milestones in indian banking
TRANSCRIPT
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Slide 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 9 - 2
Evolution of Banking in India
1770
1809
1840
1843
Bank of Madras
Bank of Bombay
Bank of Bengal
Bank of Hindostan
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Imperial Bank of India
1921
Bank ofMadras
Bank ofBombay
Bank ofBengal
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Milestones In the Indian Banking Industry
1921 CONSOLIDATION OF PRESIDENCY BANKS INTO IMPERIAL BANK OF INDIA
1935 Formation of Reserve Bank of India in the private Sector
1947 India wins freedom
1949 Nationalisation of Reserve Bank of India
1955Nationalisation of Imperial Bank of India and formation ofState Bank of India
1959 SBI Subsidiaries Act passed associate banks were formed
1969 Nationalisation of 14 Banks
1976 Regional Rural banks were started
1980 Nationalisation of 6 more Banks
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Post-Independence Era
Banking sector playing significant role in the overall developmentof the Indian economy
Various social upliftment & self employment schemes successfullyimplemented
Implemented Basle norms and operating at par with global banks
Strengthened banking system through prudential norms
Introduced several legislations to help fast recovery of NPAs
Priority sector lending still continuing for sectoral growth
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BankingActivities
Retailbanking
BusinessBanking
Corporate
BankingDealings
PrivateBanking
InvestmentBanking
UniversalBanking
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2.Banking Statistics
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Type of Bank Branches Deposits Advances
State Bank of India 1569 948 966
SBI Associates 893 291 219
14 Nationalised Banks 4314 2627 1813
Total Public Sector banks 6596 3866 2998
Private banks 1666 774 574
All Commercial Banks 8262 4640 3572
Share of PSB 80% 83% 84%
Statistics as on 1969 ( Rupees in Crore)
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Significant roles played by banks inNational Development
Capital formation
Creation of credit
Focus on rural and semi-urban development
Development of SME sector
Helping Agri, SSI and weaker sections
Development of infrastructure through project financing
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Milestones, Post-Nationalization
1970
Focus shifted from trade & business to Agriculturalfarm credit and small scale industries-
Social Control over Banks was introduced- NationalCredit Council was set up to set lending targets forcommercial banks
1972Lead bank System was launched to provide thrust torural and backward areas
1978 Deposit Insurance and Credit Guarantee Corporationwas established
1979 IRDP Integrated Rural Development Programme waslaunched to benefit the rural populace
1983 Scheme for Self Employment for Educated Youth wasintroduced
1988Introduction of Capital Adequacy norms under Baslecommittee
1991 Financial sector reforms introduced
1992Securities Scam- shocked the banking system andcapital markets
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Roles
Promotion of export trade
Financial inclusion and micro finance
Payment & settlement system
Foreign exchange transactions
Reducing concentration of wealth
Encouraging students for higher education
Effective use of technology for world standard banking
Liberalised Housing Loans for better standard of living
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Banking system -Broad Classification
PSB Others
Private Sector Banks: Oldand New generation-26
Foreign Banks-21
Regional Rural Banks
Co-operative Banks
State Bank group: SBI and5 associates; ( SB
Saurashtra & SB Indoresince merged)
Nationalised banks-19
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Technology Adoption
The growth new technologies over the past ten yearshas triggered a revolution in the banking sector in a bigway
Out of 27 PSBs 15 have been fully computerised
ATMs all over the country
Internet Banking
Electronic Payment services
Electronic fund Transfer-NEFT
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Technology..
Cheque Truncation
Data Warehousing & archiving
Data Mining
Effective MIS systems
RTGS
MICR Clearing Technology
Phone Banking
Mobile Banking
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Technology & Innovation
Business Process Re-engineering
Bancassurance
Cross selling
Credit cards and Mutual funds
Sale of gold to retailers and metal gold loans
Gold deposit schemes
Correspondent banking financial inclusion
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Risk Management Tools
Adoption of Basle norms and thrust for riskmanagement
Systematic Credit risk assessment for loans
Operations risk mgt. DRPM
Rating agencies CRISIL, CARE,FITCH etc
KYC norms and AML measures
CIBIL data base
DRT and Sarfaesi legislations
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Latest trends
Private banking & Wealth Management- Citi Bankepisode has brought a stigma recently
Mobile Banking - future in financial inclusion
70 crores mobile connections promises ample scope forbanking for everyone in their handsets
Consolidation in banking industry
Scope for Mergers & amalgamations
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Opportunities and Challenges
1. Market is seeing discontinued growth driven by new products andservices and so includes opportunities in
Credit cards
Consumer Finance
Wealth Management in the Retail Segment
Investment Banking on whole sale banking side.
Banks will no longer enjoy wind fall Treasury Gains .
Competition from Foreign Banks.
Increasing Consumer Demand for enhanced institutionalcapabilities and service level from banks due to demographic shifts
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REGULATORY AND LEGAL ENVIRONMENT
Ensuring soundness of the system by fixing benchmarksstandards for capital adequacy and prudential norms for keyperformance parameters.
Adoption of best practices especially in areas like risk
management, credit delivery etc.
Adoption of good corporate governance practices
Creation of institutional framework to protect the interest of
depositors
Regulating the entry and exit of banks including cross-borderinstitutions
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Challenges Ahead
Successive drive the socio-economic agenda of the govt.
Rethinking on branch expansion: now there is trend to go back tobrick& mortar from click & mouse banking
Unbanked areas still remains unattended
Banks looking for only profitable avenues/centres
Ensure continuity with change
Equip youngsters to be good leaders in the next decade wheremassive retirement is taking place
Value systems to be in place for social commitments and effectivemanagement of public money
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Conclusion
Change without continuity is chaos
Continuity without change would be sloth
(Max De Pree)
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Questions?
Good day!