PPT ON

BANKING
SYSTEM IN
INDIA :
FUNCTIONS
&
SERVICES
OF BANKS

Submitted by:
Shalini ;7
Shreya ;43
10th sem.

BANKING
SYSTEM IN
INDIA

INTRODUCTION
A bank is

a financial

intermediary that

institution

and

accepts deposits and

a financial
channels

those deposits into lending activities, either directly

or

through

capital

market.

A bank

connects

customers with capital deficits to customers with

capital surpluses.

History of Indian Banking System

The first bank in India, called The General Bank of India was established in the
year 1786.

The East India Company established The Bank of Bengal/Calcutta (1809),

Bank of Bombay (1840) and Bank of Madras (1843). The next bank was Bank
of Hindustan which was established in 1870.

These three individual units (Bank of Calcutta, Bank of Bombay, and Bank of
Madras) were called as Presidency Banks. Allahabad Bank which was
established in 1865, was for the first time completely run by Indians.

Punjab National Bank Ltd. was set up in 1894 with head quarters 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.

In 1921, all presidency banks were amalgamated to form the Imperial Bank of
India which was run by European Shareholders. After that the Reserve Bank of
India was established in April 1935.

At the time of first phase the growth of banking sector was very slow. Between 1913
and1948 there were approximately 1100 small banks in India.

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 with extensive powers for the supervision of
banking in India as a Central Banking Authority.

In 1955, the Imperial Bank of India was nationalized and was given the name "State
Bank of India", to act as the principal agent of RBI and to handle banking
transactions all over the country. It was established under State Bank of India Act,
1955.

On 19th July, 1969, major process of nationalization was carried out. At that time 14
major Indian commercial banks of the country were nationalized. In 1980, another 6
banks were nationalized, and thus raising the number of nationalized banks to
20.Till the year1980 approximately 80% of the banking segment in India was under
governments ownership.

On the suggestions of Narsimhan Committee, the Banking Regulation Act was

amended in 1993 and thus the gates for the new private sector banks were opened.

DEFINITION OF
BANKING
The Banking Companies Act of 1949, define Banking
Company as a company which transacts the business of
banking in India. It defines banking as, accepting for the
purpose of lending or investment of deposit money from
the public, repayable on demand or otherwise and
withdraw able by cheque draft , order or otherwise A
bank as an institution dealing in money and credit. It
safeguard of the savings of the public and gives loans
and advances.

ORIGIN
The word of Bank is said to be of Germanic origin , cognate with
the French wordBanque and the Italian word Banc , both meaning
bench. Banking is as old as the authentic history and origins of
modern Commercial banking tare traceable to ancient times. The New
Testament mention about activities of the money changers in the
temple of Jerusalem. In ancient Greece around 2000 B.C . The famous
temples of Ephesus, Delphi and Olympia were used as depositories
for peoples surplus funds and these temples were the centres of
Money lending transaction. In, India the ancient Hindu scriptures refer
to money lending activities in the Vedic period. In India The Ramayana
and Mahabharata eras, banking had become a full fledged activity and
during the Smith period which followed the Vedic period and Epic age
the business of banking was carried on by the members of the Vanish
community.

FUNCTION
S

SERVICES

PROVIDES LOCKERS FACILITIES

ISSUE OF TRAVELER'S CHEQUE

FOREIGN EXCHANGE

internet banking facility

phone banking facility

Real Time Gross Settlement

credit card

debit/ATM card

Offering saving deposits

Provide loan

Financial advisory services

Insurance services

Retirement plans

Mutual funds

Wealth management

Equity trading

Portfolio management services

COLLECTION OF INCOME

Transfer of money

HAJJ SERVICES