MINI PROJECT REPORT

ON
BANKING INDUSTRY

Submitted in the Partial fulfillment of the requirement for the

Two- Year Full-Time Master of Business Administration

(Affiliated to A.P.J Abdul Kalam Technical University, Lucknow)

(Session 2020-22)

Submitted by: Under the guidance of

Student Name- Kajal Goyal Faculty Name –
Roll no- 200038000078 Prof. Nitin Saxena
Batch - 2020-22

INSTITUTE OF TECHNOLOGY AND SCIENCE

GT Road, Mohan Nagar, Ghaziabad-www.its.edu.in

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 INSTITUTE OF TECHNOLOGY AND SCIENCE,
GHAZIABAD
(SESSION 2020-22)
CERTIFICATE OF ORIGINALITY

I hereby declare that this Mini Project-2 Report is my own work and that, to the best of my
knowledge and belief, it reproduces no material previously published or written that has been
accepted for the award of any other degree or diploma, except where due acknowledgement
has been made in the text.

STUDENT Name- Kajal Goyal

Roll no- 2000380700078
Date -

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 INSTITUTE OF TECHNOLOGY AND SCIENCE,
GHAZIABAD
Session: 2020-22

CERTIFICATE

This is to certify that MS. Kajal Goyal MBA (2020-22 Batch) a student of Institute of
Technology and Science has undertaken the Mini Project-2 on “BANKING INDUSTRY”.

The project has been carried out by the student in partial fulfillment of the requirements for
the award of MBA, under my guidance and supervision.

I am satisfied with the work of Ms. Kajal Goyal

Date-
Academic Mentor’s Name- Prof, Nitin Saxena
Signature -

ACKNOWLEDGEMENT

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I would like to express my special thanks of gratitude to my institute I.T.S. Mohan Nagar,
Ghaziabad and my respected chairperson Professor Dr VIDYA SEKRI as well as my mentor
PROF, NITIN SAXENA who gave me the golden opportunity to do this wonderful project
report on the topic " BANKING INDUSTRY " which also helped me in doing a lot of
Research and i came to know about so many new things. I am really thankful to them.

Any attempt at any level can't be satisfactorily completed without the support and guidance
of my parents and friends.

I would like to thank my parents who helped me a lot in gathering different information,
schedules, they gave me different ideas in making this project unique.

Thanking you
Yours gratefully
Kajal Goyal

EXECUTIVE SUMMARY

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“A Descriptive glimpse of Technological Evolution of Banking”

Banking system is an important constituent of overall economic system. It plays an important

role in mobilizing the nation’s savings and channelizing them into high investment priorities
and better utilization. The evolution of banking system in India is a gradual and continuous
process since ancient times. The present study is the most significant study to understand the
contribution of private sector banks by studying about their financial performance. The
private sector commercial banks were established as Banking Companies as per the
Companies Act, 1956. In the Indian banking scene, the public sector banks have dominant
position as compared to private sector banks, but private sector banks are also gaining
popularity and public faith due to their customer oriented approach, efficient financial
services and effective use of technology. Considering this background, the study of
financial performance of private sector commercial banks is apt to the situation and a unique
concept. The major objectives of this study are to review their financial performance through
the analysis and interpretation of their financial statements and to decide the best performing
bank considering the study period from 2004-05 to 2013-14. The present study considers the
sample of fifteen private sector commercial banks in India which includes eight old and seven
new private sector banks. In order to undertake the financial analysis the financial
information of select banks is collected from secondary sources of data like annual
reports of the respective banks, various reports of Reserve Bank of India, circulars of RBI,
Indian Banks’ Association reports and study material of Indian Institute of Banking
andFinance and other published sources.The study is organized into six chapters as the first
chapter deals with the introduction research methodology, review of the literature, brief
history of banking and a current scenario of banking sector. In the second chapter profile of
select banks is studied. The third chapter gives an account of the provisions of various
primary and secondary regulations applicable to banking companies. Chapter four is devoted
to the study of financial performance of select banks considering their advances, deposits,
investments, net interest income, other income, operating profit, Net profit after tax and NPA
in total as well as their annual growth during the study period for each bank.

