Home General Knowledge GENERAL KNOWLEDGE BOOSTER : BANKING SYSTEM IN INDIA
GENERAL KNOWLEDGE BOOSTER : BANKING SYSTEM IN INDIA
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Tuesday, 10 February 2015 04:33

 

 

GENERAL KNOWLEDGE BOOSTER

BANKING SYSTEM IN INDIA

From the ancient times in India, an indigenous banking system has prevailed. The businessmen called Shroffs, Seths, Sahukars, Mahajans, Chettis etc. had been carrying on the business of banking since ancient times. These indigenous bankers included very small money lenders to shroffs with huge businesses, who carried on the large and specialized business even greater than the business of banks.

The story of banking starts from Bank of Hindusthan established in 1770 and it was first bank at Calcutta under European management.

  • In 1786 General Bank of India was set up. Since Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, it became a banking center.

  • Three Presidency banks were set up under charters from the British East India Company- Bank of Calcutta, Bank of Bombay and the Bank of Madras. These worked as quasi central banks in India for many years.

The Bank of Calcutta established in 1806 immediately became Bank of Bengal.

  • In 1921 these 3 banks merged with each other and Imperial Bank of India got birth. It is today’s State Bank of India.

  • The name was changed after India’s Independence in 1955. So State bank of India is the oldest Bank of India.

In 1839, there was a fruitless effort by Indian merchants to establish a Bank called Union Bank. It failed within a decade.

  • Next came Allahabad Bank which was established in 1865 and working even today.

The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 145 years is Allahabad Bank. Allahabad bank is also known as one of India’s Oldest Joint Stock Bank.

  • The Oldest Joint Stock bank of India was Bank of Upper India established in 1863 and failed in 1913.

  • The first Bank of India with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958.

  • The first bank purely managed by Indian was Punjab National Bank, established in Lahore in 1895. The Punjab national Bank has not only survived till date but also is one of the largest banks in India.

However, the first Indian commercial bank which was wholly owned and managed by Indians was Central Bank of India which was established in 1911.

Structure of banking system in India!

The banking system in India is significantly different from other countries.

1. Reserve Bank of India:

Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935 under the RBI Act of 1934. It holds the apex position in the banking structure. RBI performs various developmental and promotional functions.

It has given wide powers to supervise and control the banking structure. It occupies the pivotal position in the monetary and banking structure of the country. In many countries central bank is known by different names.

For example, Federal Reserve Bank of U.S.A, Bank of England in U.K. and Reserve Bank of India in India. Central bank is known as a banker’s bank.

They have the authority to formulate and implement monetary and credit policies. It is owned by the government of a country and has the monopoly power of issuing notes.

2. Commercial Banks:

Commercial bank is an institution that accepts deposit, makes business loans and offer related services to various like accepting deposits and lending loans and advances to general customers and business man.

These institutions run to make profit. They cater to the financial requirements of industries and various sectors like agriculture, rural development, etc. it is a profit making institution owned by government or private of both.

Commercial bank includes public sector, private sector, foreign banks and regional rural banks:

a. Public sector banks:

It includes SBI, seven (7) associate banks and nineteen (19) nationalised banks. Altogether there are 27 public sector banks. The public sector accounts for 90 percent of total banking business in India and State Bank of India is the largest commercial bank in terms of volume of all commercial banks.

b. Private sector banks:

Private sector banks are those whose equity is held by private shareholders. For example, ICICI, HDFC etc. Private sector bank plays a major role in the development of Indian banking industry.

c. Foreign Banks:

Foreign banks are those banks, which have their head offices abroad. CITI bank, HSBC, Standard Chartered etc. are the examples of foreign bank in India.

d. Regional Rural Bank (RRB):

These are state sponsored regional rural oriented banks. They provide credit for agricultural and rural development. The main objective of RRB is to develop rural economy. Their borrowers include small and marginal farmers, agricultural labourers, artisans etc. NABARD holds the apex position in the agricultural and rural development.

3. Co-operative Bank:

Co-operative bank was set up by passing a co-operative act in 1904. They are organised and managed on the principal of co-operation and mutual help. The main objective of co-operative bank is to provide rural credit.

The cooperative banks in India play an important role even today in rural co-operative financing. The enactment of Co-operative Credit Societies Act, 1904, however, gave the real impetus to the movement. The Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to broad basing it to enable organisation of non-credit societies.

Three tier structures exist in the cooperative banking:

i. State cooperative bank at the apex level.

ii. Central cooperative banks at the district level.

iii. Primary cooperative banks and the base or local level.

4. Scheduled and Non-Scheduled banks:

A bank is said to be a scheduled bank when it has a paid up capital and reserves as per the prescription of RBI and included in the second schedule of RBI Act 1934. Non-scheduled bank are those commercial banks, which are not included in the second schedule of RBI Act 1934.

5. Development banks and other financial institutions:

A development bank is a financial institution, which provides a long term funds to the industries for development purpose. This organisation includes banks like IDBI, ICICI, IFCI etc. State level institutions like SFC’s SIDC’s etc. It also includes investment institutions like UTI, LIC, and GIC etc.

First Bank in India

1. First India bank Got ISO : Canara Bank

2. First Governor of RBI : Mr. Osborne Smith

3. First Indian governor of RBI : Mr. C D Deshmukh

4. First Bank to Introduce ATM in India : HSBC

5. First Bank to introduce saving Bank in India : Presidency bank in 1830

6. First Bank to Introduce Cheque system in India : Bengal Bank 1784

7. First Bank to introduce Internet Banking : ICICI BANK

8. First Bank to introduce Mutual Fund : State Bank of India

9. First Bank to introduce Credit Card in India : Central Bank of India

10.First Foreign Bank in India : Comptoire d’Escompte de Paris of France in 1860

11.First Bank Set Up in India : Bank of Hindustan in 1770

12.First Joint Stock Bank of British India : State Bank of India

13.First Joint Stock Bank of India : Allahabad Bank

14.First Bank that is oldest Public Bank in India : Allahabad Bank

15.First national bank that is merged with Punjab National Bank : New Bank of India in 1993

16.First Indian bank to open branch outside India in London in 1946 : Bank of India

17.First Indian Bank started with Indian capital /indigenous Bank of India : Punjab National Bank

18.First Regional Rural Bank name Prathama Grameen Bank Was started by : Syndicate Bank

 

 

 


Last Updated on Tuesday, 10 February 2015 05:07
 

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