Banking in India

Banks accept deposits and offer loans. They offer services like currency exchange, wealth management, and safe deposit boxes to consumers. For decades, India’s banking system has been meeting the country’s credit and banking demands. There are multiple levels in the current Indian banking structure to meet the various and distinct requirements of different clients and borrowers. Deposit mobilisation and economic growth in India rely heavily on the country’s banking system. Financial sector changes have significantly impacted the banking system’s performance and strength (1991). Deposits and loans are handled by banks, which are financial entities. Every type of bank has a certain role and they all do so in distinct ways.

Banking in India

• One of India’s largest and oldest banks, the State Bank of India, is still in operation (SBI). About a month after its founding, the Bank of Calcutta officially opened its doors for business. It was called the Bank of Bengal in 1809. Presidency governments built two more banking institutions in India: The Bank of Bombay, in 1840, and Madras’ Bank of Madras, a few years later. 
• When India gained independence in 1947, the Imperial Bank of India amalgamated with the State Bank of India to establish the State Bank of India. In India, the presidency banks and its successors served as quasi-central banks for many years before the RBI Act, 1934, established the Reserve Bank of India in 1935.
• According to a 1959 law, the SBI was handed responsibility of eight state-associated banks in 1960. These institutions are now referred to as “affiliate banks” by the company. A prominent private bank, Bank of India, was one of 14 that the Indian government nationalised in 1969. 
• Additional private banks were nationalised in 1980, bringing the total to eight. The bulk of Indian borrowers get their loans from these government-owned institutions. Because of their size and extensive reach, they have a monopoly in the banking industry.

Classification of Banks

Scheduled Banks

These are the Indian banks that have been placed in the Second Schedule of the Reserve Bank of India Act, 1934, and are referred to as “scheduled banks.” One of the primary advantages of being a Scheduled Bank is that it is qualified to borrow money from the Reserve Bank of India (RBI) at a bank rate.

Non-Scheduled Banks

These do not fall under this second schedule. They do not enjoy the facilities and privileges of scheduled banks. 

Nationalised Banks in India 

Nationalisation in 1969

Only the SBI is a government-owned bank in India, and the rest are privately owned and run. A key ally in India’s economic growth throughout the 1960s was the country’s banking sector. A controversy about the nationalisation of the banking industry had also erupted as it had triggered major employment. In a presentation titled “Stray thoughts on Bank Nationalization,” then-Indian Prime Minister Indira Gandhi laid out the government’s intentions at the All India Congress Meeting’s annual convention.

Subsequently, on July 19, 1969, at the stroke of midnight, the Indian government promulgated the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, which brought India’s 14 main commercial banks under government control. These banks held 85% of the nation’s bank deposits. The Bill was enacted by Parliament two weeks after the ordinance was issued, and the president signed it into law on August 9, 1969.

Nationalisation in 1980

In 1980, six additional commercial banks were nationalised as part of a second series of bank takeovers. For the stated purpose of giving the government more control over loan supply, nationalisation was cited. Around 91% of the banking sector in India was under the jurisdiction of the Indian government after the second series of nationalisations. 

Private Banks in India

Individuals or general partners with limited partners own private banks referred to as private banks. Private banks aren’t governed by a formal structure like an LLC or corporation. Creditors have access to both the bank’s “entirety of assets” and the bank’s “entirety of assets” in any such scenario. Some of the best banks in India are private banks. 

The following are the private banks in India:

1. Axis Bank Ltd
2. City Union Bank Ltd.
3. Bandhan Bank Ltd.
4. CSB Bank Limited
5. YES Bank Ltd.
6. IDBI Bank Limited
7. Federal Bank Ltd.
8. HDFC Bank Ltd
9. DCB Bank Ltd.
10. ICICI Bank Ltd.
11. IndusInd Bank Ltd
12. IDFC FIRST Bank Limited
13. Jammu & Kashmir Bank Ltd.
14. RBL Bank Ltd.
15. South Indian Bank Ltd.
16. Kotak Mahindra Bank Ltd
17. Nainital Bank Ltd.
18. Tamilnad Mercantile Bank Ltd.
19. Dhanlaxmi Bank Ltd.
20. Karnataka Bank Ltd.
21. Karur Vysya Bank Ltd.

Conclusion

Banks are licensed to accept deposits and offer loans. Services such as currency exchange, wealth management, and safe deposit boxes are among options that banks can give to their customers. Banks come in a variety of shapes and sizes. There are commercial banks, retail banks, scheduled banks, rural retail banks, corporate banking institutions, investment banks and many more. Typically, banks are regulated by the government or central bank in the majority of nations.