INTRODUCTION TO BANKING

Submitted to Miss.Amina

Group members:

Aakanksha. B- 9106
Dhanashree.B-9168
Nilesh. J- 9100
Introduction

 Development of Banking is evolutionary

in nature.
 Bank performs a multitude of functions

and services.
 In brief, “Banking is what bank does”.
 The Oxford Dictionary defines a bank as

“an establishment for the custody of

money which it pays out on a customer’s
order”.
Evolution
Origin of word “bank”

Banck – German

Banco – Italian

Bacus/ Banque

Bank- English
Origin of Banking
The origin of modern banks is traced to
three important sources. They are,
i. The goldsmiths
ii. The moneylenders and
iii. The merchant bankers.
Meaning
A bank is an institution which deals in
money and credit
 Bank is an intermediary which handles

other people ‘s money both for their

advantage and to its own profit.
Definition
 Section 5(b) defines “banking as accepting
for the purpose of lending or investment of
deposits of money from the public, repayable
on demand or otherwise and withdraw able
by cheque, draft, order or otherwise”.
 Crowther defines bank as, “one that collects

money from those who have it to spare or

who are saving it out of their income and
lends the money so collected to those who
require it”.
Features of Banking
 Dealing in money
 Deposits must be withdrawable
 Dealing with credit
 Commercial in nature
 Nature of agent
Beginning As Public Enterprise

YEAR NAME OF BANK

1157 BANK OF VENICE

1401 BANK OF BARCELONA

1407 BANK OF GENOA

1609 BANK OF AMSTERDAM

Development of Banking

The East India Company had laid the

foundations for modern banking in the
first-half of the 19th century with the
establishment of the following three
banks:
NAME OF BANKS YEAR

BANK OF BENGAL 1809

BANK OF BOMBAY 1840

BANK OF MADRAS 1843

Con’t of Development of Banking
 The above banks are known as “Presidency
Banks” and functions as a independent units.
 During the last part of 19th century and early
phase of 20th century, the ‘Swadeshi
Movement’ induced the establishment of a
number of banks with Indian Management.
 Example are shown in table form as follows:
Indian Banks
NAME OF BANKS YEAR

PUNJAB NATIONAL BANK LTD. 1895

THE BANK OF INDIA LTD. 1906

THE CANARA BANK LTD. 1906

THE INDIAN BANK LTD. 1907

THE BANK OF BARODA LTD. 1908

THE CENTRAL BANK OF INDIA 1911 AND MANY MORE

LTD.
Subsidiary of State Banks of India
In 1959, the ‘State Bank of India’ (subsidiary
banks) Act was passed by which the public
sector was further extended.
 THE STATE BANK OF BIKANER
 THE STATE BANK OF JAIPUR
 THE STATE BANK OF INDORE
 THE STATE BANK OF MYSORE
 THE STATE BANK OF PATIALA
 THE STATE BANK OF HYDERABAD
 THE STATE BANK OF SAURASHTRA
Number of Bank Branches
Year End Branches
1998 66408
1999 67157
2000 67868
2001 67937
2002 68195
Classification of Banks
 Central Banks
 Commercial Banks
 Industrial or Development Banks
 Exchange Banks ( Authorised dealers in foreign
exchange)
 Co-operative Banks
 Land Mortgage Banks
 Indigenous Banks
 Savings Banks
 Supranational Bank
 International Banks
Banking Systems
 Unit Banking
 Branch Banking
 Correspondent Banking
 Chain Banking
 Group Banking
 Pure Banking
 Mixed Banking
 Relationship Banking
Cont’d Banking Systems
 Narrow Banking
 Universal Banking
 Regional Banking
 Retail Banking
 Wholesale Banking
 Private Banking
Economic Development Through
Banking Systems
Industrial
Employment
Developmen
t
Income

Consumptio
n Banking
System
Savings

Production

Investments
Banks & Economic Development
IMPORTANCE
‣ Capital formation
 Creation of money
 Strengthen the link between organised and

unorganised sector
 Provision of long-term loans
 Helping agriculture and small scale industries
 Entrepreneurial development
 Cheque system - Medium of exchange
Cont’d
 Regulation of the flow of national savings
 Comprehensive infrastructural facilities
 Maintaining Balance of Trade
 Mitigating the effects of trade cycle
 Sectoral Priorities
 Catalyst in social change
 Effective implementation of monetary

policy