The Rig Veda
Chapter I
Introduction to Banking Operations
After reading this chapter, you will be conversant with:
• The Changing Nature of Banking Operations • Importance of Customer Relationship Management in Banks • Different Types of Products and Services Offered to Customers • Role of Technology in Banking Operations • Bookkeeping and Maintenance of Accounts • The Need for Asset-Liability Management • Regulatory Framework for Compliance
Banking has flourished in India since the ancient times. The Rig Veda mentions indebtedness and some of the earliest dharma shastras lay down rates of interest and regulations governing debts and mortgages. Thus, a money economy existed in the ancient Vedic times. References to money lending for business purposes are found in the Manu Smriti too. The Jatakas of the Buddhist period, archeological discoveries and the literature relating to it, contain evidence of the existence of “Sreshthis” or bankers. Early on, trade guilds acted as bankers both for receiving deposits and issuing loans. In South India, in particular, the larger temples served as bankers. The village communes occasionally advanced loans to peasants. In the process of emergence of systems for performing such banking operations during the early era, the Vaishyas emerged as a class of indigenous bankers and ‘hundi’ emerged as the earliest form of bill of exchange in India. These two developments can be considered as two important landmarks in the history of Indian banking. Indigenous bankers played a very important role in lending money for trade and commerce. Every town, big or small, had a Seth, a Shah, a Shroff or a Chettiar, who performed a number of banking functions. Expansion of trade and commerce, both in terms of quantity and geography meant that the concept of banking would only gain more importance. Banking operations gradually
Introduction to Banking Operations
After reading this chapter, you will be conversant with:
• The Changing Nature of Banking Operations • Importance of Customer Relationship Management in Banks • Different Types of Products and Services Offered to Customers • Role of Technology in Banking Operations • Bookkeeping and Maintenance of Accounts • The Need for Asset-Liability Management • Regulatory Framework for Compliance
Banking has flourished in India since the ancient times. The Rig Veda mentions indebtedness and some of the earliest dharma shastras lay down rates of interest and regulations governing debts and mortgages. Thus, a money economy existed in the ancient Vedic times. References to money lending for business purposes are found in the Manu Smriti too. The Jatakas of the Buddhist period, archeological discoveries and the literature relating to it, contain evidence of the existence of “Sreshthis” or bankers. Early on, trade guilds acted as bankers both for receiving deposits and issuing loans. In South India, in particular, the larger temples served as bankers. The village communes occasionally advanced loans to peasants. In the process of emergence of systems for performing such banking operations during the early era, the Vaishyas emerged as a class of indigenous bankers and ‘hundi’ emerged as the earliest form of bill of exchange in India. These two developments can be considered as two important landmarks in the history of Indian banking. Indigenous bankers played a very important role in lending money for trade and commerce. Every town, big or small, had a Seth, a Shah, a Shroff or a Chettiar, who performed a number of banking functions. Expansion of trade and commerce, both in terms of quantity and geography meant that the concept of banking would only gain more importance. Banking operations gradually