HISTORY OF BANKING

Banking is nearly as old as Civilization. The history of Banking could be said to have started with the
appearance of Money. The first record of Minted Metal Coins was in Mesopotamia in about 2500 B.C.
the first European Banknotes which was handwritten appeared in 1661 in Sweden. Cheques and printed
Paper Money appeared in the 1700’s and 1800’s with many Banks credited to deal with the increasing
Trade.

The history of Banking in each country runs in lines with the development of Trade and Industry and with
the level of Political confidence and stability. The ancient Romans developed an advanced Banking
System to serve their vast Trade network which extended throughout Europe, Asia and Africa.

Modern Banking begins in Venice. The World Bank comes from an Italian word “ban co”, meaning
Bench, because the moneylenders worked on the Benches in the Market places. The Bank of Venice was
established in 1171 to help the government to raise finance for a War.

At the same time in England, Merchants started to ask Goldsmiths to hold Gold and Silver in their Safes
in return for a Fee. Receipts given to the Merchants were sometimes used to buy or sell, with the Metal
itself staying under lock and key. The Goldsmith realized that they could lend out some of the Gold and
Silver that they had and charged Interest, as not all of the Merchants would ask for the Gold and Silver
back at the same time. Eventually, instead of charging the Merchants, the Goldsmiths paid them to
deposit their Gold and Silver.

The Bank of England was formed in 1694 to borrow Money from the Public for ht Government to
Finance the War of Augsburg against France. By 1709, Goldsmith were using Bank of England notes of
their own receipts.

The New Technology transformed the Banking Industry in the 1900’s round the World, Banks merged
into larger and fewer Groups and expanded into other countries.

The Government’s regular policy for Indian Bank since 1969 has paid rich dividends with the
Nationalization of 14 major Private Sectors Banks of India.
 BANKING IN INDIA
In Today’s Dynamic World, Banks are inevitable for the Development of the country. Banks plays a
pivotal role in enhancing each and every sector. They have helped to bringing a Draw of Development on
the World’s Horizon and developing countries like India is not an Exception.

Banks fulfills the role of a Financial Intermediary. This means that it acts as a Vehicle for moving
Finance from those who have Surplus Money to those who have Deficit. In everyday’s Branch terms the
Bank Channel funds from the Depositors whose Accounts are in the Credit to the Borrowers who are in
Debit.

Without the intermediary of the Banks, both their Depositors and their Borrowers would have to contact
each other directly. This can and does happens ofcource. This had lead to the Foundation of the Financial
Institutions like Banks.

Before a few decades, there exists some influential people who used to lend the Money.

But at a high rate of Interest, which had made borrowing of the Money out of the reach of the majority of
the People so there across a need for a financial Intermediate.

The Banks have developed their roles to such an extent that a Direct contact between the Depositors and
the Borrowers which is known as Disintermediation.

The Banking Industry has always revolved around the Traditional function of taking Deposits, Money
transfer and making Advances. Those three are closely related to each other, the objective being to Lend
Money, which is the profitable activity of the three. Taking deposits generates Funds for Lending and
Money transfer services are necessary for the attention of Deposits. The Bank have introduced
progressively more sophisticated versions of these services and have diversified introduction in
numerable areas of activity not directly relating to this traditionality.

After the Nationalization of Banks in India, the branches of the Public Sector Banks rose to
approximately 800% in Deposits and advances took a huge jump by 11000% in 1991.
 NATIONALIZATION PROCESS

1995 : Nationalization of State Bank of India

1959 : Nationalization of SBI Subsidiaries

1969 : Nationalization of 14 Major Public Sector Banks

1980 : Nationalization of 7 Banks with Deposits over Rs. 200 cr.

The General Bank of India was setup in the year 1786. Next Bank came into Existence is Hindustan and
Bengal Bank. The East India Company established the Bank of Bengal (1809), Bank of Bombay (1840),
and Bank of Madras (1843) as an Individual Units and called as the Presidency Banks. Thes three Banks
were amalgamated in 1920 and Imperial Bank of India was established which started as a Private
Shareholders Bank, mostly European Shareholders.

In 1865, Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank
Ltd. Was setup in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central
Bank of India, Bank of Baroda, Canara Bank, Indian Bank and Bank of Mysore were setup. The Reserve
Bank of India came into existence in 1935.

PHASE I

During the First Phase, the Growth was very slow and Banks also experienced periodic failures between
1913 and 1948. There were approximately 1100 Banks, mostly small. To Streamline the functioning and
the activities of the Commercial Banks, The Government of India came up with The Banking Companies
Act, 1949 which was later changed to the Banking Regulation Act 1949 as per Amendment Act of 1965.
The Reserve Bank of India was vested with expensive powers for the Supervision of Banking in India as a
Central Banking Authority.

