GROWTH IN BANKING SECTOR<br />Submitted by <br />Harish<br />rawal<br />
India’s growing banking sector:<br /><ul><li>India’s banking sector is booming at a great pace.
Indian banking sector has been found lucrative.
Most of the banks paid their focus on the retail sector and provide internet banking, phone banking and mobile banking services to their customers and have cornered one of the largest segments of the India's banking sector by targeting the India's growing middle income class.
The Indian banking sector has been a proliferation of new services. </li></li></ul><li>What is a Bank? <br />A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money<br />
Function of Banks <br />• <br />Lending money to public (loans) <br /> • <br />Transferring money from one place to another (Remittances) <br /> • <br />Acting as trustees <br />• <br />Keeping valuables in safe custody <br />• <br />Government business <br />
Reserve Bank of India <br />RBI is the banker to banks—whether commercial, cooperative, or rural. The relationship is established once the name of a bank is included in the Second Schedule to the Reserve Bank of India Act, 1934. Such bank, called a scheduled bank, is entitled to facilities of refinance fromRBI.<br />
conditions laid down<br />subject to fulfillment of the following conditions laid down in Section 42 (6) of the Act, asfollows:<br /><ul><li>It must have paid-up capital and reserves.
It must satisfy RBI that its affairs.</li></li></ul><li>Services Provided By a Bank <br />• <br />Demat Account <br />• <br />Lockers <br />• <br />Cash Management <br />• <br />Insurance Product <br />• <br />Mutual Fund Product <br />• <br />Loans <br />• <br />ECS (Electronic clearance system) <br />• <br />Taxes <br />
History of banking history<br />The first bank in India, though conservative, was established in 1786. From 1786 till today, thejourney of Indian Banking System can be segregated into three distinct phases. They are asmentioned below:<br />• <br />Early phase from 1786 to 1969 of Indian Banks <br />• <br />Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. <br />• <br />New phase of Indian Banking System with the advent of Indian Financial & Banking <br />Sector Reforms after 1991<br />
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: 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. <br />
After the nationalization of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%<br />
Mergers & Acquisitions<br />Mergers of banks took place in India in the 1960s under the direction of the Reserve Bank of India. <br />From 566 reporAting commercial banks (of which non-scheduled banks were 474) at theend of 1951, the number came down to 292 (of which 210 were non-scheduled) at end 1961, to100 (27 non-scheduled) at the end of 1966; and to 85 (14 non-scheduled) by the end of 1969.<br />
STRUCTURE OF THE BANKING INDUSTRY <br />According to the RBI definition, commercial banks which conduct the business of banking in India and which<br />(a) have paid up capital and reserves of an aggregate real and exchangeable value of not less than Rs 0.5 mnand<br />(b) satisfy the RBI that their affairs are not being conducted in a manner detrimental to the interest of their depositors, are eligible for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934, and when included are known as ‘Scheduled Commercial Banks’.<br />
Different groups <br />Banks in India are categorized in five different groupsaccording to their ownership and/or nature of operation. These bank groups are<br />(i) State Bank of India and its associates,<br />(ii) Nationalised Banks,<br />(iii) Regional Rural Banks,<br />(iv) Foreign Banks and<br />(v) Other Indian Scheduled Commercial Banks<br />
There are 71,177 bank offices spread across the country, of which 43 % are located in rural areas, 22% in semi-urban areas, 18% in urban areas and the rest (17 %) in the metropolitan areas. The major bank groups (as defined by RBI) functioning are State Bank of India and its seven associate banks, 19 nationalized banks and the IDBI Ltd, 19 Old Private Sector Banks, 8 New Private Sector Banks and 29 Foreign Banks<br />
Public Sector Banks in India <br />Among the Public Sector Banks in India, United Bank of India is one of the 14 major banks which were nationalized on July 19, 1969. Its predecessor, in the Public Sector Banks, the United Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. ComillaBanking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932).<br />
(1932). Oriental Bank of Commerce (OBC), a Government of India Undertaking offers Domestic, NRI and Commercial banking services. <br />OBC is implementing a GRAMEEN PROJECT in Dehradun District (UP) and Hanumangarh District (Rajasthan) disbursing small loans. <br />This Public Sector Bank India has implemented 14 point action plan for strengthening of credit delivery to women and has designated 5 branches as specialized branches for women entrepreneurs<br />
List of public sector banks<br />• <br />Allahabad Bank <br />• <br />Andhra Bank <br />• <br />Bank of Baroda <br />• <br />Bank of India <br />• <br />Bank of Maharashtra <br />• <br />Canara Bank <br />
Private Sector Banks <br />Private banking in India was practiced since the beginning of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the fastest growing Private Sector Bank in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution in India. <br />
Conti,.<br />The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995. <br />
Conti,.<br />ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. <br />With successive years of patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its account.<br />
Major reforms initiatives <br />Some of the major reform initiatives in the last decade that have changed the face of the Indian banking are:- <br />Interest Rate Deregulation-Interest <br />Government equity in banks <br />New private sector banks<br />New areas have been opened up for bank financing <br />
Effect of New Technologies on Banks<br />The Indian banking sector has seen an acceleration with the introduction of technological transformation like<br /> ATMs, <br />telephone banking,<br /> online banking, <br />web based products, <br />e-cheques, <br />call centers <br />credit cards, <br />debit cards.<br />
Even the old public sector banks are keeping themselves tune with the new technological changes.<br />SBI:<br />Like State Bank of India (SBI) has set aside more than Rs 500 crore during its 3 years of of time span for the up gradation.<br /> Presently, SBI has more than 3000 computerized branches and over 1000 new ATMs. Similarly,UTI:<br />United Bank of India (UTI) has started its computerization process in 1986 and so far it has completed its computerization work of more than 774 branches. <br />It has also set up 25 ATMs in throughout the India <br />
Banks and the Internet World <br />Due to the advantages of inherent conveniences, :<br />24x7 internet banking has proved to be an attractive service <br />Transactions done through the internet cost <br />Some banks also offer unique features of internet banking <br />
Notable features of the internet banking<br />• <br />Transfer of money to your account at the same bank's branch in another city. <br />• <br />Opening of a fixed deposit• <br />Issuing of a banker's cheque or a demand draft. <br />• <br />Checking of bank balance. <br />• <br />Stopping the clearance of cheque. <br />• <br />Request for the cheque book. <br />• <br />Retail Sector Growth <br />