The concept of banking started with depositing money; however, it came with high interest and several risks were involved in it. Bank which means a place to deposit. With that concept the financial service of banking started – the main purpose of which is to accept money from a depositor from lending purpose. Bank of Hindusthan was the first bank in India started back in 1970. Back in 1986, State Bank of India embarked its journey.
Importance Banking Sectors :
- Bank is financial institute that accepts money from its customers to lend the money in future.
- Bank provides the facilities like wealth management, safe deposit, as well as currency exchange.
- It accepts money from its customers and keep it safe.
- Banking services lend the money for to earn profit.
- There are two types of users in Indian banking sectors, such as personal users and industrial users.
- Currently Banks offer insurance for credit and debit cards.
- In last decades banks have offered, ATM services to withdraw cash with credit and debit cards; as well as the facilities to swipe cards in shops and restaurants.
The banking services in India are divided into four sectors, they are as follows –
- Payment Services
- Financial Intermediary
- Financial Services
- Ancillary Services
- Payment Services : This is carried out by cash deposit, cheque deposit, and demand draft. Depositing demand draft is a lengthy process. However, in recent era technology and digitalization has entirely changed the banking scenario. One can easily deposit and transfer money online through a bank’s safe and security verified website.
- Financial Intermediary : This service means accepting money from customers and lending it to a borrower.
- Financial Services : These services are investment, foreign exchange, wealth management, broking services and line of credit services.
- Ancillary Services : This facilities include giving opportunity to keep expensive jewelleries, especially gold in locker.
Reserve Bank of India :
The banks in India is directed by Reserve Bank of India (RBI) which is the supreme bank of India and was established in 1st April, 1935. It is fully owned by Government of India.
There are several Types of Banks Under RBI. They are as follows –
- Commercial Banks
- Co-operative Banks
- Development Banks
- Commercial Banks – Commercial banks are again divided into nationalized banks and private banks.
- Co-operative Banks – They are divide into short-term credit and long-term credit.
- Development Banks – Development banks are divided into EXIM, industrial and agriculture.
Challenges in Indian Banking Sectors:
- One of the biggest challenge is deregulation due to a tough competition with greater autonomy, operational flexibility etc.
- Decreased Customer’s Loyalty
- New acts set up by government – which is one of the reasons customers have lost faith in banking system and the ideation of money deposition.
Conclusion:
Apart from several challenges and difficulties, Indian banks serves a huge contribution for financial systems. People today expect the privatized banks to ameliorate their services and norms to gain peoples’ faith.