History of Banking

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INTRODUCTION
CONTENT
1.1 INTRODUCTION
1.2 HISTORY OF BANKING
1.3 HISTORY OF BANKING (INDIA)
1.4 INDIAN BANKING SYSTEM
1.5 TOP TEN PUBLIC SECTOR
BANKS
1.6 NON PERFORMING ASSETS
1.7PERFORMANCE OF PUBLIC
SECTOR BANKS
1.8 RECENT TRENDS IN PUBLIC
SECTOR BANKS
1.9 CORPORATE DEFAULTER & NPA
1.1 INTRODUCTION :
The banking sector is the lifeline of any modern economy. development of a

country is integrally linked with the development of banking."Bank" is utilized as a
part of the feeling of a business bank. It is of Germanic starting point however a
few people follow its cause to the French word "Banqui" and the Italian word
'Banca'. It alluded to a seat for continuing, loaning, and trading of cash or coins in
the commercial center by cash banks and cash changers. Keeping money exercises
were adequately imperative in Babylonia in the second thousand years b.c.
Comparative managing an account sort courses of action could likewise be found
in old Egypt.
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1.2 HISTORY OF BANKING :
 Greek and Roman financiers: from the 4th century BC :
Saving money exercises in Greece are more fluctuated and refined than in any
past society. Private business visionaries, and also sanctuaries and open bodies,
now attempt money related exchanges. They take stores, make credits, change
cash starting with one money then onto the next and test coins for weight and
virtue. Rome, with its performer for organization, embraces and regularizes the
keeping money practices of Greece.
 Religion and banking: 12th - 13th century :
The Christian restriction on usury in the end gives a chance to brokers of

another religion. European prosperity needs back. The gainful business of
managing an account moves under the control of more customary Christian
society - first among them the Lombard’s. Maybe the most well known of the
medieval Italian banks was the Medici bank, set up by Giovanni Medici in 1397.
The Medici had a long history as cash changers,
 Bankers to Europe's kings: 13th - 14th century :
In the middle of the thirteenth century financiers from north Italy, all in all
known as Lombards, progressively supplant the Jews in their customary part as
cash loan specialists to the rich and intense. The business aptitudes of the Italians
are improved by their innovation of twofold passage accounting. By the mid
fourteenth century two families in the city, the Bardi and the Peruzzi, have
become rich by offering money related administrations and the family has
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workplaces in Barcelona, Seville and Majorca, in Paris, Avignon, Nice and
Marseilles, in London, Bruges, Constantinople, Rhodes, Cyprus and Jerusalem
 Banks and cheques: from the 16th century :
In 1587 the Banco della Piazza di Rialto is opened in Venice as a state activity.
Its motivation it to complete the vital capacity of holding vendors' assets on safe
store, and empowering budgetary exchanges in Venice and somewhere else to be
made without the physical exchange of coins.
 National banks: 17th - 18th century :

Venice, subsequent to being conceivably the principal city to establish a bank
for the protecting of cash on store and the clearing of checks, is additionally a
pioneer in the association of a save money with state funds. In 1617 the Banco
Giro is set up to tackle issues experienced by the before Banco della Piazza di
Rialto, which has into inconvenience through the making of unsecured credits.
 Bank of England :
The bank of England, first sanctioned in 1694, is the model and excellent
model of all our cutting edge banks; its history, thusly, will merit the more specific
consideration. The first capital of this bank was 1,200,000 sterling. This capital did
not comprise in cash, but rather in government stock. The endorsers to the bank
had loaned the administration, the above entirety of 1,200,000. at an enthusiasm
of eight for each penny, other than an extra annuity of 4,000.
 Scotch Banks :
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Two banks were set up in Scotland by contract from the ruler; one the Bank of
Scotland, in 1695; the other, the Royal Bank of Scotland, in 1727. These two banks
have branches in the vast majority of the vital towns of Scotland; however as they
never got any restrictive benefits, a huge number of private banks jumped up to
question the business with them, and to isolate its benefits.
Paper currency makes its first appearance in Europe in the seventeenth

century. Sweden can assert the need In 1656 Johan Palmstruch builds up the
Stockholm Banco. It is a private bank however it has solid connections with the
state In 1661, in counsel with the administration, Palmstruch issues credit notes
which can be traded, on introduction to his bank, for an expressed number of
silver coins. Palmstruch's notes (the most punctual to survive dates from a 1666
issue) are noteworthy looking bits of printed paper with eight written by hand
marks on each.
1.3 HISTORY OF BANKING ( INDIA ) :

