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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
which had no access to banking hitherto. credit flows were guided towards the priority sectors. capital adequacy. 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. 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. technological changes. 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. credit management. A determined effort was made to make banking facilities available to the masses. Expansion phase had begun in mid-60s but gained momentum after nationalisation of banks and continued till 1984. CHAPTER 2 4 . customer service. staff productivity and profitability of banks. more competition. autonomy packages etc. Attention was paid to improving house-keeping. prudential guidelines on asset classification and income recognition. Measures were also taken to reduce the structural constraints that obstructed the growth of money market. Most importantly. 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.requirement of Indian economy. Branch network of the banks was widened at a very fast pace covering the rural and semi-urban population.
• To study how new distribution channels such as Internet Banking.OBJECTIVES OF THE STUDY The objectives of project are as follows: • To find out the earlier banking structure that prevailed in India. ATM facility. • 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. Phone Banking have changed the face of the Banking industry. • To draw conclusions of the impact of the changes in banking sector. • 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. • To draw a contrast between the old and the new Indian banking structure. • To assess the change in the performance and efficiency of the banks in India. 5 .
CHAPTER 3 RESEARCH METHODOLOGY Secondary Data: Secondary data is the data which is collected for some other purpose. newspapers and books. 6 . 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.
Term deposit Account and lending products being Cash Credit and Term Loans. The deregulatory efforts prompted many financial institutions (like HDFC and ICICI) and non-financial institutions enter the banking arena. PLR (Prime lending rate) was the benchmark for interest on the lending products. Due to Reserve Bank of India guidelines. the telephone or through the Net. Further. But PLR itself was. Telegraphic Transfers. Multichannel banking gained prominence. Most common deposit products being Savings Bank. For the first time consumers got the choice of conducting transactions either the traditional way (through the bank branch). through ATMs. Current Account. 10 . 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. remittance products were limited to issuance of Drafts. dictated by RBI. more often than not. And technology was central to this change. 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. The entry of private players combined with new RBI guidelines forced nationalized banks to redefine their core banking strategy.SERVICES OFFERED BY BANKS EARLIER Banks in India have traditionally offered mass banking products. 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. Bankers Cheque and Internal Transfer of funds.
11 . it is now possible to open a new account within minutes. Given the various options.Pressing Issues Today banks have to look much beyond just providing a multi-channel service platform for its customers. A recent example would be of Kotak Mahindra Finance Limited (KMFL)—a financial services company focused on investment consulting. There are other pressing issues that banks need to address in order to chalk-out a roadmap for the future. This is primarily because the cost structure at the backend is not efficient enough to offer that kind of service to the marketplace. Here are the top three concerns in the mind of every bank's CEO. Technology makes it easier for any company with the right channel infrastructure and money reserves to get into banking. This makes it imperative that banks provide best levels of service to ensure customer satisfaction. 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. etc— morphing into Kotak Bank. With the entry of new players and multiple channels. Kotak Bank overcame the initial costs of setting up its own ATM network by getting into a sharing agreement with UTI bank. New entrants with strategies such as these make the banking game tougher. auto finance. Or for that matter shift accounts within a couple of hours. customers have become more discerning and less 'loyal' to banks. Increased competition: The entry of new players into the banking space is leading to increased competition. insurance. This has been one of the major reasons behind this kind of competition from players who do not have a banking background. Customer retention: Customer retention is one of the main priorities for banks today. Many other such players are waiting on the sidelines.
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. They are now focused on: • • • Cost reduction Product differentiation Customer-centric services Although the ways in which banks implement these vary. There are lower Non Performing Assets (NPAs) in retail banking.Redefining Objectives To cope with cost pressures and increased competition as well as to retain existing customers. This is one of the main reasons why banks are focused on retail banking in a big way. That's why it becomes necessary for a bank to differentiate its products from the others. automotive. Differentiation The customer is interested in how he/she can benefit from the bank and its products. The focus is on increasing the profit margins by cutting costs where it matters—on the operations side. Cost Reductions Reduced costs basically translate to higher profit margins. the underlying objectives remain the same. it can go a long way in increasing profits. Some of the ways 12 . With this banks have redefined their business priorities. If banks can reduce costs. Credit cards and debit cards are another focus area for banks. etc are being touted by banks like never before. The main advantage of getting into retail banking is that the risks involved are lesser in this segment. banks have started venturing into newer territories.
' which takes cues from customer aspirations and transaction patterns.in which differentiation can be introduced are through specialization. Operational excellence is also a key factor in effective differentiation from the competition. Banks can differentiate themselves by adding new products to their range of services. This is because a major chunk of income of most banks comes from existing customers. This will help banks in tailoring their products according to customer needs. it will also provide better income generation capability. In addition to good customer retention rates. Customer relationships have to be managed in the best possible manner. This has led to the development of a relationship oriented model of operations focusing on customer-centric services. This will provide the bank with better yields per contact. This will ensure that the customer comes back to the bank. Another way to specialize could be by handling just specific sets of portfolios. Or. Customer-Centric Model Indian banks have realized that it no longer pays to have a 'transaction-based' operating model. it could be limiting its services just for corporate banking clients. While banks have to ensure product superiority and operational excellence. For example. it is very important that banks identify and understand customer needs. new products. the biggest challenge today is to establish customer intimacy without which the other two are meaningless. and increasing the value. Specialization basically means that the bank gets involved only in selected areas. In this context. 13 . the bank might be getting involved only in housing finance. Increasing the added value of products is another way of differentiation for banks. It also helps in new business opportunities like cross-selling and 'upselling. rather than from new customers.
Internet has significantly influenced delivery channels of the banks. The process of reforms in payment and settlement systems has gained momentum with the implementation of projects such as NDS (Negotiated Dealing System). Detailed guidelines of RBI for Internet Banking has prepared the necessary ground for growth of Internet Banking in India. was jointly set up by the Reserve Bank and Institute for Development and Research in Banking Technology in 1999. a wide area satellite based network (WAN) using VSAT (Very Small Aperture Terminals) technology. 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. INFINET. CFMS (Centralised Funds Management System) for better funds management by banks and SFMS (Structured Financial Messaging Solution) for secure message transfer. 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. banks as well as other financial entities entered the world of information technology and with Indian Financial Net (INFINET). Intra-city and intra-bank networking would facilitate in quick and efficient funds transfers across the country". This would result in funds transfers and funds-related message transfer to be routed electronically across banks using the medium of the INFINET. To reap the full benefits of such electronic message transfers. NDS.Emergence Of Information Technology In India. 14 . Internet has emerged as an important medium for delivery of banking products & services. 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 Indian Financial Network (INFINET) which initially comprised only the public sector banks was opened up for participation by other categories of members.