xv The fifth chapter deals with the financial analysis of select banks using the technique of
ratio analysis and computing arithmetic mean and percentages. comparison of actual
ratios with standard ratios is also done using ‘benchmarking’ technique. The researcher has
undertaken the financial analysis mainly to compare the liquidity, profitability, operating
efficiency and managerial efficiency of the select banks by diagnosing the financial
information contained in the financial statements and using CAMEL model. Total 21 ratios
have been computed to examine the financial performance of banks. The sixth chapter
specifies the findings, conclusions and suggestions. The financial performance of select
private sector commercial banks is satisfactory in terms of liquidity, profitability, operating
efficiency and managerial efficiency using CAMEL model and the same is also proved using
ANOVA test. The financial performance analysis reveals the Tramlined Mercantile Bank
and Karur Vyasa Bank, both old private sector bank’s as the best performing banks and their
mean rank is the lowest(4). YES Bank ranks second considering the mean rank (4.8) next to

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Tamilnad Mercantile Bank and Karur Vyasa Bank. The researcher has analysed the
financial ratios of select PVTBs considering the standards given in benchmarking
technique reveals that the financial ratios of private sector banks are not higher than the
standard ratios of representative banking industry. The analysis of the ratios shows that
percentage of number of banks having ratios below the standard is more in case of five ratios
selected for the analysis of select banks during the study period. The PVTBs need to take
remedial steps to improve the ratios and to work considering the internationally acclaimed
standards. It is suggested that RBI can stipulate the standard financial parameters
considering the Indian environment for PVTBs as already issued in case of Urban Co-
operative banks and can also set ‘Uniform Business Financial Report’ which will provide
key financial information to all the users and stakeholders. The bank management in
India must give equal importance to profitability and liquidity for their stability and further
growth. The Government must think seriously to pass the single comprehensive Act to
regulate the banking services in India and to ease the existing complex regulatory
environment.

TABLE OF CONTENT

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S.no. Topic

1. Introduction

2. Industry Profile

3. Evolution of use of Technology in the Industry

4. Upcoming Technological Advancement in the Industry

5. Conclusion

6. References

7. Annexure

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 MAIN BODY

Introduction
As per the Reserve Bank of India (RBI), India ‘s banking sector is sufficiently capitalized and
well- regulated. The financial and economic conditions in the country as far superior to any

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other country in the world. Credit, market and liquidity risk studies suggest that Indian banks
are generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
rest rusting of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India’s
immediate Payment Service (IMPS) being the only system at level five in the Faster
Payments Innovation Index (FPII)
The rapid transformation in the banking industry over the last decade has made the industry
stronger, cleaner, transparent, efficient, faster, disciplined and a lot more competitive. The
banking industry in India has a huge canvass of history, which covers the traditional banking
practices from the time of Britishers to the reforms period, nationalization to privatization of
banks and now increasing numbers of foreign banks in India. Therefore, banking in India has
been through a long journey. Rural banking and micro financing are the two gateways for the
Indian banks to grow and compete with international banks.

Banking Sector:
Step to increase the cash outflow through reduction in the statutory liquidity and cash
reserve ratio.

Nationalized banks including SBI were allowed to sell stakes to private sector and private
investors were allowed to enter the banking domain. Foreign banks were given greater access
to the domestic market, both as subsidiaries and branches, provided the foreign banks
maintained a minimum assigned capital and would be governed by the same rules and
regulations governing domestic banks. iii. Banks were given greater freedom to leverage the
capital markets and determine their asset portfolios. The banks were allowed to provide
advances against equity provided as collateral and provide bank guarantees to the broking
community.
India’s services sector has always served the Indian economy well, accounting for nearly 57
per cent of the gross domestic product (GDP). Here, the financial services segment has been a
significant contributor.

