Business India >> Indian Banking Sector

Banking in India has its origin as early as the vedic period. It is believed that the transistion from money lending to banking must have occurred even before Manu, the great Hindu Jurist, who has devoted a section of his work to deposits and advances and laid down rules relating to rates of interest. During the Mogul period, the indegenous bankers played a very important role in lending money and financing foreign trade and commerce. During the days of the East India Company, it was the turn of the agency houses to carry on the banking business. The General Bank of India was the first Joint Stock Bank to be established in the year 1786. The others which followed were the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have continued till 1906 while the other two failed in the meantime. In the first half of the 19th century the East India Company established three banks; the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Madras in 1843. These three banks also known as Presidency Banks, were independent units and functioned well. These three banks were amalgamated in 1920 and a new bank, the Imperial Bank of India was established on 27th January 1921. With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial Bank of India was taken over by the newly constituted State Bank of India. The Reserve Bank which is the Central Bank was created in 1935 by passing Reserve Bank of India Act 1934. In the wake of the Swadeshi Movement, a number of banks with Indian management were established in the country namely, Punjab National Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian Bank Ltd, the Bank of Baroda Ltd, the Central Bank of India Ltd. On July 19, 1969, 14 major banks of the country were nationalised and in 15th April 1980 six more commercial private sector banks were also taken over by the government. Today the commercial banking system in India may be distinguished into :

Public Sector Banks

  1. State Bank of India and its associate banks called the State Bank group
  2. 20 nationalised banks
  3. Regional Rural Banks mainly sponsored by Public Sector Banks


Private Sector Banks

  1. Old generation private banks
  2. New generation private banks
  3. Foreign banks in India
  4. Scheduled Co-operative Banks
  5. Non-scheduled Banks


CO-OPERATIVE SECTOR

The co-operative banking sector has been developed in the country to the suppliment the village money lender. The co-operatiev banking sector in India is divided into 4 components

  1. State Co-operative Banks
  2. Central Co-operative Banks
  3. Primary Agriculture Credit Societies
  4. Land Development Banks
  5. Urban Co-operative Banks
  6. Primary Agricultural Development Banks
  7. Primary Land Development Banks
  8. State Land Development Banks


DEVELOPMENT BANKS

  1. Industrial Finance Corporation of India (IFCI)
  2. Industrial Development Bank of India (IDBI)
  3. Industrial Credit and Investment Corporation of India (ICICI)
  4. Industrial Investment Bank of India (IIBI)
  5. Small Industries Development Bank of India (SIDBI)
  6. SCICI Ltd.
  7. National Bank for Agriculture and Rural Development (NABARD)
  8. Export Import Bank of India
  9. National Housing Bank