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Banking Services in India-583

Banking Services in India-583

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Published by: ambreeshbajpai on Mar 13, 2010
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04/25/2012

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BANKING SERVICES IN INDIAI. 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 veryearly times. The remittance of money through Hundies, an indigenous creditinstrument, 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 AgencyHouses of Calcutta and Bombay after the establishment of Rule by the East IndiaCompany in 18
th
and 19
th
centuries.During the early part of the 19
th
Century, ht volume of foreign trade wasrelatively small. Later on as the trade expanded, the need for banks of the Europeantype was felt and the government of the East India Company took interest in having itsown 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.
1
 
BANKING SERVICES IN INDIA
These three banks also known as “Presidency Bank”. The PresidencyBanks had their branches in important trading centers but mostly lacked in uniformityin their operational policies. In 1899, the Government proposed to amalgamate thesethree banks in to one so that it could also function as a Central Bank, but the PresidencyBanks 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 aCentral bank and as a banker for other banks.The RBI (Reserve Bank of India) was established in 1935 as the CentralBank of the Country. In 1949, the Banking Regulation act was passed and the RBI wasnationalized and acquired extensive regulatory powers over the commercial banks.In 1950, the Indian Banking system comprised of the RBI, the ImperialBank 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 recommendedamalgamation of the Imperial Bank of India and ten others banks into a newlyestablished bank called the State Bank of India (SBI). The Government of Indiaaccepted the recommendations of the committee and introduced the State Bank of India bill in the Lok Sabha on 16
th
April 1955 and it was passed by Parliament and got the president’s assent on 8
th
May 1955. The Act came into force on 1
st
July 1955, and theImperial Bank of India was nationalized in 1955 as the State Bank of India.
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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 followingeight state-associated banks were taken over by the SBI as its subsidiaries.
Name of the BankSubsidiary with effect from
1. State Bank of Hyderabad1
st
October 19592. State Bank of Bikaner1
st
January 19603. State Bank of Jaipur1
st
January 19604. State Bank of Saurashtra1
st
May 19605. State Bank of Patiala1
st
April 19606. State Bank of Mysore1
st
March 19607. State Bank of Indore1
st
January 19688
.
State Bank of Travancore1
st
January 1960With effect from 1st January 1963, the State Bank of Bikaner and StateBank of Jaipur with head office located at Jaipur. Thus, seven subsidiary banks StateBank of India formed the SBI Group.The SBI Group under statutory obligations was required to open newoffices in rural and semi-urban areas and modern banking was taken to these unbankedremote areas.
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