In this article, I will be talking about the banking sector in India first of all let’s see the story of the evolution of the banking sector in India,
In 1960, the State Bank of India was giving control of 8 state associated banks under the State Bank of India subsidiary Banks Act 1959 so Bank State Bank of Hyderabad State Bank of Travancore, etc. came under the direct control of State Bank of India in 1960 later on another major event was the nationalization of banks of 1969, so in 1969 14 Bank which was earlier privately were bought by the government of India this is because that these banks were earlier owned by large Businessman and now the government to control of them to further their social welfare agenda, later on in 1980 6 more private banks were Nationalized or bought by the government of India, in the later phases we have seen a greater amount of liberalization and privatization of banks in India, in 1993, then new banks license were given and new banks came into like ICICI HDFC IDBI, etc.,
Data on to in 2001 Kotak Bank and Yes Bank were given universal banking license to perform all the functions that are performed by banks csp and more recently after a gap of 13 years two more companies got banking license that is Idfc bank and Bandhan Bank further, we have also seen the coming in of foreign sector banks in the country, recently we have increased the FDI limits also known as foreign direct investment limits up to 74% in the banking history industry with some amount of restriction from the Government of India and the Reserve Bank of India as well,
Another new development that is in the past couple of years only BSc in the oncoming of differentiated banking licenses in the form of small banks and payment banks and it was seen that the condition that was applied for universal banks, they were very harsh so not enough large number of companies were able to set up shop in the back end banking industry in the country hence the need was felt that a different type of banks should be introduced with lesser qualification and as such small banks and payment banks came into being,
Now let’s talk and understand what these banks are all about, first let’s talk about small banks so smaller Bank can accept current account and savings account Casa FD that is fixed deposit and recurring deposits account they can give out depositors money as loans to other customers but the important thing is they have a very small area of operation so every small bank will be operating in a limited area but it within that area they can perform all the functions of a huge Bank like SBI HDFC and ICICI Bank, etc.
The small banks will be targeting customers which MSME micro small medium enterprises Businessman and unorganized workers small and marginal farmers and their focus will remain on getting more and more as well as disbursing greater loans, The basic idea being that it functions as a universal bank or a normal bank but within a limited area,
Now let’s talk about payment banks so they can only do accept current accounts savings accounts deposits and not FD and RD,bank csp provider payment banks cannot give loans but they can invest depositors money in government-approved securities only, their target customers are poor migrants unorganized workers wanting to send remittances home so as far as payment banks are concerned they will be utilizing the mobile banking platforms internet banking, etc to ensure that people who are living outside of their homes can send back their money to their places using the electronic or mobile platform,
So, these things are about the banking sector in India. I hope you have got some idea about it, thank you.