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India has a well developed Banking system. The banking industry originated in India in the 18th century and since then it has undergone significant number of changes. The commercial banking industry in India over the past few decades has been revolutionized by a number of factors such as independence, nationalization, deregulation, rise of the Internet, etc.The commercial banking structure in India consists of Scheduled Banks and Unscheduled Banks. In the past the banks did not find any attraction in the Indian economy because of the low level of economic activities and little business prospects. Today we find positive changes in the National business development policy. Earlier, the money lenders had a strong hold over the rural population which resulted in exploitation of small and marginal savers. The private sector banks failed in serving the society. This resulted in the nationalization of 14 commercial banks in 1969. Nationalization of commercial banks paved ways for the development of Indian economy and channelized financial resources for the upliftment of weaker sections of the society. The passage of financial modernization legislation by Congress in 1999 removed barriers, allowing banks to expand product offerings, while the potential of the Internet as a sales, marketing and delivery tool, widened the avenues to sell and deliver these products. The main products of the commercial banking industry-insurance, securities, mortgages, mutual funds and consumer credit-have all benefited from these changes. This report will examine the extent to which increased product sales have influenced overall bank assets and how commercial banks' increased market share in each of these products areas over the next five years will raise overall bank income and assets. Currently (2009), banking industry in India is generally fairly mature in terms of supply, product range and reach-even though reaches in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with
minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect mergers and acquisitions, takeovers, and asset sales.
REVIEW OF LITERATURE
Indian banking system, over the years has gone through various phases after establishment of Reserve Bank of India in 1935 during the British rule, to function as Central Bank of the country. Earlier to creation of RBI, the central bank functions were being looked after by the Imperial Bank of India. With the 5-year plan having acquired an important place after the independence, the Govt. felt that the private banks may not extend the kind of cooperation in providing credit support, the economy may need. In 1954 the All India Rural Credit Survey Committee submitted its report recommending creation of a strong, integrated, State-sponsored, State-partnered commercial banking institution with an effective machinery of branches spread all over the country. The recommendations of this committee led to establishment of first Public Sector Bank in the name of State Bank of India on July 01, 1955 by acquiring the substantial part of share capital by RBI, of the then Imperial Bank of India. Similarly during 1956-59 the associate banks came into the fold of public sector banking. Another evaluation of the banking in India was undertaken during 1966 as the private banks were still not extending the required support in the form of credit disbursal, more particularly to the unorganised sector. Each leading industrial house in the country at that time was closely associated with the promotion and control of one or more banking companies. The bulk of the deposits collected, were being deployed in organised sectors of industry and trade, while the farmers, small entrepreneurs, transporters , professionals and self-employed had to depend on
money lenders who used to exploit them by charging higher interest rates. In February 1966, a Scheme of Social Control was set-up whose main function was to periodically assess the demand for bank credit from various sectors of the economy to determine the priorities for grant of loans and advances so as to ensure optimum and efficient utilisation of resources. The scheme however, did not provide any remedy. Though a no. of branches were opened in rural area but the lending activities of the private banks were not oriented towards meeting the credit requirements of the priority/weaker sectors. On July 19, 1969, the Govt. promulgated Banking Companies (Acquisition and Transfer of Undertakings) Ordinance 1969 to acquire 14 bigger commercial bank with paid up capital of Rs.28.50cr, deposits of Rs.2629cr, loans of Rs.1813cr and with 4134 branches accounting for 80% of advances. Subsequently in 1980, 6 more banks were nationalised which brought 91% of the deposits and 84% of the advances in Public Sector Banking. During December 1969, RBI introduced the Lead Bank Scheme on the recommendations of FK Narsimhan Committee. Meanwhile, during 1962 Deposit Insurance Corporation was established to provide insurance cover to the depositors. In the post-nationalization period, there was substantial increase in the no. of branches opened in rural/semi-urban centers bringing down the population per bank branch to 12000 appx. During 1976, RRBs were established (on the recommendations of M. Narasimham Committee report). The Service Area Approach was introduced during 1989.While the 1970s and 1980s saw the high growth rate of branch banking net-work, the consolidation phase started in late 80s and more particularly during early 90s, with the submission of report by the Narasimham Committee on Reforms in Financial Services Sector during 1991. In these five decades since independence, banking in India has evolved through four distinct phases: Foundation phase can be considered to cover 1950s and 1960s till the nationalisation of banks in 1969. The focus during this period was to lay the foundation for a sound banking system in the country. As a result the phase witnessed the development of necessary legislative framework for facilitating re-organization and consolidation of the banking system, for meeting the
more competition. Attention was paid to improving house-keeping. staff productivity and profitability of banks. Expansion phase had begun in mid-60s but gained momentum after nationalisation of banks and continued till 1984. CHAPTER 2 4 . Reforms phase The macro-economic crisis faced by the country in 1991 paved the way for extensive financial sector reforms which brought deregulation of interest rates. Measures were also taken to reduce the structural constraints that obstructed the growth of money market. Branch network of the banks was widened at a very fast pace covering the rural and semi-urban population. autonomy packages etc.requirement of Indian economy. capital adequacy. Most importantly. credit flows were guided towards the priority sectors. prudential guidelines on asset classification and income recognition. However this weakened the lines of supervision and affected the quality of assets of banks and pressurized their profitability and brought competitive efficiency of the system at low ebb. A major development was transformation of Imperial Bank of India into State Bank of India in 1955 and nationalisation of 14 major private banks during 1969. which had no access to banking hitherto. credit management. technological changes. customer service. A determined effort was made to make banking facilities available to the masses. Consolidation phase: The phase started in 1985 when a series of policy initiatives were taken by RBI which saw marked slowdown in the branch expansion.
• To study how new distribution channels such as Internet Banking. ATM facility. 5 . • To draw conclusions of the impact of the changes in banking sector. • To draw a contrast between the old and the new Indian banking structure. • To determine the various services offered by banks earlier and currently • To determine the future of Indian Banking Markets • To assess the impact of information technology on the banking sector. Phone Banking have changed the face of the Banking industry.OBJECTIVES OF THE STUDY The objectives of project are as follows: • To find out the earlier banking structure that prevailed in India. • To assess the change in the performance and efficiency of the banks in India. • To assess the various factors that lead to the change in the Indian banking structure • To assess the impact of all these factors on the banking structure.
CHAPTER 3 RESEARCH METHODOLOGY Secondary Data: Secondary data is the data which is collected for some other purpose. 6 . newspapers and books. The data used for preparing the project report was secondary data. It was collected from various websites.
CHAPTER 4 BANKING SECTOR IN THE PAST
Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865.By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. Early History At the time of the American Civil War, a void was created as the supply of cotton to Lancashire stopped from the Americas. Some banks were opened at that time which functioned as entities to finance industry, including speculative trades in cotton. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. The Bank of Bengal, which later became the State Bank of India. At the beginning of the 20th century, Indian economy was passing through a relative period of stability. Around five decades have elapsed since the India's First war of Independence, and the social, industrial and other infrastructure have developed. At that time there were very small banks operated by Indians. The banking in India was controlled and dominated by the presidency banks, namely, the Bank of Bombay, the Bank of Bengal, and the Bank of Madras which later on merged to form the Imperial Bank of India, and Imperial Bank of India, upon
India's independence, was renamed the State Bank of India. The presidency banks were like the central banks and discharged most of the functions of central banks. They were established under charters from the British East India Company. Many Indians came forward to set up banks, and many banks were set up at that time, a number of which have survived to the present such as Bank of India and Corporation Bank, Indian Bank, Bank of Baroda, and Canara Bank Post-Independence The partition of India in 1947 had adversely impacted the economies of Punjab and West Bengal, and banking activities had remained paralyzed for months. The Government of India initiated measures to play an active role in the economic life of the nation. The major steps to regulate banking included:
In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. 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 may be opened without a license from the RBI, and no two banks could have common directors.
However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. Nationalisation By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. Indira Gandhi’s move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks.
A second dose of nationalisation of 6 more commercial banks followed in 1980. The nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the GOI controlled around 91% of the banking business of India. Liberalization In 1990s Narsimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which included banks i.e. Global Trust Bank which later amalgamated with Oriental Bank of Commerce, UTI Bank, ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for FDI, 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 49% with some restrictions. The new policy shook the Banking sector in India completely. 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.
