ABSTRACT:

Any economy's backbone is its banking system. With the emergence of international private
sector banks, the banking industry is facing fierce rivalry and a need to improve service
quality in order to obtain a competitive advantage over their consumers. Public sector banks
are up against tough competition from private sector banks, and they're under a lot of
pressure to keep up with the services offered by multinational banks. While public sector
banks benefit from a positive image and a large rural network, private sector banks offer
superior services and amenities. The goal of our research was to compare the public and
private sectors on public perception, basic facilities, customer-centric services, and bench
strength. We conducted a field investigation with a sample size of 50 people.

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 CONTEXT

Page no.

1. Acknowledgement .............................................................. 3

2. Abstract….......................................................................... 4

3.Context…………………………………………………….

Chapter 1. Introduction

1.1 Background ............................................................. 8-9

1.2 What is Bank?. ......................................................... 9-11

1.3 Privatization of Indian Banking… .........................................12

1.4 Indian Banking System......................................................... 13

1.5 Reserve Bank of India ......................................................... 14

1.6 Classification of banks

1.6.1 On the basis of ownership… .............................................. 15

1.6.2 According to the Law… ...................................................... 16-17

1.6.3 Technological Development in Banking Sector ....................17-18

1.7 Future of Banking Technology… ................................................ 18

1.8 Reforms in the Banking Sector ..................................................... 19

1.9 Future of Banking Reforms....................................................... 19-21

1.10 Statement of the Problem

1.10.1 Objective of the study ......................................................... 22

1.11 Nature and Scope of the Study… .............................................. 23

1.12 On the basis of the Functions ................................................. 23-25

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1.13 Structure of Banking System ....................................................... 26-28

1.14 Functions of Bank

1.14.1 Primary Functions ............................................................. 29-32

1.14.2 Secondary Functions ........................................................ 32-34

1.15 Challenges of Public And Private Sector Banks ....................... 34-35

CHAPTER 2. LITERATURE

2.1 Review of Literature ............................................................. 36-52

CHAPTER 3. RESEARCH METHODOLOGY

3.1 Sample Design..................................................................... 53-55

3.2 Primary Data ...................................................................... 55

3.3 Secondary Data................................................................... 56

Chapter 4. ANALYSIS AND INTERPRETATION OF DATA

4.1 Findings of the Study ......................................................... 57

4.2 Classifications .................................................................. 57

4.3 Conceptual Differences ................................................... 58

4.4 Analysis Data Collected… .............................................. 58-67

CHAPTER 5. SUGGESTIONS AND CONCLUSION

5.1 Suggestions .................................................................... 68-69

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 5.2 Recommendations ......................................................... 69-70

5.3 Conclusion .................................................................... 70

CHAPTER 6. BIBLIOGRAPHY

6.1 References .................................................................... 71

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Chapter 1. Introduction

1.1 Background :

The world of banking has assumed a new dimension at dawn of the 21st century with the
advent of tech banking, thereby lending the industry a stamp of university. Banking can also
be classified as retail and corporate banking. Retail banking that is designed to meet the
requirement of individual customers and their savings which includes payment of utility bills,
credit cards, consumer loans and checking bank account. Corporate banking on the other side
caters to the need of corporate customers such as opening letters, credit, managing cash, bills
discounting etc.

Banks marketing can also be defined as the part of management activity which seems to
divert the flow of profit from banking services to clients Essentially, the marketing notion
necessitates a knowledge of the customer's need to learn about the market and how it
operates. Furthermore, the industry is categorized in order for banks to better understand the
needs of their customers. Services like portfolio management, internet banking, venture
capital etc.

The services that banks provide to their customers are nearly completely focused on
managing money or finances for other individuals. Banks play a crucial role in our economy.
The basic duty of banks is to put the money in their account holders' accounts to good use by
lending it to individuals in need.

Money is a means of exchange, or a system for valuing goods and services that has been
agreed upon. Precious stones, animal products, and other valuable things were once utilised
as a means of exchange, and are still used in some places today. "Barter" is another name for
this system.

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A medium of exchange could be anything with a predetermined value. Many different types
of money are used nowadays. Money is any thing or record that is widely accepted in a
specific socio-economic setting or country as payment for goods and services and debt
repayment. Money has four major functions: it is a medium of commerce, a unit of account, a
store of value, and, in the past, a standard of postponed payment. Money can be defined as
any object or secure verifiable record that performs certain functions. Money simply indicates
how much something is worth, whether it is a new gadget or two hours of your effort. When
you have money, a bank can operate as your financial institution.

The lifeblood of trade, commerce, and industry is finance. The banking industry now serves
as the backbone of modern enterprise. The financial system is crucial to any country's
development.

The word bank is derived from either the old Italian word banca or the French word banque,
both of which refer to a bench or a money exchange table. For the purpose of lending or
exchanging, European money lenders or money changers used to display (show) coins from
various countries in large heaps (quantity) on benches or tables.