This in turn increases productivity which ultimately gives rise to profits that means better pay and less strenuous working.Advantages of Information Technology • Globalization: IT has not only brought the world closer together. • Creation of new jobs: Probably the best advantage of information technology is the creation of new jobs. thus increasing awareness. making purchases from different countries easier and convenient. Computer programmers. Systems analyzers. It also means that you can have your goods delivered right to your doorstep with having to move a single muscle. and allow for the exchange of views and ideas. 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. We can now communicate with anyone around the globe by simply text messaging them or sending them an email for an almost instantaneous response. communication has also become cheaper. but it has allowed the world's economy to become a single interdependent system. This means that we can not only share information quickly and efficiently. Hardware and Software 15 . but we can also bring down barriers of linguistic and geographic boundaries. • Communication: With the help of information technology. quicker and more efficient. • Bridging the cultural gap: Information technology has helped to bridge the cultural gap by helping people from different cultures to communicate with one another. This means that a business can be open anytime anywhere. The internet has also opened up face to face direct communication from different parts of the world thanks to the helps of video conferencing. • Cost effectiveness: Information technology has helped to computerize the business process thus streamlining businesses to make them extremely cost effective money making machines. • More time: IT has made it possible for businesses to be open 24 x7 all over the globe.
This means that a lot of lower and middle level jobs have been done away with causing more people to become unemployed. 16 . • 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. Languages too have become overshadowed. easier and more convenient. it has also bought along privacy issues. From cell phone signal interceptions to email hacking. people are now worried about their once private information becoming public knowledge. • Dominant culture: While information technology may have made the world a global village. • Privacy: Though IT may have made communication quicker. downsizing and outsourcing. Disadvantages of Information Technology • Unemployment: While information technology may have streamlined the business process it has also crated job redundancies. with English becoming the primary mode of communication for business and everything else. it has also contributed to one culture dominating another weaker one.developers and Web designers are just some of the new employment opportunities created with the help of information technology. dress and behave. if he or she wishes for their job to be secure. This means that one has to be in a constant learning mode. For example it is now argued that US influences how most young teenagers all over the world now act.
NEW SERVICES OFFERED BY BANKS Banking Services In India Bouquets of services are at customers demand in today’s banking system.to "high relationship .4. The customers have more choices in choosing their banks. the Banks plan to market bonds and debentures. Banks also offer advisory services termed as 'private banking' . A competition has been established within the banks operating in India. With years. SGL II accounts. banks are also adding services to their customers. when allowed. This section of banking deals with the latest discovery in the banking instruments along with the polished version of their old systems. Eventually. Cash Management services. Photo-credit cards. Different types of accounts and loans.2000 has further facilitated the entry of banks in this sector. Insurance peddling by Banks will be a reality soon. Investment products and Tax Advisory services.value" clients. the services provided by banks have become more easy and convenient. A few foreign & private sector banks have already introduced customized banking products like Investment Advisory Services. facilitating with plastic money and money transfer across the globe. A few banks have gone in to market mutual fund schemes. The recent Credit Policy of RBI announced on 27. With stiff competition and advancement of technology. The Indian banking industry is passing through a phase of customers market. 17 . 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.
the most common and first service of the banking sector. The bank accounts are as follows: • Bank Savings Account .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 . Bank account online is registered through a PC with an internet connection. etc. • Bank Account Online . There are different types of bank account in Indian banking sector. • Bank Term Deposits Account .Bank Current Account can be opened by individuals / partnership firms / Private and Public Limited Companies / HUFs / Specified Associates / Societies / Trusts. 18 . 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 Term Deposits Account can be opened by individuals / partnership firms / Private and Public Limited Companies / HUFs/ Specified Associates / Societies / Trusts.With the advancement of technology.Following are the services being offered: Bank Accounts Open bank account . the major banks in the public and private sector has facilitated their customer to open bank account online. etc.
Plastic Money • From barter to coin. Economy has developed a craze for plastic money which in turn is encouraging agencies in exploiting the credit card holders. The credit cards are shape and size. It is generally of plastic quality. 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. Plastic money saves the botheration of carrying cash. as specified by the ISO 7810 standard. The first card was issued in India by Visa in 1981. after getting special permission from the Reserve Bank of India. American Express. The plastic money is in true sense. State Bank of India and many more. There are number of banks and financial institutions which are engaged in this business such as CITIBANK. The modern banking system has the credit of simplifying the process which provides things at ease. ICICI Bank. Following are some of the forms of plastic money being used : • • • 19 . like a credit instrument that helps in making payments at centres without limits but with some negligible amount. HDFC Bank. The first international credit card was issued to a restricted number of customers by Andhra Bank in 1987 through the Visa program. from coin to paper and now from paper to plastic money. the monetary mechanism has witnessed radical changes. Punjab National Bank.
Visa Card VISA cards is a product of VISA USA and along with MasterCard is distributed by financial institutions around the world.Credit Cards Credit cards in India are gaining ground. Cardholders borrow money against a line of credit and pay it back with interest if the balance is carried over from month to month. Basically banks. More than 57 million cards are in circulation and growing and it is still growing further. Its products are issued by 23. 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. Credit card in India became popular with the introduction of foreign banks in the country. which can be used more than once to borrow money or buy products and services on credit. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and American Express. Nearly 600 million cards carry one of the VISA brands and more than 14 million locations accept VISA cards. 1 card in the near 20 . Credit cards are financial instruments. retail stores and other businesses issue these. Around US $ 123 billion was spent last year through American Express Cards and it is poised to be the world's No. A number of banks in India are encouraging people to use 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 however became more popular with use of magnetic strip in 1970. American Express The world's favorite card is American Express Credit Card.
A credit card with a higher limit and additional perks than a gold card. In a regressive US economy last year. Income eligibility is also higher.S.A card with an even higher limit than a platinum card.It is the most basic card (sans all frills) offered by issuers.Brand name for the standard card issued by VISA. issuers provide extra perks or incentives to cardholders. Other cards: • • • Standard Card . • • Platinum Card . Classic Card . Gold Card/Executive Card . In addition.. Europe and Asia and are used widely in the retail and everyday expenses segment. Titanium Card . Canada. American Express cards are very popular in the U.A credit card that offers a higher line of credit than a standard card. 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 . the total amount spent on American Express cards rose by 4 percent.future.