Banks have had little to do besides accepting deposits at rates fixed by Reserve Bank of India and lend amount arrived by the formula stipulated by Reserve Bank of India at rates prescribed by the latter. Telegraphic Transfers. dictated by RBI. PLR (Prime lending rate) was the benchmark for interest on the lending products. Multichannel banking gained prominence. through ATMs. The entry of private players combined with new RBI guidelines forced nationalized banks to redefine their core banking strategy. CHANGES IN BANKING STRUCTURE The Tipping Point The opening up of the Indian banking sector to private players acted as 'the tipping point' for this transformation. Most common deposit products being Savings Bank. Current Account. But PLR itself was. The deregulatory efforts prompted many financial institutions (like HDFC and ICICI) and non-financial institutions enter the banking arena. more often than not. 10 . Term deposit Account and lending products being Cash Credit and Term Loans.SERVICES OFFERED BY BANKS EARLIER Banks in India have traditionally offered mass banking products. Bankers Cheque and Internal Transfer of funds. For the first time consumers got the choice of conducting transactions either the traditional way (through the bank branch). Due to Reserve Bank of India guidelines. Further. And technology was central to this change. the telephone or through the Net. remittance products were limited to issuance of Drafts. With the entry of private players into retail banking and with multi-nationals focusing on the individual consumer in a big way. Technology played a key role in providing this multi-service platform. the banking system underwent a phenomenal change.
Customer retention: Customer retention is one of the main priorities for banks today. customers have become more discerning and less 'loyal' to banks. 11 . Cost pressures: Cost pressures come into play when banks are not able to afford the cost of a certain service or initiative although they want to or need to have it in place. Technology makes it easier for any company with the right channel infrastructure and money reserves to get into banking. Increased competition: The entry of new players into the banking space is leading to increased competition. This has been one of the major reasons behind this kind of competition from players who do not have a banking background. Here are the top three concerns in the mind of every bank's CEO. Many other such players are waiting on the sidelines. New entrants with strategies such as these make the banking game tougher. This makes it imperative that banks provide best levels of service to ensure customer satisfaction. it is now possible to open a new account within minutes. Kotak Bank overcame the initial costs of setting up its own ATM network by getting into a sharing agreement with UTI bank. A recent example would be of Kotak Mahindra Finance Limited (KMFL)—a financial services company focused on investment consulting. This is primarily because the cost structure at the backend is not efficient enough to offer that kind of service to the marketplace. insurance. Or for that matter shift accounts within a couple of hours.Pressing Issues Today banks have to look much beyond just providing a multi-channel service platform for its customers. There are other pressing issues that banks need to address in order to chalk-out a roadmap for the future. With the entry of new players and multiple channels. auto finance. etc— morphing into Kotak Bank. Given the various options.
With this banks have redefined their business priorities.Redefining Objectives To cope with cost pressures and increased competition as well as to retain existing customers. Cost Reductions Reduced costs basically translate to higher profit margins. This is one of the reasons why loans such as those for housing. Banks have woken up to the fact that they need to get into shape fast in order to handle competition. Differentiation The customer is interested in how he/she can benefit from the bank and its products. If banks can reduce costs. The focus is on increasing the profit margins by cutting costs where it matters—on the operations side. That's why it becomes necessary for a bank to differentiate its products from the others. the underlying objectives remain the same. Credit cards and debit cards are another focus area for banks. They are now focused on: • • • Cost reduction Product differentiation Customer-centric services Although the ways in which banks implement these vary. banks have started venturing into newer territories. The main advantage of getting into retail banking is that the risks involved are lesser in this segment. automotive. There are lower Non Performing Assets (NPAs) in retail banking. Some of the ways 12 . it can go a long way in increasing profits. This is one of the main reasons why banks are focused on retail banking in a big way. etc are being touted by banks like never before.
This has led to the development of a relationship oriented model of operations focusing on customer-centric services. Increasing the added value of products is another way of differentiation for banks. it will also provide better income generation capability. rather than from new customers. and increasing the value. This will ensure that the customer comes back to the bank.in which differentiation can be introduced are through specialization. This is because a major chunk of income of most banks comes from existing customers. It also helps in new business opportunities like cross-selling and 'upselling. In this context. Customer relationships have to be managed in the best possible manner. Specialization basically means that the bank gets involved only in selected areas. Another way to specialize could be by handling just specific sets of portfolios. it is very important that banks identify and understand customer needs. This will help banks in tailoring their products according to customer needs. While banks have to ensure product superiority and operational excellence. Customer-Centric Model Indian banks have realized that it no longer pays to have a 'transaction-based' operating model. In addition to good customer retention rates. Or. 13 . it could be limiting its services just for corporate banking clients. the biggest challenge today is to establish customer intimacy without which the other two are meaningless. This will provide the bank with better yields per contact. new products. For example. the bank might be getting involved only in housing finance. Banks can differentiate themselves by adding new products to their range of services. Operational excellence is also a key factor in effective differentiation from the competition.' which takes cues from customer aspirations and transaction patterns.
The Indian Financial Network (INFINET) which initially comprised only the public sector banks was opened up for participation by other categories of members. was jointly set up by the Reserve Bank and Institute for Development and Research in Banking Technology in 1999. Internet has significantly influenced delivery channels of the banks. This would result in funds transfers and funds-related message transfer to be routed electronically across banks using the medium of the INFINET. it is necessary that banks bestow sufficient attention on the computerisation and networking of the branches situated at commercially important centres on a time-bound basis. Intra-city and intra-bank networking would facilitate in quick and efficient funds transfers across the country". INFINET. banks as well as other financial entities entered the world of information technology and with Indian Financial Net (INFINET). 14 .Emergence Of Information Technology In India. Internet has emerged as an important medium for delivery of banking products & services. NDS. a wide area satellite based network (WAN) using VSAT (Very Small Aperture Terminals) technology. which has become operational since February 2002 and RTGS (Real Time Gross Settlement system) scheduled towards the end of 2003 are other major developments in the area. The first set of applications that could benefit greatly from the use of technological advances in the computer and communications area relate to the Payment systems which form the lifeline of any banking activity. To reap the full benefits of such electronic message transfers. The process of reforms in payment and settlement systems has gained momentum with the implementation of projects such as NDS (Negotiated Dealing System). CFMS (Centralised Funds Management System) for better funds management by banks and SFMS (Structured Financial Messaging Solution) for secure message transfer. Detailed guidelines of RBI for Internet Banking has prepared the necessary ground for growth of Internet Banking in India.
It also means that you can have your goods delivered right to your doorstep with having to move a single muscle. • Cost effectiveness: Information technology has helped to computerize the business process thus streamlining businesses to make them extremely cost effective money making machines. The internet has also opened up face to face direct communication from different parts of the world thanks to the helps of video conferencing. • Creation of new jobs: Probably the best advantage of information technology is the creation of new jobs. but it has allowed the world's economy to become a single interdependent system.Advantages of Information Technology • Globalization: IT has not only brought the world closer together. making purchases from different countries easier and convenient. Systems analyzers. quicker and more efficient. We can now communicate with anyone around the globe by simply text messaging them or sending them an email for an almost instantaneous response. The world has developed into a global village due to the help of information technology allowing countries like Chile and Japan who are not only separated by distance but also by language to share ideas and information. • Communication: With the help of information technology. This means that we can not only share information quickly and efficiently. Computer programmers. Hardware and Software 15 . and allow for the exchange of views and ideas. This in turn increases productivity which ultimately gives rise to profits that means better pay and less strenuous working. • More time: IT has made it possible for businesses to be open 24 x7 all over the globe. This means that a business can be open anytime anywhere. thus increasing awareness. communication has also become cheaper. but we can also bring down barriers of linguistic and geographic boundaries. • Bridging the cultural gap: Information technology has helped to bridge the cultural gap by helping people from different cultures to communicate with one another.
16 . This means that a lot of lower and middle level jobs have been done away with causing more people to become unemployed. if he or she wishes for their job to be secure. it has also bought along privacy issues. • Dominant culture: While information technology may have made the world a global village. easier and more convenient. Languages too have become overshadowed. From cell phone signal interceptions to email hacking. • Privacy: Though IT may have made communication quicker.developers and Web designers are just some of the new employment opportunities created with the help of information technology. Disadvantages of Information Technology • Unemployment: While information technology may have streamlined the business process it has also crated job redundancies. downsizing and outsourcing. people are now worried about their once private information becoming public knowledge. For example it is now argued that US influences how most young teenagers all over the world now act. it has also contributed to one culture dominating another weaker one. dress and behave. This means that one has to be in a constant learning mode. with English becoming the primary mode of communication for business and everything else. • Lack of job security: Industry experts believe that the internet has made job security a big issue as since technology keeps on changing with each day.
A few banks have gone in to market mutual fund schemes. banks are also adding services to their customers.to "high relationship . Investment products and Tax Advisory services. facilitating with plastic money and money transfer across the globe. Cash Management services. SGL II accounts.4. The past days are witness to an hour wait before withdrawing cash from accounts or a cheque from north of the country being cleared in one month in the south. A few foreign & private sector banks have already introduced customized banking products like Investment Advisory Services.value" clients. when allowed. Different types of accounts and loans. Banks also offer advisory services termed as 'private banking' . Photo-credit cards. With stiff competition and advancement of technology. This section of banking deals with the latest discovery in the banking instruments along with the polished version of their old systems. A competition has been established within the banks operating in India.NEW SERVICES OFFERED BY BANKS Banking Services In India Bouquets of services are at customers demand in today’s banking system. The customers have more choices in choosing their banks. Insurance peddling by Banks will be a reality soon. The recent Credit Policy of RBI announced on 27. Eventually. 17 . the Banks plan to market bonds and debentures. With years. The Indian banking industry is passing through a phase of customers market.2000 has further facilitated the entry of banks in this sector. the services provided by banks have become more easy and convenient.
