History of Banking

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CONTENT
1.1 INTRODUCTION
1.2 HISTORY OF BANKING
1.3 HISTORY OF BANKING (INDIA)
1.4 RECENT TRENDS IN PUBLIC
SECTOR BANKS
1.5 PROBLEMS & CHALLENGES OF
PSBS BANKS IN INDIA.
1.1 INTRODUCTION :
The banking sector is the lifeline of any modern economy. development of

a country is integrally linked with the development of banking."Bank" is utilized as
a part of the feeling of a business bank. It is of Germanic starting point however a
few people follow its cause to the French word "Banqui" and the Italian word
'Banca'. It alluded to a seat for continuing, loaning, and trading of cash or coins in
the commercial center by cash banks and cash changers. Keeping money
exercises were adequately imperative in Babylonia in the second thousand years
b.c. Comparative managing an account sort courses of action could likewise be
found in old Egypt.
A STUDY OF NON PERFORMING ASSETS MANAGEMENT WITH REFERENCE TO SELECTED PUBLIC SECTOR BANKS 1
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1.2 HISTORY OF BANKING :
Greek and Roman financiers: from the 4th century BC :
Saving money exercises in Greece are more fluctuated and refined than in any
past society. Private business visionaries, and also sanctuaries and open bodies,
now attempt money related exchanges. They take stores, make credits, change
cash starting with one money then onto the next and test coins for weight and
virtue. Rome, with its performer for organization, embraces and regularizes the
keeping money practices of Greece.
Religion and banking: 12th - 13th century :
The Christian restriction on usury in the end gives a chance to brokers of

another religion. European prosperity needs back. The gainful business of
managing an account moves under the control of more customary Christian
society - first among them the Lombards. Maybe the most well known of the
medieval Italian banks was the Medici bank, set up by Giovanni Medici in 1397.
The Medici had a long history as cash changers,
Bankers to Europe's kings: 13th - 14th century :
In the middle of the thirteenth century financiers from north Italy, all in all
known as Lombards, progressively supplant the Jews in their customary part as
cash loan specialists to the rich and intense. The business aptitudes of the Italians
are improved by their innovation of twofold passage accounting. By the mid
fourteenth century two families in the city, the Bardi and the Peruzzi, have
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become rich by offering money related administrations and the family has
workplaces in Barcelona, Seville and Majorca, in Paris, Avignon, Nice and
Marseilles, in London, Bruges, Constantinople, Rhodes, Cyprus and Jerusalem
Banks and cheques: from the 16th century :
In 1587 the Banco della Piazza di Rialto is opened in Venice as a state activity.
Its motivation it to complete the vital capacity of holding vendors' assets on safe
store, and empowering budgetary exchanges in Venice and somewhere else to be
made without the physical exchange of coins.
National banks: 17th - 18th century :
Venice, subsequent to being conceivably the principal city to establish a bank

for the protecting of cash on store and the clearing of checks, is additionally a
pioneer in the association of a save money with state funds. In 1617 the Banco
Giro is set up to tackle issues experienced by the before Banco della Piazza di
Rialto, which has into inconvenience through the making of unsecured credits.
Bank of England :
The bank of England, first sanctioned in 1694, is the model and excellent
model of all our cutting edge banks; its history, thusly, will merit the more specific
consideration. The first capital of this bank was 1,200,000 sterling. This capital did
not comprise in cash, but rather in government stock. The endorsers to the bank
had loaned the administration, the above entirety of 1,200,000. at an enthusiasm
of eight for each penny, other than an extra annuity of 4,000.
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Scotch Banks :
Two banks were set up in Scotland by contract from the ruler; one the Bank of
Scotland, in 1695; the other, the Royal Bank of Scotland, in 1727. These two banks
have branches in the vast majority of the vital towns of Scotland; however as they
never got any restrictive benefits, a huge number of private banks jumped up to
question the business with them, and to isolate its benefits.
Paper currency makes its first appearance in Europe in the seventeenth

century. Sweden can assert the need In 1656 Johan Palmstruch builds up the
Stockholm Banco. It is a private bank however it has solid connections with the
state In 1661, in counsel with the administration, Palmstruch issues credit notes
which can be traded, on introduction to his bank, for an expressed number of
silver coins. Palmstruch's notes (the most punctual to survive dates from a 1666
issue) are noteworthy looking bits of printed paper with eight written by hand
marks on each.
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1.3 HISTORY OF BANKING ( INDIA ) :
Managing an account in India has its cause as right on time as the Vedic
period. It is trusted that the move from cash loaning to saving money probably
happened even before Manu, the immense Hindu Jurist, who has committed an
area of his work to stores and progresses and set down standards identifying
with rates of intrigue. Amid the Mogul time frame, the indigenous brokers
assumed an essential part in loaning cash and financing outside exchange and
business. Amid the times of the East India Company, it was the turn of the
organization houses to bear on the managing an account business.
Pre- Independence Period : (Before 1947)
The General Bank of India was the main Joint Stock Bank to be set up in the
year 1786. The others which took after were the Bank of Hindustan and the
Bengal Bank. The Bank of Hindustan is accounted for to have proceeded till 1806.
In the main portion of the nineteenth century the East India Company built up
three banks; the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the
Bank of Madras in 1843. These three banks otherwise called Presidency Banks
were free units and worked well. These three banks were amalgamated in 1920
and another bank, the Imperial Bank of India was set up on 27th January 1921.
With the death of the State Bank of India Act in 1955, the endeavor of the
Imperial Bank of India was taken over by the recently constituted State Bank of
India. The Reserve Bank which is the Central Bank was made in 1935 by passing
Hold Bank of India Act 1934. In the wake of the Swadeshi Movement, a number
of keeps money with Indian administration were built up in the nation to be
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specific, Punjab National Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian
Bank Ltd, the Bank of Baroda Ltd, the Central Bank of India Ltd.
Post- Independence Period : ( After 1947 )
Major changes occurred in the keeping money area as the economy

developed and developed amid the decades since freedom. Not long after
accomplishing freedom, open responsibility for banks ended up noticeably
unavoidable and tuned in to the prerequisites, State Bank of India (SBI) was made
in 1955 to lead the extension drive infiltrating rustic India and accelerate the
procedure of adaptation. Standards for money acknowledgment, resource order
and advance misfortune provisioning were set up and Capital Adequacy Ratio
ended up plainly required.
In 1969, motivated by a huge social reason, 14 noteworthy banks were

nationalized; and 6 more in the year 1980. From that point forward the saving
money framework in India has assumed a vital part in the Indian economy, going
about as an instrument of social financial change. The justification behind bank
nationalization has been briefly advanced by the prominent brokers: "numerous
bank disappointment and emergencies regarding two centuries, and the harm
they did under free enterprise conditions; the necessities of arranged
development and impartial dissemination of credit which is exclusive banks was
focused for the most part on the controlling modern houses and persuasive
borrowers; the necessities of developing little scale industry and cultivating in
regards to back, hardware and contributions; from all these there rose an
inflexible interest for managing an account enactment, some administration
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control and a focal keeping money expert, including up, in the last examination, to
social control and nationalization".
Post nationalization, the Indian saving money framework enlisted colossal

