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Published by: varun_varunsharma on Nov 19, 2009
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Indian Banking- An Introduction
The Indian banking has come a long way from being a
 sleepy businessinstitution to a highly proactive and dynamic entity.
This transformationhas been largely brought about by the large dose of liberalization andeconomic reforms that allowed banks to explore new business opportunitiesrather than generating revenues from conventional streams (i.e. borrowingand lending). The stalwarts of India's financial community nodded their heads sagaciously when Prime Minister Manmohan Singh said in a speech:
"If there is one aspect in which we can confidentially assert that India isahead of China, it is in the robustness and soundness of our banking  system."
Indian banks have been rated higher than Chinese banks byinternational rating agency Standard & Poor's.The competition heated up with the entry of private and foreign banksderegulation and globalization resulted in increased competition that refinedthe traditional way of doing business. They have realized the importance of a
customer centric approach, brand building and IT enabled solutions.
Inthe fierce battle for market share and mind share, the most potent weapon isa strong, well recognized and trusted brand name. Brands attract andconvince people that they will get what is promised. Banking today hastransformed into a technology intensive and customer friendly model with afocus on convenience. The companies have redoubled their efforts to woothe customers and establish themselves firmly in the market. It is no longer an option for a company to provide good customer service, it is expected.
Reforms are continuing as part of the overall structural reforms aimed atimproving the productivity and efficiency of the economy. The sector is setto witness the emergence of financial supermarkets in the form of universal banks providing a suite of services from retail to corporate banking andindustrial lending to investment banking. The financial services market has become a battle ground with the marketers with the latest and the mostsophisticated weapons.Currently overall, banking in India is considered as fairly
mature in termsof supply, product range and reach
-even though reach in rural India stillremains a challenge for the private sector and foreign banks. Even in termsof quality of assets and capital adequacy, Indian banks are considered tohave clean, strong and transparent balance sheets-as compared to other  banks in comparable economies in its region. The Indian banking industry iscurrently in
a transition phase
. On the one hand, the public sector banks,which are the mainstay of the Indian banking system, are in the process of consolidating their position by capitalizing on the strength of their hugenetworks and customer bases. On the other, the private sector banks areventuring into a whole new game of mergers and acquisitions to expandtheir bases. The use of technology has placed Indian banks at par with their global peers. It has also changed the way banking is done in India.
‘Anywhere banking’ and ‘Anytime banking’ 
have become a reality. Thefinancial sector now operates in a more competitive environment than beforeand intermediates relatively large volume of international financial flows.The introduction of Basel II norms from 2009 and the fair level playing fieldthat will be available to foreign banks from 2010 will further enhance thesolidarity of the Indian banking sector and open new avenues.
History of Great Indian Banking
Early History
At the end of late-18th century, there were hardly any banks in India in themodern sense of the term. At the time of theAmerican Civil War , a void wascreated as the supply of cotton toLancashirestopped from the Americas.Some banks were opened at that time which functioned as entities to financeindustry, including speculative trades in cotton. With large exposure tospeculative ventures, most of the banks opened in India during that periodcould not survive and failed. The depositors lost money and lost interest inkeeping deposits with banks. Subsequently, banking in India remained theexclusive domain of Europeans for next several decades until the beginningof the 20th century.At the beginning of the20th century, Indian economy was passing through arelative period of stability. Around five decades have elapsed since theIndia's First war of Independence,and the social, industrial and other infrastructure have developed. At that time there were very small banksoperated by Indians, and most of them were owned and operated by particular communities. The banking in India was controlled and dominated by the presidency banks, namely, theBank of Bombay, theBank of Bengal, and theBank of Madras- which later on merged to form theImperial Bank   of India, and Imperial Bank of India, upon India'sindependence, was renamed theState Bank of India. There were also some exchange banks, asalso a number of Indian joint stock banks. All these banks operated indifferent segments of the economy.

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