The advent of bank account online has saved both the cost of operation for banks as well as the time taken in opening an account. Bank account online is registered through a PC with an internet connection. There are different types of bank account in Indian banking sector. etc.Bank Current Account can be opened by individuals / partnership firms / Private and Public Limited Companies / HUFs / Specified Associates / Societies / Trusts.Bank Savings Account can be opened for eligible person / persons and certain organizations / agencies (as advised by Reserve Bank of India (RBI) from time to time) • Bank Current Account . 18 . • Bank Term Deposits Account .With the advancement of technology. • Bank Account Online .Following are the services being offered: Bank Accounts Open bank account . etc. the major banks in the public and private sector has facilitated their customer to open bank account online. The bank accounts are as follows: • Bank Savings Account .Bank Term Deposits Account can be opened by individuals / partnership firms / Private and Public Limited Companies / HUFs/ Specified Associates / Societies / Trusts.the most common and first service of the banking sector.
Economy has developed a craze for plastic money which in turn is encouraging agencies in exploiting the credit card holders. American Express. like a credit instrument that helps in making payments at centres without limits but with some negligible amount. The plastic money is in true sense. ICICI Bank. HDFC Bank. Plastic money saves the botheration of carrying cash. from coin to paper and now from paper to plastic money. The credit cards are shape and size. State Bank of India and many more. Punjab National Bank. after getting special permission from the Reserve Bank of India. The first card was issued in India by Visa in 1981. It can be flashed at outlets and especially in times of emergency it provides an opportunity to withdraw cash at any hour of the day. There are number of banks and financial institutions which are engaged in this business such as CITIBANK. Following are some of the forms of plastic money being used : • • • 19 .Plastic Money • From barter to coin. The modern banking system has the credit of simplifying the process which provides things at ease. The first international credit card was issued to a restricted number of customers by Andhra Bank in 1987 through the Visa program. It is generally of plastic quality. the monetary mechanism has witnessed radical changes. as specified by the ISO 7810 standard.
A VISA cardholder borrows money against a credit line and repays the money with interest if the balance is carried over from month to month in a revolving line of credit.000 financial institutions in 220 countries and territories. Its products are issued by 23.Credit Cards Credit cards in India are gaining ground. A number of banks in India are encouraging people to use credit card. Nearly 600 million cards carry one of the VISA brands and more than 14 million locations accept VISA cards. Credit card however became more popular with use of magnetic strip in 1970. Visa Card VISA cards is a product of VISA USA and along with MasterCard is distributed by financial institutions around the world. More than 57 million cards are in circulation and growing and it is still growing further. Basically banks. Cardholders borrow money against a line of credit and pay it back with interest if the balance is carried over from month to month. which can be used more than once to borrow money or buy products and services on credit. Around US $ 123 billion was spent last year through American Express Cards and it is poised to be the world's No. Credit cards are financial instruments. retail stores and other businesses issue these. 1 card in the near 20 . The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and American Express. American Express The world's favorite card is American Express Credit Card. Master Card MasterCard is a product of MasterCard International and along with VISA are distributed by financial institutions around the world. Credit card in India became popular with the introduction of foreign banks in the country.
The following are some of the plus features of credit card in India • • • • • • • • Hotel discounts Travel fare discounts Free global calling card Lost baggage insurance Accident insurance Insurance on goods purchased Waiver of payment in case of accidental death Household insurance 21 .. Canada. Europe and Asia and are used widely in the retail and everyday expenses segment. Other cards: • • • Standard Card .It is the most basic card (sans all frills) offered by issuers.A card with an even higher limit than a platinum card.A credit card with a higher limit and additional perks than a gold card. In a regressive US economy last year. Classic Card . issuers provide extra perks or incentives to cardholders. the total amount spent on American Express cards rose by 4 percent. Income eligibility is also higher.S.A credit card that offers a higher line of credit than a standard card. • • Platinum Card .future.Brand name for the standard card issued by VISA. American Express cards are very popular in the U. In addition. Gold Card/Executive Card . Titanium Card .
Debit cards are different from credit cards. we use our own money and not the issuer's money. It operates like cash or a personal check. including grocery stores." When we use a debit card.Debit Cards Debit cards also known as check cards look like credit cards or ATM cards (automated teller machine card). retail stores. and restaurants. Using a debit card means you no longer have to stock up on traveler's checks or cash when you travel. "pay now" product. gasoline stations. In India almost all the banks issue debit card to its account holders. • • Using a debit card frees you from carrying cash or a checkbook. It’s an alternative to carrying a checkbook or cash. our money is quickly deducted from the bank account. • Debit cards may be more readily accepted by merchants than checks. you may dispute unauthorized charges or other mistakes within 60 days. •Using a debit card may mean you have less protection than with a credit card purchase for items which are never delivered. are defective. But. as with credit cards. . giving you no grace period. Features of Debit Card • • Obtaining a debit card is often easier than obtaining a credit card. especially in other states or countries wherever your card brand is accepted. Debit cards are accepted at many locations. With debit card. Using a debit card instead of writing checks saves you from showing identification or giving out personal information at the time of the transaction. •Returning goods or canceling services purchased with a debit card is treated as if the 22 purchase were made with cash or a check. Credit card is a way to "pay later. • The debit card is a quick. or were misrepresented." whereas debit card is a way to "pay now.
drafts etc. It is one of the fast moving financial product of banks. In some banks upto last ten transactions. It can perform both cash and non-cash transactions in secured environment. Car loan / auto loan are 23 . • Balance enquiry.ATM Cards Automated Teller machine (ATM) cards are capable of doing variety of functions. telephone bills etc). The following loans are given by almost all the banks in the country: • • • • • Personal Loan Car Loan or Auto Loan Loan against Shares Home Loan Education Loan or Student Loan Almost all the banks have jumped into the market of car loan which is also sometimes termed as auto loan. • Transfer of funds between accounts. ATM Cash Transactions includes deposits and withdrawals. Loans Banks in India with the way of development have become easy to apply in loan market. • • Requisition of Cheque books. Bill payments (electricity bills. • Stop Payment instructions. Non cash transactions incude: • Providing Mini Statement of last five transactions.
Banks generally issue Demand Drafts.sanctioned to the extent of 85% upon the ex-showroom price of the car with some simple paper works and a small amount of processing fee.e. Many banks will even use money transfer services as loss-leaders in order to generate account openings and cross-sell opportunities. ICICI. The international money transfer market grew 9. Economists say that the market of money transfer will further grow at a cumulative 10. The educational loan. The price evolution of money transfer products for banks will be similar to that of consumer bill pay-the product is worth 24 . in 2004. HSBC are leading. This activity is termed as remittance business. HDFC.1% average growth rate through 2008. The RBI has also liberalised the interest rates of home loan in order to match the repayment capability of even middle class people. This act of banks is known as transfer of money. It has been only a couple of years that banks have jumped into the money transfer businesses in India. Money Transfer Besides lending and depositing money. rather to be termed as student loan. Again SBI. banks also carry money from one corner of the globe to another. More number of townships are coming up to meet the demand of 'house for all'. Money Orders or other such instruments for transferring the money.3% from 2003 to 2004 i. to US$233 bn. With the use of high technology and varieties of product it seems that "Free" money transfers will become commonplace. Now people are moving to township outside the city. Banker's Cheques. Almost all banks are dealing in home loan. is a good banking product for the mass. studying at recognized colleges/universities in India and abroad are generally given education loan / student loan so as to meet the expenses on tuition fee/ maintenance cost/books and other equipment. This is a type of Telegraphic Transfer or Tele Cash Orders. from US$213 bn. Students with certain academic brilliance. Home loan is the latest craze in the banking sector with the development of the infrastructure.
we will see a good percent of all foreign-born households doing some level of online banking. That will change as banks offer transfer services through their online channel.giving away as an account acquisition tool to win overall market share and establish banking relationships. Some of them are as under: • • • • • • • • Western Union Money Transfer Union Money Transfer IKobo Money Transfer Cash2india. This service provides peace of mind to either the NRIs or to the visitors to India. which currently frequents traditional money transmitters such as Western Union. Many Indian banks have ATM'S (automatic teller machine). enable to draw foreign currency in India. By 2010.com Remit2india Samachar Money Transfer Wells Fergo International Money Transfer Travellers Express 25 . There is a terrific opportunity for banks and non-banks to offer more robust global inter-institutional funds transfer services online. quick. Money Transfer to India Apart from banks few financial institutions and online portals gives services of money transfer to India. and most do not have an alternative product marketed by their bank that is painless. First-mover banks will start having a window of opportunity to include online transfer functionality within the next couple of years. More than half of Western Union's customers today are already banked. ATM money transfer card products have had terrible bank adoption rates since being introduced in the last three to four years. and cost-effective. Money transfer to India is one of the most important parts played by the banks.