development in volume. In spite of the verifiable and multifold increases of bank
nationalization, it might be noticed that the essential money related foundations
were all state possessed and were liable to focal course and control. Banks
delighted in little self-rule as both loaning and store rates were controlled until
the finish of the 1980s. Despite the fact that nationalization of banks helped in the
spread of managing an account to the rustic and until now revealed territories,
the imposing business model allowed to general society part and absence of
rivalry prompted general wastefulness and low efficiency.
Post-Liberalization Period (1991-till date)
The shortcomings of the saving money framework was broadly examined

by the board of trustees (1991) on budgetary division changes, headed by
Narasimham. The board of trustees found that managing an account framework
was both over-directed and under-controlled.
The Banking Sector Reforms in India were started in 1992. The goals of
changes were to fortify the Indian banks, make them universally focused and urge
them to assume a viable part in quickening the procedure of development. The
changes procedure additionally started measures .
Banks were likewise coordinated to recognize issue advances on their

accounting reports and make arrangements for terrible advances and cut down
the thriving issue of non-performing resources. The period 1992-97 established
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the frameworks for change in the keeping money framework (Rangarajan, 1998).
The second Narasimham Committee Report (1998) focussed on issues like
fortifying of the saving money framework, updating of innovation and human
asset improvement.
Narasimham Committee's Recommendations:
Against this scenery, a Committee under the chairmanship of M. Narasimham was

set up by the Government of India to analyze the nation's money related
framework and its different segments and to make proposals for transforming
and enhancing the nation's monetary area. The report was put before the
Parliament in December 1991.
Decrease in Statutory Liquidity Ratio (SLR) from 39% to 25% and Cash
Reserve Ratio (CRR) from 15% to 4.5% in 2003 to provide more lending to
the industries and boost the economic development in India.
Deregulation of loan costs and aligning them on government borrow-ing
with the market-decided rates
Expulsion of branch authorizing framework so Banks themselves would be
permitted to open or close branches.
Expelling the restrictions on remote banks and stop on advance
nationalization of banks with the goal that private banks can likewise
develop.
Fixing of prudential standards and fortifying of keeping money supervision.
Legitimate grouping of benefits and full revelation and straightforwardness
of records of banks and other budgetary establishments.
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Accomplishment of a base 4 p.c. capital ampleness proportion in
connection to hazard weigh-ted resources inside three years.
Expanded rivalry in loaning between 'improvement money related
institu-tions' and banks.
Setting up of a foundation to be called Asset Reconstruction Fund with a
view to assuming control over a segment of the credit arrangement of
banks which has turned bad and doubtful and whose collection is difficult.
Introduction to Indian Banking System :
In a present day economy, banks are to be viewed as not as merchants in cash

however as the pioneers of improvement. They assume an essential part in the
preparation of stores and payment of credit to different segments of the
economy. The managing an account framework mirrors the monetary soundness
of the nation. The quality of an economy relies upon the quality and proficiency of
the budgetary framework, which thus relies upon a sound and dissolvable
managing an account framework. A sound managing an account framework
productively prepared investment funds in profitable parts and a dissolvable
saving money framework guarantees that the bank is equipped for meeting its
commitment to the investors.
The present procedure of change ought to be seen as a chance to change over

Indian keeping money into a sound, solid and lively framework fit for assuming its
part proficiently and successfully all alone without forcing any weight on
government
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Structure of Indian Banking System
The Indian financial framework includes an extensive number of business and

co-operative banks, Development banks, specialized banks for industry &
agriculture, import export banks , government disability establishments,
aggregate venture foundations, and so on. Reserve Bank of India is the central
bank of the country and apex body which regulates the business of banking in
India.
A Sound Banking system is important for any country. The Indian banking
system consists of 21 public sector banks, 26 private sector banks, 43 foreign
banks, 57 regional rural banks, 1,589 urban cooperative banks and 93,550 rural
cooperative banks, in addition to cooperative credit institutions.
Reserve Bank of India
Scheduled Non-Scheduled
Banks Banks
Scheduled Scheduled
Commercial Banks Cooperative Banks
Public Private Foreign Regional Scheduled Scheduled

sector Sector Banks Rural Urban State
banks Banks Banks Cooperative Cooperative
Banks Banks
Nationalized SBI & its Old Private New Private

Banks Associates Sector Banks Sector Banks
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1. Reserve Bank of India (RBI)
Reserve Bank of India is central bank of our country, which was established in
1935 under the Reserve Bank of India Act, 1934. Initially it started as a private
shareholders institution till January 1949, after which it became a state-owned
institution under the Reserve Bank of India Act, 1948. It is the one of oldest
central bank among the developing countries. As the apex bank of country , it has
been guiding, monitoring, regulating and promoting the destiny of Banking
business in country.
Objectives of RBI
RBI plays a more positive and dynamic role in the upliftment of a country. The
central bank of the country is financial muscle of a nation. The objectives of the
central banking system are presented below:
1. The central bank should work for the national interest of the country.
2. The central bank must aim for the stabilization of the mixed economy.
3. It aims at the stabilization of the price level at average prices.
4. Stabilization of the exchange rate is also essential.
5. It should aim for the promotion of economic activities.
Functions of RBI
The RBI functions are based on the situation of Indian economy. The RBI should
have to maintain a continuous and direct relationship with the Central
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Government while implementing the programmes and policies .The major
functions of the RBI are as below :
1. Welfare of the public
2. To maintain the financial stability of the country.
3. To make the financial transactions safely and effectively.
4. To develop & grow the financial infrastructure of the country.
5. To distribute the funds effectively without any partiality.
6. To regularize the overall credit volume for price stability.
Authorities
1. Currency issuing authority
2. Monitoring & Surveillance authority
3. Banker to the Central & State Government
4. Foreign exchange control authority
5. Promoting & Development authority.
Scheduled Banks and Non-Scheduled Banks

The scheduled banks are those which are as per the second schedule of the RBI
Act, 1934. These banks have a paid-up capital and reserves of an aggregate value
of not less than Rs. 5 lakhs, They have to fulfill the rules of RBI that their affairs
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are carried out in the interest of their depositors. All commercial banks (Indian
and foreign), regional rural banks, and state cooperative banks are scheduled
banks in India . Non- scheduled banks are those which are not as per the second
schedule of the RBI Act, 1934.
A. Commercial Banks
Commercial banks collect large amount of saving funds form overall population
and make them accessible to industries and businesses for their basic
requirement of working capital.
Commercial banks in India are generally divided into three division namely Indian-
public sector banks and private sector banks and some foreign sector banks.
Indian public sector banks a very dominant role in whole banking system by
capturing more than 92 percent share.
Commercial banks are those institutions that accept deposit, make business loans
and other related services to different customers and businesses & Industries.
These institutions carried out their operations to make profit. They fulfill the
financial requirements of industries and various other sectors includes
agriculture, rural development, etc. Commercial bank includes public sector,
private sector, foreign banks and regional rural banks.
1. Public Sector Banks