With debit card. especially in other states or countries wherever your card brand is accepted. It operates like cash or a personal check." When we use a debit card. you may dispute unauthorized charges or other mistakes within 60 days. •Returning goods or canceling services purchased with a debit card is treated as if the 22 purchase were made with cash or a check. Using a debit card means you no longer have to stock up on traveler's checks or cash when you travel. • Debit cards may be more readily accepted by merchants than checks. Debit cards are different from credit cards. or were misrepresented. • The debit card is a quick. and restaurants. . Debit cards are accepted at many locations. It’s an alternative to carrying a checkbook or cash. Features of Debit Card • • Obtaining a debit card is often easier than obtaining a credit card. retail stores. our money is quickly deducted from the bank account." whereas debit card is a way to "pay now. are defective.Debit Cards Debit cards also known as check cards look like credit cards or ATM cards (automated teller machine card). "pay now" product. giving you no grace period. But. as with credit cards. Using a debit card instead of writing checks saves you from showing identification or giving out personal information at the time of the transaction. gasoline stations. In India almost all the banks issue debit card to its account holders. we use our own money and not the issuer's money. Credit card is a way to "pay later. • • Using a debit card frees you from carrying cash or a checkbook. including grocery stores. •Using a debit card may mean you have less protection than with a credit card purchase for items which are never delivered.
It can perform both cash and non-cash transactions in secured environment. ATM Cash Transactions includes deposits and withdrawals. • • Requisition of Cheque books. • Transfer of funds between accounts. telephone bills etc). • Stop Payment instructions. In some banks upto last ten transactions. • Balance enquiry. drafts etc. Bill payments (electricity bills. Car loan / auto loan are 23 . It is one of the fast moving financial product of banks. 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.ATM Cards Automated Teller machine (ATM) cards are capable of doing variety of functions. Loans Banks in India with the way of development have become easy to apply in loan market. Non cash transactions incude: • Providing Mini Statement of last five transactions.
3% from 2003 to 2004 i. Many banks will even use money transfer services as loss-leaders in order to generate account openings and cross-sell opportunities. banks also carry money from one corner of the globe to another.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. rather to be termed as student loan. The RBI has also liberalised the interest rates of home loan in order to match the repayment capability of even middle class people.1% average growth rate through 2008. More number of townships are coming up to meet the demand of 'house for all'. from US$213 bn. Students with certain academic brilliance. HSBC are leading. Almost all banks are dealing in home loan. Economists say that the market of money transfer will further grow at a cumulative 10. This activity is termed as remittance business. to US$233 bn.e. The international money transfer market grew 9. The educational loan. ICICI. Home loan is the latest craze in the banking sector with the development of the infrastructure. Money Orders or other such instruments for transferring the money. The price evolution of money transfer products for banks will be similar to that of consumer bill pay-the product is worth 24 . 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. Banks generally issue Demand Drafts. Again SBI. This act of banks is known as transfer of money. This is a type of Telegraphic Transfer or Tele Cash Orders. HDFC. It has been only a couple of years that banks have jumped into the money transfer businesses in India. With the use of high technology and varieties of product it seems that "Free" money transfers will become commonplace. Money Transfer Besides lending and depositing money. Now people are moving to township outside the city. Banker's Cheques. in 2004. is a good banking product for the mass.
quick. Many Indian banks have ATM'S (automatic teller machine). and most do not have an alternative product marketed by their bank that is painless. Money transfer to India is one of the most important parts played by the banks.com Remit2india Samachar Money Transfer Wells Fergo International Money Transfer Travellers Express 25 . enable to draw foreign currency in India. Some of them are as under: • • • • • • • • Western Union Money Transfer Union Money Transfer IKobo Money Transfer Cash2india. More than half of Western Union's customers today are already banked. First-mover banks will start having a window of opportunity to include online transfer functionality within the next couple of years.giving away as an account acquisition tool to win overall market share and establish banking relationships. This service provides peace of mind to either the NRIs or to the visitors to India. and cost-effective. By 2010. That will change as banks offer transfer services through their online channel. which currently frequents traditional money transmitters such as Western Union. Money Transfer to India Apart from banks few financial institutions and online portals gives services of money transfer to India. we will see a good percent of all foreign-born households doing some level of online banking. ATM money transfer card products have had terrible bank adoption rates since being introduced in the last three to four years. There is a terrific opportunity for banks and non-banks to offer more robust global inter-institutional funds transfer services online.
Under this scheme. UTI. 35 extra from their customers. They are either setting up their own ATM centers or entering into tie-ups with other banks. ICICI. HDFC and IDBI count more than 50% of the total ATMs in India. the banks can use each other's ATM at a cost. The Corporation Bank has the second largest network of ATMs amongst the Public Sector Banks in India. A Visa Money Transfer is of similar kind. 26 . to the third-party fund transfer option given by some banks to its account holders through e-cheque. usually Rs. but this is restricted to only visa cardholders.000 marks in installing ATMs in India is ICICI. in many respects.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. This facility helps its customer to transfer funds from his bank account to any visa card. SBI is following the concept of 'ATMs in Quantity'. Public Sector Banks are also taking the installation of ATMs seriously for Indian market. It was in the year 1987. The first bank to cross 1. The Indian banks have also come up with a 'Swadhan' scheme. Automated Teller Machines (ATM) The first bank to introduce the ATM concept in India was the Hong Kong and Shanghai Banking Corporation (HSBC). almost every commercial bank gives ATM facilities to its customers. Now. The main feature of ‘Swadhan Card’ is as follows: • No exchange fee charged to change an old ATM card for a Swadhan card. But Private Sector Banks have taken the lead. either debit or credit within India.
Using compact HTML and WAP technologies. Moreover 8590% mobile users do not own credit cards. Still. this is lower than the average withdrawal of Rs15. • • IBA gives banks the discretion to decide a higher maximum amount for withdrawal. Exception made for select customers who can withdraw up to Rs10. but only your own bank will provide this. Mobile banking uses the same infrastructure like the ATM solution. This is needed in today's fast business environment with unending deadlines for fulfillment and loads of appointments to meet and meetings to attend. Transactions conducted through any of the member banks appear on a bank statement. one can bank from anywhere. But it is extremely easy and inexpensive to implement. 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. With mobile banking facilities. • All transactions conducted in any of the member banks appear on the bank statement.000. It reduces the cost of operation for bankers in comparison to the use of ATMs. which is given only by your own bank. 3.000 fixed as the ceiling on withdrawal. 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.• • Rs. Mobile Banking "The account that travels with you".000 by regular ATMs. mobile banking users have increased three times if we compare the use of either debit card or credit card. 27 . at anytime and in any condition or anyhow.