in many respects.000 marks in installing ATMs in India is ICICI. It was in the year 1987. The Corporation Bank has the second largest network of ATMs amongst the Public Sector Banks in India. Under this scheme. either debit or credit within India. The Indian banks have also come up with a 'Swadhan' scheme.Visa Money Transfer Visa has recently introduced the 'Visa Money Transfer' option for its savings and current account holder of any bank with a visa debit card. The first bank to cross 1. 35 extra from their customers. to the third-party fund transfer option given by some banks to its account holders through e-cheque. The main feature of ‘Swadhan Card’ is as follows: • No exchange fee charged to change an old ATM card for a Swadhan card. almost every commercial bank gives ATM facilities to its customers. They are either setting up their own ATM centers or entering into tie-ups with other banks. HDFC and IDBI count more than 50% of the total ATMs in India. but this is restricted to only visa cardholders. SBI is following the concept of 'ATMs in Quantity'. Now. Public Sector Banks are also taking the installation of ATMs seriously for Indian market. 26 . Automated Teller Machines (ATM) The first bank to introduce the ATM concept in India was the Hong Kong and Shanghai Banking Corporation (HSBC). This facility helps its customer to transfer funds from his bank account to any visa card. A Visa Money Transfer is of similar kind. But Private Sector Banks have taken the lead. UTI. usually Rs. ICICI. the banks can use each other's ATM at a cost.
Still. one can bank from anywhere. this is lower than the average withdrawal of Rs15. • • IBA gives banks the discretion to decide a higher maximum amount for withdrawal. but only your own bank will provide this. 3. Mobile banking uses the same infrastructure like the ATM solution. Mobile Banking "The account that travels with you". It reduces the cost of operation for bankers in comparison to the use of ATMs. With mobile banking facilities. at anytime and in any condition or anyhow. Exception made for select customers who can withdraw up to Rs10. the following operations can be conducted through advanced mobile phones which can is further viewed on channels such as the Internet via the Channel Manager. Moreover 8590% mobile users do not own credit cards.000. The system is either through SMS or through WAP Mobile Banking is the hottest area of development in the banking sector and is expected to replace the credit/debit card system in future. In past two years. mobile banking users have increased three times if we compare the use of either debit card or credit card.000 fixed as the ceiling on withdrawal.000 by regular ATMs.• • Rs. This is needed in today's fast business environment with unending deadlines for fulfillment and loads of appointments to meet and meetings to attend. 27 . which is given only by your own bank. But it is extremely easy and inexpensive to implement. Using compact HTML and WAP technologies. Transactions conducted through any of the member banks appear on a bank statement. • All transactions conducted in any of the member banks appear on the bank statement.
It is very similar to how an ATM works. One for the telephonic purpose and the other for banking. you can use the facility of SMS services. The following operations can be easily used by the service provider: • • • • • • • • Balance enquiry Last three transactions Cheque payment status Cheque book request Statement request Demat .Last two Transactions Bill Payment The SMS facility brings peace of mind to customers and opens doors to many more technological possibilities and innovative services.• • • • Bill payments Fund transfers Check balances Any many more which is also available in SMS Banking In countries like Korea. You may have to thank the banks which are providing banking at the send-of-your-sms. About 3. 28 . If you are having non-WAP enabled mobile handset. Bank account data is encrypted on a smart-card chip.Free Balance Holding Demat .3 million transactions were reported by Bank of Korea in 2004. So is to be your money. The technology is at its highest level to move your money while you are on the move. SMS Banking Businesses are in move. two SIM Cards are used in mobile phones.
To use ATM. In other words it is said that it is updated 'on-line. Few banks provide interaction facility between the banks and its customers. a mobile phone is needed. place queries and also can be facilitated with a wide range of transactions simultaneously. First. secret number is necessary to access. A new concept has been developed by Bank of Punjab Ltd. electricity bills. In India. With the support of this technology. real time'. etc. SMS banking is also very much safe. one authenticates the mobile number with the authentications key. a customer can make payment and receive payment of account of buy/sell (merchants) through SMS. a card is necessary and to use SMS service. 29 . Second. Net Banking Net Banking is conducting ones banking or bank account online through a computer and a net connection. Banks are coming up with arrangements of utility payments. the customer uses secret Mobile Personal Identification Number (MPIN). like telephone bills. In both the cases. in abroad there are banks like EGG Bank or NET Bank. They are as follows: • • • The banks offer only relevant information about their products and services to the mass. They call it "Mobile Wallet". the regulatory body has not yet sanctioned virtual bank. The system is updated immediately after every transaction automatically. which only have a virtual presence without any physical branches. Through net banking one can check the status of his/her account. Net Banking has three basic features.
Very few customers uses the advance interactive services provided by the banks.The current statistics show that hardly 10 per cent of Indian customers use the internet for banking. Services provided by Net Banking Queries • • • • • • • • Check Balance See Statement Inquire about cheque status Ask for a Statement Ask for a Cheque Book Inquire about TDS details See Demat Account Update profile Transactions • • • • • • • • Stop a Cheque Pay Bills Ask for a Demand Draft Transfer funds between your accounts Transfer funds to a third party Request for a new Fixed Deposit Shop Online Pay Bank Credit Card Dues 30 . Among all the facilities provided the maximum of them uses only for checking balance or requesting for a cheque book.
this kiosk works on wireless in local loop technology.Advantages of Net Banking • It removes the traditional geographical barriers as it could reach out to customers of different countries/legal jurisdiction. customers' privacy. This has raised the question of jurisdiction of law/supervisory system to which such transactions should be subjected.. Thanks to Internet Kiosk and the ATM duo which has made it possible for rural India. Security of banking transactions. heightening some of them and throwing new risk control challenges. 70% of marginal farmers do not have deposit account. which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain. This is known as Proxy Banking. Reasons for setting-up of Proxy Banking • • • • 58% of rural households still do not have bank accounts. not subject to control by any single authority or group of users. etc. It has added a new dimension to different kinds of risks traditionally associated with banking. validity of electronic contract. insurance and even equity trading. This kiosk has been set up by ICICI Bank in partnership with network n-Logue Communications in remote villages of Southern part of the country. 87% households have no formal credit. • • Proxy Banking Indian villages were miles away from mutual funds. Only 21% of rural households have access to credit from a formal source. With the help of fibre optic cables. 31 .
paddy crop. it provides increased convenience. the costs of delivering telephone-based services are substantially lower than those of branch based services. • Consumers bribe officials to get loans approved which varies between 10 and 20 per cent of the loan amount. The Proxy Banking is an innovative approach to rural lending and will add to the government's expanding base of Kisan credit cards and the good old guidelines for agricultural lending. Weather insurance given to farmers. • Branch banking in rural is a loss-making.• Only 1% rural households rely on a loan from a financial intermediary. castor. from the banks’ perspective. Life and non-life insurance provided. which is essentially the delivery channel of branch financial services via telecommunication devices where the bank customers can perform retail banking transactions by dialing a touchtone telephone or mobile communication unit. soya. Insurance policies sold to farmers like groundnut. As far as the customers are concerned. which is connected to an automated system of the bank by utilizing Automated Voice Response (AVR) technology. expanded access and significant time saving. On the other hand. Benefits to Rural • • • • • Small loans given for buying buffaloes. Telebanking has numerous benefits for both customers and banks. It has almost all the impact on productivity of ATMs. Telephone Banking Tele banking (telephone banking) can be considered as a form of remote or virtual banking. etc. 32 . Loans for setting up a tea shop. · The loans take between 24 to 33 weeks to get sanctioned.
and offers 24-hour service. Once access is gained. as it curtails customer travel distance to bank branches it offers more time for customers’ productive activities. there is more productivity per time period. usually with the help of proprietary software installed on their personal computer. seven days a week. 33 . the customer can perform a lot of retail banking functions. Hence. Also. It offers quicker rate of inter-branch transactions as the consequence of distance and time are eliminated.except that it lacks the productivity generated from cash dispensing by the ATMs. with the several networked branches serving the customer populace as one system. there is simulated division of labour among bank branches with its associated positive impact on productivity among the branches. into one unified system in the form of a Wide Area Network (WAN) or Enterprise Network (EN) for the creating and sharing of consolidated customer information/records. Branch Networking Networking of branches is the computerization and inter-connecting of geographically scattered stand-alone bank branches. Furthermore. It also has the benefits of Telephone Banking and ATMs. Personal Computer Banking PC-Banking is a service which allows the bank’s customers to access information about their accounts via a proprietary network. This certainly supports the growth of PC banking which virtually establishes a branch in the customers’ home or office. It offers retail banking services to customers at their offices/homes as an alternative to going to the bank branch/ATM. The increasing awareness of the importance of computer literacy has resulted in increasing the use of personal computers. and gives more convenience for higher productivity. This saves customers time.
