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Banks in India

India has a well developed banking system. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders, agriculturists and budding Indian industrialists. The origin of banking in India can be traced back to the last decades of the 18th century. The General Bank of India and the Bank of Hindustan, which started in 1786 were the first banks in India. Both the banks are now defunct. The oldest bank in existence in India at the moment is the State Bank of India. The State Bank of India came into existence in 1806. At that time it was known as the Bank of Calcutta. SBI is presently the largest commercial bank in the country. The role of central banking in India is looked by the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in 1947 and was given broader powers. In 1969, 14 largest commercial banks were nationalized followed by six next largest in 1980. But with adoption of economic liberalization in 1991, private banking was again allowed. 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. RBI includes only those banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) of the Act. Indian banks can be broadly classified into public sector banks (those banks in which the Government of India holds a stake), private banks (government doe not have a stake in these banks; they may be publicly listed and traded on stock exchanges) and foreign banks. Bank Fixed Deposits Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. There is great flexibility in maturity period and it ranges from 15days to 5 years. Current Account Current Account is primarily meant for businessmen, firms, companies, public enterprises etc. that have numerous daily banking transactions. Current Accounts are cheque operated accounts meant neither for the purpose of earning interest nor for the purpose of savings but only for convenience of business hence they are non-interest bearing accounts Demat Account Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a demat account in order to buy or sell shares.

Recurring Bank Deposits Under a Recurring Deposit account (RD account). when Imperial Bank of India was nationalised (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. under some circumstances the people above 55 years of age are also eligible to enjoy the benefits of this scheme. RBI has 22 regional offices and most of them are located in state capitals. 1935 in accordance with the provisions of the Reserve Bank of India Act. 1934. However. Banks of Bengal. three major banks i. In 1921. Reserve Bank of India The Reserve Bank of India was established on April 1. The Reserve Bank of India also has three fully owned subsidiaries: .e. Government has come up with a road map for expansion of foreign banks in India. 1935 in accordance with the provisions of the Reserve Bank of India Act. Its central office is in Mumbai where the Governor of RBI sits. Bank of Bombay. The history of nationalised banks in India dates back to mid-20th century. Though initially RBI was privately owned. They have helped made Indian Banking system more competitive and efficient. 1934. The deposit has a fixed tenure. a specific amount is invested in bank on monthly basis for a fixed rate of return. The main advantage of Savings Bank Account is its high liquidity and safety. it was nationalized in 1949. merged to form Imperial Bank of India. it was nationalized in 1949. Senior Citizen Saving Scheme 2004 The Senior Citizen Saving Scheme 2004 had been introduced by the Government of India for the benefit of senior citizens who have crossed the age of 60 years. Private Banks in India Initially all the banks in India were private banks. at the end of which the principal sum as well as the interest earned during that period is returned to the investor. which were founded in the pre-independence era to cater to the banking needs of the people. Nationalised Banks Nationalised banks dominate the banking system in India. and Bank of Madras. Its central office is in Mumbai where the Governor of RBI sits. Reserve Bank of India The Reserve Bank of India was established on April 1. Savings Bank Account Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. Foreign Banks in India Foreign banks have brought latest technology and latest banking practices in India. Though initially RBI was privately owned.

State Bank of Patiala (SBP). As per the Reserve Bank of India Act there are Official Directors and Non-Official Directors. Indian Bank. The board is appointed by the Government of India. Issues and exchanges or destroys currency and coins not fit for circulation. State Bank of Saurashtra (SBS). implements and monitors the monetary policy and thereby plays a key role in maintaining price stability and ensuring adequate flow of credit to productive sectors. Central Bank of India. State Bank of Mysore (SBM). one each from four local boards in Mumbai. its seven subsidiaries were also nationalised with deposits over 200 crores. there are four other Non-Official Directors. and State Bank of Travancore (SBT). when Imperial Bank of India was nationalised (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. Corporation Bank. The nationalised 14 major commercial banks were Allahabad Bank. Bank of Baroda. The directors are nominated / appointed for a period of four years. Main Functions of RBI • • • • • • Reserve Bank of India is the main monetary authority of the country. It formulates. Non-Official Directors are nominated by the government. It manages the foreign exchange of the country. also acts as their banker. It prescribes broad parameters of banking operations within which the country's banking and financial system functions. The Official Directors are appointed by the government and include Governor and Deputy Governors of RBI. Punjab National Bank (PNB). Maintains banking accounts of all scheduled banks. Union Bank of India. Chennai and New Delhi. Apart from these. Bank of India. the major nationalisation of banks happened in 1969 by the then-Prime Minister Indira Gandhi.National Housing Bank (NHB). State Bank of Indore (SBIR). Punjab and Sind Bank. There cannot be more than four Deputy Governors. Then on 19th July 1960. Bank of Maharashtra. UCO Bank. These subsidiaries of SBI were State Bank of Bikaner and Jaipur (SBBJ). However. Andhra Bank. The functions of Reserve Bank are governed by central board of directors. Deposit Insurance and Credit Guarantee Corporation of India (DICGC). Indian Overseas Bank. The major objective behind nationalisation was to spread banking infrastructure in rural areas and make cheap finance available to Indian farmers. RBI is the regulator and supervisor of the financial system in the country. Performs merchant banking function for the central and the state governments. Dena Bank. United Bank of India . Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL). The history of nationalised banks in India dates back to mid-20th century. Canara Bank. Syndicate Bank. State Bank of Hyderabad (SBH). Kolkata. Nationalised Banks in India Nationalised banks dominate the banking system in India. Oriental Bank of Commerce (OBC). These include ten Directors from various fields and one government official.

