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Banking System in India Essay in English
Banks play a crucial role in a nation’s growth and have undergone significant transformations in recent years. In India, the first two banks were the General Bank of India and the Bank of Hindustan, which are no longer in operation. The State Bank of India, founded in 1806, is the oldest bank still operating in India. The Bank of Bombay and the Bank of Madras were founded with charters from the British East India Company. The Imperial Bank of India, later renamed the State Bank of India, was established in 1921.
There are various types of banks in India, catering to different economic segments. Commercial banks accept deposits and offer various loans, while cooperative banks belong to their members and provide services like deposits and loans. Regional Rural Banks (RRBs) provide loans to small farmers and labourers in regional areas. Non-bank financial institutions (NBFIs) do not hold full licenses and are not supervised by any central bank or international banking agency. The Reserve Bank of India is responsible for regulating activities and is working on regulatory reforms and technological advancements.
India’s banking system has undergone significant changes since the 18th century but still faces issues like non-performing assets, financial inclusion, and regulatory compliance. The government and Reserve Bank are working on further reforms and technological advancements.
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Essay on the Banking System in India PDF 250 Words
The role of banks in a nation’s overall growth has undergone a significant shift recently. When banks first started to appear in India in the late 18th century, they were the General Bank of India and the Bank of Hindustan. The State Bank of India, today’s oldest operating bank in India, was founded as the Bank of Calcutta in 1806. In addition, the presidential banks of the Bank of Bombay and the Bank of Madras were established with permission from the British East India Company.
Rural regions should also experience a boom in the number of banks, not only metropolitan ones. With this objective in mind, various banks have been established to cater to different economic sectors, such as commercial banks that accept deposits and provide a range of loans to the entire country and cooperative banks, which are owned by their members and provide a range of services, including taking deposits and disbursing loans.
Regional Rural Banks (RRBs) were established in 1975 to eliminate moneylenders and provide loans to small farmers and laborers in rural regions. Non-bank financial institutions (NBFIs) are businesses that operate without a full license and are not governed by another central bank or international banking body. Central banks regulate activities and act as the Bank of Banks. In India, the Reserve Bank of India is responsible for making monetary policies and issuing currencies.
There are several banks operating in the country to provide for overall development in the country, but still, there are flaws that cause issues for banks despite the dramatic improvements to the banking system since the 18th century, including non-performing assets (NPA), financial inclusion, technology developments, and regulatory compliances. The Indian government and Reserve Bank are focusing on additional regulatory changes and technical developments to address these problems.
Essay on the Banking System in India 500 Words
Introduction
A vital role in a nation’s overall growth is played by banks. Indian banks saw radical transformations in recent years, transitioning from conventional to technologically advanced institutions. In India, banks first appeared in the late 18th century. The General Bank of India, founded in 1786, and the Bank of Hindustan, founded in 1790, were the first two banks; both are no longer in operation.
The State Bank of India, which began as the Bank of Calcutta in June 1806, and nearly soon changed its name to the Bank of Bengal, is the oldest bank still operating in India. The Bank of Bombay and the Bank of Madras, the other two presidency banks, were founded with charters from the British East India Company. The Presidency Banks and their successors both operated in a quasi-central capacity for a long time. The three banks joined in 1921 to become the Imperial Bank of India, which later changed its name to the State Bank of India upon India’s independence.
Types of Banks in India
The development should not be restricted only to the towns and big cities but also to the rural areas. For this purpose, there are various banks to cater to the different segments of the economy.
- Commercial banks: A commercial bank is a financial institution that accepts deposits, offers various types of loans, and provides a wide range of services to the whole of the country. Commercial banks include both public and private sector banks like SBI, HDFC, ICICI, and PNB.
- Co-operative Banks: A co-operative bank is a financial institution that belongs to its own members, which means that these people are the owners as well as the customers of the bank. Registered under the Cooperative Societies Act of 1912, these banks provide a large number of services, like taking deposits and giving loans to their members.
- Regional Rural Banks (RRBs) were set up on the recommendation of the Narasimham Committee in 1975 with the motive of eliminating money lenders and providing the facilities of loans to small farmers and labourers in a regional area comprising some districts of a state. In these regional rural banks, the rates at which loans are granted are comparatively low compared to commercial banks.
- A non-bank financial institution (NBFI) is a financial institution that does not hold a full license in banking, and these banks are also not supervised or regulated by any other central bank or international banking agency.
- Central Bank: The central bank of a country is a bank that regulates its activities in a proper manner. In India, the Reserve Bank of India is a central bank that makes monetary policies, issues currencies, and acts as a bank of banks.
Conclusion
The banking system in India underwent a revolutionary change from the 18th century until now. Still, there are numerous defects that act as problems for banks, like non-performing assets (NPA), financial inclusion, technological advancements, and several regulatory compliances of different laws. To solve these significant issues, the Government of India, along with the Reserve Bank of India, is working and has also made several laws like the insolvency and bankruptcy code of 2016. These issues require several more regulatory reforms and technological advancements.
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