chapter 1 introduction 1.1 overview of the industry
Banking means accepting the deposits from the customers for lending to the needy and extending the other services as to issue of DD etc. Nowadays after introduction of private sector banks the banks have become a profit centre and the functions become changed and now banks are doing the insurance and mutual funds also. But nationalised banks are still service oriented in extending loans for Education loan, and rural development activities.
A Bank is an organization which lends money to the borrowers for a purposeful task, and provides a facility to deposit and withdraw money when needed and charge for it.
HISTORY OF BANKING IN INDIA
Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders.
In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested