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Banking System In India

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For making the healthy economy, a sound and effective banking system is fundamental requirements. Banking system of India is not hassle free but it must have ability to face the new challenges imposed by external as well as internal factors. The history of banking industry can be summarized within three stages.
In this stage the economy planning was introduced, and an effort was made for regulating monetary and banking activity as the planning was required and essential. Imperial bank was renamed as State bank of India under the State Bank of India act, 1955. In 1960 and 1969, 7 subsidiary banks were nationalized and in the year 1980 the number increased to 14, as SBI nationalized total 14 major banks. The flow in industrial and agricultural …show more content…
Organized sector include Reserve Bank of India (RBI) and Commercial Bank. Commercial Banks can be classified into two board area. First is Scheduled Bank and second is Non-Scheduled Bank. Scheduled bank can be define as bank whose name appears in the second schedule of Reserve Bank of India Act 1934 and whose name is not registered in this schedule are known as Non- Schedule Bank. 23

The scheduled banks can also be classified in two areas-one is Nationalized and second is Non-Nationalized- It also covers the new generation banks, foreign banks and the co-operative banks. The unorganized sector can be categorized as a group of moneylenders and indigenous banking. Other than these two sectors, there are few financial institutions in the Indian banking system like post office savings bank, the Industrial Finance Corporations, State Finance Corporations etc. The Reserve Bank of India is head or controller of the Indian banking system.24

An efficient bank is the financial center of the economy with a responsibility to grow economy of the nation as well as increase the living standard of common people. Banks play important role for various industry and it is an agency of commerce. A bank is financial institution which works as an intermediary who accepts deposit and channelize the deposits funds for lending …show more content…
So, that the role of bank is to linked those who have surplus of capital or funds (such as investors or depositors), with those who are in need of capital or funds (such as individuals wanting a loan, or businesses wanting to grow.

Reserve Bank of India has control over the supply of money into the market. Through their power over the quantity of bank money, they can influence production in any country. Economy development is regular process and bank is major contributor in the progress. It is due to dependency of economic development of mobilization of fund, Investment and operational efficiency of various industries like agriculture, manufacturing etc.

Meaning of Banking Company: According to the Indian Banking Company Act 1949, “A banking company means any company which transacts the business of banking. Banking means accepting for the purpose of lending of investment of deposits of money from the public, payable on demand or other wise and withdraw able by cheques, draft or otherwise.”

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