Indian Banking Trends and Developments

The Indian economic climate has changed dramatically in recent years as a result of bank reforms and policies. The most significant shift is found in the financial sector, with the banking industry being the most affected. As a result, the banking industry is robust enough to endure any level of pressure and competition. As a result, these financial developments have been quite noticeable in recent years. India now has a fairly stable banking sector with different classes of banks contributing to it. In this article, we will know about the bank, types of banks and about the banking sector.

Description

The banking industry is critical to the economic prosperity of a country. Today, India has a reasonably developed banking system with many types of banks – public sector banks, foreign banks, private sector banks – both old and new generation, regional rural banks, and co-operative banks – with the Reserve Bank of India as the system’s fountainhead. 

Introduction to Bank

Banks are key to the economy because they provide essential services to both consumers and companies. You may execute typical banking operations such as deposits, withdrawals, check writing, and bill payments using a range of account types such as checking and savings accounts and certificates of deposit (CDs). You may also invest your money and earn interest on it. 

Indian Banking Sector 

The Indian banking sector may be broadly split into three categories:

Phase I: This lasted from 1786 to 1969 and was the first stage of banking. As a result, several small banks were established during this period.

Phase II: From 1969 to 1991, this period is marked by the regularisation, nationalisation, and expansion of banks.

Phase III: This phase begins in 1991 and comprises liberalisation and its aftereffects.

Banking Trends

Many developments have occurred in the banking business in recent years. These banking trends have simplified the entire banking procedure. Among these tendencies are the following:

RTGS stands for Real-Time Gross Settlement.

In March 2004, RTGS was implemented in India. It is a mechanism in which a bank gets electronic instructions for moving funds from one bank account to another bank account.

The movement of funds between accounts occurs in real-time,’ as the term implies.

The RBI operates and maintains the RTGS system.

E-cheques

This technology was created in the United States and will eventually replace traditional paper cheques in India. As a result, a negotiable instruments statute has been added in the modification to incorporate this type of E-cheque and make it necessary.

Electronic Clearing House

ECS is an electronic system that is used to make bulk payments and receipts. Payments must be comparable in type, which might be little in value and repeated. As a result, this service is especially useful for government organisations and businesses that make or receive big bulk payments. 

EFT stands for Electoral Funds Transfer

This is a method of transferring money from one’s bank account to another. So, under this approach, the concerned party tells the bank to make a cash payment or permits the bank to transfer the funds immediately. As a result, the sender should supply the bank with comprehensive information such as the receiver’s name, account type, account number of the corresponding bank, city name, branch name, and other facts.

ATM stands for Automatic Teller Machine

This is the most often used way of withdrawing money in India. Customers can use this service to withdraw money 24 hours a day, seven days a week. It enables clients to conduct all day-to-day banking activities without dealing with any people. Furthermore, these capabilities are utilised to pay finances, utility bills, and so on. 

Bank Types in India

In India, the modern banking process began in the late 18th century.  In India, there are now 34 banks, 12 of which are public sector banks and 22 of which are private sector banks.

Types of banks in India are:

• The Central Bank

The Central Bank of a country is the principal bank that monitors and synchronises all of the other banks in the country. In India, the Central Bank is known as the ‘Reserve Bank of India’ (RBI). The RBI is often referred to as the “government’s bank” or the “banker’s bank.”

• Cooperative Banks

Such banks function under the authority of the state government. The primary goal of these banks is to ensure the public’s social well-being.

This is accomplished by providing loans that are subject to concession based on user comfort.

• Commercial banks 

These banks are governed by the Banking Companies Act of 1956. These are frequently administered by either the government or a commercial company. The primary goal of such banks is to maximise profits through their commercial practices.

• Rural Regional Banks

These banks began operations in 1975 under the Regional Rural Bank Act of 1976.  The establishment of 196 occurred between 1987 and 2005. These banks are owned by the national government to the tune of 50%, the state government to the tune of 15%, and the commercial bank to the tune of 35%.

• Local Area Banks

These banks were founded in 1996 and operate under the Companies Act of 1956. These are profit-seeking banks.

These are operated by private companies.

There are now four Local Area Banks in India. All of them are located in the southern region of the country.

• Specialised banks

The specialist banks include the ‘Export and Import’ (EXIM) Bank. These banks fund exports and imports, as well as make loans. The ‘National Bank for Agricultural & Rural Development’ frequently assumes commercial and monetary responsibility for rural artworks, handicrafts, communities, and agricultural development (NABARD).

• Small Financing Institutions

The country’s national government regulates and controls it. Responsible for providing financial assistance and loans to small enterprises and trades such as farming or the impoverished unorganised sector.

Conclusion

All of these advances in Indian banking demonstrate that Indian banks are shifting toward contemporary banking, which is altering the face of conventional banking in the Indian economy. They are using information technology for the banking industry and are attempting to give their consumers technology-based banking goods and services. You may also invest your money and earn interest on it.