BANKING IN INDIA (PART 2)
- Private Banks in India are owned and operated by private players.
- Private banks are broadly classified into two: Old Private Sector Banks and New Private Sector Banks.
- The Banks that are not nationalised at the time of bank nationalisation that took place during 1969 and 1980 are known as old private sector banks.
- The banks which are given license after 1991 are called New Generation Private sector banks.
- Banking Regulation Act was amended in 1993 to permit the entry of new private players in Indian banking sector.
- Old Private sector banks are: Catholic Syrian Bank City, Union Bank, Dhanlaxmi Bank, Federal Bank, Jammu and Kashmir Bank, Karnataka Bank, Karur Vysya Bank, Lakshmi Vilas Bank, Nainital Bank, Ratnakar Bank Limited, South Indian Bank, Tamil Nadu Mercantile Bank.
- New Private sector Banks are: Axis Bank, DCB Bank Ltd, HDFC Bank, ICICI Bank, IndusInd Bank, Kotak Mahindra, Yes Bank, Bandhan Bank, IDFC Bank.
- RBI in 2014 granted ‘in principle’ approval to two applicants viz IDFC Limited and Bandhan Financial Service Private Limited, to set up banks.
Industrial Credit and Investment Corporation of India (ICICI)
- ICICI bank is the largest private sector bank in India. The parent company of ICICI bank was formed in 1955 at the initiative of World Bank, but ICICI bank was established in 1994.
- The bank known as ‘first universal Bank in the country’ is ICICI Bank
- ICICI bank launched internet banking operations in 1998.
- First bank in India to introduce complete mobile banking services is ICICI
- It is the first bank in India listed New York Stock Exchange.
- ICICI is the second largest bank in India in terms of assets and market capitalization.
Internet Banking and Core Banking
- Banking transactions done with the help of internet is called internet banking.
- The centralised system established by the bank which allows customers to conduct their transactions in any branch of the bank is called Centralized Online Real Time Electronic (CORE) banking system.
- HDFC Bank established in 1994.
- The headquarters of HDFC Bank is in Mumbai
- As of March 31, 2018, the Bank had a nationwide distribution network 4,787 branches and 12,635 ATM’s in 2,691 cities
- It is the largest private sector Bank in terms of market capitalisation.
- Times Bank merged with HDFC in 2000. This was the first merger of two private banks in new generation.
- Federal Bank started its operation in 1945
- The initial name of Federal Bank was Travancore Federal Bank; It was founded by K.P. Hormis at Nedumpuram (Thiruvalla). It was renamed as Federal Bank in 1947
- Headquarters of Federal Bank is at Aluva
- Recently Federal Bank got approval to open overseas branch at dubai International Financial Centre.
- Federal Bank is the first bank in India to release electronic/mobile pass book
Catholic Syrian Bank (CSB)
- CSB was founded in 1920 in Thrissur and commenced business on 1st January 1921.
- In 1969, CSB was included in the second schedule of RBI Act, 1934. It attained the status of Class ‘A’ Scheduled Bank when its total deposits crossed 25 crores in 1975.
- Dhanlaxmi Bank was incorporated on 14 November 1927 in Thrissur
- It became a scheduled commercial bank in 1977.
- Nedungadi Bank was the first bank established in Kerala founded by Appu Nedungadi in 1899 at Calicut
- Nedungadi Bank merged with Punjab National Bank in 2003
South Indian Bank (SIB)
- SIB was formed in 1929 by a group of 44 entrepreneurs. Its head office is in Thrissur.
- SIB was the first private sector bank to open a currency chest on behalf of RBI.
- It was the first private bank in Kerala to open an NRI branch.
- It was first private sector bank to start an Industrial Finance Branch in March 1993.
- SIB is the first Kerala based bank to implement core banking system.
- Bandhan Financial Service Limited was founded in 2001 and it is the largest micro finance organisation in India
- BFSL got banking license from RBI in 2014.
- Bandhan Bank was inaugurated on August 23, 2015 by Unian Finance Minister Arun Jaitley at Kolkata.
