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Banking System of India: Presented By-Sohini Mukherjee

The document provides an overview of the banking system in India. It discusses the evolution of banking from early banks like Bank of Bengal established in 1809 to the nationalization of banks in 1969 and 1980. It describes the key institutions like the Reserve Bank of India established in 1935, the role of commercial banks, cooperative banks, and specialized banks like NABARD, SIDBI, and EXIM bank. It also provides sample questions related to the Indian banking system.

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Shivam AgarwalITF43
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87 views31 pages

Banking System of India: Presented By-Sohini Mukherjee

The document provides an overview of the banking system in India. It discusses the evolution of banking from early banks like Bank of Bengal established in 1809 to the nationalization of banks in 1969 and 1980. It describes the key institutions like the Reserve Bank of India established in 1935, the role of commercial banks, cooperative banks, and specialized banks like NABARD, SIDBI, and EXIM bank. It also provides sample questions related to the Indian banking system.

Uploaded by

Shivam AgarwalITF43
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Banking System of India

Presented by- Sohini Mukherjee


Content
• Introduction
• Need for the Banks
• Evolution of Banking system
• Types of Banks
• Function of Banks
Introduction
• What is Bank?
Def- A bank is a financial
institution that accepts
deposits of money from
the public, withdrawals
by cheque or otherwise
and uses the money so
collected for lending to
the households, the firms
and the government.
Why we need Banks??
• To control the supply of money and credit.
• To provide the security to the savings of customers.
• To provide the required financial support and
infrastructure for both internal and external trade.
• To set equal norms and conditions (i.e. rate of
interest, period of lending etc.) to all types of
customers.
• To provide necessary financial support (i.e.
infrastructure) and funds for backward areas.
Evolution of Banking System

General Bank of India


was established in the
year 1786.

The East India Company


established-
1. Bank of Bengal/Calcutta
(1809). Presidency
2. Bank of Bombay (1840) Banks
3. Bank of Madras (1843)
Contd..
Allahabad Bank (1865)
was first time completely run
by Indians 1st April 1935
Reserve Bank
Punjab Bank (1894) of India
Headquarter - Lahore established

Between 1906 to 1913


1. Bank of India
2. Central Bank of India All Presidency
3. Bank of Baroda Bank amalgamated
with Imperial
4. Canara Bank
Bank (known as
5. Indian Bank State Bank of India)
6. Bank of Mysore
Post Independence era
• The Reserve Bank of India (RBI) was nationalised
on 1st Jan, 1949.

-RBI was empowered under Banking Regulation


Act in 1949 “to regulate , control, inspect the
banks of India” .

• The Imperial Bank of India, after independency


become State Bank of India in 1955.
Objectives of Nationalisation of Banks
• To break the ownership and control of banks by a few business
families.

• To prevent the concentration of wealth and economic power.

• To mobilize savings from masses from all the parts of the country.

• To cater to the needs to priority sectors.


Nationalisation of Banks
• Phase-1
Indira Gandhi, the Prime Minister put up a proposal for
Nationalisation of Banking sector at 1969 for the first
time.

14 banks are nationalised like, Allahabad bank, Bank of


Baroda, Bank of India, Bank of Maharashtra, Canara
bank, Punjab National Bank, UCO Bank, Union Bank of
India, etc.

Before the stage of Nationalised of Indian banks , only


State bank of India (SBI) was nationalised
• Phase-2
In the year 1980 the second round of Nationalization
started where 6 more commercial banks like,
Punjab and Sind bank, Oriental Bank of Commerce,
Corporation Bank, Andhra Bank, New Bank of India and
Vijaya Bank.

• Phase-3
The policy of Liberalization was duly followed in this
period and as a result of that a small number of these
banks got licensed. They were known as the New
generation tech-savvy banks which later merged with the
Oriental bank of commerce, IndusInd Bank, UTI bank
(known as, Axis Bank), ICICI bank and HDFC bank.
• The three sectors of banks i.e. Government, Private,
Foreign contributed their best to the overall growth of
the economy.
• As a result of liberalization of banking policies, a lot of
private banks also came into effect.
Types of Banks
Definition
• Central Bank- the central bank is the apex institution in
the banking and financial structure of the country.

• Features
1. Central bank issues currency in the country.
2. It controls and regulates the banking and financial
structure.

Names- Reserve Bank of India (India), Federal Reserve


System (U.S.), Reserve Bank of Australia (Australia) etc.
• Commercial Bank- Commercial banks are the most
important types of banks in a country. These banks accept
deposits from the public and give many short-period loans
to individuals.

• Features
1. Process of accepting deposits and expanding loans.
2. Create deposit money or credit money.
3. Operate largely for earning profit.

Names- State Bank of India, Bank of Baroda, Canara Bank,


Punjab National Bank etc.
• Cooperative Bank- These banks are run on a
cooperative basis. These banks were originally stated in
rural areas in the form of cooperative societies to for the
purpose of granting easy credit to farmers.

