The document provides a history of banking in India from 1786 to present day. It discusses 3 phases: (1) Initial stage from 1786-1969 which saw the establishment of major banks like SBI but many failed; (2) Nationalization and growth from 1969-1991 where Indira Gandhi nationalized 14 banks in 1969 and 6 more in 1980; (3) Liberalization from 1991 onward with banking reforms and the introduction of private banks. Recent trends in banking include electronic payment services, internet banking, mobile banking, and recent bank mergers.

1. Chha Mana Atha Guntha: (Six Acres
and A Third
• Chha Maana Atha Guntha was published in 1897 . The main theme of the novel deals with
the exploitation of landless peasants by a feudal Lord in British India
• Characters
• 1.Ramachandra Mangaraj; Jamindar
• 2. Champa : mistreee of Mangaraj
• 3. Bhagia : The land Holder
• 4 Saria : Wife of Bhagia
• 5 Sanatani wife of mangaraj
• 6 Govind : servant of Jamindar
•
• The Theme
• The main story is about a cruel land lord, Ramachandra Mangaraj, who is one of the
wealthiest men of the village. Starting from zero he gains a lot of property by acquiring
poor’s land. The exploitation on poor peasants using the new legal system to appropriate
their property by Mangaraj serves the main story. Meanwhile, Mangaraj’s mistress
Champa was a griddy woman his wife sanatani was woman of good heart.
•
•

2. • Bhagia, a poverty stricken peasant along with his
wife Saria, is another main character of the novel. Bhagia is
under a debt of the Mahajana for his land which counts to
be Chha Maan Atha Guntha (Six Acres and a Third) in
measure. The novel shows the fraudulent nature of the land
lord to acquire the land of the peasant.
• In the end of the story, Mangaraj is punished by the law. A
different perspective of the novel unfolds here. The judge
orders that his landed estate, his “zamindari,” be taken away.
It is sold to a lawyer, who — as rumor in the village has it —
“will come with ten palanquins followed by five horses and
two hundred foot-soldiers” to take possession of Mangaraj’s
large estate.
• The ordinary villagers react to this news by reminding one
another of an old saying:
• “O horse, what difference does it make to you if you are
stolen by a thief? You do not get much to eat here; you will
not get much to eat there. No matter who becomes the next
master, we will remain his slaves. We must look after our
own interests.”

3. Unorganized Monetary Financial Institutions
and its Draw Back for evolution of Banking
System

4. Drawbacks of unorganized sector
Drawbacks
1 Loan from Sahukar ( Unorganized borrowings )
2. No legal deed or documents are signed
3. No witness
4. No Further Investment( financial and
investment planning)
5. Un -institutional Funding
6. Unaware of Credit History
7. Financial Statements
8. No regulatory body

5. Introduction
Today, the banking industry in our country is stronger and capable of withstanding the
pressures of competition. It withstood Global Financial Crisis (2008). In the era of
Globalization Banking Sector in India is rapidly changing since 1990s due to
technological innovation, financial liberalization with entry of new private and foreign
banks, and regulatory changes in the corporate sector. Indian banking industry is
gradually moving towards adopting the globally best practices. In our country,
currently we are having a fairly well developed banking system with different classes
of banks – public sector banks, foreign banks, private sector banks – both old and
new generation, regional rural banks and co-operative banks with the Reserve Bank
of India as the leader of the system. link document unit 1.docx
There are currently 27 public sector banks in India out of which 19 are nationalized
banks and 6 are SBI and its associate banks, and rest two are IDBI Bank and Bharatiya
Mahila Bank, which are categorised as other public sector banks, 23 private sector
banks and 46 foreign banks with 325 branches (as on 31st Dec. 2015) along with 61
regional rural banks (RRBs) and more than 90,000 credit cooperatives.