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Managing an account in India has its cause as right on time as the Vedic
period. It is trusted that the move from cash loaning to saving money probably
happened even before Manu, the immense Hindu Jurist, who has committed an
area of his work to stores and progresses and set down standards identifying with
rates of intrigue. Amid the Mogul time frame, the indigenous brokers assumed an
essential part in loaning cash and financing outside exchange and business. Amid
the times of the East India Company, it was the turn of the organization houses to
bear on the managing an account business.
 Pre- Independence Period : (Before 1947)
The General Bank of India was the main Joint Stock Bank to be set up in the
year 1786. The others which took after were the Bank of Hindustan and the
Bengal Bank. The Bank of Hindustan is accounted for to have proceeded till 1806.
In the main portion of the nineteenth century the East India Company built up
three banks; the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the
Bank of Madras in 1843. These three banks otherwise called Presidency Banks
were free units and worked well. These three banks were amalgamated in 1920
and another bank, the Imperial Bank of India was set up on 27th January 1921.
With the death of the State Bank of India Act in 1955, the endeavor of the
Imperial Bank of India was taken over by the recently constituted State Bank of
India. The Reserve Bank which is the Central Bank was made in 1935 by passing
Hold Bank of India Act 1934. In the wake of the Swadeshi Movement, a number
of keeps money with Indian administration were built up in the nation to be
specific, Punjab National Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian Bank
Ltd, the Bank of Baroda Ltd, the Central Bank of India Ltd.
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 Post- Independence Period : ( After 1947 )
Major changes occurred in the keeping money area as the economy

developed and developed amid the decades since freedom. Not long after
accomplishing freedom, open responsibility for banks ended up noticeably
unavoidable and tuned in to the prerequisites, State Bank of India (SBI) was made
in 1955 to lead the extension drive infiltrating rustic India and accelerate the
procedure of adaptation. Standards for money acknowledgment, resource order
and advance misfortune provisioning were set up and Capital Adequacy Ratio
ended up plainly required.
In 1969, motivated by a huge social reason, 14 noteworthy banks were

nationalized; and 6 more in the year 1980. From that point forward the saving
money framework in India has assumed a vital part in the Indian economy, going
about as an instrument of social financial change. The justification behind bank
nationalization has been briefly advanced by the prominent brokers: "numerous
bank disappointment and emergencies regarding two centuries, and the harm
they did under free enterprise conditions; the necessities of arranged
development and impartial dissemination of credit which is exclusive banks was
focused for the most part on the controlling modern houses and persuasive
borrowers; the necessities of developing little scale industry and cultivating in
regards to back, hardware and contributions; from all these there rose an
inflexible interest for managing an account enactment, some administration
control and a focal keeping money expert, including up, in the last examination, to
social control and nationalization".
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Post nationalization, the Indian saving money framework enlisted colossal
development in volume. In spite of the verifiable and multifold increases of bank
nationalization, it might be noticed that the essential money related foundations
were all state possessed and were liable to focal course and control. Banks
delighted in little self-rule as both loaning and store rates were controlled until the
finish of the 1980s. Despite the fact that nationalization of banks helped in the
spread of managing an account to the rustic and until now revealed territories,
the imposing business model allowed to general society part and absence of
rivalry prompted general wastefulness and low efficiency.
 Post-Liberalization Period (1991-till date)
The shortcomings of the saving money framework was broadly examined by

the board of trustees (1991) on budgetary division changes, headed by
Narasimham. The board of trustees found that managing an account framework
was both over-directed and under-controlled.
The Banking Sector Reforms in India were started in 1992. The goals of
changes were to fortify the Indian banks, make them universally focused and urge
them to assume a viable part in quickening the procedure of development. The
changes procedure additionally started measures .
Banks were likewise coordinated to recognize issue advances on their

accounting reports and make arrangements for terrible advances and cut down
the thriving issue of non-performing resources. The period 1992-97 established
the frameworks for change in the keeping money framework (Rangarajan, 1998).
The second Narasimham Committee Report (1998) focussed on issues like
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fortifying of the saving money framework, updating of innovation and human
asset improvement.
 Narasimham Committee's Recommendations:
Against this scenery, a Committee under the chairmanship of M. Narasimham was

set up by the Government of India to analyze the nation's money related
framework and its different segments and to make proposals for transforming and
enhancing the nation's monetary area. The report was put before the Parliament
in December 1991.
 Decrease in Statutory Liquidity Ratio (SLR) from 39% to 25% and Cash
Reserve Ratio (CRR) from 15% to 4.5% in 2003 to provide more lending to
the industries and boost the economic development in India.
 Deregulation of loan costs and aligning them on government borrowing
with the market-decided rates
 Expulsion of branch authorizing framework so Banks themselves would be
permitted to open or close branches.
 Expelling the restrictions on remote banks and stop on advance
nationalization of banks with the goal that private banks can likewise
develop.
 Fixing of prudential standards and fortifying of keeping money supervision.
 Legitimate grouping of benefits and full revelation and straightforwardness
of records of banks and other budgetary establishments.
 Accomplishment of a base 4 p.c. capital ampleness proportion in
connection to hazard weighted resources inside three years.
 Expanded rivalry in loaning between 'improvement money related institu-
tions' and banks.
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 Setting up of a foundation to be called Asset Reconstruction Fund with a
view to assuming control over a segment of the credit arrangement of
banks which has turned bad and doubtful and whose collection is difficult.
1.4 INTRODUCTION TO INDIAN BANKING SYSTEM :
In a present day economy, banks are to be viewed as not as merchants in cash

however as the pioneers of improvement. They assume an essential part in the
preparation of stores and payment of credit to different segments of the economy.
The managing an account framework mirrors the monetary soundness of the
nation. The quality of an economy relies upon the quality and proficiency of the
budgetary framework, which thus relies upon a sound and dissolvable managing
an account framework. A sound managing an account framework productively
prepared investment funds in profitable parts and a dissolvable saving money
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framework guarantees that the bank is equipped for meeting its commitment to
the investors.
The present procedure of change ought to be seen as a chance to change over

