Introduction History of Banking in India Old banking system New banking system Conclusion

“A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital market. A bank connects customers with capital deficits to customers with capital surpluses.”

 Banking in India originated in the last decades of the 18 th Century.  The first Bank were Bank of Hindustan ( ) and the General Bank of India established in  The largest and Oldest Bank still in existence is State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal.  This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company.  The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.

 The Reserve Bank of India, India's central banking authority, was established in April 1935, but was nationalized on 1 January 1949 under the terms of the Reserve Bank of India Act,  In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India".  The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.  In July 1969 Nationalisation of 14 largest Commercial Banks taken place.

Central Bank of India Bank of Maharashtra Dena Bank Punjab National Bank Syndicate Bank Canara Bank Indian Bank Indian Overseas Bank Bank of Baroda Union Bank Allahabad Bank United Bank of India UCO Bank Bank of India

 PHASE 1 Early phase from 1786 to 1969 of Indian banks.  PHASE 2 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.  PHASE 3 New phase of Indian Banking system with the advent of Indian Financial & Banking Sector Reforms after 1991.

 ACCEPTING DEPOSITS  ISSUAL OF DEMAND DRAFTS  GRANTING LOANS & ADVANCES  UNDERTAKING SAFE CUSTODY OF VALUABLES,IMPORTANT DOCUMENTS & SECURITIES BY PROVIDING SAFE DEPOSIT VAULTS OR LOCKERS

 DOCUMENTATION IS MAINTAINED THROUGH LEDGERS ONLY.  MINIMUM BALANCE FOR OPENING AN ACCOUNT WAS MORE DURING THIS PERIOD.  CREDITS WERE GRANTED AT VERY HIGH RATE OF INTEREST.  TOKEN SYSTEM FOR WITHDRAWAL OF CASH FROM THE ACCOUNT.

 POSSIBILITY OF HUMAN ERRORS.  TIME CONSTRAINT.  CUSTOMER RELATIONSHIP WAS LIMITED.  OVER DRAFT WAS NOT AVAILABLE.  PROCESSING FEES WAS CHARGED FOR ALL THE TRANSACTIONS.  PASSING OF CHEQUES WAS DELAYED.  LIMITED USE OF TECHNOLOGY.

WHY TECHNOLOGY IN BANKS ?  TO TRANSFORM FINANCIAL SERVICES INDUSTRY IN THE NET- WORKED WORLD: -INCREASED OPERATION EFFICIENCY,PROFITABILITY & PRODUCTIVITY - SUPERIOR CUSTOMER SERVICE - PROVIDE SERVICES / PRODUCTS ACROSS A RANGE OF CHANNELS - TO BE FUTURISTIC AND HAVE “TIME” VALUE IN ALL ITS DEALINGS WITH CUSTOMERS -IMPROVED MANAGEMENT/ACCOUNTABILITY -BETTER CROSS SELLING ABILITY -MINIMAL TRANSACTION COST -IMPROVED FINANCIAL ANALYSIS CAPABILITIES.

 CORE BANKING SOLUTIONS(CBS) “Pooling data at central server”  CUSTOMER RELATIONSHIP MANAGEMENT(CRM)

 ELECTRONIC FUND TRANSFER(EFT)  ELECTRONIC CLEARING SYSTEM(ECS)  ANY BRANCH BANKING  RISK MANAGEMENT  ATM’S  CARD MANAGEMENT  MOBILE BANKING

“ The reforms to the old Banking system with the advent of technology has bought in a dramatic change in its functioning and has increased customer relationship.”