History 1
History 1
History 1
co
1
www.gradeup.co
The advancement in the Indian banking system is classified into 3 distinct phases:
• This phase is characterized by the presence of large number of banks (more than
600).
• Banking system commenced in India with the foundation of Bank of Hindustan in
Calcutta (now Kolkata) in 1770 which ceased to operate in 1832.
• After that many banks came but were not successful like:
(1) General Bank of India (1786-1791)
(2) Oudh Commercial Bank (1881-1958) – the first commercial bank of India.
• Whereas some are successful and continue to lead even now like:
(1) Allahabad Bank (est. 1865)
(2) Punjab National Bank (est. 1894, with HQ in Lahore (that time))
(3) Bank of India (est. 1906)
(4) Bank of Baroda (est. 1908)
(5) Central Bank of India (est. 1911)
• While some others like Bank of Bengal (est. 1806), Bank of Bombay (est. 1840),
Bank of Madras (est. 1843) merged into a single entity in 1921 which came to be
known as Imperial Bank of India.
• Imperial Bank of India was later renamed in 1955 as the State Bank of India.
• In April 1935, Reserve Bank of India was formed based on the recommendation
of Hilton Young Commission (set up in 1926).
• In this time period, most of the bank were small in size and suffered from a high
rate of failures. As a result, public confidence is low in these banks and deposit
mobilization was also very slow. People continued to rely on the unorganized sector
(moneylenders and indigenous bankers).
• Broadly the main characteristic feature of this phase is the Nationalization of the
bank.
• With the view of economic planning, nationalization emerged as an effective
measure.
Need for nationalization in India:
(a) The banks mostly catered to the needs of large industries, big business houses.
(b) Sectors such as agriculture, small-scale industries and exports were lagging
behind.
(c) The poor masses continued to be exploited by the moneylenders.
• Following this, in the year 1949, 1st January the Reserve Bank of India was
nationalized.
2
www.gradeup.co
• Fourteen commercial banks were nationalized on 19th July 1969. Smt. Indira
Gandhi was the Prime Minister of India, during in 1969.
i. Andhra Bank
ii. Corporation Bank
iii. New Bank of India
iv. Oriental Bank of Commerce
v. Punjab & Sindh Bank
vi. Vijaya Bank
Impact of Nationalization:
• Improved efficiency in the Banking system – since the public‘s confidence got
boosted.
• Sectors such as Agriculture, small and medium industries started getting funds which
led to economic growth.
• Increased penetration of Bank branches in rural areas.
3
www.gradeup.co
• This period saw remarkable growth in the process of development of banks with the
liberalization of economic policies.
• Even after nationalization and the subsequent regulations that followed, a large
portion of masses is untouched by the banking services.
• Considering this, in 1991, the Narasimham committee gave its recommendation
i.e. to allow the entry of private sector players into the banking system.
• Following this, RBI gave license to 10 private entities, out of which few survived the
market demands, which are- ICICI, HDFC, Axis Bank, IndusInd Bank, DCB.
• In 1998, the Narsimham committee again recommended the entry of more private
players. As a result, RBI gave a license to the following newbies:
(a) Kotak Mahindra Bank (2001)
(b)Yes Bank (2004)
• In 2013-14, the third round of bank licensing took place and in 2015, IDFC bank
and Bandhan Bank emerged.
• In order to further financial inclusion, RBI also proposed to set up 2 new kinds of
banks i.e. Payment Banks and Small Banks.
• In 2015, RBI gave in-principle licence to 11 entities to launch Payments Bank
and granted 'in-principle' approval to the 10 applicants to set up Small Finance
Banks.
Note:
• The RBI issued a license to the bank under Section 22(1) of the Banking
Regulation Act, 1949, to carry on the business of Small finance bank (SFB) and
Payments Bank in India.
4. First Small Finance Bank: Capital Local Area Bank (Capital Local Area Bank Ltd)
5
www.gradeup.co
Partha Pratim
Indian Overseas
Chennai Sengupta (MD & Good People to Grow With
Bank
CEO)
Sandeep Bakhshi
ICICI Bank Mumbai Hum Hai Na, Khayal Apka
(MD & CEO)
V. Vaidyanathan
IDFC Bank Mumbai -
(CEO)
Sumant Kathpalia
(MD& CEO)
IndusInd Bank Mumbai We Make You Feel Richer
Arun Tiwari
(Chairman)
K (3)
MS Your Family Bank Across
Karnataka Bank Mangaluru
Mahabaleshwara India
Mr. N. S. Srinath
(Chairman)
Karur Vysya Bank Tamil Nadu Smart Way to Bank
Ramesh Babu (MD &
CEO)
Kotak Mahindra Uday Kotak (MD
Mumbai Lets make money simple
Bank & CEO)
L (1)
Lakshmi Vilas Subramanian The Changing Face Of
Chennai
Bank Sundar (CEO) Prosperity
P (2)
Punjab National S. S. Mallikarjuna The Name You can Bank
New Delhi
Bank Rao (CEO & MD) Upon
Punjab & Sind S Krishnan (MD & Where Service is a Way of
New Delhi
Bank CEO) Life
R (1)
Vishwavir
RBL Bank Mumbai Apno Ka Bank
Ahuja (MD & CEO)
S (2)
State Bank of The Banker to Every Indian,
Mumbai Dinesh Khara (MD)
India With You- All The Way
Murali
South Indian Thrissur, Experience Next Generation
Ramakrishnan (MD
Bank Kerala Banking
& CEO)
U (2)
Atul Kumar Goel
UCO Bank Kolkata Honours Your Trust
(MD & CEO)
Union Bank of
Mumbai Rajkiran Rai G. Good People to Bank with
India
Y (1)
6
www.gradeup.co
David Rasquinha
EXIM Bank Mumbai -
(Managing Director)
Govinda Rajulu Chintala
NABARD Mumbai -
(Chairman)
Shri Sarada Kumar Hota
NHB New Delhi -
(Managing Director)
Devendra Kumar
Singh
SIDBI Lucknow -
V Satya Venkata Rao
(Deputy MD)
Payments Banks
Airtel Payments
New Delhi Anubrata Biswas -
Bank
India Post Payments
Bank (Now it will
New Delhi J Venkatramu -
become Small
Finance Bank)
FINO Payments Bank Mumbai Rishi Gupta -
Paytm Payments
Noida Varun Sridhar (CEO) -
Bank
H. Srikrishnan (MD &
Jio Payments Bank Mumbai -
CEO)
G. V. Nageswara Rao (MD
NSDL Payment Bank Mumbai
& CEO)
1. All the banks which have ‘Bank of India’ at the end of their name have their
headquarters in Mumbai.
Note: - United Bank of India is the only exception which does not have its
headquarter in Mumbai, (Now it is merged with Punjab National Bank)
Note: Union Bank of India which starts with 'U' but it's headquarters are in Mumbai.
4. If the Bank name Starts with "Punjab" within their name, have Headquarters in New
Delhi.