Indian keeping money into a sound, solid and lively framework fit for assuming its
part proficiently and successfully all alone without forcing any weight on
government
 Structure of Indian Banking System
The Indian financial framework includes an extensive number of business and

co-operative banks, Development banks, specialized banks for industry &
agriculture, import – export banks , government disability establishments,
aggregate venture foundations, and soBank
Reserve on. Reserve
of IndiaBank of India is the central
bank of the country and apex body which regulates the business of banking in
India. Scheduled Banks Non-Scheduled
Banks
A Sound Banking system is important for any country. The Indian banking
system consists of 21 public sector banks, 26 private sector banks, 43 foreign
banks, 57Scheduled
regional rural banks, 1,589 urban cooperative
Commercial banks
Scheduled and 93,550 rural
Cooperative
Banks Banks
cooperative banks, in addition to cooperative credit institutions.
Public Private Foreign Regional Scheduled Urban Scheduled State

sector Sector Banks Rural Banks Cooperative Cooperative
banks Banks Banks Banks
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Nationalized SBI & its Old Private Sector New Private

Banks Associates Banks Sector Banks
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1. Reserve Bank of India (RBI)
Reserve Bank of India is central bank of our country, which was established in
1935 under the Reserve Bank of India Act, 1934. Initially it started as a private
shareholders institution till January 1949, after which it became a state-owned
institution under the Reserve Bank of India Act, 1948. It is the one of oldest
central bank among the developing countries. As the apex bank of country , it has
been guiding, monitoring, regulating and promoting the destiny of Banking
business in country.
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 Objectives of RBI
RBI plays a more positive and dynamic role in the upliftment of a country. The
central bank of the country is financial muscle of a nation. The objectives of the
central banking system are presented below:
1. The central bank should work for the national interest of the country.
2. The central bank must aim for the stabilization of the mixed economy.
3. It aims at the stabilization of the price level at average prices.
4. Stabilization of the exchange rate is also essential.
5. It should aim for the promotion of economic activities.
 Functions of RBI
The RBI functions are based on the situation of Indian economy. The RBI should
have to maintain a continuous and direct relationship with the Central
Government while implementing the programmes and policies .The major
functions of the RBI are as below :
1. Welfare of the public
2. To maintain the financial stability of the country.
3. To make the financial transactions safely and effectively.
4. To develop & grow the financial infrastructure of the country.
5. To distribute the funds effectively without any partiality.
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6. To regularize the overall credit volume for price stability.
 Authorities
1. Currency issuing authority
2. Monitoring & Surveillance authority
3. Banker to the Central & State Government
4. Foreign exchange control authority
5. Promoting & Development authority.
 Scheduled Banks and Non-Scheduled Banks

The scheduled banks are those which are as per the second schedule of the RBI
Act, 1934. These banks have a paid-up capital and reserves of an aggregate value
of not less than Rs. 5 lakhs, They have to fulfill the rules of RBI that their affairs are
carried out in the interest of their depositors. All commercial banks (Indian and
foreign), regional rural banks, and state cooperative banks are scheduled banks in
India . Non- scheduled banks are those which are not as per the second schedule
of the RBI Act, 1934.
A. Commercial Banks
Commercial banks collect large amount of saving funds form overall population
and make them accessible to industries and businesses for their basic
requirement of working capital.
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Commercial banks in India are generally divided into three division namely Indian-
public sector banks and private sector banks and some foreign sector banks.
Indian public sector banks a very dominant role in whole banking system by
capturing more than 92 percent share.
Commercial banks are those institutions that accept deposit, make business loans
and other related services to different customers and businesses & Industries.
These institutions carried out their operations to make profit. They fulfill the
financial requirements of industries and various other sectors includes agriculture,
rural development, etc. Commercial bank includes public sector, private sector,
foreign banks and regional rural banks.
1. Public Sector Banks