The financial services sector in India is dominated by commercial banks which have more
than 60 per cent share of the total assets; other segments include mutual funds, insurance
firms, non-banking institutions, cooperatives and pension funds.
The Government of India has introduced reforms to liberalize, regulate and enhance the
country’s financial services industry. Presently, the country can claim to be one of the
world’s most vibrant capital markets. In spite of the challenges that are still there, the sector’s
future looks good.

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Market Size:
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46
foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural
cooperative banks in addition to cooperative credit institutions As of November 2020, the
total number of ATMs in India increased to 209,282.

Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.

During FY16-FY20, bank credit grew at a CAGR of 3.57%. As of FY20, total credit
extended surged to US$ 1,698.97 billion. During FY16-FY20, deposits grew at a CAGR of
13.93% and reached US$ 1.93 trillion by FY20.

According to the RBI, bank credit and deposits stood at Rs. 108 trillion (US$ 1.5 trillion) and
Rs. 149.6 trillion (US$ 2.1 trillion), respectively, as of March 12, 2021.Credit to non-food
industries stood at Rs. 107.3 trillion (US$ 1.5 trillion), as of March 12, 2021. Non-food
industries grew at 5.7% in January 2021 as against an increase of 8.5% in January 2020.

Industry Profile
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46
foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural

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cooperative banks in addition to cooperative credit institutions As of November 2020, the
total number of ATMs in India increased to 209,282.

Investments/Developments:
Key investments and developments in India’s banking industry include:
In December 2020, in response to the RBI’s cautionary message, the Digital Lenders’
Association issued a revised code of conduct for digital lending.
As of February 27, 2021, the number of bank accounts opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’ reached 41.93
crore and deposits in Jan Dhan bank accounts stood at more than Rs. 1.70 lakh crore (US$
23.07 billion).
On November 6, 2020, WhatsApp started UPI payments service in India on receiving the
National Payments Corporation of India (NPCI) approval to ‘Go Live’ on UPI in a graded
manner.
In October 2020, HDFC Bank and Apollo Hospitals partnered to launch the ‘Healthy Life
Programmed’, a holistic healthcare solution that makes healthy living accessible and
affordable on Apollo’s digital platform.

In 2019, banking and financial services witnessed 32 M&A (merger and acquisition)
activities worth US$ 1.72 billion.
In March 2020, State Bank of India (SBI), India’s largest lender, raised US$ 100 million in
green bonds through private placement.
In February 2020, the Cabinet Committee on Economic Affairs gave its approval for
continuation of the process of recapitalization of Regional Rural Banks (RRBs) by providing
minimum regulatory capital to RRBs for another year beyond 2019-20 - till 2020-21 to those
RRBs which are unable to maintain minimum Capital to Risk weighted Assets Ratio (CRAR)
of 9% as per the regulatory norms prescribed by RBI.
The NPAs (Non-Performing Assets) of commercial banks recorded a recovery of Rs. 400,000
crores (US$ 57.23 billion) in the last four years including record recovery of Rs. 156,746
crores (US$ 22.42 billion) in FY19.

HISTORY:

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Although some form of banking, mainly of the money-lending type, has been in existence in
India since ancient times, it was only over a century ago that proper banking began. The first
bank in India, though conservative, was established in
1786. From 1786 till today, the journey of Indian Banking System can be segregated into
three distinct phases. They are
as mentioned below:
• Early phase from 1786 to 1969 of Indian Banks
• Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms
• New phase of Indian Banking System with the advent of Indian Financial & Banking Sector
Reforms after 1991the banking industry has moved gradually from a regulated environment
to a deregulated market economy. The market developments kindled by liberalization and
globalization have resulted in changes in the intermediation role of banks.
The pace of transformation has been more significant in recent times with technology acting
as a catalyst. While the banking system has done fairly well in adjusting to the new market
dynamics, greater challenges lie ahead.

