BANKING SERVICES IN INDIA
I. HISTORY OF
BANKING IN INDIA
There are three
different phases in the history of banking in India.
1) Pre-Nationalization
Era.
2) Nationalization
Stage.
3) Post Liberalization
Era.
1) Pre-Nationalization
Era:
In India the
business of banking and credit was practices even in very early times. The
remittance of money through Hundies, an indigenous credit instrument, was very
popular. The hundies were issued by bankers known as Shroffs, Sahukars, Shahus
or Mahajans in different parts of the country.
The modern type of
banking, however, was developed by the Agency Houses of Calcutta and Bombay after the
establishment of Rule by the East India Company in 18th and 19th
centuries.
During the early part of
the 19th Century, ht volume of foreign trade was relatively small.
Later on as the trade expanded, the need for banks of the European type was
felt and the government of the East India Company took interest in having its
own bank. The government of Bengal took the
initiative and the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established
in 180. In 1840, the Bank of Bombay
and IN 1843, the Bank of Madras was also set up.
BANKING
SERVICES IN INDIA
These three banks
also known as “Presidency Bank”. The Presidency Banks had their branches in
important trading centers but mostly lacked in uniformity in their operational
policies. In 1899, the Government proposed to amalgamate these three banks in
to one so that it could also function as a Central Bank, but the Presidency
Banks did not favor the idea. However, the conditions obtaining during world
war period (1914-1918) emphasized the need for a unified banking institution,
as a result of which the Imperial Bank was set up in1921. The Imperial Bank of India acted
like a Central bank and as a banker for other banks.
The RBI (Reserve Bank of
India)
was established in 1935 as the Central Bank of the Country. In 1949, the
Banking Regulation act was passed and the RBI was nationalized and acquired
extensive regulatory powers over the commercial banks.
In 1950, the Indian
Banking system comprised of the RBI, the Imperial Bank of India,
Cooperative banks, Exchange banks and Indian Joint Stock banks.
2) Nationalization
Stages:
After Independence,
in 1951, the All India Rural Credit survey, committee of Direction with Shri.
A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India and ten
others banks into a newly established bank called the State Bank of India
(SBI). The Government of India accepted the recommendations of the committee
and introduced the State Bank of India bill in the Lok Sabha on 16th April 1955
and it was passed by Parliament and got the president’s assent on 8th May 1955. The
Act came into force on 1st
July 1955, and the Imperial Bank of India was nationalized in 1955 as
the State Bank of India.
BANKING SERVICES IN INDIA
The main objective of
establishing SBI by nationalizing the Imperial Bank of India was “to
extend banking facilities on a large scale more particularly in the rural and
semi-urban areas and to diverse other public purposes.”
In
1959, the SBI (Subsidiary Bank) act was proposed and the following eight
state-associated banks were taken over by the SBI as its subsidiaries.
Name of the
Bank Subsidiary
with effect from
1. State Bank of Hyderabad 1st October 1959
2. State Bank of Bikaner 1st January 1960
3. State Bank of Jaipur 1st January
1960
4. State Bank of Saurashtra 1st
May 1960
5. State Bank of Patiala 1st April 1960
6. State Bank of Mysore 1st March 1960
7. State Bank of Indore 1st January 1968
8. State Bank of Travancore 1st
January 1960
With
effect from 1st January 1963,
the State Bank of Bikaner
and State Bank of Jaipur with head office located at Jaipur. Thus, seven
subsidiary banks State Bank of India
formed the SBI Group.
The
SBI Group under statutory obligations was required to open new offices in rural
and semi-urban areas and modern banking was taken to these unbanked remote
areas.
No comments:
Post a Comment