Banking Sector Reforms

Presented by Lalita Tripathi-21 Savita Vijayan-45 Heena Hasrajani-12 Akshay Sahai-03 Sandeep Hishikar-40 Sudhanshu Sharma-49
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Coverage
What is a Bank? History of Banking in India Evolution Phases Banking Structure Banking Sector Reforms Functions of RBI Current Banking Reforms

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What is Bank?
Bank is an institution which trades in money, an establishment for deposits, custody and issue of money, as also for making loans and discounts & facilitating the transmission of remittances from one place to another.

Some common activities undertaken by a Bank Accounts and Deposits Loans Cards Forex and Trade services NRI Banking

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History of Banking in India

Phase - I (1786 to 1935) 1786 - The General Bank of India & Bank of Hindustan Presidency Banks: 1809 - Bank of Bengal 1840 - Bank of Bombay 1843 - Bank of Madras 1921 - Imperial Bank by amalgamating above. 1865 - Allahabad Bank exclusively by Indians. 1894 - Punjab National Bank 1906 - 1913: Bank of India, Central Bank of India, Bank of Baroda & Indian Bank etc. 1935 - RBI Phase II (1947 to 1990) Governments step in Indian Banking Sector Reform post- independence: 1948 - Nationalisation -RBI 1949 - Enactment of Banking regulation act. 1955 - Nationalisation of Imperial Bank of India. SBI, acted as Principal agent of RBI 1960 - Nationalisation of SBI & 7 subsidiaries 1969 -14 banks nationalised 1980 - 7 banks nationalised (second phase) Phase III (1991 to till date) 1991 Narasimhams committee suggested liberalisation of banking practices & introduced many products and facilities in banking in its reform measure: RBI providing licenses to foreign banks and their ATM stations Effective Customer service (Ombudsmans Scheme) Inception of phone and net banking Flexible exchange rate regime
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A decade of change and evolution

Pre-reform
Extensive regulation.

The 1990s
Liberalization and Globalization. Structural changeservices.

Today
Resilient industry. Buoyant services sector.

Indian Economy

Focus on industrial sector.

Highly segmented.

Opening up of various sub-sectors. Private sector participation.

Diversified financial groups. Globally benchmarked.

Financial Sector

Public sector dominance

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Banking Sector Reforms

Government equity in banks reduced. PSUs encouraged to approach the public for raising resources. Interest rates deregulated SLR and CRR brought down. New private sector banks Promote and encourage competition. 1993 Financial Institution Act Quick recovery of Loans. CIBIL (Credit Information Bureau of India Ltd.)

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Regulatory Authority Reserve Bank of India

 History: Became operational on April 1, 1935. Nationalized in the year 1949. Functions of RBI: (a) Currency Issuing Authority. (b) Government Banker. (c) Bankers Bank. - Issue licenses for new banks - Prescribe minimum requirement regarding paid-up capital and reserves. - Inspect the working of banks. - To conduct ad hoc investigations into complaints, irregularities and frauds. cont.......
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(d) Credit control through following instruments:

o o o o o o Cash Reserve Ratio (CRR) 6% Statutory Liquidity Ratio (SLR) 25% Repo Rate 5.75% Reserve Repo Rate 4.5% Bank Rate 6% Open Market Operations

(e) Maintain stability of external value of Indian Rupee. (f) Development activities.

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Banking Sector Today

Almost 80% of the business are still controlled by PSBs. Shares of the leading PSBs are already listed on the stock exchanges. The PSBs will play an important role in the industry due to its number of branches. Foreign banks facing the constraint of limited number of branches. The entry of foreign players has assisted in the introduction of international practices and systems. Technology developments have improved customer service. Indian Banks are setting up branches abroad specifically catering to huge NRI customers.

Cont..

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The Banking Sector Today

Emergence of integrated players. Diversifying capital deployment. Leveraging synergies
Diversification Depth

Country wide coverage. Large number of players. Increasingly sophisticated financial markets.

Technology

Regulation

Increasing use of technology in operations. Poised to expand and deepen technology usage.

Robust regulatory system aligned to international standards. Efficient monetary management.

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Thank You

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