Indian Banking System(1)

8/3/2019 Indian Banking System(1)

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AND

ROLE OF RBI IN INDIA


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y The banking system constitutes the core of the financial sector and

plays a critical role in transmitting monitory policy impulses to the

economy.

y Banking is more than 225 years old in our country. the first bank

called the bank of hindustan was established in 1770. there are 295

banks with 66,514 branches spread across the country.

y The banking system in our country comprises three constituents

-Public Sector

-Private Sector

-Foreign Sector


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y Presently, the commercial banking consists of 174 banks and

71,781 bank offices. Out of these as many as 116 banks and

64,696 bank offices are in the public sector.

y There are 20 indian banks in the brand finance global banking

500, an annual international ranking by UK based brand

finance PLC, this year.

y The SBI became the first indian bank to enter the worlds top

50 list.


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NATIONALISATION OF BANKS


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y

Before the steps of nationalisation of Indian banks, only StateBank of India (SBI) was nationalised. It took place in July

1955 under the SBIAct of 1955. Nationalisation of Seven State

Banks of India (formed subsidiary) took place on 19th July,

1960.

y The State Bank of India is India's largest commercial bank and

is ranked one of the top five banks worldwide. It serves 90million customers through a network of 9,000 branches and it

offers -- either directly or through subsidiaries -- a wide range

of banking services.


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y The second phase of nationalisation of Indian banks took place

in the year 1980. Seven more banks were nationalised with

deposits over 200 crores. Till this year, approximately 80% of

the banking segment in India were under Government

ownership.

y After the nationalisation of banks in India, the branches of the

public sector banks rose to approximately 800% in deposits

and advances took a huge jump by 11,000%.


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y 1955 : Nationalisation of State Bank of India.

y 1959 : Nationalisation of SBI subsidiaries.

y 1969 : Nationalisation of 14 major banks.

y 1980 : Nationalisation of seven banks with deposits over 200

crores.


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PUBLIC SECTORy Public sector banks have been criticised as being slothful,

corrupt and inefficient. But it is same public sector banks

which saved the indian economy recently. They have

penetrated deeply into the country through massive branch

expansion.

y Banks in public sector faced problems from all sides. Negative

attitude of public, unenthusiastic response from the government

disobedient behavior from employees and their unions and

hype from foreign banks.


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y W

ith the presence of banks in remote areas, government bankhave mobilised deposits which added to the lendable funds in

the hands of the government. Lendable funds helped maintain

liqudity in the financial sector.

y The government bank have stood the test of time and have

become much stranger as revealed by their share in total

deposits and advances.


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PRIVA

TE SECTORy There are 28 banks in the private sector and together account

for 20.4 per cent deposits, and 20.3 per cent of the advances.

y Narasimham committees recommendations proved to be a big

boon for private banks. The committee recommended that there

should be no more nationalisation of private banks and there

should be no disparity in the treatment given to public or

private banks.


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y There are criticisms against banks in private sector. They have

mostly confined their activities to big cities, almost ignoring

small towns and rural areas. This is borne out by fact only four

per cent of their total deposits have come from rural areas and

lent only two per cent of their money to village side.


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FOREIGN BANKS

y Foreign banks which are registered outside india, but having

branches in india. There are 30 such banks with 279 branches.

In additional, 41 foreign banks operate through representative

offices. Foreign banks are mostly in the private sector of their

respective countries.

y Entry of foreign banks has been welcome in as much as they

brought, along with them new technology, professional

management practice, new banking products and funds.All

these benefited the indian economy.


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HALL OF FAME

y There are 20 Indian banks in the brand finance global banking

500, an annual international ranking by UK based brandfinance PLC.


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Rank

2009

Rank

2010

Indian banks Brand value

2009(million

$)

Brand

value 2010

70 36 SBI 1448 4531

110 70 ICICI Bank 939 2164

153 141 HDFC Bank 611 951

192 174 PNB 384 713

228 195 Bank Of India 273 602

260 196 Bank Of Baroda 229 601

251 213 Canara Bank 243 525

269 239 Axis Bank 205 428

351 274 UBI 137 340

280 287 Kotak 188 321


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2009 2010 Indian Bank 2009 2010

418 305 IDBI bank limited 103 299

371 334 Indian Overseas Bank 127 236

- 345 Allahabad Bank - 224

454 355 Indian Bank 92 215

- 393 Corporation Bank - 180

- 408 Rural Electrification Corp - 165

467 447 Oriental Bank Of

Commerce

86 139

486 453 Syndicate Bank 81 138

- 461 Andhra Bank - 134

- 471 Central Bank Of India - 127

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Indian Banking System(1)

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