Public sector banks in Indian banking industry has emerged as three different
stages . First, the Transformation of the Imperial Bank of India into the State Bank
of India in 1955, which is followed by the taking over of the 7 state associated
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banks as its subsidiary banks, secondly the nationalization of 14 main commercial
banks on July 19, 1969 and last but not the least the nationalization of 6 more
commercial banks on April 15, 1980.
There are 27 Public Sector Banks in India including State Bank of India and
its 5 Associate Banks, together called State Bank Group (The names of the 5
Associate Banks are: State Bank of Travancore (SBT), State Bank of Patiala (SBP),
State Bank of Hyderabad (SBH), State Bank of Mysore (SBM) and State Bank of
Bikaner and Jaipur (SBBJ). The Union Cabinet approved the merger of the five
subsidiaries; and Bharatiya Mahila Bank Ltd with SBI on June 15, 2016. As on from
April 1, 2017 all the 5 associate banks of SBI and Bhartiya Mahila Bank are merged
with State Bank of India. After this merger now SBI is counted among the top 50
largest banks of the world. Today there are total 21 Nationalized banks in India.
The public sector accounts for 75 percent of total banking business in India.
List of Public sector Banks.
1. State bank of India. 12.IDBI Bank
2. Andhra Bank 13.Oriental Bank of Commerce
3. Bank of India 14.Punjab & Sindh Bank
4. Bank of Baroda 15.Punjab National Bank
5. Bank of Maharashtra 16.State Bank of India
6. Canara Bank 17.Syndicate Bank
7. Central Bank of India 18.UCO Bank
8. Corporation Bank 19.Union Bank of India
9. Dena Bank 20.United Bank of India
10.Indian Bank 21.Vijaya Bank
11.Indian Overseas Bank
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2. Private Sector Banks

These are banks which major share capital is held by private individuals and
not by Government . These banks are registered as companies with limited
liability. The private sector banks is divided into two parts like New Private banks
which is incorporated after 1993 and old Private banks which is incorporated
before 1993. There are total 26 private sector banks . Examples of private sector
banks are: ICICI Bank, Axis bank, HDFC, etc.
List of Private sector Banks.
1. Axis bank 15.Nainital Bank
2. Catholic Syrian Bank 16.RBL Bank
3. City Union Bank 17.South Indian Bank
4. DCB Bank 18.Tamilnad Mercantile Bank
5. Dhanlaxmi Bank Limited
6. Federal Bank 19.Yes Bank
7. HDFC Bank 20.Bandhan Bank
8. ICICI Bank 21. Capital small finance Bank Ltd
9. IndusInd Bank 22. Costal local area Bank Ltd
10.Jammu and Kashmir Bank 23. Krishna Bhima Samruddhi
11.Karnataka Bank Local Area Bank Ltd
12.Karur Vysya Bank 24. Subhadra Local Area Bank Ltd.
13.Kotak Mahindra Bank[2] 25. IDFC Bank Limited
14.Lakshmi Vilas Bank 26.Equitas Small Finance Bank Ltd
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3. Foreign Banks
These banks are those banks which registered headquarters in foreign country
but operate or work in India through their branches. As on 31st December 2015
total 44 foreign banks working in India. Like Standard Chartered Bank, Citi Bank,
HSBC, Deutsche Bank, etc.
4. Regional Rural Banks (RRBs):
there were 196 Regional Rural Banks which includes 27 State Cooperative Banks.
But as on 31st March, 2013 due to mergers the number of Regional Rural Banks
has come down from 196 to 64. The numbers of branches of RRBs are 17856 as
on 31 March 2013 covering 635 districts throughout the India.
B. Co-Operative Banks :
The co-operative bank is a financial institute which belongs to its members, who
are at the same time the owners and the customers of the bank. Co-operative
banks are created by persons belonging to the local or professional community or
sharing a common interest. Co-operative banks generally provide their members
with a wide range of banking and financial services (loans, deposits, banking
accounts, etc). It provide limited banking service. Cooperative banks are the
primary financiers of agricultural activities, some small-scale industries and self-
employed workers. The functions of bank is carried out on the basis of no-profit
no-loss.
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The Co-operative Banking structure in India is Subdivided into Five Category
namely , Primary Urban Co-Operative bank, Primary Agricultural Credit Society,
District Central Co-operative banks, State Co-operatives banks, Land
Development Banks. Currently total 19 schedule state co-operative banks are
working in India. 14 Non Schedule state Co-operative banks are also working in
India.
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1.4 RECENT TRENDS IN PUBLIC SECTOR BANKS :
In the current year, the banking Industry has been under going fast changes which
is reflecting in major important changes. Innovation in information technology is
the most noteworthy ranges which have changed quickly. It has quickened the
publishing of monetary data which bringing down the expenses of numerous
financial activities . In the last few years Banking sector has introduced some new
items: Credit Cards, ATM, Tele-Banking, Electronic Fund Transfer (EFT), Real Time
Gross Settlement (RTGS), Internet Banking, Mobile Banking and so forth. These
new improvements increase the proficiency of banks by diminishing transaction
cost.
CORE BANKING SOLUTIONS :
Center Banking Solutions (CBS) or Centralized Banking Solutions is the procedure

which is finished in a brought together condition i.e. under which the data
identifying with the client's record (i.e. money related dealings, calling, wage,
relatives and so forth.) is put away in the Central Server of the bank (that is
accessible to all the organized branches) rather than the branch server.
Contingent on the size and needs of a bank, it could be for the every one of the
operations or for constrained operations. This undertaking is helped through
cutting edge programming by making utilization of the administrations gave by
particular offices. Because of its advantages, a no. of banks in India as of late have
found a way to actualize the CBS with a view to assemble association with the
client in light of the data caught and offering to the client, the modified money
related items as per their need.
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Advantages to Customer:
1. Transaction of business can be done from any branch.
2. High accuracy with less error in Transaction.
3. Huge amount of fund available.
Advantages to Banks:
1. Standardize process follow by all branches of banks.
2. Better service to customer that increase customer retention.
3. Better use of available resource.
1. Demat Account : In India, a demat account, the contraction for

dematerialised account, is a sort of managing an account which dematerializes
paper-based physical stock offers. The dematerialised account is utilized to abstain
from holding physical offers: the offers are purchased and sold through a stock
merchant.
The Securities and Exchange Board of India (SEBI) commands a demat represent
share exchanging over 500 shares. As of April 2006, it wound up noticeably
required that any individual holding a demat record ought to have a Permanent
Account Number (PAN),
Advantages
1. A sheltered and helpful approach to hold securities;
2. Immediate exchange of securities;
3. No stamp obligation on exchange of securities;
4. Elimination of dangers related with physical authentications, for example,
awful conveyance, fake securities, delays, burglaries and so forth.;
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5. Reduction in printed material required in exchange of securities;
6. Reduction in exchange cost;
2. Telebanking : Telebanking provides banking facility on telephone network. A

client can use facility of banking through a phone call and by giving the coded
Personal Identification Number (PIN) to the bank. Telebanking is widely easy to
use and successful in nature.
Following service is provided by Telebanking to customers :
1. Facility to stop payment.
2. Ask information about status of Cheque.
3. Information on the present loan costs.
4. Request for a DD or pay Order.
5. Demat Account related administrations.
3. Internet Banking : The aggregate number of enlisted clients for Internet