It serves 90 million customers through a network of 9. the State Bank of India is the largest commercial bank of India and is ranked one of the top five banks worldwide. In the year 1980. in which 7 more banks were nationalised with deposits over 200 crores. the Government of India held a control over 91% of the banking industry in India. the second phase of nationalisation of Indian banks took place. At present.000 branches. With this. After the nationalisation of banks there was a huge jump in the deposits and advances with the banks. and Vijaya Bank. List of Public Sector Banks in India is as follows: • • • • • • • • • • • • • • • • • • • • • • • • • • • • Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India (SBI) State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank IDBI Bank Private Banks in India .(UBI).

private banks have played a major role in the development of Indian banking industry. Thus. it was later amalgamated with Oriental Bank of Commerce (OBC). At present. etc. They have made banking more efficient and customer friendly.Initially all the banks in India were private banks. merged to form Imperial Bank of India. The Government of India issued an ordinance and nationalized the 14 largest commercial banks of India. 5 lakhs and a paid up capital of Rs. the Reserve Bank of India (RBI) was established and it took over the central banking responsibilities from the Imperial Bank of India. 45270. Imperial Bank of India was subsequently transformed into State Bank of India (SBI). Central Bank of India. which came to be known as New Generation tech-savvy banks. Kotak Mahindra Bank. Jammu & Kashmir Bank. thus. after the declaration of first-five year plan.e. Banks of Bengal. Allahabad Bank. In 1955. Chatterji. including Punjab National Bank (PNB). In 1921. In 1994. In 1935. the then finance minister of the erstwhile Mewar Government.C. Following this. the first private bank after liberalization. 1943. the GOI nationalized 6 more commercial banks. ING Vysya Bank. Bank of Bombay. extensively contributed towards the establishment of the Bank. Karnataka Bank. Undoubtedly. with an authorized capital of Rs. Global Trust Bank was. Canara Bank. occurred the nationalization of major banks in India on 19 July 1969. In 1980. with control over 91% of banking business of India. etc. Private Banks in India include leading banks like ICICI Banks. and Bank of Madras. Then Housing Development Finance Corporation Limited (HDFC) became the first (still existing) to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. in the . at Udaipur. transferring commercial banking functions completely to IBI. Catholic Syrian Bank was incorporated on 26th November 1920. the Reserve Bank Of India issued a policy of liberalization to license limited number of private banks. Major private banks in India are: Bank of Rajasthan A leading private sector bank. in the Thrissur district of Kerala. being tech-savvy and full of expertise. In the process they have jolted public sector banks out of complacency and forced them to become more competitive. SBI Commercial and International Bank. Shri Rai Bahadur P. Dhanalakshmi Bank The foundation of Dhanalakshmi Bank Limited was laid down on 14th November 1927. three major banks i. public sector banks revived to take up leading role in the banking structure. the Bank of Rajasthan was founded on the auspicious day of Akshya Tritiya on May 8. Catholic Syrian Bank With the Swadeshi Movement of early 20th century as its base. which were founded in the pre-independence era to cater to the banking needs of the people. The bank commenced its operations on 1st January 1921.

when the company offered ICICI Bank's shares to the public. in Kashmir (India).Thrissur district of Kerala. a global financial powerhouse boasting of Dutch origin. when erstwhile Vysya Bank Ltd was merged with ING. in Central Travancore (a princely state later merged into Kerala). more commonly referred to as J&K Bank. Four years later. with an authorized capital of Rs. Some of its financial services include commercial banking. The bank was incorporated on 1st October 1938 and it was in the following year (more precisely on 4th July 1939) that it commenced its business. as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI).000 and only 7 employees. Federal Bank Federal Bank Limited was founded as Travancore Federal Bank Limited in the year 1931. one of initial banks to be set up in the private sector of India Jammu & Kashmir Bank The origin of Jammu and Kashmir Bank Limited. for setting up a bank in the private sector. ICICI's shareholding was reduced to 46%. . 5000. ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange (NYSE) ING Vysya Bank ING Vysya Bank Ltd came into being in October 2002. in 1994. under Travancore Company's Act. It was one of the first banks to receive an 'in principle' approval from RBI. ICICI Bank ICICI Bank started as a wholly owned subsidiary of ICICI Limited. Karnataka Bank Karnataka Bank Limited is a leading private sector bank in India. Kotak Mahindra Bank Kotak Mahindra Bank is one of India's leading financial private banking institutions. Karur Vysya Bank The Karur Vysya Bank Limited commonly known as KVB was set up by Late Shri M. a place near Tiruvalla. life insurance and investment banking. Venkatarama Chettiar and the Late Shri Athi Krishna Chettiar. a town located in the Kannada district of Karnataka. was established in the year 1994. HDFC Bank Housing Development Finance Corporation Limited. can be traced back to the year 1938. mutual funds. when it was established as the first state-owned bank in India. a textile town in the Tamil Nadu state of India. the two great visionaries in 1916 in Karur. In the year 2000. more popularly known as HDFC Bank Ltd. stock broking. an Indian financial institution.A. A group of innovative entrepreneurs had started the bank with a capital of Rs. It was incorporated on 18th February 1924 at Mangalore. Vysya Bank Ltd.11. The bank emerged as a major player during the freedom movement of 20th Century India. It offers banking solutions that covers almost every sphere of life. It was established at Nedumpuram.

