The banking system in India is considerably different from the other countries. This is because of the economic, social and geographic characteristics of mother India. She is the nation with unity in diversity and she also has a huge population.
Further, with the huge population, there is also a difference in the income levels in India. Further, a huge population from rural India has shifted to the urban India. The urban India already has a huge population.
All these characteristics have an effect on the structure. Not just the structure, but also the size of the Indian banking system. Also, to meet the needs of the government policy, the banking system was also subjected to many nationalized schemes.
The RBI Credit Policies create the guidelines for the banks in India. As they will have to meet the requests of the local people, the banks are long confined to the Indian borders.
Origin of banking system in India:
In India, the banking system commenced in the last decades of the 18th century. The first banks in India were Bank of Hindustan and General Bank of India. Both these banks are no more into existence in the country.
The oldest bank that still stands in India is the State Bank of India. This bank popularly known as SBI has its origin in the Bank of Calcutta in June 1806. Then, the name of the bank became Bank of Bengal.
SBI had a different name and she is one of the three banks oldest banks in India. These three were established under the charter of the British East India Company. These three banks are jointly called as Presidency Banks. They worked as quasi-central banks. Then, in 1921, the three banks amalgamated and a new name was given as the Imperial Bank of India. This bank was again named as the State Bank of India after Indian independence.
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Savings culture unique in India:
The important reason for the growth and development of banking sector in India is the unique savings habit in India. This savings habit is a production of the family system in India. This habit has contributed to the development of branches for many banks across the country. Even, most public banks have their presence both in urban and rural India.
Other unique characteristics of the banking system in India:
The Indian Banking System might not be the best in the world. But there are certain unique opportunities that make banking as the core development area in the Indian Economy. These factors are discussed below:
- The population in India:
The high population and also untapped potential is offered by the Indian market. So, the banking system in India will become the third largest in the world by 2025.
- Retail Banking:
In this category, the opportunities lie in different areas. Some of them include money supply and the number of banks. The other opportunities are client borrowing, banking regulation and increase in client borrowing.
There are many other factors like development in the industrial sector, increase in the working urban population. Also, liberalization and Jan Dhan Yojana contribute to the growth of banking sector in India.
Increasing number of youngsters’ interest in working for banking sector:
Another major contributor for the uniqueness of the Indian banking system is that interest shown by youngsters. They wish to work for this sector. Youngsters are aware of the fact that they can get better job securities in this sector. When many young minds are hired to this sector through bank exams, improved innovations are possible.
Thanks to the interest shown by the Indian banks to recruit young talents. In fact, every year, the IBPS conducts PO and clerk examination for recruitment of the right candidates for public sector banks. Private Banks also offer the best employment prospects and opportunities for Indians. With all these contributors, it is expected that this sector will see a huge growth very shortly.