Public sector banks in Indian banking industry has emerged as three different
stages . First, the Transformation of the Imperial Bank of India into the State Bank
of India in 1955, which is followed by the taking over of the 7 state associated
banks as its subsidiary banks, secondly the nationalization of 14 main commercial
banks on July 19, 1969 and last but not the least the nationalization of 6 more
commercial banks on April 15, 1980.
There are 27 Public Sector Banks in India including State Bank of India and
its 5 Associate Banks, together called State Bank Group (The names of the 5
Associate Banks are: State Bank of Travancore (SBT), State Bank of Patiala (SBP),
State Bank of Hyderabad (SBH), State Bank of Mysore (SBM) and State Bank of
Bikaner and Jaipur (SBBJ). The Union Cabinet approved the merger of the five
subsidiaries; and Bharatiya Mahila Bank Ltd with SBI on June 15, 2016. As on from
April 1, 2017 all the 5 associate banks of SBI and Bhartiya Mahila Bank are merged
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with State Bank of India. After this merger now SBI is counted among the top 50
largest banks of the world. Today there are total 21 Nationalized banks in India.
The public sector accounts for 75 percent of total banking business in India.
 List of Public sector Banks.
1. State bank of India. 12.IDBI Bank
13.Oriental Bank of Commerce
2. Andhra Bank
14.Punjab & Sindh Bank
3. Bank of India
15.Punjab National Bank
4. Bank of Baroda
16.State Bank of India
5. Bank of Maharashtra
17.Syndicate Bank
6. Canara Bank
18.UCO Bank
7. Central Bank of India
19.Union Bank of India
8. Corporation Bank
20.United Bank of India
9. Dena Bank
21.Vijaya Bank
10.Indian Bank
11.Indian Overseas Bank
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2. Private Sector Banks
These are banks which major share capital is held by private individuals and
not by Government . These banks are registered as companies with limited
liability. The private sector banks is divided into two parts like New Private banks
which is incorporated after 1993 and old Private banks which is incorporated
before 1993. There are total 26 private sector banks . Examples of private sector
banks are: ICICI Bank, Axis bank, HDFC, etc.
 List of Private sector Banks.
1. Axis bank 17. South Indian Bank

2. Catholic Syrian Bank 18. Tamilnad Mercantile Bank
Limited
3. City Union Bank 19. Yes Bank
4. DCB Bank 20.Bandhan Bank
5. Dhanlaxmi Bank 21. Capital small finance Bank Ltd
6. Federal Bank 22. Costal local area Bank Ltd
7. HDFC Bank
8. ICICI Bank 23. Krishna Bhima Samruddhi
9. IndusInd Bank Local Area Bank Ltd
10. Jammu and Kashmir Bank
11. Karnataka Bank
24. Subhadra Local Area Bank Ltd.
12. Karur Vysya Bank
[2]
13. Kotak Mahindra Bank 25. IDFC Bank Limited
14. Lakshmi Vilas Bank
15. Nainital Bank
26.Equitas Small Finance Bank Ltd
16. RBL Bank
3. Foreign Banks
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These banks are those banks which registered headquarters in foreign country but
operate or work in India through their branches. As on 31 st December 2015 total
44 foreign banks working in India. Like Standard Chartered Bank, Citi Bank, HSBC,
Deutsche Bank, etc.
4. Regional Rural Banks (RRBs):
there were 196 Regional Rural Banks which includes 27 State Cooperative Banks.
But as on 31st March, 2013 due to mergers the number of Regional Rural Banks
has come down from 196 to 64. The numbers of branches of RRBs are 17856 as on
31 March 2013 covering 635 districts throughout the India.
B. Co-Operative Banks :
The co-operative bank is a financial institute which belongs to its members, who
are at the same time the owners and the customers of the bank. Co-operative
banks are created by persons belonging to the local or professional community or
sharing a common interest. Co-operative banks generally provide their members
with a wide range of banking and financial services (loans, deposits, banking
accounts, etc). It provide limited banking service. Cooperative banks are the
primary financiers of agricultural activities, some small-scale industries and self-
employed workers. The functions of bank is carried out on the basis of “no-profit
no-loss”.
The Co-operative Banking structure in India is Subdivided into Five Category

namely , Primary Urban Co-Operative bank, Primary Agricultural Credit Society,
District Central Co-operative banks, State Co-operatives banks, Land Development
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Banks. Currently total 19 schedule state co-operative banks are working in India.
14 Non – Schedule state Co-operative banks are also working in India.
1.5 TOP TEN PUBLIC SECTOR BANKS PROFILE :
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Public sector Units are those in which government holds majority stake,
i.e,. more than 50 % stake of an enterprise. It is also known as Public Sector Unit
(PSU). Government is the owner of the PSU, and is responsible for the managerial
control of the enterprise. Similarly, if the majority share of a bank is held by
the government (generally, central government, then it is known as Public Sector
Bank (PSB).
The Top Ten public sector banks are as per their market capitalization on BSE.
1. State Bank of India
SBI started with the establishment of the Bank of Calcutta (which later
changed to the Bank of Bengal) is 1806. Later in 1921,the other two banks, the
Bank of Bombay and the Bank of Madras, merged with the Bank of Bengal to form
the Imperial Bank of India.
State Bank of India (SBI) is the largest commercial bank of India. The
government-controlled bank through nearly 60 percent stake in SBI. State Bank of
India also has the world's largest branch network, with more than 13,500 branch
offices all over India, staffed by nearly 2,20,000 employees. SBI is also present
worldwide, with seven international subsidiaries in the United States, Canada,
Nepal, Bhutan, Nigeria, Mauritius, and the United Kingdom, and more than 50
branch offices in 30 countries.
It has capture 29th position in most reputed company in world by Forbes in