One for the telephonic purpose and the other for banking.Free Balance Holding Demat . The technology is at its highest level to move your money while you are on the move.• • • • Bill payments Fund transfers Check balances Any many more which is also available in SMS Banking In countries like Korea. SMS Banking Businesses are in move. So is to be your money. you can use the facility of SMS services. You may have to thank the banks which are providing banking at the send-of-your-sms. About 3. 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 . It is very similar to how an ATM works. 28 . If you are having non-WAP enabled mobile handset.3 million transactions were reported by Bank of Korea in 2004. two SIM Cards are used in mobile phones. Bank account data is encrypted on a smart-card chip.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.
which only have a virtual presence without any physical branches. real time'. First. the customer uses secret Mobile Personal Identification Number (MPIN). in abroad there are banks like EGG Bank or NET Bank. place queries and also can be facilitated with a wide range of transactions simultaneously. Banks are coming up with arrangements of utility payments. With the support of this technology. a card is necessary and to use SMS service. In other words it is said that it is updated 'on-line. SMS banking is also very much safe. Second. a mobile phone is needed.To use ATM. Net Banking Net Banking is conducting ones banking or bank account online through a computer and a net connection. In India. 29 . a customer can make payment and receive payment of account of buy/sell (merchants) through SMS. Net Banking has three basic features. secret number is necessary to access. They are as follows: • • • The banks offer only relevant information about their products and services to the mass. Few banks provide interaction facility between the banks and its customers. In both the cases. the regulatory body has not yet sanctioned virtual bank. etc. The system is updated immediately after every transaction automatically. like telephone bills. Through net banking one can check the status of his/her account. electricity bills. one authenticates the mobile number with the authentications key. A new concept has been developed by Bank of Punjab Ltd. They call it "Mobile Wallet".
The current statistics show that hardly 10 per cent of Indian customers use the internet for banking. Among all the facilities provided the maximum of them uses only for checking balance or requesting for a cheque book. 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 . Very few customers uses the advance interactive services provided by the banks.
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. This has raised the question of jurisdiction of law/supervisory system to which such transactions should be subjected. validity of electronic contract. which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain. heightening some of them and throwing new risk control challenges. this kiosk works on wireless in local loop technology. insurance and even equity trading. Security of banking transactions. Reasons for setting-up of Proxy Banking • • • • 58% of rural households still do not have bank accounts.Advantages of Net Banking • It removes the traditional geographical barriers as it could reach out to customers of different countries/legal jurisdiction. not subject to control by any single authority or group of users. • • Proxy Banking Indian villages were miles away from mutual funds. With the help of fibre optic cables. 70% of marginal farmers do not have deposit account. Thanks to Internet Kiosk and the ATM duo which has made it possible for rural India. 31 . etc.. It has added a new dimension to different kinds of risks traditionally associated with banking. customers' privacy. This is known as Proxy Banking. 87% households have no formal credit. Only 21% of rural households have access to credit from a formal source.
• Only 1% rural households rely on a loan from a financial intermediary. • Branch banking in rural is a loss-making. Benefits to Rural • • • • • Small loans given for buying buffaloes. the costs of delivering telephone-based services are substantially lower than those of branch based services. On the other hand. from the banks’ perspective. paddy crop. which is connected to an automated system of the bank by utilizing Automated Voice Response (AVR) technology. expanded access and significant time saving. Insurance policies sold to farmers like groundnut. 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. · The loans take between 24 to 33 weeks to get sanctioned. Telephone Banking Tele banking (telephone banking) can be considered as a form of remote or virtual banking. it provides increased convenience. Life and non-life insurance provided. 32 . 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. Telebanking has numerous benefits for both customers and banks. Loans for setting up a tea shop. castor. • Consumers bribe officials to get loans approved which varies between 10 and 20 per cent of the loan amount. Weather insurance given to farmers. It has almost all the impact on productivity of ATMs. As far as the customers are concerned. etc.
This saves customers time. This certainly supports the growth of PC banking which virtually establishes a branch in the customers’ home or office. as it curtails customer travel distance to bank branches it offers more time for customers’ productive activities. with the several networked branches serving the customer populace as one system. usually with the help of proprietary software installed on their personal computer. It offers quicker rate of inter-branch transactions as the consequence of distance and time are eliminated. 33 . The increasing awareness of the importance of computer literacy has resulted in increasing the use of personal computers. Hence. there is more productivity per time period. It also has the benefits of Telephone Banking and ATMs. 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. Once access is gained. the customer can perform a lot of retail banking functions. and offers 24-hour service. there is simulated division of labour among bank branches with its associated positive impact on productivity among the branches. Also.except that it lacks the productivity generated from cash dispensing by the ATMs. seven days a week. and gives more convenience for higher productivity. Furthermore. Branch Networking Networking of branches is the computerization and inter-connecting of geographically scattered stand-alone bank branches. Personal Computer Banking PC-Banking is a service which allows the bank’s customers to access information about their accounts via a proprietary network. It offers retail banking services to customers at their offices/homes as an alternative to going to the bank branch/ATM.
reservations. Through satellites. A POS uses a debit card to activate an Electronic Fund Transfer Process (Chorafas. stock exchanges. Technological developments particularly in the area of Telecommunications and Information Technology are revolutionizing the way business is done. hence continual productivity for the bank even after banking hours. Very Small Aperture Terminals (VSATs) In Banking Very Small Aperture Terminals work with the help of the satellite. 34 . 1988). 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. The advances in IT have certainly introduced new delivery channels in the Indian banking industry. They are briefly known as VSATs. Furthermore. VSATs are very useful in banking industry. 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. VSATs use small antennas which may have variable size of 1.8 meters and these acts as small earth stations. the system continues after banking hours. retail trade. The terminals used in VSATs have very small apertures.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). VSATs technology has made banking services very simple and speedy. 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.8 meters or 3. 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.
Characteristics • These terminals can exchange and transmit information. 100 crores were arranged by the public sector banks. • Exchange of information has geared up and speedy clearing of pending entries has been made possible. The transmission through a larger earth station which is called Hub-Station. • File work can be easily transferred.5 m to 11m. industries. • These earth stations normally use bit rate which is less than megabyte per second. • The shortcomings of telecommunications have been overcome with the help of VSATs. document services etc. 135 crores out of which Rs. • VSATs cannot directly transmit messages to each other.corporate networking. 35 . international services. Uses of VSATs The activities relating to VSATs technology has now started. 35 crores were arranged by RBI and Rs. This network links 2800 bank branches with one another. The size of antennas Hub-Station ranges between 7. • Payment system has been made more effective. • The currency chest operation has become more fast and accurate. weather forecasting. The whole project is has incurred expenditure of Rs. • VSATs can function at ‘C-Band’. 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 use of e-mail is made more effective through VSATs. • The banks offer specialized telephone facilities through this network. • Through VSATs technology every organization is able to develop its own system of communications. They are: • • • Non-Resident (Ordinary) Account . • The self owned communication system can be operationalised by the institution.FCNR A/c An Indian resident who is earning foreign exchange can also maintain Foreign Currency account in the country with an authorized dealer. There are different types of accounts for them. 36 . Banking Services For NRI’s Almost all the Indian Banks provide services to the NRIs.NRO A/c Non-Resident (External) Rupee Account .NRE A/c Non-Resident (Foreign Currency) Account .