saving money in India is more than two million. India has somewhat less than a
million dynamic Internet keeping money clients. In this way showing, the idea of
Internet managing an account is without a doubt getting on.
India falls behind different nations in Internet saving money. In the US, the quantity
of business manages an account with value-based sites is 1,275 or 12 percent of
the aggregate number of banks. Of these, seven could be called 'virtual banks.'
From the Asian market understanding, obviously Internet keeping money is setting
down deep roots and will be a noteworthy channel to obtain and benefit clients.
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Markets like Korea and Singapore have almost 10 percent of their populace
keeping money over the Internet.
Internet Banking & India : Indian banks have a unimportant Internet

managing an account record. ICICI Bank commenced internet based banking in
1996 and a large group of different banks soon took action accordingly. Be that as
it may, notwithstanding for the Internet in general, 1996 to 1998 denoted the
selection stage, while utilization expanded just in 1999 because of lower ISP online
charges, expanded PC infiltration and a tech-accommodating environment.
Internet Banking & Public sector Banks : As in all types of innovation

developments, PSU banks have remained slow in the race for commencing Internet
Banking . There are not very many nationalized banks like State Bank of India, Bank
of Baroda, Allahabad Bank, Syndicate Bank and Bank of India that offer Internet
Banking . Some others like Union Bank of India, Canara Bank and Punjab National
Bank are very nearly doing as such. SBI's Internet banking activity, propelled in July
2001, is in actuality doing great and has more than 18,000 enrolled clients
crosswise over 150 branches
4. Automatic Teller Machine : The presentation of ATM's has given the

clients the office of round the Banking Facility . The ATM's are utilized by banks for
making the clients managing their account with less efforts . ATM card is a gadget
that permits client who has an ATM card to perform routine banking activity with
less interfacing with human teller. The ATMs help client to get money as and when
he wants though bank is closed.
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Advantages to Customers :
To Transfer money from one account to another.
To see account related information.
To get money .
ATM's give 24 hrs. 7 days and 365 days a year benefit.
Service is quick and effective
Privacy in transaction
Wider adaptability set up and time of withdrawals.
he exchange is totally secure you have to enter in Personal Identification
Number (Unique number for each client).
Advantages to Banks :
Alternative to expand managing an account hours.
Crowding at bank counters significantly lessened.
Alternative to new branches and to decrease working costs.
Relieves bank representatives to concentrate on more explanatory and
inventive work.
ATM's can be introduced anyplace like Airports, Railway Stations, Petrol Pumps, Big
Business arcades, markets, and so forth. Henceforth, it gives simple access to the
clients, for getting money. The ATM was given first by the remote banks like
Citibank, Grind lays bank and now by numerous private and open segment banks in
India like ICICI Bank, HDFC Bank, SBI, UTI Bank and so forth. The ICICI has propelled
ATM Services to its clients in all the Metropolitan Cities in India.
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5. Mobile Banking : Mobile Banking (otherwise called M-Banking or SMS
Banking) is a term utilized for performing balance checks, account exchanges,
installments, and so forth., by means of a cell phone, for example, a cell phone. It
was Internet Banking, which introduced another period in keeping money comfort
by conveying the whole operations to the PC, and now portable managing an
account guarantees to take it to the following level.
Mobile Banking tends to this principal restriction of Internet Banking, as it

diminishes the client necessity to only a cell phone. Versatile utilization has seen a
hazardous development in a large portion of the Asian economies like India, China
and Korea. The primary reason that Mobile Banking scores over Internet Banking is
that it empowers 'Anyplace Anytime Banking'.
Mobile Banking has been at the limit of an unrest for quite a while. While
numerous administrators, and in addition banks, had presented versatile managing
an account applications, it never wound up noticeably prominent because of
security concerns. The quantity of individuals utilizing mobile banking has bounced
from under 10,000 to 120,000 of every two years. While the trend is growing, lack
of awareness of services, apart from perceived security issues are inhibiting faster
take-off.
Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI), a
'Working Group on Mobile Banking' to inspect diverse parts of Mobile Banking (M-
managing an account).
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Various Mobile Banking Services to the Consumers
Account Information
1. Mini-statements and checking of account history

2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements
6. Mutual funds / equity statements
7. Insurance policy management
8. Pension plan management
Payments & Transfers
1. Domestic and international fund transfers

2. Mobile re-charging
3. Commercial payment processing
4. Bill payment processing
Investments
1. Portfolio management services

2. Real-time stock quotes
3. Personalized alerts and notifications on security prices
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Support
1. Status of requests for credit, including mortgage approval, and insurance

coverage
2. Check (cheque) book and card requests
3. Exchange of data messages and e-mail, including complaint submission and
tracking
6. Credit card : The credit card can be characterized as a little plastic card that
enables its holder to purchase merchandise and ventures using a loan and to pay at
settled interims through card issuing office. The charge card discharges the clients
frame botheration of conveying money and guarantees wellbeing.
A man who gains a pay of Rs 60,000 for every annum is qualified for card. A
reference from a financier and the businesses of the candidate is demanded.
7. Debit card : Debit cards will offer direct withdrawal of fund from a client's
financial balance. As far as possible is dictated by the client's bank contingent on
accessible adjust in the record of the client. It is a special plastic card connected
with electromagnetic identification that one can use to pay for things purchased
directly from its bank account. Under the system, cardholders accounts are
immediately debited against purchase or service to the computer network. Hence,
under debit card the card holder must have adequate balance in his account.
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8. Multi City Check : "Multi City Check" or MCC is an office wherein the client can
issue checks drawn at the base branch and payable at any branch. These checks
will be dealt with as nearby checks at the remote branch. There will be no
gathering charges and the credit will be given around the same time, as pertinent
to neighborhood checks. Regardless of the possibility that the check is dropped at
whatever other bank other than the base bank, there won't be any gathering
charges. For instance, if Mr. An is paid a Multi city check by Mr. B at SBI branch in
Delhi, Mr. A can drop the same at any bank in Mumbai where he holds a record,
and there won't be any accumulation charges.
Payment and Settlement Systems
In recent years, money transfer , especially the development of electronic money

schemes, have been gaining popularity. While electronic money has the ability to
take over from cash for making small-value payments, making such transactions
are becoming easier and cheaper for both consumers and banks. The evolution of
peer-to-peer money transfer mechanisms poses a challenge to current role of
banks as gatekeepers to traditional payment systems. Robust payment systems,
therefore, are a key requirement in maintaining and promoting financial stability
with technology playing both a facilitating and disruptive role in them.
Reserve Banks initiatives for electronic payments and banking
As part of its public policy objective of promoting a safe, secure, sound and
efficient payment system, the Reserve Bank has taken several initiatives to develop
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INTRODUCTION
and promote electronic payments infrastructure. Towards this end, the RBI
introduced the following:
1. Electronic Clearing Service (ECS) : With a view to upgrading payment

