INDIAN BANKING SYSTEM

 INDIAN BANKING SYSTEM

                Indian Banking System is a most important topic in IBPS point of view to get a bank job. From this section ten to fifteen questions are being asked in every exam. So this has utmost importance and these topics are very important in the Interview point of view as these are the basics of banking.

                                             Bank is an institution which attracts deposits from the public and lends the money to the needy persons at various interest rates.

Types of Banking :
        World wide two types of Banking systems are there one is Branch Banking another one is unit Banking.
Branch Banking : Ex-India ,England

In the Indian Banking Scenario,we have the system of Branch Banking ,otherwise called Chain Banking in operation.

Structure Of the Indian Commercial Banks :

Board Of Directors —Head Office —–Functional Departments —–Circle Office/Zonal Office — Divisional Office/Regional Office –

Branches/Service Units

Unit Banking :  Ex America 

               In the America Banking Scenario they have the system of unit banking.In the case of unit banking prevalent mostly in U.S.A , the banks operations are in general confined to a single office or very rare cases restricted to branches with in a strictly limited area .

Modern Banking in India :

                 Modern Indian Banking divided in to two types one is British Banking another one is Indian Origin Banking.

Evolution of Reserve Bank Of India :
                                 In 1926,the Royal Commission on Indian currency and finance (Popularly known as the Hilton Young Commission) recommended that the dichotomy of functions and division of responsibility for control of currency and credit should be ended.The Commission therefore suggested the establishment of a central bank to be called the Reserve Bank of India.In 1933 constitutional reforms for the country a proposal for the transfer of responsibility of the centre from British to Indian hands was made dependant on the condition that a Reserve Bank free from political influence would be established and be in successful operation. Mean While, the Indian central banking enquiry committee(1931)had also strongly recommended establishment of a Reserve Bank at the earliest possible date.

 By all these events RBI Bill was passed by the Assembly on December 22,1933.RBI act were brought into force on January 1,1935 after the completion of preliminaries , the Bank was inaugurated on April 1,1935.

• In 1935,RBI first Governor   —      Osbarn Smith
• RBI Initial Share Capital       —      5 Crores (5,00,000 Shares * 100rs )

Nationalisation of the RBI :

                          In order to have a close integration policies of the Reserve Bank and those of the Govt.It was decided to nationalise the Reserve Bank immediately after the independence of the country. In terms of the Reserve Bank Act 1948, the entire share capital of the bank was acquired by the central Govt 1st January 1949,the Reserve Bank began functioning as a state owned and State controlled Central Bank.

Let us capture the origin and evolution of the Reserve Bank of India through the following chart

• Presidency Banks
• Imperial Bank Of India
• Hilton-Young Commission Proposal T Set up a Reserve Bank
• as a private shareholder’s bank
• Central Banking enquiry committee ,1931
• Reserve Bank bills
• Reserve bank of India Act ,1934
• Constitution of the Reserve Bank of India ,April 1,1935
• Nationalisation of the Reserve Bank Of India ,1949