banking sector
CHAPTER I
INTRODUCTION
PART A- BANKING INDUSTRY
Indian Banking has come from a long way from being a sleepy business organization to a highly proactive and dynamic entity. This transformation has been brought by the liberalization and economic reforms that allowed Banks to explore new business opportunities. Banking in India has evolved through five distinct phases. Each phase could be separated from the other by a landmark development in the sphere of Banking Sector.
Phase I –Pre-independence Phase (up to 1947)
India had centuries old tradition of indigenous Banking. There existed many evidences showing that the concept of Banking was not new to India. As Chanakya‟s Arthashashtra about 3000 B.C. showed facts that Banking was already there in powerful existence in
India. Banking began with the foundation of the Agency houses in Calcutta and Bombay in
18 century 1.
1
In early periods, the lending money was simple and easy as it was sahukar who financed clients whom he closely knows. Moneylenders used to be known as people who fulfilled urgent needs of people but later they were known for malpractices. As they charged extra rates of interests and made illiterate people fool. With the arrival of the British rule, indigenous Banking received a setback.
The Bank of Hindustan was established in 1770 and due to the financial crisis, it was closed in 1832. The most significant achievement of this period was emergence of three
Presidency Banks: Bank of Bengal (1809), Bank of Bombay (1840) with a capital of Rs.52 lakhs, and Bank of Madras (1843) with a capital of Rs. 30 lakhs. These were Quasi
Government Institutions under charter from Local Government, which contributed to the share capital 2. Establishment of Joint Stock Banks like, Allahabad Bank of India 1865,
Alliance Bank of Simala 1894, and other Banks started gaining grounds by 1900. There were total 20 Banks, comprising of three Presidency Banks, nine Indian Banks, and
INTRODUCTION
PART A- BANKING INDUSTRY
Indian Banking has come from a long way from being a sleepy business organization to a highly proactive and dynamic entity. This transformation has been brought by the liberalization and economic reforms that allowed Banks to explore new business opportunities. Banking in India has evolved through five distinct phases. Each phase could be separated from the other by a landmark development in the sphere of Banking Sector.
Phase I –Pre-independence Phase (up to 1947)
India had centuries old tradition of indigenous Banking. There existed many evidences showing that the concept of Banking was not new to India. As Chanakya‟s Arthashashtra about 3000 B.C. showed facts that Banking was already there in powerful existence in
India. Banking began with the foundation of the Agency houses in Calcutta and Bombay in
18 century 1.
1
In early periods, the lending money was simple and easy as it was sahukar who financed clients whom he closely knows. Moneylenders used to be known as people who fulfilled urgent needs of people but later they were known for malpractices. As they charged extra rates of interests and made illiterate people fool. With the arrival of the British rule, indigenous Banking received a setback.
The Bank of Hindustan was established in 1770 and due to the financial crisis, it was closed in 1832. The most significant achievement of this period was emergence of three
Presidency Banks: Bank of Bengal (1809), Bank of Bombay (1840) with a capital of Rs.52 lakhs, and Bank of Madras (1843) with a capital of Rs. 30 lakhs. These were Quasi
Government Institutions under charter from Local Government, which contributed to the share capital 2. Establishment of Joint Stock Banks like, Allahabad Bank of India 1865,
Alliance Bank of Simala 1894, and other Banks started gaining grounds by 1900. There were total 20 Banks, comprising of three Presidency Banks, nine Indian Banks, and
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