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Banking in India originated in the first decade of 18th Century with The General Bank of India coming into existence in 1786 . This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank Of India being established as "The Bank of Calcutta" in Calcutta in June 1806 . Couple of decades later, foreign banks like HSBC and Credit Lyonnais started their Calcutta operations in the 1850 s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire , and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank set up in 1865 . By the 1900 s, the market expanded with the establishment of banks like Punjab National Bank , in 1895 in Lahore; Bank Of India , in 1906 , in Mumbai - both of which were founded under private onwership. Indian banking sector was formally regulated by Reserve Bank Of India from 1935 . After India's independence in 1947 , the Reserve Bank was nationalized and given broader powers. SBI GROUP .]] State Bank of India, with its seven associate banks command the largest banking resources in India. SBI and its associate banks are:
NATIONALISATION The next significant milestone in Indian Banking happened in the late 1960 s when the then Indira Gandhi Government nationalizd, on 19th July , 1969 , 14 major commercial Indian banks, followed by nationalization of 6 more commercial Indian banks in 1980 . The stated reason for the nationalisation was more control of credit delivery. After this, until the 1990 s, the nationalised banks grew at a leisurely pace of around 4%-also called as the Hindu growth of the Indian economy. After the amalgamation of New Bank Of India with Punjab National Bank , currently there are 19 nationalised banks in India:
LIBERALISATION In the early 1990 s the then Narasimha Rao government embarked on a policy of Liberalisation and gave licences to a small number of private banks, which came to be known as ''New Generation tech-savvy banks'', which included banks like ICICI Bank and HDFC Bank . This move along with the rapid growth in the Economy Of India , kickstarted the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. However there had been a few hiccups for these new banks with many either being taken over like Global Trust Bank while others like Centurion Bank have found the going tough. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%. CURRENT SCENARIO Currently ( 2005 ), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility-without any stated exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector, the demand for banking services-especially retail banking, mortgages and investment services are expected to be strong. M&As, takeovers, asset sales and much more action (as it is unravelling in China) will happen on this front in India. Recently (March 2006), the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. |
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