6. Brief History of Banking in India
Phase I (1786- 1969): Intial Stage of Banking in India
• The first banks were The General Bank of India, which started in 1786, and Bank
of Hindustan, both of which are now defunct.
• The oldest bank in existence in India is the State Bank of India, which originated in
the "The Bank of Bengal" in Calcutta in June 1806. This was one of the three
presidency banks, the other two being the Bank of Bombay and the Bank of
Madras. The three banks merged in 1921 to form the Imperial Bank of India. (As
quasi government institution)link document unit 1.docx
• Foreign banks too started to arrive, particularly in Calcutta in the 1860s. The
Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another
in Bombay in 1862; branches in Madras and Pondicherry.
• The Reserve Bank of India formally took on the responsibility of regulating the
Indian banking sector from 1935.( reserve Bank act 1934) After India's
independence the Reserve Bank was nationalized on 1st January 1949 under the
RBI Act 1948 and given broader powers.
• After India's independence, the Imperial Bank of India became the State Bank of
India in 1955.
• Before 1969, State Bank of India (SBI) was the only public sector bank in India.
Under the first phase of nationalization of banks, it was nationalized in 1955
under the SBI Act of 1955.
• In preindependence era 600 banks were

7. Following the path of Bank of Hindustan, various other banks
were established in India. They were:
● The General Bank of India (1786-1791)
● Oudh Commercial Bank (1881-1958)
● Bank of Bengal (1809)
● Bank of Bombay (1840)
● Bank of Madras (1843)
If we talk of the reasons as to why many major banks failed to
survive during the during the pre independence period,
following conclusions can be drawn:
• ● Indian account holders had become fraud prone
• ● Lack of machines and technology
• ● Human errors & time consuming
• ● Less facilities
• ● Lack of proper management skills

8. Bank Registered in pre independence
ERA
• Allahabad Bank 1865
• Punjab National Bank 1894
• Bank of India 1906
• Central Bank of India 1911
• Canara Bank 1906
• Bank of Baroda 1908

9. Brief History of Banking in India
Phase II (1969- 1991): Nationalization, Regularization and Growth: The second phase
of nationalization of banks took place in 1969. Fourteen banks were nationalized in
this year by the then Prime Minister of India Mrs. Indira Gandhi. In the year 1980, six
more banks were nationalized with deposits over 200 crores.
The major objective behind nationalization was to spread banking net work in the
rural areas and make available cheap finance to Indian farmers. Until the 1990s, the
nationalized banks grew at a pace of around 4%, closer to the average growth rate of
the Indian economy.
Phase III (1991 onwards): Liberalization and its Aftermath: Today, Indian banking
sector is mature with banks having strong and transparent balance sheets. The major
growth drivers are increase in retail credit demand, proliferation of ATMs and debit-
cards, decreasing NPAs due to securitization, improved macroeconomic conditions,
diversification, interest rates, regulatory and policy changes (e.g. amendments to the
Banking Regulation Act). Certain trends like growing competition, product innovation
and branding, focus on strengthening risk management systems, emphasis on
technology have emerged in the recent past.

10. • Once the banks were established in the country, regular monitoring and regulations need
to be followed to continue the profits provided by the banking sector. The last phase or
the ongoing phase of the banking sector development plays a very important role.
• To provide stability and profitability to the Nationalised Public sector Banks, the
Government decided to set up a committee under the leadership of Shri. M Narasimham
to manage the various reforms in theIndian banking industry. The biggest development
was the introduction of Private sector banks in India. RBI gave license to 10
Private sector banks to establish themselves in the country. These banks included:
• 1. Global Trust Bank
• 2. ICICI Bank
• 3. HDFC Bank
• 4. Axis Bank
• 5. Bank of Punjab
• 6. IndusInd Bank
• 7. Centurion Bank
• 8. IDBI Bank
• 9. Times Bank
• 10. Development Credit Bank

11. The other measures taken include:
● Setting up of branches of the various Foriegn Banks in India
● No more nationalisation of Banks could be done
● The committee announced that RBI and Government would
treat both public and private sector banks equally
● Any Foreign Bank could start joint ventures with Indian Banks
● Payments banks were introduced with the development in the
field of banking and technology
● Small Finance Banks were allowed to set their branches across
India
● A major part of Indian banking moved online with internet
banking and apps available for fund transfer
• Thus, the history of banking in India shows that with time and
the needs of people, major developments
• have been done in the banking sector with an aim to prosper
it.