Three different banks viz. the Khalij Commercial Bank. Foreign Banks in India Foreign banks have brought latest technology and latest banking practices in India. the State Bank of India. Established in 1995 to back SBI's corporate and international banking services. Life Insurance Corporation of India (LIC) and General Insurance Corporation ltd. the Emirates Commercial Bank and the Federal Commercial Bank merged in the month of July . YES Bank Yes Bank is one of the top most private Indian banks. the world's single AAA rated private Bank. foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or conversion of existing branches into a WOS. The second phase will commence in April 2009 after a review of the experience gained after due consultation with all the stake holders in the banking sector. Abu Dhabi Commercial Bank Ltd. The review would examine issues concerning extension of national treatment to WOS. when King Williem – I issued a Royal Decree declaring the establishment of the Nederlandsche Handel-Maatschappij (Netherlands Trading Society. (SBICI) is a completely owned private auxiliary of India's biggest banking and financial services set up. Awarded by the only Greenfield license award by RBI in last 14 years. The bank was sponsored together by the administrator of the specified undertaking of the Unit Trust of India. this bank is established and run by Rana Kapoor and Ashok Kapur with the financial support of Rabobank Nederland. The NTS had been established with an aim to promote the trade between the Netherlands and the Dutch East Indies.SBI Commercial and International Bank SBI Commercial and International Bank. the SBI Commercial and International Bank is the only bank in India to be been awarded ISO-9002 quality systems certification for the Bank as a whole UTI Bank Axis Bank was formed as UTI when it was incorporated in 1994 when Government of India allowed private players in the banking sector. Abu Dhabi Commercial Bank (ADCB) is one of the most prominent nationalized banks of the United Arab Emirates (UAE). The road map has two phases. During the first phase between March 2005 and March 2009. Major foreign banks in India are: ABN-AMRO Bank The history of ABN Amro Bank dates back to the year 1924. Government has come up with a road map for expansion of foreign banks in India. dilution of stake and permitting mergers/acquisitions of any private sector banks in India by a foreign bank. They have helped made Indian Banking system more competitive and efficient. NTS).

American Express Bank Ltd With its headquarters located in New York. still a huge chunk of its revenues originate from the continents of Asia. Deutsche Bank Deutsche Bank. currently operational within over 70 nations with more than 1.. headquartered at Frankfurt in Germany. It is one the world's leading international financial service providers with roughly EURO 2. Although the bank is located in Britain.000 strong workforce as of April 2009. ranks among the global leaders in corporate banking and securities. and is a part of the financial services company Citigroup.700 branches and 73. and is known to be one of the largest banks to exist in South East Asian region by asset value. HSBC Ltd HSBC Bank is a subsidiary of HSBC Holdings plc.S. as reported by The Banker magazine. Africa and Middle East. Citibank had been founded in the year 1812.1985. according to the Forbes magazine. Initially its name was City Bank of New York. Traveller’s Cheque and Charge Card services. and is well known all around the world for its dedicated Credit Card.000 clients.S.2 trillion in assets and approximately 80. which was later changed to First National City Bank of New York. and the largest bank in the Eurozone (consortium of countries having adopted Euro as their primary currency). .. asset management. is the largest banking group in the world. and private wealth management. The government of Singapore established the DBS Bank in the year 1968. and it was primarily aimed at providing development oriented financial services. DBS Bank Ltd DBS Bank is a Singapore-based bank. BNP Paribas BNP Paribas is one of the oldest banks in the continent of Europe. and the 6th largest company in the world as of April 2009. a London based banking giant which. Barclays GRCB India has placed itself amongst the most respected foreign banks in the country that is serving more than 830. Standard Chartered Bank Standard Chartered Bank is a London based bank. leading to the incorporation of the Abu Dhabi Commercial Bank. American Express company is a global financial services provider. transaction banking. In a short period of just two and a half years.700-strong workforce offering its services to the bank. American Express had been established in the year 1850. U.000 employees. also known as “AmEx” in short. Citibank Citibank is one of the largest banks in the U. Barclays Bank Barclays GRCB India is led by Samir Bhatia as its Managing Director. The bank is present in 87 countries with a 162.