system to the international banking standards, the Reserve Bank of India took the
initiative and set up Electronic Clearing Service in India, in the mid 1990s, which is
the counterpart of the automated clearing house (ACH) system in certain other
countries. It has two variants
ECS - Credit Clearing and ECS - Debit Clearing. : While the Credit Clearing
operates on the principle of single debit-multiple credits and is used for making
payment of salary, pension, dividend and interest, etc. The Debit Clearing functions
on the principle of single credit-multiple debits and is used for collecting
payments by utility service providers like electricity, telephone bills as well by
banks for receiving principal / interest repayments for housing and personal loans
from the borrowers.
At present, about 18 million transactions done through the ECS system every
month. This facility is currently available at 70 different centers in the country.
2. Real Time Gross Settlement System : The payment system in the our
country largely follows the deferred net settlement system, under which the net
amount is settled between the banks, on a deferred basis. Such a dispensation
entails an element of settlement risk. Hence, as a step towards risk mitigation in
the large value payment systems, the RTGS was operationalised by the RBI in
March 2004, which enables settlement of transactions in real time, on a gross
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INTRODUCTION
basis. Almost all the inter-bank transactions in the country and many time-critical
customer transactions are now settled through this system.
RTGS is fully secured electronic funds transfer system where banks and
customers can receive payments on real time basis. The outreach of RTGS
transactions has also grown geographically. Out of about 75,000 bank branches in
the country, more than 48,300 bank branches now accept requests for remittance
through RTGS system for customer transactions as well as inter-bank
transactions.The daily average of transactions is over 34,000 by volume and over
Rs.2 lakh crore by value. The RBI also provides collateralised Intra-Day-Liquidity
(IDL) support to the member banks for the RTGS operations.
3. National Electronic Fund Transfer: The NEFT was launched by the RBI in
November 2005 as nation-wide retail electronic payment system to facilitate funds
transfer by the bank customers, between the networked bank branches in the
country. It has, however, been observed that the public sector banks are not active
users of NEFT and the majority of NEFT outward transactions are carried by a few
new-generation private sector banks and foreign banks.
For instance, in June 2008, while these banks, as a segment, accounted for a
little over 43 per cent each of the aggregate volume of outward and inward NEFT
transactions, the share of public sector banks in total outward NEFT transactions
was rather low at a little over 12 per cent, of which half the volume was the
contribution of the State Bank of India. The RBI has been pursuing the matter with
the PSBs for increasing their participation in the NEFT system in terms of the
number of NEFT-enabled branches and the number of NEFT transactions originated
by them.
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INTRODUCTION
.In order to popularize the e-payments in the country, the RBI, on its part,
has waived the service charges to be levied on the member banks, till March 31,
2009, in respect of the RTGS and NEFT transactions. The RBI also provides, free of
charge, intra-day liquidity to the banks for the RTGS transactions. The service
charges to be levied by banks from their customers for RTGS & NEFT have,
however, been deregulated and left to discretion of the individual bank.
4. Cheque Truncation System (CTS) : The latest electronic payment product

introduced by the RBI is the Cheque Truncation System, which was launched, on a
pilot basis, in the National Capital Region of New Delhi on February 1, 2008, with
the participation of 10 banks. At present all the banks are participating in the
system through 53 direct member banks.
The main objective of the CTS is to improve the efficiency and substantially
reduce the cheque processing time in the system. The traditional clearing system
requiring the physical presentation of cheques in the clearing house for payment
and settlement, inevitably entails consequential inefficiencies in terms of clearing
time and infrastructure required.
In contrast, the main advantage of cheque truncation is that it eliminates the
physical presentation of the cheque to the clearing house; instead, the electronic
image of the cheque would be sent to the clearing house. The CTS would enable
the realisation of cheques on the same day, and provide a more cost-effective
mode of settlement than manual and MICR clearing. Smaller banks, which may find
it unviable to set up the infrastructure, could utilise the services of service bureaus
set up for this purpose by a few larger banks.
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5. National Electronic Clearing Service (NECS) ; The National ECS is a product
being developed by the RBI to enable centralised processing of the ECS
transactions, in contrast to the existing ECS system that has decentralised
operations at 70 locations, spread all over the country.
Under the National ECS, the processing of all the ECS transactions would be
centralised at the National Clearing Cell at Nariman Point, Mumbai and sponsor
banks would need to only upload the relative files to a web server, with online data
validation facility. Destination banks would receive their inward clearing data / file
at a central location, through the web server.
The National ECS would leverage the Core Banking platform of the
commercial banks, to enable around 50,000 core-banking-enabled branches of the
various banks, to avail of this service. The system would facilitate end-to-end
seamless posting of the NECS transactions in a straight-through-processing (STP)
environment. This would help the users and member banks to send, receive and
process the data files at one centralised place, thereby improving the efficiency of
the payment system.
6. Negotiated Dealing System : The system which became operational

during Feb 2002 facilitates the submission of bids/applications for
auctions/floatation of govt. securities through pooled terminal facility located at
Regional Offices of Public Debt Offices across the country and through member
terminals. The system can be used for daily Repo and Reverse Repo auctions under
Liquidity Adjustment Facility.
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INTRODUCTION
1.5 Problems And Challenges Of Public Sector Banks
(PSBs) in India
Since nationalization, Public Sector Banks (PSBs) had been demonstrating an

exceptionally blushing photo of their execution. Be that as it may, because of the
approaches of coordinated loaning and need division loaning, their execution
began declining and it turned into a matter of profound worry for the
policymakers. The changes in the keeping money division prompted the change in
the gainfulness of PSBs. Despite the fact that the PSBs have accomplished this
target limitedly, their relative execution has been reliably laying behind the
execution of both the outside and residential private banks
STRENGTH, WEAKNESS, OPPORTUNITY AND THREATS
The strengths include: (a) an extensive branch network, (b) diversified credit plan,
(c) skilled labour force and expertise, (d) large number of clients.
The weaknesses of PSBs are: (a) high rate of NPAs, (b) poor capital base, (c) lack
of autonomy in HRM policies, (d) loss of making branches, (e) lack of
accountability, (f) technology gap among private and public sector banks, (g) poor
quality of services by PSBs, (h) customer retention and (i) gap in the productivity
of various bank groups, etc.
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The public sector banks have immense opportunities, which include: (a)
liberalization of the economy, (b) infrastructure development, (c) adoption of
modern technology and (d) existence of untapped potential, etc. The public sector
banks are surrounded by threats like (a) competition from new private sector
banks and foreign banks, (b) increasing cost of operations, (c) financial
disintermediation,(d) implication of globalization, (e) intensified competition
within the banking sector and (f) competition from global banking giants.
PROBLEMS OF PUBLIC SECTOR BANKS (PSBs) IN INDIA
1. Issue Of Pressure On Profitability : The issue of weight on efficiency was

experienced amid 1993-95 as uncovered from the misfortunes caused to
saving money division With nonstop development in number of branches
and labor, push on social and provincial managing an account, coordinated
segment loaning, support of higher hold proportions, waiver of advances
under concessions, reimbursement default by huge modern corporates and
different borrowers, and so on had their telling effect in the benefit of the
banks.
2. Issue Of Low Productivity : Another issue which Indian open part banks
are standing up to is low efficiency. The low efficiency has been because of
immense surplus labor, poor work culture and nonappearance of
representatives' sense of duty regarding the association
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INTRODUCTION
3. Issue Of Non-Performing Assets (Npas) : A genuine danger to survival and
achievement of Indian PSBs in the development of awkwardly abnormal
state of non-performing resources In its cover Trends and Progress of
Banking in India, 1997-98, the Reserve Bank of India (RBI) revealed the
gross NPAs as level of advances of PSBs, which was 16 for each penny as on
March 31, 2000 obstructing about Rs. 52,000crore in non-performing
advances
4. Test Of Competition From New Banks : The present time of rivalry has
seen different substantial multinational banks like American Bank, Hong
Kong Bank, Swiss Bank, City Bank, and so forth and other multinational
banks coming forcefully. The new banks have set the tone and to a degree
additionally the standard for mechanical enhancements with item
advancements, which commanded the customary PSBs.
5. Test Of Cross-Industry Competition : The web gives individuals from other

