Indusind Bank

Banking industry in India developed on a modern basis after the origination of banks like Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 Later, three presidency banks under Presidency Bank’s act 1876 i. e. Bank of Calcutta, Bank of Bombay and Bank of Madras were set up, which laid foundation for modern banking in India. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial bank carried out limited number of central banking functions prior to establishment of RBI.

It engaged in all types of Commercial banking, business except dealing in foreign exchange. The Imperial Bank of India, which upon India’s independence, became the State Bank of India in 1955. COLONIAL PERIOD: Some of the prominent banks where established during the commercial era, namely The Allahabad Bank, which was established in 1865 is one of the oldest Joint Stock bank in India, and is still functioning today. The Punjab National Bank established in Lahore in 1895, is now one of the largest banks in India.

The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. POST-INDEPENDENCE After the partition of India, the government took drastic steps to regulate the banking industry. Additional powers and authority were vested in the Reserve bank of India to monitor the functioning of the entire banking system.

The passing the Banking regulations act in 1949, empowered RBI to further regulate, inspect, and control Indian banks. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: * The Reserve Bank.

of India, India’s central banking authority, was established in April 1935, but was nationalised on 1 January 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. * In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) “to regulate, control, and inspect the banks in India”. * The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.

NATIONALISATION IN 1960’s: The nationalisation of banking sector in the country began from 1960s; the Indian banking industry had become an important tool to facilitate the development of the Indian economy. In 1960, RBI was empowered to force compulsory merger of weak banks with the strong one, which significantly reduced the total number of banks from 566 in 1951 to 85 in 1969. In July 1969, government nationalised 14 banks having deposits of Rs. 50 crores & above. In 1980, government acquired 6 more banks with deposits of more than Rs. 200 crores.

Nationalisation of banks was to make them play the role of catalytic agents for economic growth. During the first phase of nationalisation 14 banks were nationalised, these banks were mostly owned by businessmen and even managed by them. It included •Central Bank of India •Bank of Maharashtra •Dena Bank •Punjab National Bank •Syndicate Bank •Canara Bank •Indian Bank •Indian Overseas Bank •Bank of Baroda •Union Bank •Allahabad Bank •United Bank of India •UCO Bank •Bank of India During the second phase of nationalisation in 1980 six more banks were nationalised, namely;

* Andhra Bank * Corporation Bank * Oriental bank of Commerce * Punjab and Sind Bank * Vijaya Bank * New Bank of India LIBERALISATION IN 1990’s: In the early 1990s, Narasimha Commission embarked on a policy of liberalisation, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed AXIS Bank),ICICI Bank and HDFC Bank.

This move, along with the rapid growth in the economy of India, revitalised the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 74% with some restrictions.

The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. STRUCTURE OF INDIAN BANKING INDUSTRY: Banking Industry in India functions under the sunshade of Reserve Bank of India – the regulatory, Central bank. Banking Industry mainly consists of: • Commercial Banks • Co-operative Banks The commercial banking structure in India consists of:

* Scheduled Commercial Banks : Scheduled commercial Banks constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (60) of the Act. Some co-operative banks are scheduled commercial banks, being a part of the second schedule confers some benefits to the bank in terms of access to accommodation by RBI during the times of liquidity constraints.

* Unscheduled / Non-scheduled Banks: The banks which are not registered in the list of central bank under its charter are known as non-scheduled banks. They are not bound to perform banking services according to the policies and instructions of central bank. These banks do not fulfil the required qualifications of a scheduled bank as prescribed by the central bank. They also do not enjoy the public confidence. In many countries, many non-scheduled banks are also working.