1.1 Introduction of bank
Bank is a financial institution which deals with other’s people money i.e. money given by the depositors.The establishment authorized by a government to accept deopsits,pay interests,clear checks,make loans,act as an intermediary in financial transactions,and provide other financial services to the customers.The roots of banking can be treated to the earliest civilizations.The Egyptians and early societies of the Middle East developed the prototype upon which modern banking is based.Agriculture commodities were stored in granaries operated by the government, and the records of deopsits and withdrawls were manitained.
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However, it was during the Moghul period that indigenousbankers started playing a vital role in lending money and financing of the foreign tradeand commerce
Banking in India originated in the last decades of the 18thcentury. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct.The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two beingthe Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company.
For many years the Presidency banks acted as quasi-central banks, as did their successors. The EastIndia Company established Bank of Bengal, Bank of Bombay and Bank of Madras as independentunits and called it Presidency Banks. The three banks merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.
1.3 Executive Summary
A retrospect of the events clearly indicates that the Indian banking sectorhas come far away from the days of nationalization. The NarasimhamCommittee laid the foundation for the reformation of the Indian banking sectorConstituted in 1991, the Committee submitted two reports, in1992 and 1998, which laid significant thrust on enhancing the efficiencyand viability of the banking sector. As the international standards becameprevalent, banks had to unlearn their traditional operational methods of directed credit, directed investments and fixed interest rates, all of whichled to deterioration in the quality of loan portfolios, inadequacy of capitaland the erosion of profitability. The recent international consensus on preserving the soundness of thebanking system has veered around certain core themes. These are:effective risk management systems, adequate capital provision, soundpractices of supervision and regulation, transparency of operation,conducive public policy intervention and maintenance of macroeconomicstability in the economy.Until recently, the lack of competitiveness vis-à-vis global standards, lowtechnological level in operations, over staffing, high NPAs and low levelsof motivation had shackled the performance of the banking industry.However, the banking sector reforms have provided the necessaryplatform for the Indian banks to operate on the basis of operationalflexibility and functional autonomy, thereby enhancing efficiency,productivity and profitabili
1.4 Introduction of Commercial Bank
A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits. After the Great Depression, the U.S. Congress required that banks engage only in banking...