12. • Amalgamation of Banks: Larger banks would
have a relatively advantages, hence recently the
Union Cabinet on 15-02-2017 approved the
merger of State Bank of India with five of its
associate banks including State Bank of Bikaner
and Jaipur, State Bank of Hyderabad, State Bank
of Mysore, State Bank of Patiala, and State Bank
of Travancore

13. Nationalization of Banks
Given below is the list of these 14 Banks nationalised in 1969:
• 1. Allahabad Bank
• 2. Bank of India
• 3. Bank of Baroda
• 4. Bank of Maharashtra
• 5. Central Bank of India
• 6. Canara Bank
• 7. Dena Bank
• 8. Indian Overseas Bank
• 9. Indian Bank
• 10. Punjab National Bank
• 11. Syndicate Bank
• 12. Union Bank of India
• 13. United Bank
• 14. UCO Bank

14. • In the year 1980, another 6 banks were nationalised
taking the number to 20 banks. These banks
• included:
• 1. Andhra Bank
• 2. Corporation Bank
• 3. New Bank of India
• 4. Oriental Bank of Comm.
• 5. Punjab & Sind Bank
• 6. Vijaya Bank

15. Apart from the above mentioned 20 banks, there were
seven subsidiaries of SBI which were nationalised in
1959:
1. State Bank of Patiala
• 2. State Bank of Hyderabad
• 3. State Bank of Bikaner & Jaipur
• 4. State Bank of Mysore
• 5. State Bank of Travancore
• 6. State Bank of Saurashtra
• 7. State Bank of Indore
All these banks were later merged with the State Bank
of India in 2017, except for the State Bank of
Saurashtra, which was merged in 2008 and State Bank
of Indore, which was merged in 2010. The Regional
Rural Banks in India were established in the year 1975
for the development of rural areas in India

16. Structure of Banking in India
RBI is the Apex Bank
As per Section 5(b) of the Banking Regulation Act 1949, “Banking” means the accepting, for the purpose
of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and
withdrawal by cheque, draft, order or otherwise.”
All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are scheduled
banks. link document unit 1.docx

18. Banking Reforms in India
In August 1991, the Government appointed a committee under the chair of M.
Narasimham, which worked for the liberalization and efficiency of banking
practices. The Committee submitted its report in November 1991 and the
following recommendations were given:
• Establishment of a four-tier hierarchy for the banking structure consists of three to
four large banks with SBI at the top.
• The private sector banks should be treated equally with the public sector banks and
government should contemplate to nationalize any such banks.
• The ban on setting new banks in private sector should be lifted and the licensing
policy in the branch expansion must be abolished.
• The government has to be more liberal in the expansion of foreign bank branches
and foreign operations of Indian banks should be rationalized.
• The Statutory Liquidity Ratio and Cash Reserve Ratio should be progressively
brought down from 1991-92.
• The directed credit program should be re-examined and the priority sector should
be redefined to comprise small and marginal farmers, the tiny industrial sector,
small business operators and weaker sections.
• Banking industry should follow BIS (Bank for International Settlement) / Basel
norms with in 3 years. (Basel guidelines (1988) refer to broad
supervisory standards formulated by the group of central banks called
the Basel Committee on Banking Supervision (BCBS) mainly focuses on risks to
banks and the financial system).

19. Banking Reforms in India
• Interest rates should be deregulated to suit the market conditions.
• The government should tighten the prudential norms for income recognition and asset classifications
for the banks and financial institutions to ensure proper provisioning (Setting aside of money from
profits to compensate a probable loss caused on lending a loan) and transparency.
• The competition in lending between DFIs (Development of Financial Institutions) and banks should be
increased and a shift from consortium lending to syndicated lending should be made.
• In respect of doubtful debts, provisions should be created to the extent of 100 percent of the security
shortfall.
• The government share of public sector banks should be disinvested to a certain percentage like in case
of any other PSU.
• Each public sector banks should setup at least one rural banking subsidiary and they should be treated
at par with RRBs.
The major recommendations of the second Narasimham II report were as follows:
• The committee favored the merger of strong public sector banks and closure of some weaker banks if
their rehabilitation was not possible.
• It recommended corrective measures like recapitalization is undertaken for weak banks and if
required such banks should be closed down.
• The committee had also suggested an amicable golden handshake scheme surplus banking sector staff.
• Suggesting a possible short term solution to weak banks, the report observed the narrow banks could
be allowed as a mean of facilitating their rehabilitation.
• Expressing concern over rising non-performing assets, the committee provides the idea of setting up an
asset reconstruction fund to tackle the problem of huge non-performing assets (NPAs) of banks under
public sector.