STRUCTURE:
The Reserve Bank of India, the nation’s central bank, began operations on April 01, 1935. It
was established with the objective of ensuring monetary stability and operating the currency
and credit system of the country to its advantage. In India, the banks are being segregated in
different groups. Each group has their own benefits, own dedicated target markets, limitations
in operating in India. The commercial banking structure in India consists of Scheduled
Commercial Banks and Unscheduled Banks.
Scheduled commercial Banks constitute those banks which have been included in the Second
Schedule of Reserve Bank of India (RBI) Act, 1934. For the purpose of assessment of
performance of banks, the Reserve Bank of India categories them as public sector banks, old
private sector banks, new private sector banks and foreign banks.

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Industry Scenario:
Bank accounts opened under Go Pradhan Mantri Jan Dhan Yojana ~420 Mn and deposits in
Jan Dhan Yojana accounts were around $18.4 Bn.
Bank Credit from FY16-20 has registered a CAGR of 3.6% and as of FY20 and total credit
extended stand at ~$1.7
Investments stood as the 2nd largest component in the assets side of the total banks’ balance
sheets after loans and advances, driven primarily by Government securities.
As of 2020, the capital adequacy amongst Indian banks remained above regulatory
requirements with RBI also further relaxing the leverage ratio for banks to boost lending.
Deposits has registered a ~14% CAGR from $1.15 Tn (2016) to ~$2 Tn (2021). RBI has
taken steps to enable mobile payments key enablers to growth, by removing transaction limit
of $745 and allowing banks to set their own limits.
Recovery of stressed assets improved during 2019-20 through the IBC, 2016 and
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests
(SARFAESI) Act, 2002.

Functions of the Banking Industry:

Functions Banking teaser the banking industry is growing rapidly. It's estimated that the
assets of the 1,000 largest banks are worth almost $100 trillion USD. With the growth in the
industry, banks manage a diverse portfolio of functions. Bank provides various services and
offers many products. The following discussion explains the key functions of the bank:

 Provide security to the savings of customers by safeguarding it

 Offering interest on the deposits kept with it
 Control the supply of money and credit
 Arrange funds to the parties who need them by borrowing from parties who have surplus

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 Encourage public confidence in the working of the financial system
 Increase savings speedily and efficiently
 Avoid focus of financial powers in the hands of a few individuals and institutions
 Set equal norms and conditions to all types of customers Functions of the Banking
Industry
 Avoid focus of financial powers in the hands of a few individuals and institutions
 Set equal norms and conditions to all types of customers

Business Model: Dynamic Regulatory Environment

Regulations Banking teaser Banks operating in most of the countries are exposed to various
stringent regulations. Most governments enforce rules and procedures to govern their
operations and service offerings, and the manner in which they grow and expand their
facilities to better serve the public. A banker works within the financial system to provide
loans, accept deposits, and provide other services to their customers. They must do so within
a climate of extensive regulation, designed primarily to protect the public interests. The main
reasons why banks are heavily regulated are as follows:
• To protect the safety of the public's savings.
• To control the supply of money and credit in order to achieve a nation's broad economic
goal.
• To ensure equal opportunity and fairness in the public's access to credit and other vital
financial services.
• To promote public confidence in the financial system, so that savings are made speedily and
efficiently.
• To avoid concentrations of financial power in the hands of a few individuals and
institutions.
• Provide the Government with credit, tax revenues, and other services.
• To help sectors of the economy that they have special

Current Industry Trends:

Trends Banking teaser as a variety of models for cooperation and integration among finance
industries have emerged, some of the traditional distinctions between banks, insurance
companies, and securities firms are fast diminishing. In spite of all these developments, banks
continue to maintain and perform their primary role—accepting deposits and lending funds
from these deposits. During recent times, technological advances have enabled banks to
extend their reach globally, and there is no longer a need for customers to visit bank branches
for every transaction, as most of the transactions can happen online.

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The growth in cross-border activities has also increased the demand for banks that can
provide various services across borders to different nationalities. Despite these advances in
cross-border activities, the banking industry is nowhere near as globalized as some other
industries. There is no doubt that “Technology” is going to be a catalyst in that growth,
creating huge opportunities for professionals with a good understanding of the banking
industry domain.