The advances in IT have certainly introduced new delivery channels in the Indian banking industry. VSATs are very useful in banking industry. hence continual productivity for the bank even after banking hours. the system continues after banking hours. Very Small Aperture Terminals (VSATs) In Banking Very Small Aperture Terminals work with the help of the satellite. It also saves customers time and energy in getting to bank branches or ATMs for cash withdrawals which can be harnessed into other productive activities.Electronic Fund Transfer At Point Of Sale (EFTPoS) An Electronic Funds Transfer at the Point of Sale is an on-line system that allows customers to transfer funds instantaneously from their bank accounts to merchant accounts when making purchases (at purchase points). Furthermore.8 meters or 3. This revolution in the market place has set in motion a revolution in the banking sector for the provision of a payment system that is compatible with the demands of the electronic marketplace. Through satellites. 1988). Technological developments particularly in the area of Telecommunications and Information Technology are revolutionizing the way business is done. VSATs technology has made banking services very simple and speedy. 34 . VSATs use small antennas which may have variable size of 1. stock exchanges. A POS uses a debit card to activate an Electronic Fund Transfer Process (Chorafas. reservations. Electronic commerce is now thought to hold the promise of a new commercial revolution by offering an inexpensive and direct way to exchange information and to sell or buy products and services. Increased banking productivity results from the use of EFTPoS to service customers shopping payment requirements in stead of clerical duties in handling cheques and cash withdrawals for shopping. The terminals used in VSATs have very small apertures. They are briefly known as VSATs. retail trade.8 meters and these acts as small earth stations.
• These earth stations normally use bit rate which is less than megabyte per second.corporate networking. This network links 2800 bank branches with one another. industries. 35 . Characteristics • These terminals can exchange and transmit information. • Payment system has been made more effective. document services etc. weather forecasting. 135 crores out of which Rs. • The shortcomings of telecommunications have been overcome with the help of VSATs.5 m to 11m. 100 crores were arranged by the public sector banks. • VSATs can function at ‘C-Band’. The transmission through a larger earth station which is called Hub-Station. • VSATs cannot directly transmit messages to each other. • File work can be easily transferred. Uses of VSATs The activities relating to VSATs technology has now started. The size of antennas Hub-Station ranges between 7. • The currency chest operation has become more fast and accurate. international services. The whole project is has incurred expenditure of Rs. • Exchange of information has geared up and speedy clearing of pending entries has been made possible. 35 crores were arranged by RBI and Rs. The following operations can be performed by using this technology: • The quality of customer service at the counters has improved to a large extent.
• The self owned communication system can be operationalised by the institution.NRE A/c Non-Resident (Foreign Currency) Account .• The use of e-mail is made more effective through VSATs.NRO A/c Non-Resident (External) Rupee Account . There are different types of accounts for them. Banking Services For NRI’s Almost all the Indian Banks provide services to the NRIs.FCNR A/c An Indian resident who is earning foreign exchange can also maintain Foreign Currency account in the country with an authorized dealer. 36 . They are: • • • Non-Resident (Ordinary) Account . • The banks offer specialized telephone facilities through this network. • Through VSATs technology every organization is able to develop its own system of communications.
It was something between the nominal rate of interest and the expected rate of inflation. Capital adequacy norms extended to financial 37 . Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) became important institutions. The Reserve Bank of India (RBI) has become more independent. The important achievements the following fields are discussed under separate heads: Financial Markets In the last decade. they started making debt in the market. They grew rapidly in commercial banking and asset management business. Opinions are also there that there should be a super-regulator for the financial services sector instead of multiplicity of regulators. Private Sector Institutions played an important role. every governments India took major steps in reforming the financial sector of the country. Regulators The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The borrowers did not pay high price while depositors had incentives to save. Competition among financial intermediaries gradually helped the interest rates to decline. The real interest rate was maintained. The Government accepted the important role of regulators. Since 1991. Development Finance Institutions Financial institution's access to SLR funds reduced. Convertibility clause no longer obligatory for assistance to corporate sanctioned by term-lending institutions. Deregulation added to it.IMPACT OF CHANGE IN BANKING STRUCTURE ON ECONOMY Financial and Banking reforms The last decade witnessed the maturity of India's financial markets. Now they have to approach the capital market for debt and equity funds. With the openings in the insurance sector for these institutions.
institutions. the gilt. Primary dealers bid for these securities and also trade in them. the SEBI has now decided to concentrate on the development of the debt market. Stamp duty is being withdrawn at the time of dematerialization of debt instruments in order to encourage paperless trading. Long-term debt market. strengthening of existing instruments and setting up of the Discount and Finance House of India (DFHI). The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO) window. has a mandate to develop the secondary market in government securities. The Securities Trading Corporation of India (STCI). the requirement of minimum net owned funds. Until recently. After bringing some order to the equity market. DFIs such as IDBI and ICICI have entered other segments of financial services such as commercial banking. The RBI has introduced a liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo auctions and liquidity is sucked out through repo auctions. Several measures have been initiated and include new money market instruments.2 crores.up. has been raised to Rs. The DFHI is the principal agency for developing a secondary market for money market instruments and Government of India treasury bills. The move to universal banking has started. 38 .edged market occupies an important position in the financial set. The secondary market was underdeveloped and lacked liquidity. On account of the substantial issue of government debt. which started operations in June 1994. asset management and insurance through separate ventures. Non-banking finance companies In the case of new NBFCs seeking registration with the RBI. the money market in India was narrow and circumscribed by tight regulations over interest rates and participants.
Expectations are that India will be an attractive emerging market with tremendous potential. The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs. improving disclosure standards and experimenting with new types of distribution. the industry had a framework for the establishment of many more players. The insurance industry is the latest to be thrown open to competition from the private sector including foreign players.70. Unfortunately. 39 . with participation restricted to 26 per cent of equity.The Capital Market The number of shareholders in India is estimated at 25 million. It is too early to conclude whether the erstwhile public sector monopolies will successfully be able to face up to the competition posed by the new players. only an estimated two lakh persons actively trade in stocks. Mutual Funds The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations. The foreign owned AMCs are the ones which are now setting the pace for the industry. mutual funds started becoming popular.000 crores. setting new standards of customer service. which have led to retail investors deserting the stock markets. With the issuance of SEBI guidelines. but its share is going down. Foreign companies can only enter joint ventures with Indian companies. during recent times the stock markets have been constrained by some unsavory developments. However. There has been a dramatic improvement in the country's stock market trading infrastructure during the last few years. With the growth in the securities markets and tax advantages granted for investment in mutual fund units. 1996 and amendments thereto. but it can be expected that the customer will gain from improved service. The biggest shock to the mutual fund industry during recent times was the insecurity generated in the minds of investors regarding the US 64 schemes. They are introducing new products. both Indian and foreign players.
the capital market regulator was established in 1992. and special recovery tribunals set up to facilitate quicker recovery of loan arrears. Good regulation will. market and operational risks. Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and cash reserve ratio (CRR) brought down in steps. Derivative products such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced. be essential. PSBs were encouraged to approach the public for raising resources. asset classification. SEBI. provisioning for delinquent loans and for capital adequacy. A credit information bureau being established to identify bad risks. Interest rates on the deposits and lending sides almost entirely were deregulated. Deregulation Of Banking System Prudential norms were introduced for income recognition. Recovery of debts due to banks and the Financial Institutions Act. 1947. substantial capital were provided by the Government to PSBs. in order to improve the low per capita insurance coverage. 40 . repealed. 1993 was passed. New private sector banks allowed promoting and encouraging competition. office of the Controller of Capital Issues was abolished and the initial share pricing were decontrolled. RBI guidelines issued for risk management systems in banks encompassing credit. Capital Market Developments The Capital Issues (Control) Act.The new players will need to bring in innovative products as well as fresh ideas on marketing and distribution. of course. Bank lending norms liberalized and a loan system to ensure better control over credit introduced. In order to reach the stipulated capital adequacy norms. Banks asked to set up asset liability management (ALM) systems.
and made rules for making client or broker relationship more transparent which included separation of client and broker accounts. Companies given the freedom to issue dematerialized shares in any denomination. SEBI reconstituted governing boards of the stock exchanges. Private Mutual Funds Permitted The Depositories Act had given a legal framework for the establishment of depositories to record ownership deals in book entry form. 100 were abolished. 10 and Rs. Derivatives trading starts with index options and futures. subject to conditions. SEBI empowered to register and regulate venture capital funds. To reduce the cost of issue. Indian companies were permitted to access international capital markets through euro issues. The National Stock Exchange (NSE). 41 . A system of rolling settlements introduced. The practice of making preferential allotment of shares at prices unrelated to the prevailing market prices stopped and fresh guidelines were issued by SEBI. Buy Back Of Shares Allowed The SEBI started insisting on greater corporate disclosures. Dematerialization of stocks encouraged paperless trading. Standard denomination for equity shares of Rs. SEBI issued detailed employee stock option scheme and employee stock purchase scheme for listed companies. Several local stock exchanges changed over from floor based trading to screen based trading. with nationwide stock trading and electronic display. underwriting by the issuer were made optional. introduced capital adequacy norms for brokers. clearing and settlement facilities was established. Steps were taken to improve corporate governance based on the report of a committee. Companies were required to disclose all material facts and specific risk factors associated with their projects while making public issues.Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the SEBI.
