The Financial & Banking Industry in India is more than
150 years old. It dates back to 1850s when four Gujaratis and a Parsi
stockbroker would gather under the banyan trees which were in front of Mumbai’s
town hall. The meetings continued regularly though at different venues.
During this period, the number of brokers increased as well.
Gradually, with the numbers of members increasing, the group
moved to Dalal Street in 1874 and in 1875, they became an official organization
which came to be known as, ‘The Native Share & Stock Brokers Association.’
In 1956, under the Securities Contracts Regulation Act, the
BSE became the first stock exchange which was recognized by the Indian
Government.
On the recommendation of the Pherwani Committee in 1991, the
National Stock Exchange of India was set up by the then Government of India. It
was promoted by leading Financial Institutions essentially led by IDBI on the
behest of the Government of India. Incorporated in November 1992, as a tax paying
organization, it was recognized as a stock exchange in April 1993 under the
securities contracts (Regulation) Act, 1956.
The Banking industry in India is adequately capitalized and
regulated. The economic and financial conditions are much better here. Liquidity,
credit and market studies have proven Indian banks to be flexible. They have
negotiated the ups and downs in the global economy reasonably well.
The RBI or Reserve Bank of India is the topmost body that
monitors and governs the banking industry in India. Any shortcoming or
discrepancies in the banking industry are dealt with by the RBI.
Schedule and Non-scheduled banks are a key division of the
banking industry in India. There are an approximate 67,000 scheduled bank
branches located in India. They consist of co-operative and commercial banks.
The Public Sector Banks form the base of the banking sector in India.
The total assets of these public sector banks account for
78% out of the total assets in the banking sector in India. The private sector in
banking is slowly making its way up. They are the leaders so far in mobile
banking, phone banking, ATM’s and Internet Banking sectors.
With global recession looming large, the investment in the
banking industry in India still prevails though the volumes may have gone down
considerably. FDI in India grew by a whopping 145% in between 2006 and 2007 and
by a decent 46.6% during 2007-2008. The FDI in 2009 was down to 18.6%. However,
with the recession extending its session, the investments are liable to rise
during this period.
The government of India has started encouraging foreign
investment in the banking sector, as a result of which the foreign players will
help in the growth of this sector. FDI in Indian Banking may lead to improved
efficiency, better capitalization and an improved adaptability. While the
government of India is attracting FDI, FII and NRI investment in this field,
the Indian banking and financial industry has immense potential to grow even
further and expand.
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