Is Effective Banking System Gives Healthy Economy In A Country free essay sample

Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, 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 the Central Banking Authority. During those day’s public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to the traders. PHASE II: Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: †¢1949: Enactment of Banking Regulation Act. †¢1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. †¢1961: Insurance cover extended to deposits. †¢1969: Nationalization of 14 major banks. †¢1971: Creation of credit guarantee corporation. †¢1975: Creation of regional rural banks. †¢1980: Nationalization of seven banks with deposits over 200 crore. After the nationalization of banks, the b ranches of the public sector bank India raised to approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. Unit Trust of India (UTI-I) ?Life Insurance Corporation of India (LIC) ?General Insurance Corporation Ltd. Also with associates viz. National Insurance Company Ltd. , The New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd. Axis Bank in India today is capitalised with Rs. 232. 86 Crores with 47. 50% public holding other than promoters. It has more than 200 branch offices and Extension Counters in the country with over 1250 Axis Bank ATM proving to be one of the largest ATM networks in the country. Axis Bank India commits to adopt the best industry practices internationally to achieve excellence. Axis Bank has strengths in retail as well as corporate banking. By the end of December 2004, Axis Bank in India had over 2. 7 million debit cards. This is the first bank in India to offer the AT PAR Cheque facility, without any charges, to all its Savings Bank customers in all the places across the country where it has presence. With the AT PAR cheque facility, customers can make cheque payments to any beneficiary at any of its existence place. The ceiling per instrument is Rs. 50,000/-. The latest offerings of the bank along with Dollar variant is the Euro and Pound Sterling variants of the International Travel Currency Card. The Travel Currency Card is a signature based pre-paid travel card which enables traveler’s global access to their money in local currency of the visiting country in a safe and convenient way. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence was established in 1964 by an Act of Parliament; neither did the Government of India own it nor contributes any capital. The RBI was asked to contribute one-half of its initial capital of Rs 5 crore, and given the mandate of running the UTI in the interest of the unit-holders. The State Bank of India and the Life Insurance Corporation contributed 15 per cent of the capital each, and the rest was contributed by scheduled commercial banks which were not nationalized then. This kind of structure for a unit trust is not found anywhere else in the world. Again, unlike other unit trusts and mutual funds, the UTI was not created to earn profits. In the course of nearly four decades of its existence, it (the UTI) has succeeded phenomenally in achieving its objective and has the largest share anywhere in the world of the domestic mutual fund industry. The emergence of a foreign expert during the setting up of the UTI makes an interesting story. The announcement by the then Finance Minister that the Government of India was contemplating the establishment of a unit trust caught the eye of Mr. George Woods, the then President of the World Bank. Mr. Woods took a great deal of interest in the Indian financial system, as he was one of the principal architects of the ICI CI, in which his bank, First Boston Corporation Bank, had a sizeable shareholding. Mr. Woods offered, through Mr. B. K. Nehru, who was Indias Executive Director on the World Bank, the services of an expert. The Centre jumped at the offer, and asked the RBI to hold up the finalization of the unit trust proposals till the expert visited India. The only point Mr. Sullivan made was that the provision to limit the ownership of units to individuals might result in unnecessarily restricting the market for units. While making this point, he had in mind the practice in the US, where small pension funds are an important class of customers for the unit trusts. The Centre accepted the foreign experts suggestion, and the necessary amendments were made in the draft Bill.