20. Recent Trends in the Banking System
Electronic Payment Services – e – Cheques: In the recent days we are aware of e-
governance, e-mail, e-commerce, e-tail etc. In the same manner, a new technology
is being developed in US for introduction of e-cheque, which will eventually
replace the conventional paper cheque.
Real Time Gross Settlement (RTGS): Real Time Gross Settlement system,
introduced in India since March 2004.
Electronic Funds Transfer (EFT): It is a system whereby anyone who wants to
make payment to another person/company etc. can approach his bank and make
cash payment or give instructions/authorization to transfer funds directly from his
own account to the bank account of the receiver/beneficiary.
Electronic Clearing Service (ECS): It is a retail payment system that can be used
to make bulk payments/receipts
Automatic Teller Machine (ATM): It is the most popular devise in India, which
enables the customers to withdraw their money 24 hours a day 7 days a week.
Point of Sale Terminal: It is a computer terminal that is linked online to the
computerized customer information files in a bank and magnetically encoded
plastic transaction card that identifies the customer to the computer.

21. Recent Trends in the Banking System
• Tele - Banking: It facilitates the customer to do entire non-cash related
banking on telephone. Under this devise Automatic Voice Recorder is used
for simpler queries and transactions. For complicated queries and
transactions, manned phone terminals are used.
• Electronic Data Interchange (EDI): It is the electronic exchange of
business documents like purchase order, invoices, shipping notices,
receiving advices etc. in a standard, computer processed, universally
accepted format between trading partners.
• Net Banking: It is used for transfer of funds, booking rail tickets, shopping,
purchasing cinema tickets, purchasing shares etc.
• Mobile Banking: Mobile banking is a service provided by a bank or other
financial institution that allows its customers to conduct a range of financial
transactions remotely using a mobile device such as a mobile phone or
tablet, and using software, usually called an app, provided by the financial
institution for the purpose.
• Amalgamation of Banks: The consolidation of banks is known as
amalgamation of banks. Recently the Union Cabinet on 15-02-2017
approved the merger of State Bank of India with five of its associate banks
for efficient enhanced operational efficiency and reduced cost of funds.

22. Implications and Challenges
Implications:
•The banks were quickly responded to the changes in the industry; especially the new
generation banks.
•The continuance of the trend has re-defined and re-engineered the banking operations as
whole with more customization through leveraging technology.
•As technology makes banking convenient, customers access to banking services increased
and doing banking transactions any time and from any ware.
•The importance of physical branches is going down.
Challenges: The major challenges faced by banks today are:
Non – Performing Assets (NPAs): The banking industry cannot afford to sustain itself
with such high levels of NPA’s thus, “lend, but lent for a purpose and with a purpose
ought to be the slogan for salvation”.
Information technology (IT) in Banking: The application of IT and e-banking is
becoming the order of the day with the banking system heading towards virtual banking.
Training the banking staff with the latest soft ware skills is also a challenge.
World Wide Banking (WWB): As an extreme case of e-banking World Wide Banking
(WWB) on the pattern of World Wide Web (WWW) can be visualized. Customers would be
able to do all their banking operations sitting in their offices or homes and operating through
internet. This would be the case of banking reaching the customers. This is also another
challenge for our banking system.
Cyber Crimes: Today, the major cybercrimes which plague the banking sector are ATM
frauds, hacking of bank accounts, Denial of Service, Credit Card frauds, phishing (Sending
false e-mails) etc. are challenges to the banking industry.

23. Future Outlook & Conclusion
Future Outlook:
Although, the adoption of technology in banks continues at a rapid pace,
the concentration is perceptibly more in the metros and urban areas. The
benefit of Information Technology is yet to percolate sufficiently to the
common man living in his rural hamlet. More and more programs and
software in regional languages could be introduced to attract more and
more people from the rural segments also. Standards based messaging
systems should be increasingly deployed in order to address cross platform
transactions. The surplus manpower generated by the use of IT should be
used for marketing new schemes and banks should form a ‘brains trust'
comprising domain experts and technology specialists.
Conclusion:
Indian banking system will further grow in size and complexity while acting
as an important agent of economic growth and intermingling different
segments of the financial sector. It automatically follows that the future of
Indian banking depends not only in internal dynamics unleashed by ongoing
returns but also on global trends in the financial sectors.

24. THANK YOU