industry portions chances to prevail in business where they have had
almost no such assets previously. The new non-monetary participants, for
example, Microsoft, AOL, Time Warner and Amazon.com are additionally
debilitating to customary budgetary administration organizations and banks
than the new virtual contestants, in light of the fact that these non-money
related organizations have set up validity, steadfast purchaser and
profound pockets .
6. Issue OF Managing Dual Ownership : Overseeing duality of possession is
an impossible to miss issue which the PSBs need to experience in light of
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INTRODUCTION
cooperation of private investors in their offer capital. PSBs to survive and
develop effectively are required to work as per the desires of one of its
central investors. In the changed situation, there would be two noteworthy
gatherings of investors, viz., the Government of India (GOI) and Reserve
Bank of India (RBI) on one hand and private investors on the other.
7. Issue Of IT Infrastructure : In the period of computerization, despite the

fact that the banks have begun computerization process, this has given
little solaces to the clients. Still the client needs to sit tight for quite a while
in long lines. Further, the operation by PC is postponed by the way that
some working staff is not extremely talented and accordingly it requires
greater investment.
8. Bureaucratic Interference : Another critical purpose behind the situation of

the clients of PSBs is the bureaucratic set-up inside the banks whereby it
takes months together to get the advance endorsed. When credit gets
endorsed, the undertaking cost gets raised offering ascend to defaults in
the installments by the association and at last bank is compelled to have
bigger NPAs in their grasp.
9. Poor Environment : The messy and poor condition is another issue of PSBs
in India. The minute one enters a bank it would seem that a messy run
down stockroom with broken and torn seats, which debilitates a client to
wander into and profit the administrations. It would appear that butchery
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INTRODUCTION
where the client is rationally discolored to such an extent that he has a
craving for taking a medication.
10.Issue Of Consumer Unfriendly : Another reason is that the general

population working in the banks have an extremely solid inclination that
they are Government "requests". Accordingly no one can shunt them out
and thusly they don't work. The efficiency, yield in banks is low to the point
that one will discover the majority of the staff in the banks caught up with
tattling and the purported "bechara" client standing vulnerable reviling his
destiny. Further, the union governmental issues with strikes each seventh
day makes the life of the client more hopeless. It can be very much
envisioned that one-day conclusion of banks hits the economy with around
Rs. 2000crore misfortune, however who thought about it.
11.Welfare Motivation : Another certain reason is that banks being

government association and in their target towards a social state they have
ignored the gainful clients at the cost of misfortune accounts, their
techniques don't exist by any stretch of the imagination. A similar
treatment to all client, regardless of whether one stores Rs. 1 lakh or Rs.
500 may prompt poor broker client relationship. The disappointment of the
higher-end client constrains him to search for different alternatives.
12. Absence Of Knowledge : However, Indian open part banks have made an
immense system of branches, having colossal client base, they are not
ready to extricate any information, from the tremendous measure of over-
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INTRODUCTION
burden information that they have on these clients. To fabricate
procedures to pull in and hold clients some information is in verifiable from
with the representatives about the client, which is there a result of casual
contacts. However, private area banks are setting up forceful and
innovation sharp rivalry to open segment banks as creative items and
administrations, for example, round the clock managing an account office,
net-keeping money, free home administration to open a ledger and to pull
back/store cash with check/draft (home saving money), free auto clear
office in the sparing record with alternatives to clear overabundance
finances in investment account to high premium settled store, ATM and
365 days benefit, giving a programmed terminal in a corporate office for
organization to get to its record from its office, offering appealing
purchaser tough advances, instructive advances, Visas, and so on .
13.Issue Of Customer Adoption Issue : Nowadays general society segment

banks are showing different items and administrations to their clients on
the web, yet its extension is restricted. The issue of bank is that they should
strive to pull in more number of clients. This is conceivable just when they
guarantee security of online exchanges. In addition, banks that have made
an unmistakable internet offering could pull in more number of clients
when contrasted with those banks which are utilizing practically
comparative items and administrations. The eventual fate of web based
saving money exchanges relies upon their capacity to persuade their clients
to utilize their online entrances.
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INTRODUCTION
14. Issue Of Choice Of Banking Technology : Without a doubt, web based
keeping money spares a considerable measure of time. Two sorts of saving
money models like coordinated managing an account and remain solitary.
Web keeping money is appearing. Be that as it may, banks may experience
issues because of wrong decision of innovation, inadequate control forms
and improper framework plan. This wrong choice of innovation may
prompt a misfortune as far as money related misfortunes well as loss of
brand picture and goodwill. Because of this reason, many banks depend on
outsider specialist organization for managing an account innovation.
15. Difficulties Of The Survival Of Public Sector Banks (Psbs) In India : The
change of operational and appropriation productivity of business banks has
dependably been an issue for Government of India (GOI) in interview with
RBI. Throughout the years, such as Banking Commission (1972) under the
Chairmanship of R.G. Saraiya and in 1976 under the chairmanship of
Manubhai Shah and the Committee for the working of PSBs (1978) under
the Chairmanship of James S. Raj have recommended auxiliary changes
towards this target. In any case, the monetary ascent of 1990s brought
forth the new financial large scale level deduction to enhance the monetary
wellbeing of the Indian economy. Money related area changes, especially
managing an account part, gave new stable and sound heading to the
Indian economy. Under the administration of Liberalization, Privatization
and Globalization (LPG), some open area banks are as yet confronting
intense issues as their survival has turned out to be extremely troublesome
Chapter 1
INTRODUCTION
in the aggressive world. Different difficulties have occurred to handle the
issue.
16.Aggressive Environment : The Foreign Banks and New Private Sector Banks
have seen a noteworthy development however on the opposite side, PSBs
are at the edge of survival among them with enormous capital base, most
recent innovation, imaginative and universally tried items/administrations
are bringing the purchaser's consideration. Notwithstanding, to make
Indian PSBs intensely solid, they ought to take after the systems of New
Private Sector Banks and Foreign Banks as benchmark with a presentation
of most recent innovation, inventive and internationally acknowledged
items/administrations took after by arrangement of experienced, gifted
and tech-accommodating experts. This will make it basic for Banks to
upgrade their frameworks and techniques to universal principles and
furthermore at the same time brace their money related positions.
17. Showcasing Strategies : The PSBs are required to devise reasonable