. United Bank of India is one of the 14 major banks which were nationalised on July 19. 42 . 1969. 1999 issued for regulating new credit rating agencies as well as introducing a code of conduct for all credit rating agencies operating in India. was formed in 1950 with the amalgamation of four banks viz. BANKING STRUCTURE IN INDIA Public Sector Banks Among the Public Sector Banks in India. the United Bank of India Ltd.The SEBI (Credit Rating Agencies) Regulations. Its predecessor. in the Public Sector Banks.
(1922) and Hooghly Bank Ltd. Oriental Bank of Commerce (OBC). 18. 9. 14. 2. (1932). 5. (1918). 4.Comilla Banking Corporation Ltd. 19. Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharastra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank 43 . 7. Comilla Union Bank Ltd. 8. OBC is implementing a GRAMEEN PROJECT in Dehradun District (UP) and Hanumangarh District (Rajasthan) disbursing small loans. 11. a Government of India Undertaking offers Domestic. 16. 6. 15. 10. Bengal Central Bank Ltd. (1914). NRI and Commercial banking services. 13. The following are the list of Public Sector Banks in India 1. 3. 17. 12. This Public Sector Bank India has implemented 14 point action plan for strengthening of credit delivery to women and has designated 5 branches as specialized branches for women entrepreneurs.
The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution in India. Major Private Banks in India are: 44 . to set up a bank in the private sector banks in India as part of the RBI's liberalisation of the Indian Banking Industry. It is one of the fastest growing Bank Private Sector Banks in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank.List of State Bank of India and its subsidiary. a Public Sector Banks • State Bank of India o o o o o o State Bank of Bikaner & Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of Indore (SBIr) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Travancore (SBT) Private Sector Banks Private banking in India was practiced since the beginning of banking system in India. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995.
• Bank of Rajasthan • Catholic Syrian Bank • Bharat Overseas Bank • Centurion Bank of Punjab • Dhanalakshmi Bank • Federal Bank • HDFC Bank • ICICI Bank • IDBI Bank • IndusInd Bank • ING Vysya Bank • Jammu & Kashmir Bank • Karnataka Bank • Karur Vysya Bank • Kotak Mahindra Bank • SBI Commercial & International Bank • South Indian Bank • United Western Bank • UTI Bank • YES Bank • City Union Bank • Nainital Bank • Tamilnad Mercantile Bank • Lord Krishna Bank • Lakshmi Vilas Bank • Ratnakar Bank 45 .
The Cooperative bank is an important constituent of the Indian Financial System. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act. judging by the role assigned to co operative. The cooperative banks in India play an important role even today in rural financing. but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. the expectations the co operative is supposed to fulfill. The businesses of cooperative bank in the urban areas also have increased phenomenally in recent years due to the sharp increase in the number of primary co-operative banks. their number.Co-Operative Banks The Co operative banks in India started functioning almost 100 years ago. 1965. Though the co operative movement originated in the West. The cooperative bank is also regulated by the RBI. Cooperative banks in India finance rural areas under: • • • • • Farming Cattle Milk Hatchery Personal finance Cooperative banks in India finance urban areas under: • • • • • Self-employment Industries Small scale units Home finance Consumer finance Regional Rural Banks 46 . Co operative Banks in India are registered under the Co-operative Societies Act. and the number of offices the cooperative bank operate.
The policy conveys that foreign banks in India may not acquire Indian ones (except for weak banks identified by the RBI. Regional rural banks in India penetrated every corner of the country and extended a helping hand in the growth process of the country. New rules announced by the Reserve Bank of India for the foreign banks in India in this budget have put up great hopes among foreign banks which allow them to grow unfettered. Now foreign banks in India are permitted to set up local subsidiaries. the banking sector in India also become competitive and accurative. Please see the list of foreign banks in India till date.Rural banking in India started since the establishment of banking sector in India. The total number of SBIs Regional Rural Banks in India branches is 2349 (16%).475 rural banks in the country of which 2126 (91%) are located in remote rural areas. SBI has 30 Regional Rural Banks in India known as RRBs. Till date in rural banking in India. Few of them are as follows: • Haryana State Cooperative Apex Bank Limited • National Bank for Agriculture and Rural Development (NABARD) • Sindhanur Urban Souharda Co-operative Bank • United Bank of India • Syndicate Bank Foreign Banks Foreign Banks in India always brought an explanation about the prompt services to customers. The rural banks of SBI are spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to North East. on its terms) and their Indian subsidiaries will not be able to open branches freely. Rural Banks in those days mainly focused upon the agro sector. Apart from SBI. there are other few banks which functions for the development of the rural areas in India. After the set up foreign banks in India. There are 197 RRB’s in India. there are 14. 47 .
the list of foreign banks in India is going to become more quantitative as a number of foreign banks are still waiting with baggage to start business in India. Upcoming Foreign Banks In India 48 .List of Foreign Banks in India • • • • • • • • • • • • • • • • • • • • ABN-AMRO Bank Abu Dhabi Commercial Bank Bank of Ceylon BNP Paribas Bank Citi Bank Deutsche Bank HSBC Sonali Bank JPMorgan Chase Bank Standard Chartered Bank Scotia Bank Bank of America American Express Bank DBS Bank Krung Thai Bank Chinatrust Commercial Bank Arab Bangladesh Bank Mizuho Corporate Bank Oman International Bank Calyon Bank By the year 2009.
The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20 members. Local Boards consist of five members each Central Government appointed for a term of four years to represent territorial and economic interests and the interests of co-operative and indigenous banks. It was established in April 1935 under the RBI Act. The Government held shares of nominal value of Rs. ten nominated Directors by the Government to give representation to important elements in the economic life of the country. and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai.000. 1934 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission.00. Chennai and New Delhi. 49 .20. Reserve Bank of India was nationalised in the year 1949. the Governor and four Deputy Governors. 2. Kolkata. List of foreign banks going to set up business in India: • • • • • Royal Bank of Scotland Switzerland's UBS US-based GE Capital Credit Suisse Group Industrial and Commercial Bank of China RESERVE BANK OF INDIA The central bank of the country is the Reserve Bank of India (RBI).By 2009 few more names is going to be added in the list of foreign banks in India. 100 each fully paid which was entirely owned by private shareholders in the beginning.000 shares of Rs. The share capital was divided into 5. This is as an aftermath of the sudden interest shown by Reserve Bank of India paving roadmap for foreign banks in India greater freedom in India. one Government official from the Ministry of Finance.
Originally. It is also referred to as Central Bank. also acts as their banker. To operate the credit and currency system of the country to its advantage.The Reserve Bank of India Act. 1935. Development of banks. Under Section 22 of the Reserve Bank of India Act. The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government. 1934 provides the statutory basis of the functioning of the Bank. The Reserve Bank has a separate Issue Department which is entrusted with the issue of currency notes. Supervision and licensing of banks. To act as a regulator and supervisor of the financial system Management of foreign exchange control Banker to the Government because it performs merchant banking function for the central and the state governments. Objectives of constituting the Reserve Bank of India: • • • • • • To regulate the issue of bank notes. The assets and liabilities of the Issue Department are kept separate from those of the Banking Department. To maintain reserves with a view to securing monetary stability. the assets of the Issue 50 . These are as follows: Bank Of Issue RBI is also known as the Bank of Issue as it enjoys monopoly in issuing currency throughout the country. the Bank has the sole right to issue bank notes of all denominations. Functions Of Reserve Bank Of India • • The Reserve Bank of India Act of 1934 entrust all the important functions of a central bank in the Reserve Bank of India. The RBI Act. 1934 was commenced on April 1. It is so called as it maintains cash reserves of all the commercial banks in India with itself.
According to the provisions of the Banking Companies Act of 1949. It adds to the government treasury. the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Ra. of which at least Rs. It ensures flexibility in the money supply It ensures general public’s faith in the currency system of the country. Bankers' Bank and Lender of the Last Resort The Reserve Bank of India acts as the bankers' bank. to keep the cash balances as deposits free of interest. Since 1957. via. 115 crores should be in gold. eligible bills of exchange and promissory notes payable in India. 40 crores in value. to receive and to make payments on behalf of the Government and to carry out their exchange remittances and other banking operations. Banker To Government The second important function of the Reserve Bank of India is to act as Government banker. The Reserve Bank is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir. The Reserve Bank has the obligation to transact Government business. Due to the exigencies of the Second World War and the post-war period. It acts as adviser to the Government on all monetary and banking matters. gold bullion or sterling securities provided the amount of gold was not less than Rs. It makes loans and advances to the States and local authorities. The system as it exists today is known as the minimum reserve system. Government of India rupee securities. these provisions were considerably modified. The RBI acts as a financial advisor and performs agency functions for the government also. Following are the advantages of giving monopoly power to central bank:It brings uniformity in the notes issue. 200 crores. The remaining three-fifths of the assets might be held in rupee coins. every scheduled bank was required to maintain with the 51 . agent and adviser.Department were to consist of not less than two-fifths of gold coin.
