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BANKS in India: How Banking Affect The Social Behaviour Of India.

If I talk about myself, I just tell about my first experience to the Bank. I have visited first time to the BANK when I was at class 1 or 2 with my Grandfather.

Bank was filled with Human, since I get filled with irritation. After this incident, BANK are for elders.


Introduction to Bank:-

We use to DEFINE bank, "An institution which accepts public deposits and creates credit is a financial institution. Lending activities may be carried out directly or indirectly on the capital markets."

In many countries, banks are highly regulated, owing to their importance to the financial stability of a country. Most states have instituted a so - called fractional reserves bank system under which banks only hold a share of their current liabilities with liquid assets.

In general, the banks are subject to minimum capital requirements based on an international capital standard set called the Basel Accords, in addition to the other rules designed to provide for liquidity.


History of Bank in india mean HISTORY OF Reserve BANK. 

Let's start with Reserve Bank


Banking shall be defined in accordance with the Act of 1949 of the Banking Companies as accepted by a check bill, order or otherwise, for the purposes of lending or investing the deposit money from the public, which may be paid upon request or not. It also defines the Bank as a money and credit institution. It guarantees public savings and provides credit and progress.

The key role of the bancary sector in providing liquidity for a country's economic growth. It acts as the main cornerstone of the entire financial system. It provides security for depositors who want to deposit their savings in a bank. It offers liquidity for borrowers both on a short- and long - term basis, based on their needs.

During the British era, the banking industry was developed. The UK East India Company has set up three banks,

  1. Bank of Bengal.   – 1809
  2. Bank of Bombay –  1840
  3. Bank of Madras  –  1843

These banks were subsequently amalgamated and called Imperial Bank which, in 1955, was taken over by the SBI.

  •  The Reserve Bank of India was established   in 1935 ;
  •  the Punjab National Bank ;
  •  the Bank of India ;
  •  the Bank of Canara, and 
  • the Indian Bank ;
  •  the main banks in Indian banking history.

Early Phase: 

Growth was very slow during the first phase and banks had periodic failures in the early phase. About 1,100 banks were found in the early phase, mostly small.

Pre - Nationalized Phase:  

The Reserve Bank of India was the breakthrough that occured at this phase. The Indian Reserve Bank (RBI) was set up to preserve currency stability in India. The Indian banking phase was eventful, a restructuring and regulatory phase. But in India, with the exception of the State Bank of India, banks remained private persons, despite these provisions as well as control and regulation.

Pre – nationalized phase: 

The breakthrough in this phase was the Reserve Bank of India. In order to maintain currency stability in India, the Indian Reserve Bank (RBI) was established. The Indian banking phase has been eventful, restructured and regulated. However, despite this provision and control and regulation, banks in India remained private persons with the exception of the State Bank of India.

Modern phase: 

This is the stage of the tech - savvy banks "New Generation." It can be referred to as ' the phase of reform. ' In India, the supply, product portfolio and reach of banking services are generally fairly mature – though rural India remains a challenge both for the private sector and for foreign banks.

Nationalized BANK OF india:

  • In 1969, Government of India nationalised 14 major banks whose national deposits were more than 50 crores.

  1. Allahabad Bank               
  2. Bank of India                          
  3. Punjab National Bank
  4. Bank of Baroda
  5. Bank of Maharashtra         
  6. Central Bank of India
  7. Canara Bank         
  8. Dena Bank
  9. Indian Overseas Bank
  10. Indian Bank
  11. United Bank                              
  12. Syndicate Bank             
  13. Union Bank of India
  14. UCO Bank

In addition, in 1980, six other banks were nationalized. The priority sector lending target was also increased to 40% with the second wave of nationalisation.

  1. Andhra Bank             
  2. Corporation Bank
  3. New Bank of India
  4. Oriental Bank of Commerce                           
  5. Punjab & Sindh Bank
  6.   Vijaya Bank


Since the 1991 economic reforms, the role of banks in India has greatly changed. These changes have been caused by LPG, i.e. by GOI's liberalization, privatisation and globalisation. Since then most traditional and obsolete concepts have changed significantly with practices, processes and banking methods. 

In India today, banks are more customer- and service - oriented than before 1991. banks in India. They now give their rural customers a lot of importance. They are ready to assist and serve the banking requirements of India on a regular basis.