Sector Profile: Banking Sector

Indian Banking Sector is extremely critical for the economic development of the country. The
last decade witnessed unprecedented growth and value creation in India’s banking sector with
little impact from the global financial crisis due to strong regulation and discipline. However,
the scenario is now changing due to various reasons. Tightening of monetary policy, a
burgeoning fiscal and current account deficit, the need for increased infrastructure lending,
de-regulation of interest rates on savings accounts, etc. have diluted the robust performance
of banks in comparison toother sectors. The RBI had increased lending rates 13 times
between March 2010 and October 2011 in a bid to rein in inflation. A direct result of this has
been the impact on demand, leading to reduced revenue, lower margins and an increase in
non –performing assets (NPAs) of banks.
Today, there are various concerns facing the Indian Banking Industry. However, some of the
issues that need immediate attention are as follows: Financial Inclusion – Financial inclusion
refers to delivery of banking services at an affordable cost to the vast sections of
disadvantaged and low-income group.
Priority Sector Lending – It is based on bringing unbanked into banking community. While
sectors included under PSL meet this overarching agenda, it also has to be feasible and self-
sustaining. Banks are being asked to use Banking Correspondents (BCs) to help meet with
their PSL targets.
Payment System - The Reserve Bank aims to develop a more efficient and integrated
payment system in the country. In its 'Payment Systems In India: Vision 2012-15'document,
main focus of RBI is to provide a modern electronic payments system that is safe, simple and
low-cost for use by all. Investments in Physical Gold and Real Estate - Today, a lot of money
is invested by
Indian households in acquiring physical gold and real estate industry that involves huge cash
transactions. It is therefore extremely essential for the government to look at ways to reduce
high cash transactions so that the money could be channelized by the banks in other revenue
generation schemes and liquidity in the system remains intact.
On the other hand, though investments in real estate sector contribute to employment
creation, it should be made more transparent so that the black money flowing into this sector
is controlled and becomes accountable. There should be more digitization of data.

HDFC Bank

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HDFC Bank Limited is a holding company. The bank offers a range of banking services
covering commercial and investment banking on the wholesale side and transactional/branch
banking on the retail side. It also offers financial services. The bank's segments include
treasury, retail banking, wholesale banking and other banking business.

ICICI Bank
ICICI Bank Limited is a banking sector company. The bank is engaged in providing a range
of banking and financial services, including commercial banking, retail banking, project and
corporate finance, working capital finance, insurance, venture capital and private equity,
investment banking, broking and treasury products and services. The bank...

State Bank of India (SBI)

State Bank of India provides a range of products and services to individuals, commercial
enterprises, large corporates, public bodies and institutional customers. It offers a range of
segments like treasury, which includes the entire investment portfolio and trading in foreign
exchange contracts and derivative contracts; corporate/wholesale banking.
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44
foreign banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural

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cooperative banks in addition to cooperative credit institutions. As of November 2020, the
total number of ATMs in India increased to 209,282.

According to the RBI, India’s foreign exchange reserves reached US$ 580.3 billion, as of
March 5, 2021. According to the RBI, bank credit and deposits stood at Rs. 107.75 trillion
(US$ 1.46 trillion) and Rs. 149.34 trillion (US$ 2.02 trillion), respectively, as of February 29,
2021.

Credit to non-food industries stood at Rs. 105.53 trillion (US$ 1.44 trillion), as of January 15,
2021.Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in
FY20.Total assets across the banking sector (including public, private sector and foreign
banks) increased to US$ 2.52 trillion in FY20.

Indian banks are increasingly focusing on adopting integrated approach to risk management.
The NPAs (Non-Performing Assets) of commercial banks has recorded a recovery of Rs.
400,000 crore (US$ 57.23 billion) in FY19, which is highest in the last four years.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the
banking sector. Total equity funding of microfinance sector grew 42% y-o-y to Rs. 14,206
crore (US$ 2.03 billion) in 2018-19.

As of February 27, 2021, the number of bank accounts opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’ reached 41.93
crore and deposits in Jan Dhan bank accounts stood at more than Rs. 1.70 lakh crore (US$
23.07 billion).

