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“MODERNIZATION IN BANKING SCNERIO” BACHELOR OF COMMERCE BANKING & INSURANCE SEMESTER V Submitted In Partial Fulfilment of the requirements For the Award of the Degree of Bachelor of Commerce – Banking & Insurance By ADSULE SEEMA GANESH ROLL NO .

RESEARCH ETHOLOGY Data Collection : PRIMARY DATA Primary visit to a bank: State Bank of India Janakalyan Sahakari Bank Limited SECONDARY DATA  Websites  Books . 4. To predict the future of modern banking. 2. OBJECTIVE OF THE STUDY 1.RESEARCH DESIGN The purpose of the study is to understand the facilities provided by and the innovative techniques used by banks which benefit the customer and save their precious time. 3. To understand new banking product and services. To understand differences between traditional banking and modern banking. To know that how modern banking services saves our time.

7. 5. 5.CONTENT NUMB ER 1. 8. 3. 6. 4. 2. CHAPTER Introduction Banking System In India Modernization In Banking Sector Various Schemes In Banking Sector Banking Tecnologies Indian Banking Industry 2015 Visiting Report Of SBI Visiting Report Of Janakalyan Sahakari Bank Limited PAGE NUMBE R .

money orders. Banks are a subset of the financial services industry. insurance companies. and cashier’s cheques. The Banking sector offers several facilities and opportunities to their customers. For the past three decades. As a variety of models for cooperation and integration among finance industries have emerged.A BRIEF INTRODUCTION A bank is a financial institution that provides banking and other financial services to their customers. reporting the transactions of their accounts and portfolios. some of the traditional distinctions between banks. credit. In spite of these changes. banks continue to maintain and perform their primary role accepting deposits and lending funds form these deposits. throughout the day. India’s banking system has several outstanding achievements to its credit. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. All the banks safeguards the money and valuables and provide Loans. and payment services. and securities firms have diminished. A banking system also referred as a system provided by the bank which offers cash management services for customers. . The banking system in India should not only be hassle free but it should be able to meet the new challenges posed by the technology and any other external and internal factors. such as checking accounts. The banks also offer investment and insurance products. The Banks are the main participants of the financial system in India. There are also non-banking institutions that provide certain banking services without meeting the legal definition of the bank.

 To encourage public confidence in the working of the financial system. The organised banking sector works within the financial system to provide loans.  To set equal norms and conditions to all type of customers. accept deposits and provide other services to their customers.  To avoid focus of financial powers in the hands of new individuals and institutions. Again there were no security of public savings and no uniformity regarding loans. . which was fully regulated by the Government. The following Functions of the bank explain the need of the bank and its importance:  To provide the security to the savings of customers.  To control the supply of money and credit.Need Of The Banks Before the establishment of banks. At that time the interest relates were very high. the financial activities were handled by money lenders and individuals. increase savings speedily and efficiently. So as to overcome such problems the organised banking sector was established.

However. To understand the history of modern banking in India. one has to refer to the “English Agency Houses established by East India Company. As such. especially in the rural and semi-urban areas and for various other sectors. However. The State Bank of Jaipur 3. it was not authorised to issue currency. The State Bank of Bikaner 2. the “Imperial Bank of India Act” was established in 1921. Because of this dual functions and lack of their own capital they failed and vanished from the scene during the third of 18th century. The Central Bank of India Limited in 1911 and many other banks were established in the same line. the State Bank of India’ act was passed. the stronger and well managed banks like those mentioned above survive the crises. the banking functio0ns became an effective force only after the Decade of 20t Century. Accordingly the ‘Imperial Bank’ was nationalised and ‘State Bank of India’ was emerged with the objective of extension of banking facilities on a large scale. were basically trading firms and carrying on banking business as part of their main business. But the most of the weak banks went bankrupts due to wrong policy decisions taken by the management sand due to severe banking crises during 1913-1918. Punjab National Bank Limited in 1895. The East India Company laid the foundations for modern banking in the first half of the 19th century with the establishment of the following three banks:  Bank of Bangal in 1809  Bank of Bombay in 1840  Bank of Madras in 1843 These banks are also known as “Presidency Banks” and they functioned well as independent units. the “Imperial Bank of India Act” was passed for incorporate the three Presidency Banks.” These agency houses. The Indian Bank in 1907. ‘In 1955. The Canara Bank in 1906. For example. During the last part of 19th century and early phase of 20th century. The Bank og India Limited in 1906. The State Bank of Patiala . It was given power to hold Government funds and manage the Public Debt. But. the ‘Swedish Movement’ introduced the establishment of a number of banks with India Management. The State Bank of Mysore 5. The branches of the bank were functioning as clearing houses. The Bank of Baroda in 1908. The period of World War I. The following banks were made the subsidiaries of State Bank of India: 1.DEVELOPMENT OF BANKING IN INDIA Banking in India is indeed as old as Himalayas. In 1920. the ‘State Bank of India’ Act was passed by which the public sector banking was furthered extended. In 1959. The State Bank of Indore 4.