A modern economy cannot function without a bank. A bank, like any other business, is one
that is heavily involved in money transactions. No one can live without money nowadays,
and without a bank, safe and secure money transactions are impossible. A bank can be found
wherever there is money. It engages in a variety of activities. A bank performs a variety of
crucial functions for the growth of society and the country. As a result, no one can deny the
significance of a bank. The bank is regarded to be the heart of the modern economy.
Commercial banks are financial entities that lend money as well as offer transactional,
savings, and money market services.

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1.2 What is Bank?

According to the research, a bank is defined as,

"An establishment that keeps money in its custody and pays it out according to a customer's
request."

The Banking Companies Act of 1949 in India defines a banking company as follows:

"One who engages in the banking business, which entails collecting money from the public
for the purpose of lending or investing it to depositors, repayable on demand or otherwise,
and withdrawable by check, draught, or order." The Indian banking system is an important
part of the overall financial system. It demonstrates a significant conduit for gathering small
savings from households and lending them to businesses.

The Reserve Bank of India (RBI) is the central bank of India and is responsible for all
banking concerns.

History of Banks –

During the 'Swadeshi' movement, there had a significant impact in the financial sector. From
1906 through 1911, a large number of banks were created.

During this time, banks such as Bank of Baroda, Corporation Bank, Bank of India, Canara
Bank, and others were established. Many powerful political leaders and business tycoons
funded the banks at the time.

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In the early years, the three presidential banks, the Bank of Bombay, the Bank of Bengal, and
the Bank of Madras, merged to become the Imperial Bank of India. The bank was private
until 1955.

The Imperial Bank of India was thereafter taken over by the government. The State Bank of
India is currently known all over the world. As a result, among all the banks that exist today,
State Bank of India is the most important.

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1.3 Privatization of Indian Banking-

It entails more market force, ensures more competition, diminishes the role of the state in
the economy, and so encourages more private participation in government tasks various
policies to promote competition and market forces in the economy It is true also known as
whole-of-economy structural adjustment programmes and as a component of a more
comprehensive economic policy Privatization, on the other hand, refers to the sale of a
public entity to a private entity. It is one of the policy initiatives aimed at increasing the
efficiency of state-owned companies. Privatization is a process.The political process has
significant economic and social ramifications that affect businesses not only in terms of
performance, but also in terms of social welfare and stability. Any impact evaluation must
take into account social implications, particularly those related to employment and social
safety net initiatives.

ATM cards, Internet Banking, Phone Banking, and Mobile Banking are new creative
banking channels that are widely used since they save both time and money, which are
two key resources that everyone is short of and rushing to obtain. In addition, private
sector banks are coordinating their infrastructure, marketing quality, and technology in
order to demonstrate a strong commitment to consumer and retail banking. These banks'
main focus is on product and service innovation.

In 1969, the federal government intended to nationalise 14 major private banks. The goal
was to enlist the financial industry to help the government realise its socialist aspirations.
When the country's banks were operated by the private sector in the 1950s and 1960s,
there were massive financial inequities. The government therefore decided that taking
over the banking sector was the best way to promote financial inclusion. Following this,
other committees were established to make suggestions regarding bank privatisation. The
Narasimhan Committee recommended that the government hold a 33 percent share,
whereas the PJ Nayak Committee recommended a 50 percent stake. The gross
nonperforming assets (NPA) ratio of commercial banks is likely to rise to 13.5 percent by
September 2021, up from 7.5 percent in September 2020, according to the RBI's Financial
Stability Report. This would mean that the public sector would have to work harder to
increase equity, putting even more pressure on the government.

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1.4 Indian Banking System

In India, the banking sector serves as a meeting place for savers and investors. Since
liberalization, the structure of the Indian banking sector and our country's financial markets
have undergone significant changes.

Banks play an important role in amassing public savings and making them available for
investment in the modern era. They also increase capital mobility by generating demand
deposits while granting loans and purchasing investment assets.

As a result, we may infer that the overall effects of the banking system in India have been
favorable, resulting in a win-win situation for all enterprises and investors.

The history of India's banking sector is important to understand. As a result, we've compiled a
list of key elements about India's banking system's history.

Did you know that India's first bank, the 'Bank of Hindustan,' was founded in 1770? Yes, you
read that correctly. In the year 1770. Calcutta was the location of the bank, which ceased
operations in 1832.

More than 500 banks were established during that time period, but only a few of them
survived, including the Bank of Bengal (1809), Bank of Bombay (1840), and Bank of Madras
(1843).

Note: The Bank of Calcutta (India's oldest commercial bank) was founded in 1806. The bank
was given a royal status and renamed the Bank of Bengal after three years.

The three banks mentioned above were created during the British Empire's reign in India. All
of these financial institutions were combined into one.

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1.5 Reserve Bank of India

The Reserve Bank of India (RBI) is the apex body in the Indian banking sector for all matters
connected to the banking system. It serves as India's "Central Bank" and acts as a banker to
all other banks.