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Rising income is expected to enhance the need for banking services in rural areas, and
therefore, drive the growth of the sector.

The digital payments revolution will trigger massive changes in the way credit is disbursed in
India. Debit cards have radically replaced credit cards as the preferred payment mode in India
after demonetization. In February 2021, Unified Payments Interface (UPI) recorded 2.29
billion transactions worth Rs. 4.25 lakh crore (US$ 57.68 billion).

Government Initiatives:
As per Union Budget 2021-22, the government will disinvest IDBI Bank and privatize two
public sector banks.
As per Union Budget 2019-20, the Government proposed fully automated GST refund
module and an electronic invoice system that will eliminate the need for a separate e-way bill.
Government smoothly carried out consolidation, reducing the number of Public Sector Banks
by eight.
As of September 2018, the Government of India made Pradhan Mantri Jan Dhan Yojana
(PMJDY) scheme an open-ended scheme and added more incentives. The Government of
India planned to inject Rs. 42,000 crore (US$ 5.99 billion) in public sector banks by March.

Achievements:

Following are the achievements of the Government:

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In March 2021, Unified Payments Interface (UPI) recorded 2.73 billion transactions worth
Rs. 5 lakh crore (US$ 68.88 billion).
According to the RBI, India’s foreign exchange reserve reached US$ 574.82 billion as of
November 27, 2020.
To improve infrastructure in villages, 204,000 point of sale (Po’s) terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture & Rural
Development (NABARD).
The number of transactions through immediate payment service (IMPS) increased to 346.55
million in volume and amounted to Rs. 2.88 trillion (US$ 39.57 billion) in value in January
2021.

Evolution of use of Technology in the Industry

History of Banking in India:

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Banking in India forms the base for the economic development of the country. Major changes
in the banking system and management have been seen over the years with the advancement
in technology, considering the needs of people.

The History of Banking in India dates back before India got independence in 1947 and is a
key topic in terms of questions asked in various Government exams. In this article, we shall
discuss in detail the evolution of the banking sector in India. The banking sector development
can be divided into three phases:

Phase I: The Early Phase which lasted from 1770 to 1969

Phase II: The Nationalization Phase which lasted from 1969 to 1991

Phase III: The Liberalization or the Banking Sector Reforms Phase which began in 1991 and
continues to flourish till date.

Pre-Independence Period (1786-1947)

The first bank of India was the “Bank of Hindustan”, established in 1770 an located in the
then, Indian capital, Calcutta. However, this bank failed to work and ceased operations in
1832.
During the Pre-Independence period over 600 banks had been registered in the country, but
only a few managed to survive.

Following the path of Bank of Hindustan, various other banks were established in India. They
were:

The General Bank of India (1786-1791)

Oudh Commercial Bank (1881-1958)
Bank of Bengal (1809)
Bank of Bombay (1840)
Bank of Madras (1843)
If we talk of the reasons as to why many major banks failed to survive during the pre-
independence period, the following conclusions can be drawn:

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 Indian account holders had become fraud-prone
Lack of machines and technology
Human errors & time-consuming
Fewer facilities
Lack of proper management skills

Following the Pre-Independence period was the post-independence period, which observed
some significant changes in the banking industry scenario and has till date developed a lot.

Post-Independence Period (1947-1991)

At the time, when India got independence, all the major banks of the country were led
privately which was a cause of concern as the people belonging to rural areas were still
dependent on money lenders for financial assistance.
With an aim to solve this problem, the then Government decided to nationalize the Banks.
These banks were nationalized under the Banking Regulation Act, 1949. Whereas, the
Reserve Bank of India was nationalized in 1949.Candidates can check the list of Banking
sector reforms and Acts at the linked article.
Following it was the formation of State Bank of India in 1955 and other 14 banks were
nationalized between the time duration of 1969 to 1991. These were the banks whose national
deposits were more than 50 crores.