the agriculture sector and its allied activities were the largest contributor to the national income. It was necessary to check these monopolies in order to ensure a smooth supply of credit to socially desirable sections. . Nationalisation was urgently needed for catering funds to them. Developing Banking Habits: In India more than 70% population used to stay in rural areas. small and village industries were in need of funds for their expansion and further economic development. The State Bank of Saurashtra 8.6. It could be done through expanding banking network in the un-banked areas. Expansion of Banking: In a large country like India the numbers of banks existing those days were certainly inadequate. The State Bank of Trevancore OBJECTIVE BEHIND NATIONALIZATION OF BANKS OF INDIA The nationalisation of commercial banks took place with an aim to achieve following major objectives: Social welfare It was the need of the hour to direct the funds for the needy and required sectors of the Indian Economy. Priority Sector Lending: In India. Thus these were labelled as the priority sectors. Controlling private monopolies: Prior to nationalisation many banks were controlled by private business houses and corporate families. But unfortunately they were deprived of their due share in the credit. It was necessary to spread banking across the country. The State Bank of Hyderabad 7. It was necessary to develop the banking habit among such a large population. Sector such as agriculture.

Madhya Pradesh. These are several limitations faced by the banks nationalisation in India. etc. removing the bad days of bank nationalisation. . Inadequate Banking Facilities: Even though banks have spread across the country. Political and Administrative Interference : Many public sector banks badly suffered due to the political interference. Lower Efficiency and Profit: After nationalisation banks went in the Government sector. in many senses it failed in attaining them. The major limitations of the bank nationalisation in India are:Limited sources mobilized and allocated: The resources mobilized after the nationalization is not sufficient if we consider the needs of the Indian Economy. In fact it converted many of the banking institutions in the loss making entities. lack of accountability. Under this backdrops it is necessary to have a critical look to the whole process of nationalisation in the period after bank nationalisation. Chhattisgarh and north-eastern states of India. still many parts of the country are unbanked. But after Economic Reform of 1991. It resulted into lower efficiency and poor profitability of banks. Banking was nit done on professional and ethical grounds. Especially in the backward states such as the Utter Pradesh. such as weak infrastructure. lack of profit motive. poor competitiveness etc.Demerit’s/Limitations of Bank Nationalisation in India Though the nationalisation of commercial banks was undertaken with tall objectives. efficiency and productivity. Banks expenditure increased to dangerous levels. It has made Indian banks more vibrant and professional organisations. Many times political forces pressured them. etc. It ultimately resulted in huge non-performing assets (NPA) of these banks and inefficiency. The reasons were obvious apathetic working. Sometimes the deposits mobilised are enough but the resource allocation is not as per the expansions. the Indian Banking industry has entered in to the new horizons of competitiveness. trade union struggle. Apart from this there are certain other limitations as well. large staff administrative expenditure. Increased Expenditure : Due to huge expansion in a branch network. political interface.

Commercial banks are involved in diversified activities and perform varieties of functions.FUNCTIONS OF BANKS Trough borrowings and lending the main function of banking. The functions of a modern bank are classified under the following heads: The Functions of Banks are as follows: . yet they are not only function as commercial banks.