The document provides an overview of the banking sector in India from pre-independence to current times. It discusses the early banks established in India in the 19th century during British rule. After independence, the government nationalized major banks in 1969 and 1980 to gain greater control over credit. Banking was liberalized in the 1990s, allowing private banks like HDFC and ICICI to form. Today India has over 150 banks with modern technologies like internet banking, ATMs, and UPI payments widely used. The future of Indian banking is expected to include consolidation and global expansion.

1. BANKING IN INDIA
Shivam Shekhar

2. CONTENTS
▷What is Banking sector?
▷Pre-Independence Scenario
▷Post-Independence Scenario
▷Post-Liberalisation Scenario
▷Current Scenario

3. What is Banking Sector?
Bank & its role, Types of banking

4. Bank & its role
▷Bank is a financial institution that accepts deposits
from public and creates credit.
▷In addition banks also provide lending activities
either directly or through capital markets.
▷In simple words, facilitates the holding & exchange
of money.
▷Banks earn by interests on loans & investing the
money available with them in high-return investment
areas.

5. Types of banking
▷Personal Banking: Our day to day banks; Deposits,
withdrawals, loans etc
▷Commercial Banking: Deposits, business loans &
offer investment products
▷Investment Banking: Services such as raising
capital, assist in M&A
▷Private Banking: Banking, investment & other
services to high-net-worth-individuals(HNWI’s)

6. Pre-Independence Scenario
Early banks, 20th Century banking

7. Early banks
▷Commercial Bank & Calcutta Bank merged in 1829
to form Union Bank of Calcutta later failed in 1848
▷Allahabad Bank, the oldest functional bank today
estd. in 1865
▷Foreign banks started to appear in 1860’s in Calcutta
with CEP(later converted to BNP Paribas) & HSBC
▷First entirely Indian Bank, Oudh Commercial Bank
estd. in 1881 in Faizabad followed by Punjab National
Bank at Lahore in 1894

8. 20th Century banking
▷Early 20th Century, period of stability in Indian
Economy
▷1906-11, several banks inspired by Swadeshi
movement
▷Several banks started in Udupi district of
Karnataka, called “Cradle of Indian Banking”
▷RBI found in 1935 to respond to economic troubles
after WW1
▷1914-18 to 1939-45, from WW1 to WW2 and further
couple of years until Independence, Banking sector
was in troubles

9. Post-Independence Scenario
Early independence years, Nationalisation of banks

10. Early independence years
▷Partition impacted Punjab & Bengal, the 2 major
hubs of economy
▷Govt initiated measures to play role in economy
▷Nationalisation of RBI in 1949
▷Banking Regulation Act enacted in 1949
empowering RBI to “regulate, control & inspect the
banks in India”
▷Banking industry was important to facilitate
development of economy

11. Nationalisation of banks
▷Despite of RBI regulations, majority of banks were
controlled privately
▷Govt nationalised 14 largest banks holding at least
85% of deposits through an ordinance
▷Second round of nationalisation in 1980 nationalised
6 more banks giving govt the control of over 91% of
banking business
▷Reason given was to give govt more control of credit
delivery

12. Post-Liberalisation Scenario
Banking in 1990s

13. Banking in 1990s
▷By the end of 1990, India was in a serious economic
crisis
▷In early 1990s, govt started liberalisation by licensing
small number of private banks; License Raj was slowly
phased out; Allowed FDI in many sectors
▷Axis Bank, ICICI Bank, HDFC Bank etc are results of
this measures
▷This revitalised the banking sector in India with
rapid growth in all 3 sectors namely govt banks,
private banks & foreign banks

14. Current Scenarios
Structure of banking sector, Adoption of modern technologies,
Recent activities

15. Structure of banking sector
▷Broadly classified into Scheduled & Non-
Scheduled Banks
▷Scheduled banks further divided into 5 groups: SBI
& its associates, Nationalised banks, Private sector
banks, Foreign banks, Regional rural banks
▷Largest commercial bank today is SBI
▷Today, India has over 150 banks with over 100,000
branches and more than $ 1.0 trillion in deposits
▷India’s banking sector is now mature

16. Adoption of modern technologies
▷1984: MICR adopted for standardised cheques
▷1987: ATM started by HSBC
▷1988: Committee on Computerisation in Banks set up
▷1996: Internet Banking started by ICICI Bank
▷2004: RTGS started for real time payments
▷2005: NEFT started for electronic funds transfer
▷2010: IMPS started for immediate payments
▷2016: UPI started for payments using mobile phones

17. Future prospects
▷RBI gave a glimpse of what future banking would be like
and following are salient points:
▷Multilayered banking structure with 4 tiers
▷Continuous banking license opposed to previous policy
▷Consolidation of banks as few cater to global needs
▷Dilution of govt stakes in Public Sector Banks
▷Foreign banks in India will have better presence
▷More presence abroad for Indian banks