Given below is the list of these 14 Banks nationalized in 1969:

Allahabad Bank
Bank of India
Bank of Baroda
Bank of Maharashtra
Central Bank of India
Canera Bank
Dena Bank
Indian Overseas Bank
Indian Bank
Punjab National Bank
Syndicate Bank
Union Bank of India

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 United Bank
UCO Bank In the year 1980, another 6 banks were nationalized, taking the number to 20
banks. These banks included:

Andhra Bank
Corporation Bank
New Bank of India
Oriental Bank of Comm.
Punjab & Sind Bank
Vijaya Bank

Apart from the above mentioned 20 banks, there were seven subsidiaries of SBI which were
nationalized in 1959:

State Bank of Patiala

State Bank of Hyderabad
State Bank of Bikaner & Jaipur
State Bank of Mysore
State Bank of Travancore
State Bank of Saurashtra
State Bank of Indore
All these banks were later merged with the State Bank of India in 2017, except for the State
Bank of Saurashtra, which was merged in 2008 and State Bank of Indore, which was merged
in 2010.

Note: The Regional Rural Banks in India were established in the year 1975 for the
development of rural areas in India. Candidates can get the list of RRBs in India at the linked
article.

Impact of Nationalization:

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This post-Independence phase was the one that led to major developments in the banking
sector of India and also in the evolution of the banking sector.

Liberalization Period (1991-Till Date)

Once the banks were established in the country, regular monitoring and regulations need to
be followed to continue the profits provided by the banking sector. The last phase or the
ongoing phase of the banking sector development plays a significant role.

To provide stability and profitability to the Nationalized Public sector Banks, the
Government decided to set up a committee under the leadership of Shri. M Narasimha to
manage the various reforms in the Indian banking industry.

The biggest development was the introduction of Private sector banks in India. RBI gave
license to 10 Private sector banks to establish themselves in the country. These banks
included:

Global Trust Bank

ICICI Bank
HDFC Bank
Axis Bank
Bank of Punjab
IndusInd Bank
Centurion Bank
IDBI Bank
Times Bank
Development Credit Bank

The other measures taken include:

Setting up of branches of the various Foreign Banks in India No more nationalization of

Banks could be done.

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 The committee announced that RBI and Government would treat both public and private
sector banks equally Any Foreign Bank could start joint ventures with Indian Banks.
Payments banks were introduced with the development in the field of banking and
technology. Small Finance Banks were allowed to set their branches across India.
A major part of Indian banking moved online with internet banking and apps available for
fund transfer Thus, the history of banking in India shows that with time and the needs of
people, major developments have been done in the banking sector with an aim to prosper it.

Upcoming technological advancements in the industry

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In the new What’s Going on in Banking 2020 study, the top five technologies for 2020 are: 1)
Digital account opening; 2) P2P payments; 3) Video collaboration/ marketing; 4) Cloud
computing; and 5) Application programming interfaces (APIs). 1) Digital Account Opening

1) Digital Account Opening

Digital accounting opening (DAO) is the most popular technology for the third year in a row,
with a third of banks and credit unions expecting to add new or replacement systems in 2020.
An additional 46% plan to modify or enhance their existing DAO systems, up from the 39%
who said they would do so in 2019.
The continued focus on digital account opening begs the question: Why can’t banks get
digital account opening right?

There are a number of reasons but the primary cause is ineffective process design.

Many banks approach the account opening process from a regulatory compliance perspective.
It actually takes very little information to get an account open. Banks should redesign the
process to allow for the simplest account opening and funding possible—and then work on
reducing risk and meeting regulations.

2) Person-to-Person (P2P) Payments

Roughly three in 10 institutions plan to select a new or replacement P2P payment tool in
2020. That percentage is down from the 35% who planned to do so in 2019. But the number
of banks and credit unions looking to enhance or modify their P2P payment capabilities rises
from 25% in 2019 to 40% in 2020.
This is good news for Zelle.

According to a study from S&P Global, Zelle is now the P2P payment provider in 21 of the
25 largest US banks—with two more planning to launch Zelle. In the next 45 largest banks,
21 are Zelle banks, with two more coming on shortly.