Since 1956.e.Reserve Bank a cash balance equivalent to 5% of its demand liabilities and 2 per cent of its time liabilities in India. It can do so through changing the Bank rate or through open market operations. Controller of Credit The Reserve Bank of India is the controller of credit i. it has the power to influence the volume of credit created by banks in India. in detail. The Reserve Bank of India is armed with many more powers to control the Indian money market. the Reserve Bank of India can ask any particular bank or the whole banking system not to lend to particular groups or persons on the basis of certain types of securities. Each scheduled bank must send a weekly return to the Reserve Bank showing. By an amendment of 1962. The main objective behind this is that no investment opportunity should go unutilized just due to the scarcity of funds. Every bank has to get a license from the Reserve Bank of India to do banking business within India. Since commercial banks can always expect the Reserve Bank of India to come to their help in times of banking crisis the Reserve Bank becomes not only the banker's bank but also the lender of the last resort. its assets and liabilities. The scheduled banks can borrow from the Reserve Bank of India on the basis of eligible securities or get financial accommodation in times of need or stringency by rediscounting bills of exchange. The minimum cash requirements can be changed by the Reserve Bank of India. selective controls of credit are increasingly being used by the Reserve Bank. According to the Banking Regulation Act of 1949. This power of the Bank to call for information is also intended to give it effective control of the credit 52 . the distinction between demand and time liabilities was abolished and banks have been asked to keep cash reserves equal to 3 per cent of their aggregate deposit liabilities. the license can be cancelled by the Reserve Bank of certain stipulated conditions are not fulfilled. Every bank will have to get the permission of the Reserve Bank before it can open a new branch.
1 = sh. Further. It controls the credit operations of banks through quantitative and qualitative controls. Besides maintaining the rate of exchange of the rupee. has the following powers: It holds the cash reserves of all the scheduled banks. According to the Reserve Bank of India Act of 1934. inspection and calling for information. The Reserve Bank has also the power to inspect the accounts of any commercial bank.M. It controls the banking system through the system of licensing.6d. the Reserve Bank of India.F. therefore. 10. though there were periods of extreme pressure in favour of or against the rupee. It acts as the lender of the last resort by providing rediscount facilities to scheduled banks. 6d. The vast sterling balances were acquired and managed by the Bank.000. Since 1935 the Bank was able to maintain the exchange rate fixed at lsh. 53 .system. The rate of exchange fixed was Re. Custodian of Foreign Reserves The Reserve Bank of India has the responsibility to maintain the official rate of exchange. As supreme banking authority in the country. the Reserve Bank has the responsibility of maintaining fixed exchange rates with all other member countries of the I. the Bank was required to buy and sell at fixed rates any amount of sterling in lots of not less than Rs. the Reserve Bank has to act as the custodian of India's reserve of international currencies. the RBI has the responsibility of administering the exchange controls of the country. The RBI not only has to hold these foreign exchange reserves but also take various steps to enhance the volume of these reserves with it. After India became a member of the International Monetary Fund in 1946.
The RBI is authorised to carry out periodical inspections of the banks and to call for returns and necessary information from them. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation. the range of the Reserve Bank's functions has steadily widened. the Reserve bank has certain nonmonetary functions of the nature of supervision of banks and promotion of sound banking in India. it set up the Deposit Insurance Corporation in 1962. The Reserve Bank Act. and liquidation. reconstruction. and establish and promote new specialized financing agencies. The Bank now performs a variety of developmental and promotional functions. 1934. the Agricultural Refinance 54 . extend banking facilities to rural and semi-urban areas. liquidity of their assets. the Reserve Bank has helped in the setting up of the IFCI and the SFC. at one time. the Unit Trust of India in 1964. amalgamation. Promotional functions With economic growth assuming a new urgency since Independence. management and methods of working. The Reserve Bank was asked to promote banking habit.Supervisory functions In addition to its traditional central banking functions. relating to licensing and establishments. which. the Industrial Development Bank of India also in 1964. Accordingly. and the Banking Regulation Act. branch expansion. The nationalisation of 14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid development of the economy and realisation of certain desired social objectives. 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks. were regarded as outside the normal scope of central banking.
the second phase comprising the centralised funds transfer system would be made available by the middle of 2003. to eliminate moneylenders from the villages and to route its short term credit to agriculture. The initiatives taken by RBI are as follows: Implementation of Centralised Funds Management System The centralised funds management system provides for a centralised viewing of balance positions of the account holders across different accounts maintained at various locations of RBI. the process of setting up of registration authorities under the CA has commenced at various banks. and to provide industrial finance as well as agricultural finance. Government of India. 55 . No bank can undertake any activity without the approval of RBI and thus RBI played a major role in the introduction of the information technology in the banking sector. the Reserve Bank of India set up the Agricultural Credit Department to provide agricultural credit. The RBI has set up the Agricultural Refinance and Development Corporation to provide long-term finance to farmers. Reserve Bank Of India took several measures in the development of the banking sector. The Controller of Certifying Authorities. Certification and Digital Signatures The mid-term Review of October 2002 indicated the need for information security on the network and the use of public key infrastructure (PKI) by banks. Being the central bank of the country. 54 banks have implemented the system at their treasuries/funds management branches. As far back as 1935. Consequently. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilise savings. The Bank has developed the co-operative credit movement to encourage saving.Corporation of India in 1963 and the Industrial Reconstruction Corporation of India in 1972. So far. have approved the Institute for Development and Research in Banking Technology as a Certification Authority(CA)for digital signatures. But only since 1951 the Bank's role in this field has become extremely important. While the first phase of the system covering the centralised funds enquiry system has been made available to the users.
The draft Bill provides a legal basis for netting. apart from empowering RBI to have regulatory and oversight powers over payment and settlement systems of the country.In addition to the negotiated dealing system. under the aegis of the Ministry of Communications and Information Technology. has been initiated. The project is aimed at the formulation of standards for multi-application smart cards on the basis of inter-operable systems and technological components of the entire system. the electronic clearing service and electronic funds transfer (EFT) are also being enhanced in terms of security by means of implementation of PKI and digital signatures using the facilities offered by the CA.H. after examining the various aspects relating to payment and settlement systems. The report of the Committee was put on the RBI website for wider dissemination. Multi-application Smart Cards Recognising the need for technology based payment products and the growing importance of smart card based payment flows. NEFT would provide for movement of electronic transfer of funds in a safe. The draft Bill has been forwarded to the Government. submitted its report in September 2002 along with a draft Payment Systems Bill. national EFT (NEFT) is being introduced using the backbone of the structured financial messaging system (SFMS) of the IDRBT. Patil) was set up in 2002. The Committee. a Committee on Payment Systems (Chairman: Dr. Committee on Payment Systems In order to examine the entire gamut of the process of reforms in payment and settlement systems which would be culminating with the real time gross settlement (RTGS) system. Special Electronic Funds Transfer As indicated in the mid-term Review of October 2002. a pilot project for multi-application smart cards in conjunction with a few banks and vendors. R. secure and quick manner across branches of any bank to any other bank through a central gateway of each 56 . Government of India.
Since this scheme requires connectivity across a large number of branches at many cities. if done outside NDS. insurance companies. enables on-line dealing and dissemination of trade information relating to instruments in money. National Settlement System(NSS) The clearing and settlement activities are dispersed through 1. This has facilitated same day transfer of funds across accounts of constituents at all these branches. The following are some of the offerings of Central Bank of India. mutual funds and any other institution as admitted by RBI. with the inter-bank settlement being effected in the books of account of banks maintained at RBI. • An Exclusive Ladies Department to cater to the Bank's women clientele. 57 . In order to facilitate banks to have better control over their funds. • The Home Savings Safe Deposit Scheme to build saving/thrift habits in all sections of the society. financial institutions (FIs). Reporting of Call/Notice Money Market Transactions on NDS Platform Negotiated dealing system (NDS). all deals in government securities.047 clearing houses managed by RBI. if the deal is done on NDS and within 15 minutes of concluding the deal. These include banks. it is proposed to introduce national settlement system in a phased manner. primary dealers (PDs). public sector banks and other institutions. government securities and foreign exchange markets. At present. Membership in NDS is open to all institutions which are members of INFINET and are maintaining subsidiary general ledger (SGL) Account with RBI. call/notice/term money. the SBI and its associates. which has become operational since February 2002.bank. a special EFT was introduced in April 2003 covering about 3000 branches in 500 cities. CDs and CP executed among NDS members have to be reported automatically through NDS.