PHASE II

The Government of India had took major steps in the Indian Banking Sector Reform after Independence.
In 1955, it Nationalized the Imperial Bank of India with extensive Banking facilities on a large scale
specially in the Rural and Semi-Rural areas. It formed State Bank of India to act as the principal agent of
RBI and to handle the Banking Transactions of the Union and State Governments all over the country.
Seven Banks forming Subsidiaries of State Bank of India was Nationalized in 1960 on 19th July 1969,
major process of Nationalization was carried out. It was the effort of the Former Prime Minister of India
Mrs. Indira Gandhi, 14 major Commercial Banks in the country were Nationalized.

Second Phase of Nationalization in the Indian Banking Sector Reforms was carried out in 1980 with 7
more Banks. This step had bought 80% of the Banking Segment in India under the Government of India
ownership.

The Following steps are 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 7 Banks with deposits over Rs. 200 cr.

After the Nationalization of Banks, the branches of the Public Sector Banks in India rose approximately
to 800% in Deposits and advances took a jump by 11000%.

Banking under the ownership of the Government of India had gave the Public implicit faith and immense
confidence about the sustainability of these Institutions.

PHASE III

This phase has Introduced many more Products and Facilities in the Banking Sector’s reforms. In 1991,
under the Chairmanship of M Narasimham, a committee was setup by his name which worked for the
Liberalization of the Banking practices.

The country is facilitated with the Foreign Banks and their ATM Stations. Efforts are being put to give a
satisfactory Service to the Customers. Phone Banking and Net Banking were introduced. The entire
System had become more convenient and swift. Time is given more importance than Money.
The Financial System of India has shown a great deal of Resilience. It is sheltered from any crisis
triggered by any External Macroeconomics shock as other East Asian Countries had suffered. This is all
due to a flexible Rate regime, the Foreign Reserve are high, the Capital Account is not yet fully
convertible and Banks and their Customers have a limited Foreign Exchange exposure.
 ACKNOWLEDGMENT
I would like to give my proud Privilege and sincere Thanks to express my words of Attitude to Dr.
AKHIL MATHUR SIR, Head of Department of Faculty of Commerce and Management Studies,
Lachoo Memorial College, Jodhpur for Extending his Guideline and Cooperation in the Successful
completion of my Project and the preparation of the Project Report on the Topic – “BANKING
STRUCTURE IN INDIA” .

I also Thank my Parents who always provide me their Time, Support and Inspiration needed to prepare
this Report.

REGARD’S:-

JAIDEEP SINGH BHATI,

M.B.A. – 1st SEMETER,

ROLL NO. – 184301028.

The Banking Scenario in India has been changing at a fast pace from being just Borrowers and Lenders
traditionally, the focus has shifted to more Differentiated and Customized Products and Services provider
from Regulation to Liberalization in the year 1991, from Planned Economy to the Market.

Economy, from Licensing to integration with the Global Economics, the change have been swift. Almost
all the Sectors, operating in the Economy was affected including the Banking Sector. Thus, the whole of
the Banking System in the country has undergone a Radical change. Let us see how the Banking Sector
has evolved after the Independence in India .

After Independence in 1945 and proclamation in 1950, the country setup for the future public ownership
of the Banks with the creation of State Bank of India in 1955 to spread the expansion of Banking in the
Rural India. Political compulsion brought Nationalization of the Banks in 1969.

Technology was becoming a Global phenomenon lacking a vision of the future and the Bank erred badly
in opposing the technology for the up gradation of the Banks. They mistakenly believed that the
Technology would leads to the Retrenchment and eventually Marginalization of their unions.

The Rules under which the Banks operated were changed in 1993. Norms or Income Recognition, Assets
classification and Loan loss provisions were ignored and Capital adequacy ratio has become Mandatory.
The Amendment of the Banking Regulation Act in 1993 has result with the Entry of the new Private
Sectors Banks and the Foreign Private Sector Banks in India.

TODAY’S MAJOR PLAERS IN INDIAN BANKING SECTOR

1. STATE BANK OF INDIA LTD. 10. BANK OF INDIA LTD.

WWW.WIKIPEDIA.COM

WWW.RBI.ORG.IN

WWW.NSEINDIA.COM

WWW.ECONOMICTIMES.ORG

WWW.BUSINESS-STANDARD.COM
 CONTENTS
 HISTORY OF BANKING

 BANKING IN INDIA

 BANK DEFINITION

 RESERVE BANK OF INDIA

 BASIC BANKING STRUCTURE IN INDIA

 SCHEDULED AND NON SCHEDULED BANKS

 SCHEDULED COMMERCIAL BANKS

 SCHEDULED COOPERATIVE BANKS

 PUBLIC SECTOR BANKS

 PRIVATE SECTOR BANKS

a. OLD PRIVATE SECTOR BANKS

 REGIONAL RURAL BANKS

 FOREIGN PRIVATE SECTOR BANKS

 DIFFERENCES BETWEEN PUBLIC AND PRIVATE SECTOR BANKS

 EMPLOYEE CAREER GROWTH COMPARISON

 CONCLUSION

 BIBLIOGRAPHY