they started making debt in the market. Competition among financial intermediaries gradually helped the interest rates to decline. The real interest rate was maintained. It was something between the nominal rate of interest and the expected rate of inflation. They grew rapidly in commercial banking and asset management business. Capital adequacy norms extended to financial 37 . Since 1991. Deregulation added to it. The borrowers did not pay high price while depositors had incentives to save. every governments India took major steps in reforming the financial sector of the country. Development Finance Institutions Financial institution's access to SLR funds reduced. With the openings in the insurance sector for these institutions. Now they have to approach the capital market for debt and equity funds. Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) became important institutions.IMPACT OF CHANGE IN BANKING STRUCTURE ON ECONOMY Financial and Banking reforms The last decade witnessed the maturity of India's financial markets. 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. Convertibility clause no longer obligatory for assistance to corporate sanctioned by term-lending institutions. The Government accepted the important role of regulators. The important achievements the following fields are discussed under separate heads: Financial Markets In the last decade. Regulators The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The Reserve Bank of India (RBI) has become more independent.
Stamp duty is being withdrawn at the time of dematerialization of debt instruments in order to encourage paperless trading. The Securities Trading Corporation of India (STCI). 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.2 crores. The move to universal banking has started. On account of the substantial issue of government debt. The DFHI is the principal agency for developing a secondary market for money market instruments and Government of India treasury bills. the SEBI has now decided to concentrate on the development of the debt market.edged market occupies an important position in the financial set. DFIs such as IDBI and ICICI have entered other segments of financial services such as commercial banking. Several measures have been initiated and include new money market instruments. The secondary market was underdeveloped and lacked liquidity. has a mandate to develop the secondary market in government securities. The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO) window. After bringing some order to the equity market. the money market in India was narrow and circumscribed by tight regulations over interest rates and participants.institutions.up. which started operations in June 1994. strengthening of existing instruments and setting up of the Discount and Finance House of India (DFHI). 38 . Until recently. Primary dealers bid for these securities and also trade in them. the gilt. Long-term debt market. Non-banking finance companies In the case of new NBFCs seeking registration with the RBI. has been raised to Rs. asset management and insurance through separate ventures. the requirement of minimum net owned funds.
70. improving disclosure standards and experimenting with new types of distribution. setting new standards of customer service. 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. mutual funds started becoming popular. only an estimated two lakh persons actively trade in stocks. 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.000 crores. which have led to retail investors deserting the stock markets.The Capital Market The number of shareholders in India is estimated at 25 million. With the issuance of SEBI guidelines. Unfortunately. The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs. 1996 and amendments thereto. However. but its share is going down. the industry had a framework for the establishment of many more players. with participation restricted to 26 per cent of equity. both Indian and foreign players. 39 . Foreign companies can only enter joint ventures with Indian companies. but it can be expected that the customer will gain from improved service. Expectations are that India will be an attractive emerging market with tremendous potential. during recent times the stock markets have been constrained by some unsavory developments. With the growth in the securities markets and tax advantages granted for investment in mutual fund units. Mutual Funds The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations. The insurance industry is the latest to be thrown open to competition from the private sector including foreign players. There has been a dramatic improvement in the country's stock market trading infrastructure during the last few years. They are introducing new products. The foreign owned AMCs are the ones which are now setting the pace for the industry.
Bank lending norms liberalized and a loan system to ensure better control over credit introduced. Recovery of debts due to banks and the Financial Institutions Act. the capital market regulator was established in 1992. Interest rates on the deposits and lending sides almost entirely were deregulated. Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and cash reserve ratio (CRR) brought down in steps. RBI guidelines issued for risk management systems in banks encompassing credit. In order to reach the stipulated capital adequacy norms. in order to improve the low per capita insurance coverage. and special recovery tribunals set up to facilitate quicker recovery of loan arrears. 1947. provisioning for delinquent loans and for capital adequacy. PSBs were encouraged to approach the public for raising resources. of course. 1993 was passed. A credit information bureau being established to identify bad risks. Derivative products such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced. Deregulation Of Banking System Prudential norms were introduced for income recognition. New private sector banks allowed promoting and encouraging competition. be essential. office of the Controller of Capital Issues was abolished and the initial share pricing were decontrolled. substantial capital were provided by the Government to PSBs. Banks asked to set up asset liability management (ALM) systems. Good regulation will. repealed. market and operational risks. 40 . SEBI.The new players will need to bring in innovative products as well as fresh ideas on marketing and distribution. asset classification. Capital Market Developments The Capital Issues (Control) Act.
The practice of making preferential allotment of shares at prices unrelated to the prevailing market prices stopped and fresh guidelines were issued by SEBI.Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the SEBI. A system of rolling settlements introduced. Companies were required to disclose all material facts and specific risk factors associated with their projects while making public issues. Buy Back Of Shares Allowed The SEBI started insisting on greater corporate disclosures. clearing and settlement facilities was established. underwriting by the issuer were made optional. Several local stock exchanges changed over from floor based trading to screen based trading. Standard denomination for equity shares of Rs. 41 . subject to conditions. Indian companies were permitted to access international capital markets through euro issues. SEBI empowered to register and regulate venture capital funds. Dematerialization of stocks encouraged paperless trading. Companies given the freedom to issue dematerialized shares in any denomination. SEBI issued detailed employee stock option scheme and employee stock purchase scheme for listed companies. Derivatives trading starts with index options and futures. 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. SEBI reconstituted governing boards of the stock exchanges. The National Stock Exchange (NSE). with nationwide stock trading and electronic display. Steps were taken to improve corporate governance based on the report of a committee. and made rules for making client or broker relationship more transparent which included separation of client and broker accounts. 100 were abolished. To reduce the cost of issue. introduced capital adequacy norms for brokers. 10 and Rs.
42 . 1969. the United Bank of India Ltd. was formed in 1950 with the amalgamation of four banks viz. Its predecessor. in the Public Sector Banks. 1999 issued for regulating new credit rating agencies as well as introducing a code of conduct for all credit rating agencies operating in India. United Bank of India is one of the 14 major banks which were nationalised on July 19. BANKING STRUCTURE IN INDIA Public Sector Banks Among the Public Sector Banks in India..The SEBI (Credit Rating Agencies) Regulations.