Setting up of the Executor and Trustee Department. cross-border M&A sales fell in 1999. the announcement of a merger is usually accompanied by an 58 . notably with respect to employment. In developing Asia.• • • • • • • • Safe Deposit Locker facility and Rupee Travelers’ Cheques. Developed countries are the most important sellers and buyers in crossborder M&As. the credit card of the Bank was introduced. Deposit Insurance Benefit Scheme.000 deals taking place every year. Recurring Deposit Scheme. MERGERS AND ACQUISITIONS IN BANKING SECTOR Mergers and acquisitions (M&As) are a global phenomenon. accounting for close to 90 per cent and 95 per cent of sales/purchases in 199899. they continued to grow. Acquisitions are considerably more important than mergers in developing and transition countries. including in the countries most affected by the 1997 financial crisis. The Merchant Banking Cell was established. 'Platinum Jubilee Money Back Deposit Scheme' was launched. Indeed. respectively. In developing countries. This M&A-driven consolidation is raising important public policy concerns. The housing subsidiary Cent Bank Home Finance Ltd. Central card. was started with its headquarters at Bhopal in Madhya Pradesh. with an estimated 4. • Quick Cheque Collection Service (QCC) & Express Service was set up to enable speedy collection of outstation cheques.
"The government will have to make up its mind either to bring in additional capital or move towards reducing its share from 51 per cent through appropriate statutory changes. a copy of which was seen by Reuters. two overlapping organizations are compressed into one. C. Consolidation in the Indian banking sector was likely to gain prominence in the near future and this must be driven by commercial factors. both for strategic investment as well as for business correspondent relationships. A 1999 KPMG survey of company directors whose companies had participated in major crossborder M&A deals between 1996 and 1998 found that 82 per cent of respondents believed the deals they had been involved in had been a success.announcement of cost-cutting redundancies in the merging organizations. To gain full merger benefits. 59 . a top economic adviser to the government said yesterday. trimming duplicated operations which entails redundancies at all levels. It is nevertheless difficult to disentangle the employment effects of M&As from those of other factors such as increased competitive pressures. told a banking conference. automation or the introduction of information and communication technologies which are similarly inciting organizations to restructure even in the absence of M&As." Rangarajan said in his speech. Rangarajan. who heads the prime minister's economic advisory panel. YES BANK IN TALKS WITH FOREIGN MAJORS The private sector YES Bank is in talks with foreign banks. More bank mergers in India The Indian government should infuse more capital into state-run banks or move to cut its stakes below 51 per cent to meet the growing needs of the economy. often on a massive scale.
as it will have a bigger network & larger share of SME and retail business. We have filtered our clients very carefully. The bank also reported a net NPA of 0. 2008 more than doubled to Rs 64 crore from Rs 31 crore in the same period a year ago. YES Bank would be in a better position to attract foreign partners.Large MNC banks are keen on expanding in India and looking at significant minority or near majority stake in Indian banks. By then. Foreign banks are expected to get more leeway in expanding their network in India after 2009. The bank has 130 forex clients across large corporates and mid corporates. said the bank did not have any delinquency in its marked-to-market (MTM) derivatives exposure. The net profit of the bank for the quarter ended March 31. Chief Financial Officer. Rana Kapoor. said Mr. Mr. YES Bank. Out of the total MTM derivatives exposure. 60 . Mr. large corporates account for about 70 per cent. Banks such as YES bank will be in a privileged position to talk to foreign banks when the Reserve Bank of India guidelines become conducive. Monga said. “We do not have a single derivatives exposure to the SME sector. Kapoor said. while mid-corporates or emerging corporates account for the remaining 30 per cent.8 crore as against Rs 12.7 crore. Chief Executive Officer and Managing Director. Rajat Monga.” Mr.09 per cent for the first time and made higher provisions of Rs 22.
The cost of banking intermediation in India is higher and bank penetration is far lower than in other markets. have made several notable efforts to improve regulation in the sector. This is reflected in their market valuation. growth and value creation in the sector remain limited to a small part of it. profitability and non-performing assets (NPAs). which comprise the Reserve Bank of India (RBI). Opportunities And Challenges For Players The bar for what it means to be a successful player in the sector has been raised. Four challenges must be addressed before success can be achieved. Ministry of Finance and related government and financial sector regulatory entities. the market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards. improved regulations. consumer finance and wealth management on the retail side. However. The policy makers. innovation. and in fee-based income and investment banking on the wholesale banking side. India’s banking industry must strengthen itself significantly if it has to support the modern and vibrant economy which India aspires to be. The sector now compares favorably with banking sectors in the region on metrics like growth. growth and value creation. A few banks have established an outstanding track record of innovation. These 61 . First.INDIAN BANKING SCENARIO 2010 Towards a High-performing Sector The last decade has seen many positive developments in the Indian banking sector.
credit and operations. examines the impressive growth of this industry. with assets expected to reach US$1 trillion by 2010. While public sector banks still dominate India’s banking industry. with global players now actively competing with domestic banks. 62 . FUTURE OF INDIAN BANKING MARKET The Indian banking market is growing at an astonishing rate. with banking assets increasing at a CAGR of 24% from 2001 to 2008. banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. and technological innovations are all contributing to this growth. Second.4 billion in 2003 to US$616.15 billion in 2008. with increased interest in India.require new skills in sales & marketing. the private sector is growing. competition from foreign banks will only intensify. largely due to an expanding economy and growing consumer middle class in need of financial services. An expanding economy. India's economy is growing at a rate of 8%. Third. from US$374. Fourth. given the demographic shifts resulting from changes in age profile and household income. middle class. This will expose the weaker banks. Overview of Indian Banking Market. consumers will increasingly demand enhanced institutional capabilities and service levels from banks. A new Celent report.
journals and books and no other efforts have been made to verify their correctness. • Due to paucity of time only the important factors have been discussed. 63 .LIMITATIONS • This study is based on the secondary data collected from various newspapers.
proxy banking. etc. mobile banking. plastic money such as credit cards. however. internet banking. development and spread of banking. After Independence. • Currently. debit cards. ATM cards. in February 1961. 64 . expansion of business. During and after World War I. 87 banks were liquidated. Hence. electronic money transfers. Since then. growth of banking during the first 3 plan periods resembles that of capitalist growth. • Before Nationalisation. investment banking.CHAPTER 5 CONCLUSIONS AND SUGGESTIONS • The Indian banking can be broadly categorized into nationalized (government owned). The Reserve Bank of India is the apex institution in the Indian banking system & acts a regulator and a centralized body for monitoring any discrepancies and shortcoming in the system. branch banking. Development of banks in India was characterized by bank failures. investment banking. banks in the beginning faced severs financial crisis. New services have been started such as merchant banking. The government of India announced Banking Regulations Act in 1949 to consolidate and regulate the banking growth in India • After Nationalisation. telebanking. the performance of banking has been remarkable in the many aspects such as branch expansion. banking system has entered into the third phase of development which is characterized by innovation & diversification in order to meet new challenges. announcement of 14 banks was made for the purpose of nationalisation. Therefore government focused on social banking than capitalistic banking. SMS banking. the Indian banking underwent a thorough and moral change. priority sector advances. There was need for stimulating the savings and investment to meet the growing demand for bank credit for economic development. smart cards. private banks and specialized banking institutions. housing finance.
• The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. commercial papers. which has resulted in innovative methods of offering new banking products & services. The private sector bank grid also includes 24 foreign banks. Indian nationalized banks continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. factoring services. with assets expected to reach US$1 trillion by 2010.Banks have indulged in activities such as service area approach. 223 banks are in the public sector & 51 are in the private sector. Banks are now realizing the importance of being a big player & are beginning to focus their attention on mergers & acquisitions to take advantage of economies of scale. certificate of deposit. housing finance. focusing on the expansion of retail and rural banking. 65 . There is need for taking decisive actions . However there is a need to create more awareness regarding social development. Banks have been benefited a lot with the internet and information technology. As a result banks have become more efficient and cost-effective. mutual funds. Players are becoming increasingly customer-centric in their approach. • Indian banking market is growing at an astonishing rate. stock invest and other money and capital market instruments. The Indian banking industry is in the middle of an IT revolution. • Industry estimates indicate that out of 274 commercial banks operating in India.
indiamart.com accessed in March 2009 www.org.bankingindiaupdate.banknetindia. New Delhi Parmod Kumar. Banking Sector Efficiency in Globalised Economy M&A in Indian Banking System.rbi.com accessed in March 2009 www.google.business-standard.com accessed in March 2009 www. Sultan Chand & Sons . First Edition 2002.in accessed in March 2009 www.finance.com accessed in March 2009 Newspapers: The Economic Times Books: T.com accessed in March 2009 www.com accessed in March 2009 www. 2005.An Executive Handbook. Eletronic Banking & Information Technology in Banks.wikipedia.thehindubusinessline.com accessed in March 2009 www.BIBLIOGRAPHY There was immense need and flow of the information while preparing the project report which was gathered through various sources mentioned below: Websites: www. Mumbai 66 . D Malhotra.