2009. It is also awarded the Best Public sector bank in 2013. Until 7 th October
2013, SBI never had a woman chairperson, but Arundhati Bhattacharya now
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serves the State Bank of India and was listed the 36th most powerful woman in
the world by Forbes. Even after facing strong competition from several
multinational banks, SBI is the leading Indian banker and has largest yearly total
assets and turnover.
2. Bank of Baroda
Bank of Baroda (BoB) was founded by Maharaja Sayajirao Gaekwad in July

1908. It started with a paid up capital of Rs 10 lakh. Bank of Baroda is a pioneer in
various customer centric initiatives in the Indian banking sector. It is the second
largest bank in India, after State Bank Of India. Its headquarters is in Vadodara,
Based on 2017 data, it is ranked 1145 on Forbes Global 2000 list. BoB has total
assets in excess of ₹ 3.58 trillion, a network of 5538 branches in India and abroad,
and 10441 ATMs as of July, 2017.
3. Punjab National Bank
Punjab National Bank, India's first Swadeshi Bank, initiated its operations on
April 12, 1895 from Lahore, with an approved capital of Rs 2 lac and working
capital of Rs 20,000. The far-located visionaries and nationalists like Lala Lajpat
Rai, Mr. E C Jessawala, Babu Kali Prasono Roy, Lala Harkishan Lal and Sardar Dyal
Singh Majithia showed boldness in offering articulation to the soul of patriotism
by setting up the main bank simply overseen by the Indians with Indian Capital.
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In the long history of more than 122 years of the Bank, 7 banks have
converged with PNB and it has turned out to be more grounded and more
grounded with a system of 6937 Domestic branches and 10681 ATMs as on 31st
March 2017.
4. Canara Bank
It is Founded as 'Canara Bank Hindu Permanent Fund' in 1906, by late Shri

Ammembal Subba Rao Pai, an altruist, this little seed bloomed into a restricted
organization as 'Canara Bank Ltd.' in 1910 and progressed toward becoming
Canara Bank in 1969 after nationalization
On 31 March 2017, the bank had a system of 6085 branches and more than
10569 ATMs spread crosswise over India. The bank likewise has workplaces
abroad in London, Hong Kong, Moscow, Shanghai, Doha, Bahrain, South Africa,
Dubai, Tanzania and New York.
5.Central Bank of India
Set up in 1911, Central Bank of India was the principal Indian business bank
which was entirely possessed and overseen by Indians. The foundation of the
Bank was a definitive acknowledgment of the fantasy of Sir Sorabji
Pochkhanawala, organizer of the Bank. Sir Pherozesha Mehta was the principal
Chairman of a genuinely 'Swadeshi Bank'. Truth be told, such was the degree of
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pride felt by Sir Sorabji Pochkhanawala that he announced Central Bank of India as
the 'property of the country and the nation's advantage'. He additionally included
that 'National Bank of India lives on individuals' confidence and views itself as the
general population's own bank'.
The bank has 4730 branches, 5319 ATM's and 4 expansion counters
crosswise over 27 Indian states and three Union Territories. At present, Central
Bank of India has abroad office at Nairobi, Hong Kong
As on 31 March 2015, the bank's stores and surplus remained at ₹ 283030

million. Its aggregate business toward the finish of the last financial added up to ₹
45,05,390(approx) million.
6.Bank of India
Bank of India was established on seventh September, 1906 by a gathering of

famous businesspeople from Mumbai. The Bank was under private possession
and control till July 1969 when it was nationalized alongside 13 different banks.
Starting with one office in Mumbai, with a paid-up capital of Rs.50 lakh and
50 representatives, the Bank has made a quick development throughout the years
and bloomed into a forceful establishment with a solid national nearness and
sizable worldwide operations. In business volume, the Bank possesses a chief
position among the nationalized banks.
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The Bank has more than 5000 branches in India spread over all states/union
domains including specific branches. These branches are controlled through 54
Zonal Offices and 8 NBG Offices. There are 60 branches/workplaces and 5
Subsidaries and 1 joint wander abroad.
7.Indian Bank
Indian Bank is an government owned bank set up in 1907 and

headquartered in Chennai, India. It has 20,661 representatives, 2594 branches
and is one of the best performing open area banks in India. It has abroad branches
in Colombo and Jaffna in Sri Lanka, and in Singapore, and 223 journalist banks in
71 nations. Since 1969 the Government of India has claimed the bank.
As of April 2009, the bank has Core Banking Solution (CBS) actualized in its
1642 branches and 66 expansion counters. The bank has 755 associated
Automatic Teller Machines (ATMs) introduced in 225 areas across the nation.
8.IDBI Bank
Industrial Development bank of India (IDBI) was constituted under