market systems to expand the volume of business level. In this way, the
PSBs should look into on the immense information they have about the
purchaser, devise about particular items for particular fragments, separate
as indicated by shopper possibilities and its desires, and concentrate on
couple of potential clients with tweaked items and administrations instead
of serving all clients with general items. Utilizing CRM, arrangement of
youthful workers with crisp and innovative personalities with ability in most
Chapter 1
INTRODUCTION
recent innovation, as an issue of decision is alluring to make due in the
globalized advertise.
18.Picture Building : The PSBs should begin on enormous scale the picture
building exercise. The banks should concentrate their consideration on
formation of such an outward looks, to the point that it has a craving for
anything entering the bank. The official of the bank ought to be easy to
understand with great quality furniture and other appealing foundation.
19. Change Of Human Capital : Another vital test is the change of human
capital. Be that as it may, the PSBs are over-burden with much experienced
senior old staff that is never prepared to acknowledge the change.
Presently a-days, it is the need of great importance to create and deal with
the HR to make them versatile to the evolving condition. It is a test for PSBs
that how to deal with their human money to make it gainful. In any case,
PSBs ought to give at work preparing to the effective staff to make them
skilled to comprehend and work with most recent innovation and its
application. The execution of staff ought to be assessed on quarterly
premise and it is likewise required to present Voluntary Requirement
Scheme (VRS) legitimately.
20. Redesign, Restructuring And Reengineering (Rrr) : The time is the most
valuable thing; banks ought to comprehend the estimation of shopper's
opportunity. The pointless printed material and extensive process should
be stopped in PSBs. In any case, rearrangement, rebuilding and
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INTRODUCTION
reengineering (RRR) are the need of great importance. Keeping in mind the
end goal to lead, catch and hold the shopper, banks need to use their
insight about purchaser to decide about item design, advancement, valuing
and benefit level, channel blend all that suit the customer better. The CRM
(Customer Relationship Management) framework influences more exact
sense of duty regarding client to in view of educated judgment enhancing
client relationship at each stage paying little heed to the collaboration
point, branch, cell focus or the web and that full subtle elements of every
cooperation are constantly caught for examination and basic leadership.
21. Persistent Strikes : Another imperative test is that the development of

exchange unionism in banks; bringing about regular strikes, lockouts,
struggle among the administration and representatives prompting loss of
both the customer and also the banks. These strikes have the roots in
disappointment of specialists on the premise of non-satisfaction of
guarantees, broken examination framework and nonappearance of
responsibility in the framework. This prompts the ascent of aggregate NPAs
of the planned business banks. This requires the enhanced credit aptitudes
for examination of credit proposition and checking the misfortune.
22. Decrease In Interest Rates : The decay of financing costs is because of

hesitance to take advances. It is so long and complex that when it is
endorsed, the task get deferred, which brings about less return and
therefore bigger NPAs. The intrigue pay as level of normal working assets of
PSBs has fallen extensively from 10.3 of every 1997-98 to 9.92 of every
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INTRODUCTION
2000-01. While the private banks premium salary as rate to normal working
assets is 10.41 out of 2000-01 as against 10.35 out of 1997-98 and that of
remote banks 9.43 as against 8.83 out of 1997-98. This demonstrates
private banks and outside banks can expand premium wage when
contrasted with PSBs. It is a reasonable sign of move of buyers. This is a
major test before the PSBs to handle with private part banks and outside
banks.
23.Challenges Of Administration, Risk And Compliance : GRC is perceived and

an incorporated approach. Without an engaged approach a to GRC
structure, a bank would be more helpless against dangers, as complexities
and interdependencies of dangers increment with increment in global
business. Further, the execution of GRC in the Indian saving money
segment will require genuine responsibility of assets and administration
center. It will likewise involve contracting and preparing representatives in
India to create skill in taking care of particular abroad regulations.8 3.4.10
CORPORATE GOVERNANCE Banks not just acknowledge and convey huge
measure of uncollateralized open supports in guardian limit, however they
additionally use such subsidizes through credit creation. Banks are
additionally vital for smooth working of the installment framework. Benefit
thought process can't be the sole paradigm for business choices. It is a huge
test to banks where the needs and impetuses won't not be all around
adjusted by the operation of sound standards of Corporate Governance. In
the event that the inside lopsided characteristics are not re-adjusted
instantly, the remedy may develop through outside powers and might be
Chapter 1
INTRODUCTION
excruciating and expensive to all partners. The concentration, thusly, ought
to be on upgrading and bracing operation of the standards of sound
Corporate Governance.
24. Enhancing Risk Management System : RBI had issued rules on resource
obligation administration and Risk Management Systems in Banks in 1999
and Guidance Notes on Credit Risk Management and Market Risk
Management in October 2002 and the Guidance note on Operational Risk
Management in 2005. In spite of the fact that Basel II concentrates
fundamentally on dangers it execution can't be viewed as an end in itself.
The present business condition requests an incorporated way to deal with
hazard administration. It is not any more adequate to deal with each Risk
Independently. Banks in India are moving from the individual portion
framework to a venture wide Risk Management System. This is putting
more prominent requests on the Risk Management abilities in Banks and
has conveyed to the bleeding edge, the requirement for limit building,
while the primary need would be hazard incorporating over the whole
Bank, the allure of Risk conglomeration over the Group will likewise require
consideration. Banks would be required to distribute noteworthy assets
towards this target throughout the following couple of years.
25. Country Coverage : Indian neighborhood banks extraordinarily state bank

bunches having a decent scope and many branches in rustic zones. In any
case, that is very inadequate with regards to specialized upgrade. The
administrations accessible at urban communities are particularly not
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INTRODUCTION
accessible to country branches, which are vital if banks need to contend
now a day.
26. Benefit Accountability : Another test is benefit responsibility that the PSBs
give more weight on gainfulness not on the responsibility. In the event that
the required benefit target is accomplished, no one is responsible to
remunerate and comparably, on the off chance that it is not accomplished,
at that point likewise no one is responsible for discipline. To adapt up to the
issue, PSBs should make appropriate approaches revenue driven
responsibility. In this way, the PSBs should settle responsibility with focuses
on every unit and representative of the banks and reward to those
individuals who have accomplished the objective.
27. Difficulties Regarding Retention Of Skilled Manpower : It is normal that

from April 2009 onwards, there will be fast changes in the Indian keeping
money division. The administrative rules for beginning outside banks and
obtaining of Indian private banks by remote banks will turn out to be more
liberal. As a result, maintenance of gifted labor will be a test to the
nationalized banks, since remote and private banks will attempt to draw
them with appealing pay bundles
28. Difficulties Of Technology : That is genuine that Indian banks were at that
point begun automated workings thus numerous other innovative up
degree done yet is this adequate? In metro urban areas Indian
neighborhood banks are having great equivalent innovation yet that can't
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INTRODUCTION
be upheld and similar by the entire system of different urban communities
and town branches. Another critical test is that Indian open area banks
ought to have utilized imaginative innovation to encourage money related
consideration of the unbanked populace of India through utilization of
biometric procedures and blossoming portable system. Be that as it may,
this client encounter and custom fitted offerings are progressively getting
to be plainly key to bank gainfulness.
29. Difficulties Of Online Banking : Online managing an account has changed

the substance of the whole keeping money framework. It opens another
channel for banks to achieve their clients and serve them better. Internet
keeping money has a few focal points when contrasted with the customary
saving money framework, for example, get to independent of time and
place, deal with all his financial balances from one secure webpage, and
utilizing account conglomeration, stock citations and portfolio
administration programs for successful administration of benefits. In any
case, verification, security trust, non-revocation and protection issues are a
portion of the difficulties that online banks need to adapt to.
30. Difficulties Of Mobile Banking : Versatile saving money is getting a charge