Functions:-

1. The Reserve Bank of India (RBI) is the financial system's regulator and supervisor. It
establishes the rules and regulations under which Indian banks and financial
institutions must function. The goal is to run the banks and financial system as
efficiently as possible while maintaining public trust in the system. It's a success for
RBI when people have faith in the banking system. How does the RBI maintain
public trust? By guaranteeing that depositors' money is safe with banks and that all
banking and financial services run smoothly and according to the rules.
2. Manager of Foreign Exchange: In India, all foreign currency flow must be done as per
0FEMA (Foreign Exchange Management Act). It is the RBI who ensures that
transactions happens as per FEMA. The bigger role of RBI is in ensuring that external
trade happens in a seamless manner. Whether, the trader is a resident Indian or a
foreign national, they must be able to deal in foreign exchange in an easy and
transparent manner.

3. The Reserve Bank of India (RBI) is in charge of printing and issuing new currency
notes in India. The RBI is also in charge of exchanging outdated or damaged notes for new
ones. In this approach, the RBI can keep track of how much "excellent quality currency" is
needed in the market at any one time. "Cash" refers to both notes and coins in this context.

4. Banker to Banks: The Reserve Bank of India (RBI) has an account with all Indian
banks. This is where they maintain their statutory reserves and other deposits. As a result,
RBI also serves as a banker to the banks. The RBI is in charge of ensuring interbank
transactions. As an exceptional case, the RBI can lend money to banks.

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1.6 Classification of Banks

1.6.1 On the basis of ownership

PUBLIC SECTOR BANKS:

Public sector banks are ones in which the government owns more than half of the company.
Most depositors assume that their money is safer in public sector banks since they are owned
by the government. As a result, the majority of public sector banks have a sizable clientele.

PRIVATE SECTOR BANKS:

The bank is the public's most trusted financial institution. This institution meets all of our
financial requirements. Anyone can open a bank account and conduct all of their financial
transactions there. This organization assists everyone in saving money, doing financial
transactions, and obtaining a loan for a variety of financial needs. However, not all banks are
created equal. A bank can be divided into two groups based on its stakeholders. Private sector
banks are one of them. These banks work in a different way. Let's look at how private sector
banks operate and the benefits and drawbacks that come with them.

Co-OPERATIVE BANKS:

A cooperative bank is a financial institution that offers its customers retail and commercial
banking solutions and services. The twist is that, unlike other banks that are owned by the
government or a private entity, customers own the bank.

Assume you have a group of people in your neighbourhood that have the same goal and
share a common interest. Everyone in the group is willing to put money aside 'as a collective.'

In this instance, a cooperative bank will be of assistance. The group might put money aside
and invest it in a common cause. The interest will be shared equally. A member of the
organization can also apply for loans and other forms of financial support from the group.

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 1.6.2 According to the Law

Scheduled Bank:

Scheduled Banks, as the name implies, are banks that are listed in the Reserve Bank of India
(RBI) Act, 1934's Second Schedule. To be considered a scheduled bank, a bank must meet
the following requirements:

1.A total of Rs. 5 lacs in paid-up capital and reserves is required.

2. The bank must demonstrate to the central bank that its operations do not jeopardise
interest.
3. Instead of being a single proprietorship or a partnership, the bank must be a corporation.

Scheduled Banks are subdivided as:

a) State co-operative banks.
b) Commercial banks.

PUBLIC SECTOR PRIVATE SECTOR

Allahabad Bank Axis Bank Ltd
Bank of Baroda Bank of Punjab Ltd
Bank of India HDFC Bank Ltd
Bank of Maharashtra ICIC Bank Ltd
Canara Bank IDBI Bank Ltd
Central Bank of India IndusInd Bank Ltd
Dena Bank South Indian Bank

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Non-Scheduled Banks:

They don't meet all of the conditions in clause 42, but they do adhere to the RBI's specific
instructions.

Non-scheduled banks are those having a reserve capital of less than 5 lakh rupees.

They are not permitted to borrow from the RBI for conventional banking purposes, unlike
scheduled banks, except in an emergency or unusual circumstances.

A few examples include Bangalore City Co-operative Bank Ltd. and Baroda City Co-
operative Bank Limited.

They are further classified as follows:

a) Central Co-operative Banks & Primary Credit Societies.

b) Commercial Banks.

1.6.3 Technological Development In Banking Sector:-

Information technology advancements have a significant impact on the banking sector's

growth and inclusion through supporting inclusive economic growth. IT integrates front-end
and back-end processes and aids in cost reduction.

Appropriate application of information technologies and modern conveniences, such as:

1. Automated Teller Machines (ATMs), Mobile Banking (SMS), and Telephone Banking

2. Internet banking, email, Datanet, RBI Net, Nicnet, I-Net, and so forth...

3. Cash Dispensers, Electronic Payments, and Home Banking

4. Gross settlement systems that are updated in real time (RTGS)

5. Electronic Fund Transfer (NEFT) (NEFT)

6. Electronic Clearing System, No. 6 (ECS),

7. EFT (Electronic Fund Transfer) (EFT)

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