The following points briefly highlight the changing role of banks in India.
  1. Better customer service,
  2. Mobile banking facility,
  3. Bank on wheels scheme,
  4. Portfolio management,
  5. Issue of electro-magnetic cards,
  6. Universal banking,
  7. Automated teller machine (ATM),
  8. Internet banking,
  9. Encouragement to bank amalgamation,
  10. Encouragement to personal loans,
  11. Marketing of mutual funds,
  12. Social banking, etc.

Better customer service 

In India, the total banking services were very poor before 1991. Long queues (lines) were available for receiving check payment and depositing money. Some bank personnel were very harsh to their customers at that time. But after the Indian economic reforms of 1991, all of this changed remarkably. 

Banks are now very focused on customers and services in India. Your service has become fast, efficient and easy to customize. The main reason for this positive change is increased competition from new private banks and the introduction by RBI of the Ombudsman Scheme. 

Mobile banking 

By simply using their cellphones or mobile phones, customers can easily carry out major banking transactions. In this case, a customer must start using his bank to activate this service. The bank officer generally asks the customer to fill in a simple form in order to register its mobile number (authorize). 

This service is activated after registration and a username and password are provided to the customer. Customer can now find his or her bank balance comfortably and securely with secret credentials and registered telephone, transfer money from his or her account, ask for a cheque book, stop paying the cheque, etc.

Bank on Wheels 

In the North - East of India, the ' Bank on Wheels ' system was introduced. This scheme makes banking services accessible to people in the remote regions of India. This is a generous endeavor to satisfy rural India's banking needs.

Portfolio management

Banks do all their clients ' investments work. Banks invest the money of their customers into stocks, debentures, fixed deposits, etc. They enter into an agreement with their customers first and charge them a fee. Then they can fully invest or disinvest the money of their customers. They must, however, provide their customers with security and profit.

Issue of Electro-Magnetic Cards

Banks have already started issuing electronic magnetic cards to their customers in India. These cards aid in the carrying out of cash, the online purchase and the availability of the ATM facilities, the reservation of a railway ticket, etc.

Credit cards help clients spend money that they don't have in hand (loaned to some extent, as previously agreed by the bank). Their purchases and withdrawal receive a monthly statement. This declaration includes the interest and service fee as well as the amount transacted. The entire sum must be paid back to the bank either completely or in installments, but prior to the date of due date, as shown in the statement of the credit card.

Debit cards help customers spend the money they have saved on their bank accounts. You don't need to bring any cash, you can instead use a debit - card to buy (shop) and/or withdraw money from an ATM. The use of debit cards shall not charge an interest.

Charge cards are used for a month to spend the money to some degree. The customer receives a statement at the end of the month. He would only have to pay a small fee if he had a sufficient balance. But if he has no balance, a grace period (usually from 25 to 50 days) is given him to repay the money.

Currently, smart cards are used as an alternative to public transport services available. This includes railways, state transport and local busses in India. Included in its plastic body, is Smart card with an integrated circuit (IC). It is manufactured according to ISO standards.

For the advantage of the rural population of India, kisan credit cards are used. Indian farmers (kisans) can purchase inputs and goods for their own consumption using this card. Both commercial and cooperative banks issue these cards.

Universal Banking

In India, after the year 2000 the concept of universal banking was recognized. All banking and non - banking services are available to customers under one roof. Universal bank is like a great shop. It offers a wide range of services, including banking, insurance, commercial banking, etc.

Automated Teller Machine (ATM):

ATM offers numerous benefits. Many banks have therefore opened ATM centers to offer their customers convenience. Now banks not only operate ATM centers in their branches, but also in public places such as airports, train stations, hotels and so on. Some banks have joined forces to establish common ATM centers throughout India.

Internet Banking

Also called internet banking as e - bank or net banking. Here, the customer has access to the Internet or worldwide Web (WWW) for bank transactions. The client does not have to visit the branch of the bank. The customer can easily request the balance of the Bank, transfer funds, check book request, etc. Through this facility. Many large banks offer their technologically knowledgeable customers this service.

Encouragement to Bank Amalgamation

Bank failure is well protected by the amalgamation facility. Depositors therefore do not need to be concerned about their deposits. When stronger banks absorb weaker banks, they are called bank amalgamation.

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