3. Oriental Bank of Commerce (OBC). OBC is implementing a GRAMEEN PROJECT in Dehradun District (UP) and Hanumangarh District (Rajasthan) disbursing small loans. 15. (1922) and Hooghly Bank Ltd. (1932). a Government of India Undertaking offers Domestic. 13. The following are the list of Public Sector Banks in India 1. 18. 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. 16.Comilla Banking Corporation Ltd. 7. Comilla Union Bank 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 . (1914). 14. 4. NRI and Commercial banking services. 8. Bengal Central Bank Ltd. 9. 11. 12. 5. 2. 10. 17. (1918). 6.
The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. Major Private Banks in India are: 44 .List of State Bank of India and its subsidiary. to set up a bank in the private sector banks in India as part of the RBI's liberalisation of the Indian Banking Industry. 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 is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution 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. The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited.
• 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 .
1965.Co-Operative Banks The Co operative banks in India started functioning almost 100 years ago. and the number of offices the cooperative bank operate. The cooperative bank is also regulated by the RBI. 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. 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 . The Cooperative bank is an important constituent of the Indian Financial System. 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. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act. Though the co operative movement originated in the West. judging by the role assigned to co operative. Co operative Banks in India are registered under the Co-operative Societies Act. their number. the expectations the co operative is supposed to fulfill.
47 . there are other few banks which functions for the development of the rural areas 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. Apart from SBI. The policy conveys that foreign banks in India may not acquire Indian ones (except for weak banks identified by the RBI.Rural banking in India started since the establishment of banking sector in India. The rural banks of SBI are spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to North East. SBI has 30 Regional Rural Banks in India known as RRBs. there are 14. The total number of SBIs Regional Rural Banks in India branches is 2349 (16%). the banking sector in India also become competitive and accurative. on its terms) and their Indian subsidiaries will not be able to open branches freely. Please see the list of foreign banks in India till date.475 rural banks in the country of which 2126 (91%) are located in remote rural areas. Rural Banks in those days mainly focused upon the agro sector. There are 197 RRB’s in India. 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. Regional rural banks in India penetrated every corner of the country and extended a helping hand in the growth process of the country. After the set up foreign banks in India. Till date in rural banking in India. Now foreign banks in India are permitted to set up local subsidiaries.
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.
5 crores on the basis of the recommendations of the Hilton Young Commission. 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). ten nominated Directors by the Government to give representation to important elements in the economic life of the country.20.000 shares of Rs.000. The share capital was divided into 5. the Governor and four Deputy Governors. Kolkata. one Government official from the Ministry of Finance. 2. 1934 with a share capital of Rs. and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai. 100 each fully paid which was entirely owned by private shareholders in the beginning. Chennai and New Delhi. 49 . 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. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20 members. It was established in April 1935 under the RBI Act. The Government held shares of nominal value of Rs.By 2009 few more names is going to be added in the list of foreign banks in India. Reserve Bank of India was nationalised in the year 1949.00. 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.
Under Section 22 of the Reserve Bank of India Act. To operate the credit and currency system of the country to its advantage. 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. Originally. 1934 provides the statutory basis of the functioning of the Bank. also acts as their banker. Development of banks. 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. It is so called as it maintains cash reserves of all the commercial banks in India with itself. The Reserve Bank has a separate Issue Department which is entrusted with the issue of currency notes. Objectives of constituting the Reserve Bank of India: • • • • • • To regulate the issue of bank notes. The RBI Act. The assets and liabilities of the Issue Department are kept separate from those of the Banking Department. 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. Supervision and licensing of banks. 1935.The Reserve Bank of India Act. the Bank has the sole right to issue bank notes of all denominations. 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. To maintain reserves with a view to securing monetary stability. the assets of the Issue 50 . It is also referred to as Central Bank. 1934 was commenced on April 1.
The RBI acts as a financial advisor and performs agency functions for the government also. these provisions were considerably modified. Since 1957. to receive and to make payments on behalf of the Government and to carry out their exchange remittances and other banking operations. agent and adviser. Bankers' Bank and Lender of the Last Resort The Reserve Bank of India acts as the bankers' bank. via.Department were to consist of not less than two-fifths of gold coin. Banker To Government The second important function of the Reserve Bank of India is to act as Government banker. The Reserve Bank has the obligation to transact Government business. Government of India rupee securities. eligible bills of exchange and promissory notes payable in India. every scheduled bank was required to maintain with the 51 . The remaining three-fifths of the assets might be held in rupee coins. It ensures flexibility in the money supply It ensures general public’s faith in the currency system of the country. 200 crores. It acts as adviser to the Government on all monetary and banking matters. Due to the exigencies of the Second World War and the post-war period. It makes loans and advances to the States and local authorities. of which at least Rs. According to the provisions of the Banking Companies Act of 1949. The Reserve Bank is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir. It adds to the government treasury. to keep the cash balances as deposits free of interest. 40 crores in value. 115 crores should be in gold. gold bullion or sterling securities provided the amount of gold was not less than Rs. Following are the advantages of giving monopoly power to central bank:It brings uniformity in the notes issue. the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Ra. The system as it exists today is known as the minimum reserve system.
it has the power to influence the volume of credit created by banks in India. The Reserve Bank of India is armed with many more powers to control the Indian money market. According to the Banking Regulation Act of 1949. 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. 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. It can do so through changing the Bank rate or through open market operations. 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.e. selective controls of credit are increasingly being used by the Reserve Bank. Since 1956. Each scheduled bank must send a weekly return to the Reserve Bank showing. This power of the Bank to call for information is also intended to give it effective control of the credit 52 . 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. By an amendment of 1962. its assets and liabilities. Every bank has to get a license from the Reserve Bank of India to do banking business within India. Every bank will have to get the permission of the Reserve Bank before it can open a new branch.Reserve Bank a cash balance equivalent to 5% of its demand liabilities and 2 per cent of its time liabilities in India. The minimum cash requirements can be changed by the Reserve Bank of India. Controller of Credit The Reserve Bank of India is the controller of credit i. the license can be cancelled by the Reserve Bank of certain stipulated conditions are not fulfilled. in detail. The main objective behind this is that no investment opportunity should go unutilized just due to the scarcity of funds.
