 Nationalised banks: 1. Bank of India 2. Union Bank of India 3. Bank of Baroda 4. Bank of Maharashtra 5. Punjab National Bank 6. Indian Bank 7. Indian Overseas Bank 8. Central Bank of India 9. Canara Bank 10. Syndicate Bank 11. United Commercial Bank 12. Allahabad Bank 13. United Bank of India 14. Dena Bank
Creation of credit guarantee Corporation Creation of regional Rural Banks(1975):-The Govt of India set up Regional Rural Banks (RRBs) on October 2, 1975.The banks provide credit to the weaker sections of the rural areas-small farmers, agricultural labourers, artisans and small entrepreneurs.Initially, five RRBs were set up on October 2,1975.Capital share -50% by the central government, 15% by the state government and 35% by the scheduled bank.Total authorized capital- 1 crore which has since been raised to 5 Crore.
1980 : Nationalisation of seven banks with deposits over 200 crores.1990 :- the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.
1991 :- the Indian rupee was devalued. The currency lost 18% relative to the us dollar. Narsimahmam Committee advised restructuring the financial sector by a temporal reduced reserve ratio as well as the statutory liquidity ratio.
Licensing a small number of private banks(New Generation tech-savvy banks) . eg :axis bank, Global Trust Bank. This turning point should reinforce the market and was often called neo liberal. all Foreign Direct Investment at that time was 10% (at present it has gone up to 74% with some restrictions).
System become more convenient and swift. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customer. eg online banking. Time is given more importance than money. This move, along with the rapid growth in the economy of India , revitalized the banking sector in India
Phase I Slow growth rate Phase II nationalization of 14 indian banks Phase III the trend continues---7 more banks nationalized no such significant changes with a constant growth rate
Phase IV New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.
Focus only on corporate clients Lack of skill expertise in retail and structured finance Lack of distribution system Limited use of technology Inefficient capital allocation Competition in market
FDI in banking sector can solve various problems of the overall banking sector. Such asa) Innovative Financial Products.b) Technical Developments in the Foreign Marketsc) Problem of Inefficient Managementd) Non-performing Assetse) Financial Instabilityf) Poor Capitalizationg) Changing Financial Market Conditions
Technological Advancement Improving Risk Management Rural Banking Developing a flexible model for rapid scale--up at optimal cost.
Indian banking sector has 6th rank in all over the world rank. SBI has 6500+ ATMs all over the country. ICICI bank has 3500+ ATMs all over the country. RBI had printed 6,39,948 lakhs crore notes till 6THNov 2008. SBI provides the facility and it is tie with 9200+ banks to use their ATM. Transaction done through ATMs is around 70,000 crore in a year