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Essay on “Banking in India” Complete Essay for Class 10, Class 12 and Graduation and other classes.

Banking in India

 

       Synopsis: The history of modern banking in India can be traced back to 1881. 14 major banks were nationalized in 1969 followed by another 6 in 1980.  The Reserve bank of India was set up in 1934. The State Bank of India, with 7 associate banks is the largest bank in the country.  There were 288 banks in March 1995 including nationalized and non-nationalized banks.  At the end of March 1995 three were 62,346 bank offices including those of the foreign banks.  Then there are number of Regional Rural banks numbering about 196.  The establishment of National Bank for Agriculture and Rural Development in 1992 was another milestone in banking.  The Export-import bank was set up in 1982 to look afar the financial needs of the exporters and importers.  Indecent years there has been phenomenal growth in banking sector and continuing reforms have ensured their competitiveness, viability and profitability.  So, some measures have been taken to tackle these problems.  

            The history of modern banking in India is about 100 years old.  The first bank of limited liability managed by Indians was Oudh Commercials Bank established in 1881. Later Punjab National Bank was set upon tin 1894. Swedish movement which began in 1906 encouraged the formation of number co commercial banks.  The Banking Companies was passed in January 1946 and the Banking Companies Act was passed in February 1946.  The Banking Companies Act was passed in February 1949.  The main objectives of public sector banks have been to mobilize savings and utilize them for productive purposes; to save large social purpose under close public regulation, legitimize credit needs of private sector industry and trade, to curb the use of nark credit for speculative and other unproductive purposes.

The Reserve Bank of India was set up me 1934 and nationalized in 1949. 

The Main objectives of the Bank are regulating issue of bank notes, keeping foreign exchange reserves of the country, operating currency nod credit system and developing financial structure of the country on sound lines consistent with natal social-economic objectives and policies.  The State Bank of India is the biggest commercial nab in the country. In these associated banks, SBI owns either the entire or the majority of share capital.

In the early years of independence, the number of bank offices was very

Small.  Injure 1951, it stood at 5,115, it increased to 6,168 in June 1969.  After the nationalization of banks. At the end of March 1995, there wren 62,346 bank offices and ranches including those of the foreign banks.  There are now 196 Regional Rural banks in all Sates except Sikkim and Hogan having a network of 14,542 branches and covering 408 districts.  In August 1996 the lending rates of these Regional Rural banks was deregulated by the RBI.

            The overall performance of public sector banks was negative which meant 0.07 per cent return on assets.  Low rates of return of many public sector banks, cooped with heavy losses of a few is a major source of concern.  The total non-performing assets (NPAs) of the Indian banking system are the highest in the world.  NPAs are lower in private and foreign banks because of a couple of reasons.  The government has initiated some measures to correct and improve the situation which include focusing a drastic reduction of NPAs, further recapitalization of banks, and Asset Reconstruction Fund (ARE) etc.  Another important measure is to set up a Settlement Advisory Committee (SAC), headed by a retired high court judge to advice on compromise of onetime settlement proposals.

            A good deposit growth and sluggish off take of credit were other features of the banking scene during the period.  The deposits of all scheduled commercial banks grew by 16.1 per cent (12.1 per cent last year); total credit rose by 8.9 per cent (20% per cent last year). Due to comfortable liquidity position, dependence of the banking system on high cost certificates of deposits for resource mobilization was substantially less.  Another important feature of the year was the cross-border capital flows which led to a fore reserve growth with the attendant appreciation of rupee against dollar.

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