Banking in India

Did you know the word Bank was derived from the Italian word “banco”, which means “bench” over which transactions happened during the earliest days when banking as a concept came into existence. A bank needs an approval from the government to set up its business. This approval or license is applied differently in different countries.

Banks have come a long way since their origin of having started out with the basic act of lending and borrowing money. Did you know the word Bank was derived from the Italian word “banco”, which means “bench” over which transactions happened during the earliest days when banking as a concept came into existence. A bank needs an approval from the government to set up its business. This approval or license is applied differently in different countries. The set of regulations vary according to the government policies and other norms established by the government of that country.

Towards the last few decades of the 18th century the concept of banking was introduced in India. The oldest bank in India is the State Bank of India, a PSU that was initially set up in June 1806 and is currently the largest commercial bank. Central banking for which the Reserve Bank of India (RBI) is responsible took over these duties from the then Imperial Bank of India. After India’s independence in 1947, RBI was nationalized and given a wider scope to exercise its powers and judgment. A nationalization spree occurred in 1969, when 14 of the largest commercial banks was provided this status following another nationalization process of the next six largest banks in 1980.

According to a recent count, India has 88 scheduled commercial banks (SCBs). Of this there are 27 public sector banks (with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.

According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

2 thoughts on “Banking in India

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