Industrial Development bank of India Act, 1964 as a Development Financial
Institution and appeared as on July 01, 1964 by the notification of government of
India dated on June 22, 1964. It was viewed as a Public Financial Institution as far
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as the arrangements of Section 4A of the Companies Act, 1956. It kept on filling in
as a DFI for a long time till the year 2004 when it was changed into a Bank.
It is right now tenth biggest advancement bank on the planet as far as

reach, with 3700 ATMs, 1995 branches, including one abroad branch at Dubai, and
1382 focuses. It is one of 21 business banks possessed by the Government of
India. The Bank has a total accounting report size of INR 3.74 trillion as on 31
March 2016
9.Union Bank of India
Union Bank of India (UBI) was enlisted on 11 November 1919 as a restricted

organization in Mumbai and was introduced by Mahatma Gandhi. At the season of
India's Independence in 1947, UBI just had four branches – three in Mumbai and
one in Saurashtra, all moved in key exchange focuses. After Independence UBI
quickened its development and when the legislature nationalized it in 1969, it had
developed to 240 branches in 28 states. Not long after nationalization,
UBI converge in Belgaum Bank, a private segment bank set up in 1930 that
had itself converge in a bank in 1964, the Shri Jadeya Shankarling Bank. At that
point in 1985 UBI converged in Miraj State Bank, which had been built up in 1929.
In 1999 the Reserve Bank of India asked for that UBI secure Sikkim Bank in a
protect after broad anomalies had been found at the non–scheduled bank. Sikkim
Bank had eight branches situated in the North–east, which was appealing to UBI.
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UBI started its universal development in 2007 with the opening of agent
workplaces in Abu Dhabi, United Arab Emirates, and Shanghai, Peoples Republic
of China. The following year, UBI set up a branch in Hong Kong, its initially branch
outside India. In 2009, UBI opened a delegate office in Sydney, Australia.
10.Vijaya Bank
Vijaya Bank, was established on 23rd October 1931 by late Shri A.B.Shetty
and other ambitious agriculturists in Mangalore, Karnataka. The goal of the
organizers was basically to advance keeping money propensity, thrift and business
among the cultivating group of Dakshina Kannada area in Karnataka State. The
bank turned into a planned bank in 1958.
Vijaya Bank consistently developed into an expansive All India bank, with
nine littler banks converging with it amid the 1963-68. The acknowledge for this
merger and also development goes to late Shri Mulki Sunder Ram Shetty, the then
the Chief Executive of the bank. The bank was nationalized on fifteenth April 1980.
The bank has manufactured a system of 2030 branches, 13 Extension Counters
and 1865 ATMs as on 31.12.2016, that traverse all States and Union Territories in
the nation.
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1.6 NON PERFORMING ASSETS :
The word NPA is not something new to the bankers. It is regular but
disguised loan asset. As everyone knows, a portion of assets may become NPA .An
asset becomes non-performing when it ceases to generate income for the bank.
All loan advances of banks are assets. The loan or lease, which is not
meeting its stated interest or principal repayment of the secured debt to the
designated lender, is called as a Non-Performing Asset.
“A Non Performing Asset means an asset or account of a borrower, which

has been classified by a bank or financial institution as substandard, doubtful or
loan asset. The borrower has not paid any previously-agreed payments or the
Principal amount, making the loan account non-performing”.
- By KHAN
AND JAIN
A non-performing asset (NPA) is a classification used by financial

institutions that refer to loans that are in jeopardy of default. Once the borrower
has failed to make interest or principal payments for 90 days the loan is
considered to be a non-performing asset.
Non Performing Asset means an asset or account of borrower, which has

been classified by a bank or financial institution as sub-standard, doubtful or loss
asset in accordance with the directions or guidance relating to asset classification
issued by The Reserve Banks of India.
26
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“Non-Performing Assets are those assets that cease to generate income
for banks.” Dr.Rajesham and Dr.K.Rajender
 TYPES OF NON-PERFORMING ASSETS

1. Standard: Bank receives the principal and interest repayment, systematically
from the borrower.Another important aspect is that the arrears of the principal
as well as the interest does not surpass more than 90 days on the closing of the
FY (Financial Year). An assets which is generating regular income to the bank
called standard assets.
2. Sub-Standard: An asset which is overdue for a period of more than 90 days but
less than 12 months are called Sub-Standard
3. Doubtful: A doubtful asset is one which has remained as a NPA for a period
exceeding 12 months. A loan classified as doubtful has all the weaknesses
inherent in assets that were classified as sub-standard, with the added
characteristic that the weaknesses make collection or liquidation in full, on the
basis of currently-known facts, conditions and values – highly questionable and
improbable.
4. Loss: Assets which are doubtful and considered as non-recoverable by bank,
internal or external auditor or central bank inspectors called loss.
Standard Asset It does not create any problem while paying

interest/ installments of the principal. It
usually carries more than normal risk
attached to the business.
Sub- standard asset NPA for a period less than or equal to 12
months.
Doubtful Asset NPA for a period exceeding 12 months.
Loss Asset An asset where loss has been identified by