If more banks and credit unions adopt Zelle—and then follow PNC’s lead and shut out
Venmo by locking out Plaid—consumers will increasingly find Zelle to be the most
convenient P2P payment option to use, causing some switching behavior.

Consumers may not be thrilled about it—but it’s hard to imagine that they’ll switch banks as
a result of it.

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3) Video Collaboration/Marketing

This technology is new to Cornerstone’s study and enters the charts with a little more than a
quarter of survey respondents indicating that they plan to add video collaboration/marketing
tools in 2020.

This would more than double the number of institutions deploying this technology, as just
one in five institutions say they’ve already implemented video collaboration/ marketing
platforms to date.

The rise of video collaboration/marketing into the top 5 was a long time coming.

Vendors—and some analysts for that matter—have been hyping video for a while now. One
study found that more than three-quarters of bank execs surveyed said that video technology:
1) accelerated decision making; 2) improved productivity; 3) boosted product innovation; and
4) improved the customer experience.

If that were true, why has it taken so long for banks to make investments in video?

Because: 1) Nearly every technology promises the benefits listed above, and 2) It’s taken this
long for banks to get serious about branch transformation, which is driving this uptick in
video investment.

4) Cloud Computing

A quarter of financial institutions plan to invest in or implement cloud computing

technologies in 2020. Forty percent say they’ve already done so, and half of them will
enhance or modify what they’ve got.

Despite these numbers, many C-level execs still oppose cloud computing. Cloud proponents
fail to sway the holdouts because their arguments run counter to the holdouts’ experiences—
and you can’t fight experience-based perceptions with theory.

5) APIs

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One in four community-based financial institutions plan to invest in or deploy APIs in 2020,
on top of the 35% that have already done so.

What are they hoping to accomplish? Back in 2015, I wrote the following:

“APIs will become central to the competitive dynamics of the industry. Banks must rapidly
assess fintech’s’ offerings, integrate them, and deploy them to their customer base.” APIs are
about speed, agility, and personalization. You’re dead in the water if: 1) It takes nine to 12
months to integrate partners’ products and/or data, or 2) The partnership process requires
significant time and resources to negotiate legal matters, revenue sharing, pricing, etc.

And for all the talk about personalization in banking, nothing that exists today comes close to
what’s possible in an environment with a robust set of partial-stack fintech providers and
smart full-stack banks integrated through APIs.

Conclusion

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The mobile and wireless market has been one of the fastest growing markets in the world.
The arrival of technology and the escalating use of mobile and smart phone devices, has
given the banking industry a new platform. Connecting a customer anytime and anywhere to
their money and needs is a must have service that has become an unstoppable necessity. This
worldwide communication is leading a new generation of strong banking relationships. The
banking world can achieve superior interactions with their public base if they accommodate
all their customer needs. They have a unique challenge to keep their customer alliances and
keeping up with the new technologies, and competitive strategies that other banks also have
to offer the public. Conveniences of services plus outside locations like ATMS are crucial to
every bank’s success. Meeting all challenges including safety and security are perfect
examples of good banking strategies. In order for the financial institutions to effectively grow
they must embrace the new technologies and customize them to suit their economic success
and the public’s success.

Online banking is certainly here to stay. Online banking is a necessity for the bank's that we
studied and others in order for them to stay in business. While its existence doesn't necessary
give them a competitive edge because it is so common place, it is truly a cost of doing
business.

As a tool of modern living and as a lifestyle aid, it is absolutely indispensable. The fact is that
many services that are now being offered with online banking are almost impossible to do
conveniently with regular banking.

As we venture into the future, the internet will undoubtedly continue to change the banking
industry.

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 Annexure
INSTITUTE OF TECHNOLOGY AND, SCIENCE
GHAZIABAD

The Project report of

KAJAL GOYAL
Technological Advancements in Banking Industry

is approved is acceptable in quality and form.

Internal Examiner External

Examiner
Name: Name:
Designation: Designation:

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