PHASE IThe General Bank of India was set up in the year 1786. Next came Bank of Hindustanand 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.
Phase-2Nationalisation of Imperial Bank of India with extensive banking facilities on a large scale specially in rural and semi-urban areas.It formed State Bank of India to act as the principal agent of RBI and to handlebanking transactions of the Union and State Governments all over the country.Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July, 1969, major process of nationalisation was carried out. 14 major commercial banks in the country was nationalised.The second phase of nationalisation of Indian banks took place in the year 1980. Seven more banks were nationalised with deposits over 200 crores. Till this year, approximately 80% of the banking segment in India were under Government ownership.
Phase-3• Entry of Foreign Banks Entry of Foreign Banks• Phone Banking and NetPhone Banking• Shelter from external macroeconomic shockShelter .• System become more convenient and swift .
Nationalisation• Nationalization of Banks started in 1955, with State Bank of India being the first bank to be nationalized. Then in 1960, its seven subsidiaries (now six) were also nationalized. The process of nationalization of banks picked up speed in 1969, under the governance of then prime minister, Indira Gandhi and 14 banks were nationalized with the objective of spreading banking infrastructure in rural areas and make cheap finance available to Indian farmers.
second phase of nationalization of Indian banks took place in 1980, in which 7 more banks were nationalized with deposits over 200 crores. At present, the 27 nationalized banks are- (remember, State bank of Saurashtra is now merged with SBI)• Bank of Baroda Bank of India• Bank of Maharashtra• Canara Bank• Central Bank of India• Corporation Bank• Dena Bank• Indian Bank• Indian Overseas Bank• Oriental Bank of Commerce• Punjab and Sind Bank• Punjab National Bank• State Bank of Bikaner & Jaipur• State Bank of Hyderabad• State Bank of India (SBI)• State Bank of Indore• State Bank of Mysore• State Bank of Patiala• State Bank of Saurashtra• State Bank of Travancore• Syndicate Bank• UCO Bank• Union Bank of India• United Bank of India• Vijaya Bank• IDBI Bank
FUNCTIONS OFBANK• Accepting Deposits from public/others Accepting Deposits from public/others(Deposits).(Deposits).• Lending money to public (Loans).Lending money to public (Loans).• Transferring money from one place to Transferring money from one place to another (Remittances).another (Remittances).• Acting as trustees. Acting as trustees.• Keeping valuables in safe custody. Keeping valuables in safe custody.• Government business. Government business.
What constitute Bank• Bank is an institution which trades in money, an establishment for the deposits, custody and issue of money, as also for making loans and discounts and facilitating the transmission of remittances from one place to another”. Savings Bank : Running account for saving with restriction in number of withdrawal Current Account: Running account without restriction on number of withdrawals Term Deposit : Deposit of an amount for a fixed period where interest is paid monthly/Quarterly. Special Term Deposit : Deposit of an amount for a fixed period where interest is compounded (Capitalized) and paid on maturity. Recurring Deposit : Regular (Monthly) deposit of a fixed amount for a fixed period WHAT IS BANKING
Act as a trustee• Banks also act as trustees for various purposes. For example,Banks also act as trustees for various purposes. For example,whenever a company wishes to issue secured DEBENTURES, itwhenever a company wishes to issue secured DEBENTURES, ithas to appoint a financial intermediary as trustee who takeshas to appoint a financial intermediary as trustee who takescharge of the security for the debenture and looks after thecharge of the security for the debenture and looks after theinterests of the debenture holders. Such entity necessarily haveinterests of the debenture holders. Such entity necessarily haveto have expertise in financial matters and also be of sufficientto have expertise in financial matters and also be of sufficientstanding in the market/society to generate confidence in thestanding in the market/society to generate confidence in theminds of potential subscribers to the debenture. While Banks areminds of potential subscribers to the debenture. While Banks arethe natural choice for the customers, Banks must possess thethe natural choice for the customers, Banks must possess thefollowing to be effective and retain that:following to be effective and retain that:• A track record of sufficient length. A track record of sufficient length.• Facilities for safe keeping.Facilities for safe keeping.• Legal skills to take necessary steps for the trusteeshipLegal skills to take necessary steps for the trusteeship..
Scenario of Indian Banks• Indian banking sector has 6Indian banking sector has 6rank in all over the world. rank in all over the world.• SBI has 6500+ ATMs all over the country.SBI has 6500+ ATMs all over the country.• ICICI bank has 3500+ ATMs all over the country.I CICI bank has 3500+ ATMs all over the country.• RBI had printed 6,39,948 lakhs crore notes till 6RBI had printed 6,39,948 lakhs crore notes till 6• Nov2008.• Inspite of it India has 23+ ATMs per million people,Inspite of it India has 23+ ATMs per million people,China has 55+ ATMs and South Korea has 1600+ ATMsChina has 55+ ATMs and South Korea has 1600+ ATMsper million people.per million people.• Transaction done through ATMs is around 70,000 croreTransaction done through ATMs is around 70,000 crorein a year.in a year.ICICI bank has largest no. branches in foreign also.ICICI bank has largest no. branches in fore
Regulation of Banks• The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: 1949 : Enactment of Banking Regulation Act.• 1955 : Nationalisation of State Bank of India.• 1959 : Nationalisation of SBI subsidiaries.• 1961 : Insurance cover extended to deposits.• 1969 : Nationalisation of 14 major banks.• 1971 : Creation of credit guarantee corporation.• 1975 : Creation of regional rural banks.• 1980 : Nationalisation of seven banks with deposits over 200 crore.
Indian Financial System• Commercial BanksPublic sector banksPvt. Sector BanksForeign banks• Cooperative InstitutionsUrban Cooperative SocietiesState Cooperative societiesCentral cooperative societies• Financial InstitutionsAll India Financial InstitutionsState Financial corporationState industrial and Development corporation• Non banking Financial Companies• Capital Market Intermediaries
Source of banks funds• Long-Term Sources:• Tier one and Tier two Capital in the form of equity/subordinate debts/debentures/preference shares.• Internal accrual generated out of profits.• Long-term fixed deposits generated from public and corporate clients, financial institutions, and mutual funds, etc.• Long-term borrowings from financial institutions like NABARD/SIDBI.• Short-Term Sources:• Call money market, i.e., funds generated among interbanking transactions where there is online trading of money between bankers.• Fixed deposits generated from public and corporate clients, FIs, and MFs, etc.• Market-linked borrowings from RBI.• Sale of liquid certificate deposits in the open market.• Borrowing from RBI under Repo (Repurchase option).• Short and medium-term fixed deposits generated from public and corporate clients, mutual funds, and financial institutions, etc.• Floating in current and saving accounts.• Short-term borrowings from FIs by way of rated papers placed, etc.