out of a quick development; Mobile keeping money is not the same as
Internet saving money and ATMs from multiple points of view. The banks
get profitable information about the clients through versatile saving money
which causes them in viable client relationship administration rehearses.
Through portable managing an account, all required changes are to be sent
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INTRODUCTION
to the clients in time, and the entire framework ought to be especially
trained and powerful. There ought not be any change for any data spillage.
The keeping money division has been confronting the issues like excessively
control by the RBI, disintegrated profitability and effectiveness of PSBs, constant
misfortunes conceived by PSBs, expanding NPAs, weakened portfolio quality,
poor customer benefit, out of date innovation and powerlessness to meet the
aggressive condition till 1991. Subsequently, the saving money part changes were
presented for the change of the operational effectiveness of banks to additionally
improve the efficiency and benefit amid 1991 and onwards.
In any case, managing an account division changes have made a high focused
and dynamic condition for PSBs in the wake of Globalization and merciless rivalry.
The SWOT investigation of PSBs after change period distinguished the qualities, as
broad branch arrange, expanded credit design, talented work power and
aptitude, vast number of customers. The high rate of NPAs, customer deplete,
poor capital base, absence of independence in HRM approaches, misfortune
making branches, absence of responsibility, innovation hole among private and
PSBs, low quality of administrations by PSBs are the shortcomings of PSBs. The
chances of PSBs are towards foundation improvement, selection of new
innovation, and undiscovered potential, and so on. The dangers of PSBs
incorporate rivalry among the private remote banks, expanding expense of
operations and rivalry from worldwide managing an account division.
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INTRODUCTION
In the post-change time, PSBs involve the significant position in the nation. The
significant issues which Indian PSBs are confronting today are the issue of weight
on benefit, low efficiency, NPAs, different union exercises, test of rivalry from
new banks, test of cross-industry rivalry, danger of rivalry from worldwide
players, issue of overseeing double proprietorship, disagreeable consumerism,
weight on welfare inspiration, bureaucratic impedance, absence of information,
and so on.
The difficulties of the survival of PSBs in India incorporate the aggressive

condition, shopper center, showcasing systems, picture building, change of
human capital, revamping, rebuilding and reengineering, consistent strikes,
declining loan fees, benefit responsibility, solidification (merger and acquisitions),
self-rule identifying with operational opportunity, and so forth. These zones are
should have been additionally viewed as and some conceivable changes should be
included ensuing changes in keeping money division. These difficulties postured
dangers to PSBs, as well as prompted poor execution towards accomplishing their
goals in contrast with their partners.
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INTRODUCTION
Refference :
1. http://economictimes.indiatimes.com/articleshow/52468717.cms?utm_sourc
e=contentofinterest&utm_medium=text&utm_campaign=cppst
2. http://www.historyworld.net/wrldhis/PlainTextHistories.asp?groupid=2453&
HistoryID=ac19&gtrack=pthc#ixzz4moDffZbj
3. https://sol.du.ac.in/mod/book/view.php?id=1225&chapterid=856
4. https://data.gov.in/keywords/performance-public-sector-banks
5. http://www.bankexamstoday.com/2017/02/banking-system-in-india-
explain.html
6. http://www.yourarticlelibrary.com/banking/indian-banking-system-structure-
and-other-details-with-diagrams/23495/
7. http://www.jagranjosh.com/general-knowledge/structure-of-banking-sector-
in-india-1448530019-1
8. https://rbidocs.rbi.org.in/rdocs/notification/PDFs/45MCIRAC280610.pdf
9. http://www.mca.gov.in/MinistryV2/defaultercompanieslist.html
10.www.sbi.co.in
11.www.pnbindia.in
12.www.bankofbaroda.co.in
13.www.bankofindia.com
14.www.canarabank.in
15.www.centralbankofindia.co.in
16.www.idbi.com
17.www.indianbank.in
18.www.unionbankofindia.co.in
19.www.vijayabank.com

History of Banking

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History of Banking

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Chapter 1

The banking sector is the lifeline of any modern economy. development of

Greek and Roman financiers: from the 4th century BC :

Religion and banking: 12th - 13th century :

The Christian restriction on usury in the end gives a chance to brokers of

Bankers to Europe's kings: 13th - 14th century :

Banks and cheques: from the 16th century :

National banks: 17th - 18th century :

Venice, subsequent to being conceivably the principal city to establish a bank

Paper currency makes its first appearance in Europe in the seventeenth

Pre- Independence Period : (Before 1947)

Post- Independence Period : ( After 1947 )

Major changes occurred in the keeping money area as the economy

In 1969, motivated by a huge social reason, 14 noteworthy banks were

Post nationalization, the Indian saving money framework enlisted colossal

Post-Liberalization Period (1991-till date)

The shortcomings of the saving money framework was broadly examined

Banks were likewise coordinated to recognize issue advances on their

Narasimham Committee's Recommendations:

Against this scenery, a Committee under the chairmanship of M. Narasimham was

Introduction to Indian Banking System :

In a present day economy, banks are to be viewed as not as merchants in cash

The present procedure of change ought to be seen as a chance to change over

The Indian financial framework includes an extensive number of business and

Reserve Bank of India

Public Private Foreign Regional Scheduled Scheduled

Nationalized SBI & its Old Private New Private

3. It aims at the stabilization of the price level at average prices.

4. Stabilization of the exchange rate is also essential.

5. It should aim for the promotion of economic activities.

1. Welfare of the public

2. To maintain the financial stability of the country.

3. To make the financial transactions safely and effectively.

4. To develop & grow the financial infrastructure of the country.

5. To distribute the funds effectively without any partiality.

6. To regularize the overall credit volume for price stability.

1. Currency issuing authority

2. Monitoring & Surveillance authority

3. Banker to the Central & State Government

4. Foreign exchange control authority

5. Promoting & Development authority.

Scheduled Banks and Non-Scheduled Banks

1. Public Sector Banks

2. Private Sector Banks

13.Kotak Mahindra Bank[2] 25. IDFC Bank Limited

14.Lakshmi Vilas Bank 26.Equitas Small Finance Bank Ltd

4. Regional Rural Banks (RRBs):

CORE BANKING SOLUTIONS :

Center Banking Solutions (CBS) or Centralized Banking Solutions is the procedure

1. Demat Account : In India, a demat account, the contraction for

2. Telebanking : Telebanking provides banking facility on telephone network. A

3. Internet Banking : The aggregate number of enlisted clients for Internet

Internet Banking & India : Indian banks have a unimportant Internet

Internet Banking & Public sector Banks : As in all types of innovation

4. Automatic Teller Machine : The presentation of ATM's has given the

Mobile Banking tends to this principal restriction of Internet Banking, as it

1. Mini-statements and checking of account history

Payments & Transfers

1. Domestic and international fund transfers

1. Portfolio management services

1. Status of requests for credit, including mortgage approval, and insurance

Payment and Settlement Systems

In recent years, money transfer , especially the development of electronic money