As supreme banking authority in the country. 6d.6d. Besides maintaining the rate of exchange of the rupee. 1 = sh. According to the Reserve Bank of India Act of 1934.F. It controls the banking system through the system of licensing.M. The vast sterling balances were acquired and managed by the Bank. Further.system. Since 1935 the Bank was able to maintain the exchange rate fixed at lsh. the Bank was required to buy and sell at fixed rates any amount of sterling in lots of not less than Rs. Custodian of Foreign Reserves The Reserve Bank of India has the responsibility to maintain the official rate of exchange. inspection and calling for information. It controls the credit operations of banks through quantitative and qualitative controls. 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. has the following powers: It holds the cash reserves of all the scheduled banks. 53 .000. therefore. the Reserve Bank has the responsibility of maintaining fixed exchange rates with all other member countries of the I. the RBI has the responsibility of administering the exchange controls of the country. the Reserve Bank has to act as the custodian of India's reserve of international currencies. After India became a member of the International Monetary Fund in 1946. 10. It acts as the lender of the last resort by providing rediscount facilities to scheduled banks. though there were periods of extreme pressure in favour of or against the rupee. The Reserve Bank has also the power to inspect the accounts of any commercial bank. the Reserve Bank of India. The rate of exchange fixed was Re.
amalgamation. extend banking facilities to rural and semi-urban areas. the range of the Reserve Bank's functions has steadily widened. the Unit Trust of India in 1964. it set up the Deposit Insurance Corporation in 1962. The Reserve Bank Act. 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. liquidity of their assets. The Reserve Bank was asked to promote banking habit. Promotional functions With economic growth assuming a new urgency since Independence. and liquidation. 1934. the Reserve bank has certain nonmonetary functions of the nature of supervision of banks and promotion of sound banking in India. Accordingly. 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks. and establish and promote new specialized financing agencies. at one time. which. reconstruction. 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. the Reserve Bank has helped in the setting up of the IFCI and the SFC. the Agricultural Refinance 54 . relating to licensing and establishments. the Industrial Development Bank of India also in 1964. branch expansion.Supervisory functions In addition to its traditional central banking functions. The Bank now performs a variety of developmental and promotional functions. and the Banking Regulation Act. management and methods of working. 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. 55 . 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 Reserve Bank of India set up the Agricultural Credit Department to provide agricultural credit.Corporation of India in 1963 and the Industrial Reconstruction Corporation of India in 1972. 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. have approved the Institute for Development and Research in Banking Technology as a Certification Authority(CA)for digital signatures. So far. The Bank has developed the co-operative credit movement to encourage saving. to eliminate moneylenders from the villages and to route its short term credit to agriculture. the process of setting up of registration authorities under the CA has commenced at various banks. 54 banks have implemented the system at their treasuries/funds management branches. The Controller of Certifying Authorities. 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. While the first phase of the system covering the centralised funds enquiry system has been made available to the users. 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. But only since 1951 the Bank's role in this field has become extremely important. Consequently. As far back as 1935. Government of India. and to provide industrial finance as well as agricultural finance. Being the central bank of the country. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilise savings.
under the aegis of the Ministry of Communications and Information Technology.H. after examining the various aspects relating to payment and settlement systems. a pilot project for multi-application smart cards in conjunction with a few banks and vendors.In addition to the negotiated dealing 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. The draft Bill has been forwarded to the Government. national EFT (NEFT) is being introduced using the backbone of the structured financial messaging system (SFMS) of the IDRBT. has been initiated. The draft Bill provides a legal basis for netting. Government of India. 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. apart from empowering RBI to have regulatory and oversight powers over payment and settlement systems of the country. 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. submitted its report in September 2002 along with a draft Payment Systems Bill. 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. R. Patil) was set up in 2002. secure and quick manner across branches of any bank to any other bank through a central gateway of each 56 . Special Electronic Funds Transfer As indicated in the mid-term Review of October 2002. NEFT would provide for movement of electronic transfer of funds in a safe. a Committee on Payment Systems (Chairman: Dr. The Committee.
primary dealers (PDs). government securities and foreign exchange markets. • The Home Savings Safe Deposit Scheme to build saving/thrift habits in all sections of the society. These include banks. mutual funds and any other institution as admitted by RBI. Membership in NDS is open to all institutions which are members of INFINET and are maintaining subsidiary general ledger (SGL) Account with RBI. financial institutions (FIs). Since this scheme requires connectivity across a large number of branches at many cities. all deals in government securities. if done outside NDS. At present.bank. a special EFT was introduced in April 2003 covering about 3000 branches in 500 cities. The following are some of the offerings of Central Bank of India. • An Exclusive Ladies Department to cater to the Bank's women clientele. the SBI and its associates. if the deal is done on NDS and within 15 minutes of concluding the deal. enables on-line dealing and dissemination of trade information relating to instruments in money. which has become operational since February 2002. with the inter-bank settlement being effected in the books of account of banks maintained at RBI. 57 . In order to facilitate banks to have better control over their funds. public sector banks and other institutions. This has facilitated same day transfer of funds across accounts of constituents at all these branches. National Settlement System(NSS) The clearing and settlement activities are dispersed through 1.047 clearing houses managed by RBI. insurance companies. CDs and CP executed among NDS members have to be reported automatically through NDS. call/notice/term money. Reporting of Call/Notice Money Market Transactions on NDS Platform Negotiated dealing system (NDS). it is proposed to introduce national settlement system in a phased manner.
notably with respect to employment. accounting for close to 90 per cent and 95 per cent of sales/purchases in 199899. Setting up of the Executor and Trustee Department. • Quick Cheque Collection Service (QCC) & Express Service was set up to enable speedy collection of outstation cheques. Deposit Insurance Benefit Scheme. they continued to grow. In developing Asia.000 deals taking place every year. was started with its headquarters at Bhopal in Madhya Pradesh. Central card.• • • • • • • • Safe Deposit Locker facility and Rupee Travelers’ Cheques. This M&A-driven consolidation is raising important public policy concerns. Developed countries are the most important sellers and buyers in crossborder M&As. cross-border M&A sales fell in 1999. the credit card of the Bank was introduced. the announcement of a merger is usually accompanied by an 58 . Acquisitions are considerably more important than mergers in developing and transition countries. with an estimated 4. The Merchant Banking Cell was established. In developing countries. The housing subsidiary Cent Bank Home Finance Ltd. respectively. Indeed. including in the countries most affected by the 1997 financial crisis. MERGERS AND ACQUISITIONS IN BANKING SECTOR Mergers and acquisitions (M&As) are a global phenomenon. Recurring Deposit Scheme. 'Platinum Jubilee Money Back Deposit Scheme' was launched.
