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Introduction
Liberalization and Globalization have shifted the focus of the Indian Banking
industry on the retail segment. All banks, irrespective of their size and origin, have
started consolidating their efforts on maximizing their benefits from this business
opportunity. Reforms of the financial sector initiated in 1995-96, removed the
operational constraints that were hindering the growth of the banking sector in
India. Since then, the banking sector has never looked back. In order to acquaint
yourself with banking, it is always beneficial to trace the history of banking. This
unit traces the phases of development of banking and then turns to the present
scenario in the banking industry.
In the 1920s, retail banking was already established. It already offers its services to
the public, but what it lacks is security. Retail banks are unregulated during those
times, which is bad because the clients’ money is not secured. Banks were also
using customers’ money in investing for their own benefits without the customer
knowing. For that same reason, when the stock market caused a problem that the
bank lost everyone’s money, they were not able to give it back. To resolve the
difficulty, the Federal Deposit Insurance Corporation was made to make sure that
the money of depositors would be secured and protected. It will also help banks
regulate the banking industry.