the bank or internal or external auditors or
27
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INTRODUCTION
by the RBI inspection.
1.7 PERFORMANCE OF PUBLIC SECTOR BANKS :
The financial changes in India began in right on time nineties, however their result
is obvious at this point. Real changes took put in the working of Banks in India
simply after Librelization , globalization and privatization. Expanded rivalry, new
data advances and consequently declining preparing costs, the disintegration of
item and geographic limits, and less prohibitive legislative directions have all
assumed a noteworthy part for Public Sector Banks in India to commandingly
contend with Private and Foreign Banks.
The most recent decade has seen numerous positive improvements in the Indian
banking system. The policy makers which involve the Reserve Bank of India (RBI),
Ministry of Finance and related government and financial sector regulatory
entities have endeavored a few outstanding efforts to enhance performance in
the sector . The public sector banks now looks at positively with managing an
account divisions in the area on measurements like development, profitability and
non-performing resources (NPAs). A couple of banks have set up an extraordinary
reputation of advancement, development and esteem creation.
The technological revolution has completely changed the Indian banking system.
The use of computers and mobile has led to the introduction of online banking in
India now a days. India has the most number of bank branches on the planet. As
indicated by IMF information for 2015 there are more than 1.2 lakh bank branches
in India, followed by China and Colombia with more than 95,680 and 94,074 bank
28
Chapter 1
INTRODUCTION
offices individually. RBI information for the June 2016 quarter demonstrates India
now has more than 1.3 lakh bank offices.
The net loss of twenty public sector banks is of Rs 16,272.34 crore for the fourth
quarter ended March 2016 as bad loans situation very worsened. Public Sector
Banks earns net profit of Rs 4,063.58 crore in the last quarter a year ago. Non-
performing assets or bad loans in some cases must requires prompt corrective
action otherwise become a major problem. As per RBI directives, a prompt
corrective action may be enforced in cases where gross NPA has crossed 10 per
cent. all public sector banks had given negative return to investors since the
beginning of the ongoing calendar year 2016.
State Bank of India : State bank of Indian register 66% slump in standalone profit
to Rs. 1,263.81 crores for the last quarter of 2017. The Bank’s gross non-
performing assets (NPAs) declined to 6.90 per cent of gross advances, down 33
basis points from 7.23 per cent reported on December 2017 . Gross NPAs in the
year-ago quarter stood at 6.50 per cent. On a net basis, NPAs fell to 3.71 per cent
from 4.24 per cent in December 2017 and 3.71 per cent in the corresponding
quarter last year.
Bank of Baroda : Bank of Baroda (BoB) on Thursday reported a profit of Rs154.72

crore on March 2017 quarter as provisions for bad loans was decline. The bank
had reported a huge loss of Rs3,230.14 crore in the same quarter in last year ago.
The provisions of bad loans declined to Rs2,622.97 crore from Rs6,857.66 crore in
29
Chapter 1
INTRODUCTION
the year ago period as gross non-performing asset (NPA) ratio moved up
marginally to 10.46% from 9.99%. Its net NPAs also decreased to 4.72% as against
5.06%.
Punjab National Bank : Punjab National Bank on 18th may 2017 reported a net
loss of Rs 5,367.14 crore on last quarter ended on 31 st March 2016 against net
profit of Rs 306.56 crore in the previous year . As far as asset quality is concerned,
Gross Non-Performing Assets (NPAs) rose to 12.90 per at the end of March, from
6.55 per cent a year ago. Net NPAs too jumped to 8.61 per cent as against 4.06 per
cent.
Canara Bank : Canara Bank Ltd has reported the net profit of Rs.214.18 crore, on
march 2017 against a Rs3905.49 crore loss recorded a year ago when it made
heavy provisions for bad loans. Gross non-performing assets (NPAs) as a ratio of
gross advances were at 9.63%, against 9.97% as of 31 December. Net NPA ratio at
the end of the fourth quarter was 6.33%, slightly down from 6.72% in the third
quarter.
Central Bank of India : Central Bank of India recorded the net loss of Rs 592 crore
during the last quarter on March 2017 on improved recovery, even though bad
loans soared. Gross NPA to gross advances raised up to 17.81% as on March 2017
from 11.95% a year ago. Net non-performing assets increase up to 10.20% of net
advances from 7.36% a year ago.
Bank of India : Bank of India has reported a net loss of Rs1,045.54 crore for the
March 2017. The gross non-performing assets (NPAs) were at 13.22% at the end of
the March 2017. Net NPAs came in marginally lower at 6.90% in the quarter
30
Chapter 1
INTRODUCTION
compared to 7.09% in the last three months, but comparatively lower than the
March 2016 quarter’s 7.79%.
Indian Bank : The Net profit of Indian bank raise up to Rs319.7 crore for the last
quarter ended on 31st March 2017 from Rs 93.62 crore in the year earlier. The
bank’s gross non-performing assets (NPAs) Increase up to 1.9% to Rs 9,865.13
crore at the end of the quater March 2017 from Rs9,675.1 crore in the quater
December.
IDBI Bank : IDBI has reported a standalone net loss of Rs 3199 crore on 31 st
march 2017, as against a standalone net loss of Rs 1735.81 crore for the same
quarter in the previous year. It reported gross NPAs of 21.25% and net NPAs of
13.21% for the quarter ended March 31, 2017.
Union Bank of India : Union Bank of India on Monday to report a 12.5% increase
in the net profit at Rs108.22 crore for the March quarter. Net NPAs also rose to
6.57% from 5.25% year ago.
Vijaya Bank : Vijaya Bank has reported a net profit of Rs 204 crore for the fourth
quarter of the financial year 2016-17, registering increase of 187 per cent year-on-
year (YoY) jump from Rs 71 crore.
Gross non-performing assets (NPAs) reduced up to 23.15% to Rs 6,381.78 crore at

