Evolution Of Banking Flashcards
What is a limited liability company?
The owners and investors private assets are not at risk if company fails.
Private assets are not sold to pay debt or liabilities.
The first modern bank was set up in
MADRAS in 1683
by officers of East India Company.
Thes first Joint Stock bank was
Bank of Bombay
1720
followed by BANK of HINDUSTAN in culcutta established in 1770.
Bank of hindustan is established in
Calcutta in 1770
2nd joint stock bank
The first presidency bank was
Bank of BENGAL in culcutta 1806
With capital of 50 lakhs rupees.
What are the presidency banks?
Presidencies- units of Administartive jurisdiction in country for EAST INDIA Company
Presidency banks are governed by Royal Charters.
Bangal presidency
Bombay presidency madras presidency
Cronological order of PRESIDENCY BANKS
Bank of bengal in kolkatta 1806
Bank of Bombay 1840
Bank of Madras 1843
Which of the following is first Joint stock bank of india?
- Bank of Madras
- Bank of Bombay
- Bank of Hindustan
- Bank of Calcutta
- Bank of Bengal
Bank of Bombay
IMPERIAL BANK of India is
Formed by Amalgamation of
three presidency banks Bank of Bengal, Bank of Bombay, Bank of Madras.
in 1921.
Imoerial bank of India is now STATE BANK OF INDIA
In which year IMPERIAL Bank Of India established?
1921
First indian owned bank and
the second is
ALLAHABAD bank
1865
Punjab National Bank
1895 in LAHORE
Need of a central bank in India arise due to
The Great depression on banking between 1928 to 1934, a large number of banks failed due to bad loans
RBI act 1934 to check bank failures and cater to agriculture needs.
RBI was set up in 1935
Banking regulation act 1949 gave extensive powers to
RBI for banking supervision
Protecting interests of depositors
Organisation
Management
Audit and liquidation of banking companies
Control over opening of new banks and branches.
Before that RBI doesn’t draw any powers from RBI act 1934 to regulate banking sector
To extend the banking for all and to regulate the banking sector which act is made after independence
Banking Companies act 1949 or
Banking Regulation Act 1949
What is the impact of BANKING REGULATION act 1949
Bnkg Reg Act 1949 gave extensive supervision power as the central banking authority of gvt
- protecting interests of depositors
- organisation
- management
- Control over opening up of branches
- preventing unorganieed liquidation of banks
Before that RBI doesn’t draw any powers from RBI act 1934 to regulate banking sector
What is nationalisation of banking?
To takeover the BANKS owened by provite sector into PUBLIC SECTOR ownership by aquiring maximum stake
It arised due to the wide implications of BANKING REGULATION ACT 1949
Nationalisation of Imperial bank took place in
1st wave of nationalisation
1955
By converting Imperial bank to SBI
To extend the banking facilities on large scale
to rural and semi urban areas.
Intially ownership of SBI vested with RBI later transfered to GOI
Which act helped to enhance the depositors trust in banking system?
Deposit insurance and credit guarentee corporation of India act 1962
This corporation formed funds to secure deposits with insurence
2nd wave of Nationalisation of Banks took place in
1nd wave 1969
14 banks were nationalised through an ordinance in 1969 later made into an act called BANKING COMPANIES ( Aquisition and transfer of Undertakings) Act 1970.
To promote
Economov growth
Regional balence of economic activities
Diffusion of economic power
3rd wave of Nationalisation of banks took place in
1980 6 abnks were nationalised in 1980 Andhra bank Vijaya bank Oriental bank of commerce Punjab and sind bank Corporation bank New bank of India
What are the disadavantages of nationalisation of Banks
1) Excessive use of money by govt as banks
became public enterprises
2) Nationalistaion killed competition among
banks and killed innovations
3) No intention to make profits and improve
financial health
4) Trade unions became strong with political
patronage and resisted any change in
banking system
5) High regulated environment with
administered interest rates, restrictions
on credit flows, more priority of lending to
govt sectors reduced the profitability of
banking sectors
6) High Credit rationalisation(definite percent
of credit for different sectors) decresed
producticity of banking
7) increased Red tapism jn banking sector
What is Lead Bank Scheme ( 1969)?
Along with nationalisation several other schemes are introduced to expand banking to weaker sections
LBS is one among them
A LEAD BANK responsible for surveying credit needs of people and development of banking and credit fecilites in a DISTRICT alloted to it.
What is Regional Rural bank?
A abnking structure known as REGIONAL RURAL BANKS setup in 1976
to cater the needs of small and marginal farmers despite of the Commercial banks fails to cater their needs
First phase of reforms are made on the recommendations of
Narasimahan Committee 1991
Reforms implemented from 1992
What are recommendations of Narasimhan comittee?
These recomemdations were departure from existing banking sector regulations.
Deregulation and liberalisation
To create viable and efficient banking system, which improve productivity and eficiency of banking sector.
What are the main policy changes made in first phase of reforms 1991
Focussee on cleaning up bank balence sheets
Greater discloaure
Transperency in accounting
RBI laid clear policies for asset classification, income recognition, loan- loss provisioning investment valuation with Bank for international settlements(BIS) capital Adequancy standards
Intially banks reported losses due to these reforms. Some weaker banks are merged with stronger banks ( New bank of India with PNB)
two PSB’s SBI and Oriental Bank came with IPO(initial Public Offerings) for the first time leading to dilution of gvt ownership from banks
Competition infused in banking system in 1993 when RBI given permission to set up Privite Sector Banks and Foreign banks allowed to open branches in India.
When did the Centre acquire the Reserve Bank of India’s entire 59.73% equity stake in the
State Bank of India (SBI) at over Rs. 35,531 crores in New Delhi?
(c) June 29, 2007