Rangarajan. 59 . who heads the prime minister's economic advisory panel. a top economic adviser to the government said yesterday. automation or the introduction of information and communication technologies which are similarly inciting organizations to restructure even in the absence of M&As. a copy of which was seen by Reuters. Consolidation in the Indian banking sector was likely to gain prominence in the near future and this must be driven by commercial factors. two overlapping organizations are compressed into one. C. told a banking conference. "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. trimming duplicated operations which entails redundancies at all levels. 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. often on a massive scale. 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. It is nevertheless difficult to disentangle the employment effects of M&As from those of other factors such as increased competitive pressures." Rangarajan said in his speech. YES BANK IN TALKS WITH FOREIGN MAJORS The private sector YES Bank is in talks with foreign banks. To gain full merger benefits. both for strategic investment as well as for business correspondent relationships.announcement of cost-cutting redundancies in the merging organizations.
The bank has 130 forex clients across large corporates and mid corporates. Mr. Out of the total MTM derivatives exposure. Mr. 2008 more than doubled to Rs 64 crore from Rs 31 crore in the same period a year ago. said the bank did not have any delinquency in its marked-to-market (MTM) derivatives exposure. By then. We have filtered our clients very carefully. Chief Financial Officer. 60 . while mid-corporates or emerging corporates account for the remaining 30 per cent. YES Bank would be in a better position to attract foreign partners. YES Bank.” Mr. Rajat Monga. The net profit of the bank for the quarter ended March 31.09 per cent for the first time and made higher provisions of Rs 22. Monga said.8 crore as against Rs 12. The bank also reported a net NPA of 0. 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. Kapoor said.Large MNC banks are keen on expanding in India and looking at significant minority or near majority stake in Indian banks. large corporates account for about 70 per cent. Chief Executive Officer and Managing Director. Rana Kapoor. said Mr. “We do not have a single derivatives exposure to the SME sector.7 crore. as it will have a bigger network & larger share of SME and retail business. Foreign banks are expected to get more leeway in expanding their network in India after 2009.
These 61 . innovation. The policy makers. This is reflected in their market valuation. consumer finance and wealth management on the retail side. the market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards.INDIAN BANKING SCENARIO 2010 Towards a High-performing Sector The last decade has seen many positive developments in the Indian banking sector. profitability and non-performing assets (NPAs). Four challenges must be addressed before success can be achieved. Ministry of Finance and related government and financial sector regulatory entities. A few banks have established an outstanding track record of innovation. However. which comprise the Reserve Bank of India (RBI). India’s banking industry must strengthen itself significantly if it has to support the modern and vibrant economy which India aspires to be. growth and value creation in the sector remain limited to a small part of it. growth and value creation. have made several notable efforts to improve regulation in the sector. and in fee-based income and investment banking on the wholesale banking side. improved regulations. The cost of banking intermediation in India is higher and bank penetration is far lower than in other markets. The sector now compares favorably with banking sectors in the region on metrics like growth. Opportunities And Challenges For Players The bar for what it means to be a successful player in the sector has been raised. First.
A new Celent report. An expanding economy. with banking assets increasing at a CAGR of 24% from 2001 to 2008. India's economy is growing at a rate of 8%. with increased interest in India. given the demographic shifts resulting from changes in age profile and household income. and technological innovations are all contributing to this growth. Second. Fourth. with global players now actively competing with domestic banks. Third.4 billion in 2003 to US$616. the private sector is growing. FUTURE OF INDIAN BANKING MARKET The Indian banking market is growing at an astonishing rate. examines the impressive growth of this industry. 62 . consumers will increasingly demand enhanced institutional capabilities and service levels from banks. with assets expected to reach US$1 trillion by 2010. This will expose the weaker banks. from US$374. Overview of Indian Banking Market. middle class. largely due to an expanding economy and growing consumer middle class in need of financial services.15 billion in 2008. competition from foreign banks will only intensify. banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. credit and operations. While public sector banks still dominate India’s banking industry.require new skills in sales & marketing.
63 .LIMITATIONS • This study is based on the secondary data collected from various newspapers. • Due to paucity of time only the important factors have been discussed. journals and books and no other efforts have been made to verify their correctness.
expansion of business. announcement of 14 banks was made for the purpose of nationalisation. investment banking. mobile banking. however. Therefore government focused on social banking than capitalistic banking. There was need for stimulating the savings and investment to meet the growing demand for bank credit for economic development. 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. • Before Nationalisation. 87 banks were liquidated. debit cards. During and after World War I. development and spread of banking. SMS banking. After Independence. New services have been started such as merchant banking. • Currently. Hence.CHAPTER 5 CONCLUSIONS AND SUGGESTIONS • The Indian banking can be broadly categorized into nationalized (government owned). investment banking. the performance of banking has been remarkable in the many aspects such as branch expansion. internet banking. housing finance. in February 1961. the Indian banking underwent a thorough and moral change. banking system has entered into the third phase of development which is characterized by innovation & diversification in order to meet new challenges. Development of banks in India was characterized by bank failures. Since then. ATM cards. The government of India announced Banking Regulations Act in 1949 to consolidate and regulate the banking growth in India • After Nationalisation. banks in the beginning faced severs financial crisis. electronic money transfers. branch banking. proxy banking. priority sector advances. private banks and specialized banking institutions. plastic money such as credit cards. etc. smart cards. telebanking. growth of banking during the first 3 plan periods resembles that of capitalist growth. 64 .
mutual funds. with assets expected to reach US$1 trillion by 2010. However there is a need to create more awareness regarding social development. • Indian banking market is growing at an astonishing rate. As a result banks have become more efficient and cost-effective. The private sector bank grid also includes 24 foreign banks. stock invest and other money and capital market instruments. There is need for taking decisive actions . factoring services. housing finance. 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. • Industry estimates indicate that out of 274 commercial banks operating in India. which has resulted in innovative methods of offering new banking products & services. commercial papers. 65 . Players are becoming increasingly customer-centric in their approach. 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. certificate of deposit. • 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. The Indian banking industry is in the middle of an IT revolution.Banks have indulged in activities such as service area approach. Banks have been benefited a lot with the internet and information technology. focusing on the expansion of retail and rural banking.
finance. Banking Sector Efficiency in Globalised Economy M&A in Indian Banking System.An Executive Handbook.rbi. D Malhotra.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.banknetindia. Mumbai 66 .com accessed in March 2009 www.com accessed in March 2009 www.thehindubusinessline.indiamart.com accessed in March 2009 www.wikipedia.org.com accessed in March 2009 Newspapers: The Economic Times Books: T. New Delhi Parmod Kumar.google. Sultan Chand & Sons . Eletronic Banking & Information Technology in Banks.com accessed in March 2009 www.bankingindiaupdate.in accessed in March 2009 www. 2005.com accessed in March 2009 www.business-standard. First Edition 2002.com accessed in March 2009 www.
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