- Bandhan is the first bank to be set up in eastern part of India after independence.
- Asok Kumar Lahiri is the first Chairman of Bandhan Bank.
- IDFC received a universal banking license from the Reserve Bank of India (RBI) in July 2015. Its headquarters is in Mumbai.
- The bank was inaugurated by Prime Minister Narendra Modi in October 2015.
- First Banking Robot in India – Lakshmi ( introduced by City Union Bank, Chennai)
- Software Robotics was introduced by – ICICI
- World’s first bank to deploy a robot for customer service – HDFC
- India’s first artificial Intelligence powered voicebot – Keya ( developed by Kotak Mahindra Bank)
- The banking robots developed by HDFC Bank –IRA (Interactive Robotic Assistant)
- Humanoid robots deployed by Canara Bank – Mitra, Candi
- Payment Bank is a new concept introduced by RBI to enhance financial inclusion.
- Nachiket Mor committee appointed by RBI in 2013 suggested for the formation of Payment Banks in India.
- Payment banks will target poor citizens, low-income households, migrant labourers and small business, offering savings accounts and low-cost transaction services.
- The main difference between payment banks and traditional banks is that former can only receive deposits; they cannot offer any financial products, such as loans or credit cards.
- They can enable transfers and remittances through a mobile phone and can issue debit cards. Payment Banks can only accept deposits of up to Rs 1 Lakh per customer.
- Reserve Bank granted in-principle approval to 11 payment banks in 2015.
- First Payment bank launched was Airtel Payment Bank. India Post Payments Bank is the second payment bank to launch its operations.
- Foreign banks are allowed to operate in India through a single mode of presence, i.e, either branch mode or a wholly subsidiary mode, after submitting relevant information to the RBI
- As on January 2018, there are 45 foreign banks from 24 countries operating in India.
- The presence of foreign banks in India declined in terms of number of branches and employees. Foreign banks had 317 branches in 2015-16; it has reduced to 286 in 2016-17.
- Standard Chartered Bank, a British bank has largest number of bank branches in India (100), followed by Citibank (35) and HSBC (26).
- Universal banking is a system of banking where banks undertakes all kinds of financial activities and provide financial services such as insurance, housing finance mutual funds etc.
- In other words, universal banks are allowed to perform all banking, financial and related business activities.
- A merchant bank is a company deals mostly international financing activities such as foreign corporate investing, trade finance etc.
- They are experts in international trade but it does not provide regular banking services to general public.
LEAD BANK SCHEME
The Study Group headed by Prof. D. R. Gadgil (Gadgil Study Group) in 1969 drew attention to the fact that commercial banks did not have adequate presence in rural areas and also lacked the required rural orientation. A Committee of Bankers on Branch Expansion Programme of public sector banks appointed by Reserve Bank of India under the Chairmanship of Shri F. K. F. Nariman (Nariman Committee) in 1969 recommended that each public sector bank should concentrate on certain districts where it should act as a ‘Lead Bank’. Based on its recommendation, Lead Bank Scheme was introduced by Reserve Bank of India in December 1969. Under this, a particular bank is assigned the lead bank responsibility of the district. In 2009, a High Level Committee headed by Smt Usha Thorat reviewed this scheme and decided to continue this scheme.
- Micro Units Development and Refinance Agency Bank (Mudra Bank) is a public sector institution launched by Prime Minister Narendra Modi on April 8, 2015
- It provide loans at low rate to micro – finance institution and non – banking – financial institutions which then provide credit to Micro, Small, Medium Enterprises (MSMEs)
- Mudra Bank was set up under the Pradhan Mantri MUDRA Yojana.
- MUDRA will initially be registered as a company and function as a non – banking financial institution.
- The bank will categorise the clents in to three categaries and allot maximum loans based on these categories
- Shishu : Allows loans up to Rs. 50,000
- Kishore : Allows loans up to Rs. 5 Lakhs
- Tarun : Allows loans up to Rs. 10 Lakhs