• Features-
1. Co-operative bank members are both customer and
owner of the bank.
2. They have played a significant role in the financial
inclusion.

Names- Saraswat Cooperative Bank, Cosmos Cooperative


Bank, Bharat Cooperative Bank etc.
• Public Sector Bank (PSB)- Public sector banks are
those banks which are owned and managed by the
government or some agency of the government.
27
Public Sector
Banks (PSB)

5 19
SBI Subsidiaries Nationalised
Bank bank

Bharatiya
IDBI Mahila Bank
Cont.
• Private Bank- Private banks are in the hands of private
bankers. Example, ICICI bank, HDFC bank etc.

• Foreign Bank- Foreign banks operating in India are the


wholly owned subsidiaries/ branches incorporated in foreign
countries. Examples, Citibank, American Express etc.

• Regional Rural Bank- These banks have been set up in the


rural areas to meet the needs of the weaker sections of the
rural population like farmers.
NABARD
• National Bank for Agriculture and Rural Development.

• Established on 12 July 1982 by B. Sivaramman Committee.

• Promote sustainable and equitable agriculture and rural development through participative
financial and non-financial interventions, innovations, technology and institutional development

for securing prosperity .


SIDBI
• Small Industries Development Bank of India.
• Established on 2nd April 1990 under an Act of Indian Parliament.
• Acts as the Principal Financial Institution for Promotion, Financing and
Development of the Micro, Small and Medium Enterprise (MSME) sector as
well as for co-ordination of functions of institutions engaged in similar
activities
Exchange Bank
• The bank was established in Bombay in 1942.
• The exchange banks finance the internal trade of the country. This
bank is mainly engaged for buying and selling of foreign exchange.
• This bank helps to develop the growth of international trade.
Exim Bank
• Known as ‘Export Import Bank’.
• Established in 1982.
• Provide long term financial assistance to the exporters and importers.
Thank You
Sample Questions
1. SEBI stands for
a) Science and Engineering Board of India
b) Securities and Exchange Board of India
c) Social Equity Bureau of India
d) Science and Educational Board of India

2. Which is the largest commercial bank in India?


a) Reserve Bank of India
b) State Bank of India
c) ICICI Bank
d) Bank of India

3. Bank of Hindustan is the oldest bank in India. When did it start functioning?
a) 1990
b) 1770
c) 1885
d) 1892
4. The Bank of Calcutta, Bank of Bombay and Bank of Madras were merged in 1921 to form
a) Reserve Bank of India
b) Imperial Bank of India
c) Bank of India
d) Union Bank of India

5. When was the Reserve Bank of India established?


a) 1935
b) 1920
c) 1928
d) 1947

6. When was the Imperial Bank of India nationalized to form the State Bank of India?
a) 1947
b) 1949
c) 1951
d) 1955

7. The Reserve Bank of India was nationalized in?


a) 1947
b) 1948
c) 1950
d) 1949
8. What is a Bank which has capital and reserves of over Rs. 5 lakhs called?
a) National Bank
b) Cooperative Bank
c) Scheduled Bank
d) Unscheduled Bank

9. The Export-Import (EXIM) Bank was set up in


a) 1982
b) 1983
c) 1987
d) 1985

10. Which of the following has the sole right of issuing paper notes in India?
a) Union Government
b) Reserve Bank of India
c) Ministry of Finance
d) Supreme Court

11. In India, coins and subsidiary coins are issued by


a) Union Government
b) Reserve Bank of India
c) Ministry of Finance
d) Supreme Court
12. Which of the following is entrusted with the task of receiving all money on behalf of the Government as also with the task of making payments on their
behalf?
a) State Bank of India
b) Reserve Bank of India
c) Ministry of Finance
d) Union Parliament

13. When did Regional Rural Banks start functioning in India?


a) 1975
b) 1947
c) 1956
d) 1960

14. In India, income tax is levied by


a) Union Government
b) State Governments
c) Ministry of Finance
d) RBI

15. Which among the following was the first bank purely managed by Indians and Indian capital investment?
(A) Oudh Commercial Bank
(B) Punjab National Bank
(C) Bank of India
(D) Allahabad Bank
16. Which of the following organizations looks after the credit needs of agriculture and rural development in India?
(A) FCI
(B) IDBI
(C) NABARD
(D) ICAR

17.Which among the following was the oldest existing public sector bank in India?
(A) Oudh Commercial Bank
(B) Punjab National Bank
(C) Bank of India
(D) Allahabad Bank

18. Which among the following is NOT a subsidiary of RBI?


(A) National Housing Bank
(B) NABARD
(C) Bharatiya Reserve Bank Note Mudran Private Limited
(D) SIDBI
Answer
1. B 17. D
2. B 18. D
3. B
4. B
5. A
6. D
7. D
8. C
9. A
10. B
11. C
12. B
13. A
14. A
15. B
16. C

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