Indian Banking Industry
INDIAN BANKING INDUSTRY Banking forms the back bone of the country. Banks are special as they not only accept and deploy large amounts of uncollateralized public funds in fiduciary capacity, but also leverage such funds through credit creation. They directly or indirectly affect the growth of the country. Banking in India has gone through different phases of nationalization and liberalization. In confront of American crisis, evolving technology, growing Indian economy and further liberalization of Indian government has made the banking industry the most dynamic industry in the country. How this industry evolves through these challenges determines the fate of many other industries and the country.
History:
Post independence, banking system has been very weak in India. Banking was restricted mainly to urban areas and neglected in the rural and semi-urban areas. Large industries and big business houses enjoyed major portion of the credit facilities. Agriculture, small-scale industries and exports did not receive the deserved attention. Therefore, inspired by a larger social purpose, 14 major banks were nationalised in 1969 and six more in 1980. Since then the banking system in India has played a pivotal role in the Indian economy, acting as an instrument of social and economic change.
Post nationalisation, the Indian banking system registered tremendous growth in volume. Despite multi-fold gains of bank nationalization, it may be noted that the important financial institutions were all state owned and were subject to central control. Banks enjoyed little autonomy as both lending and deposit rates were controlled until the end of the 1980s. Though, nationalisation of banks helped in the spread of banking to the rural and uncovered areas, the monopoly granted to the public sector and lack of competition led to overall inefficiency and low productivity. To overcome this series of reforms have been introduced in the post-liberalisation era. Few of these reforms
History:
Post independence, banking system has been very weak in India. Banking was restricted mainly to urban areas and neglected in the rural and semi-urban areas. Large industries and big business houses enjoyed major portion of the credit facilities. Agriculture, small-scale industries and exports did not receive the deserved attention. Therefore, inspired by a larger social purpose, 14 major banks were nationalised in 1969 and six more in 1980. Since then the banking system in India has played a pivotal role in the Indian economy, acting as an instrument of social and economic change.
Post nationalisation, the Indian banking system registered tremendous growth in volume. Despite multi-fold gains of bank nationalization, it may be noted that the important financial institutions were all state owned and were subject to central control. Banks enjoyed little autonomy as both lending and deposit rates were controlled until the end of the 1980s. Though, nationalisation of banks helped in the spread of banking to the rural and uncovered areas, the monopoly granted to the public sector and lack of competition led to overall inefficiency and low productivity. To overcome this series of reforms have been introduced in the post-liberalisation era. Few of these reforms