the end of the March quarter from Rs 8,304.60 crore in the December quarter.
Net NPAs rose to 4.35% in the March quarter from 4.74% in the previous quarter
and 4.81% in the same quarter last year.
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Chapter 1
INTRODUCTION
1.8 RECENT TRENDS IN PUBLIC SECTOR BANKS :
In the current year, the banking Industry has been under going fast changes which
is reflecting in major important changes. Innovation in information technology is
the most noteworthy ranges which have changed quickly. It has quickened the
publishing of monetary data which bringing down the expenses of numerous
financial activities . In the last few years Banking sector has introduced some new
items: Credit Cards, ATM, Tele-Banking, Electronic Fund Transfer (EFT), Real Time
Gross Settlement (RTGS), Internet Banking, Mobile Banking and so forth. These
new improvements increase the proficiency of banks by diminishing transaction
cost.
 CORE BANKING SOLUTIONS :
Center Banking Solutions (CBS) or Centralized Banking Solutions is the procedure

which is finished in a brought together condition i.e. under which the data
identifying with the client's record (i.e. money related dealings, calling, wage,
relatives and so forth.) is put away in the Central Server of the bank (that is
accessible to all the organized branches) rather than the branch server. Contingent
on the size and needs of a bank, it could be for the every one of the operations or
for constrained operations. This undertaking is helped through cutting edge
programming by making utilization of the administrations gave by particular
offices. Because of its advantages, a no. of banks in India as of late have found a
way to actualize the CBS with a view to assemble association with the client in
light of the data caught and offering to the client, the modified money related
items as per their need.
32
Chapter 1
INTRODUCTION
 Advantages to Customer:
1. Transaction of business can be done from any branch.
2. High accuracy with less error in Transaction.
3. Huge amount of fund available.
 Advantages to Banks:
1. Standardize process follow by all branches of banks.
2. Better service to customer that increase customer retention.
3. Better use of available resource.
1. Demat Account : In India, a demat account, the contraction for

dematerialised account, is a sort of managing an account which dematerializes
paper-based physical stock offers. The dematerialised account is utilized to abstain
from holding physical offers: the offers are purchased and sold through a stock
merchant.
The Securities and Exchange Board of India (SEBI) commands a demat represent
share exchanging over 500 shares. As of April 2006, it wound up noticeably
required that any individual holding a demat record ought to have a Permanent
Account Number (PAN),
 Advantages
1. A sheltered and helpful approach to hold securities;
2. Immediate exchange of securities;
3. No stamp obligation on exchange of securities;
4. Elimination of dangers related with physical authentications, for example,
awful conveyance, fake securities, delays, burglaries and so forth.;
5. Reduction in printed material required in exchange of securities;
6. Reduction in exchange cost;
2. Telebanking : Telebanking provides banking facility on telephone network. A

client can use facility of banking through a phone call and by giving the coded
33
Chapter 1
INTRODUCTION
Personal Identification Number (PIN) to the bank. Telebanking is widely easy to
use and successful in nature.
 Following service is provided by Telebanking to customers :
1. Facility to stop payment.
2. Ask information about status of Cheque.
3. Information on the present loan costs.
4. Request for a DD or pay Order.
5. Demat Account related administrations.
3. Internet Banking : The aggregate number of enlisted clients for Internet

saving money in India is more than two million. India has somewhat less than a
million dynamic Internet keeping money clients. In this way showing, the idea of
Internet managing an account is without a doubt getting on.
India falls behind different nations in Internet saving money. In the US, the quantity
of business manages an account with value-based sites is 1,275 or 12 percent of
the aggregate number of banks. Of these, seven could be called 'virtual banks.'
From the Asian market understanding, obviously Internet keeping money is setting
down deep roots and will be a noteworthy channel to obtain and benefit clients.
Markets like Korea and Singapore have almost 10 percent of their populace keeping
money over the Internet.
 Internet Banking & India : Indian banks have a unimportant Internet

managing an account record. ICICI Bank commenced internet based banking in
1996 and a large group of different banks soon took action accordingly. Be that as it
may, notwithstanding for the Internet in general, 1996 to 1998 denoted the
selection stage, while utilization expanded just in 1999 because of lower ISP online
charges, expanded PC infiltration and a tech-accommodating environment.
34
Chapter 1
INTRODUCTION
 Internet Banking & Public sector Banks : As in all types of innovation
developments, PSU banks have remained slow in the race for commencing Internet
Banking . There are not very many nationalized banks like State Bank of India, Bank
of Baroda, Allahabad Bank, Syndicate Bank and Bank of India that offer Internet
Banking . Some others like Union Bank of India, Canara Bank and Punjab National
Bank are very nearly doing as such. SBI's Internet banking activity, propelled in July
2001, is in actuality doing great and has more than 18,000 enrolled clients
crosswise over 150 branches
4. Automatic Teller Machine : The presentation of ATM's has given the clients
the office of round the Banking Facility . The ATM's are utilized by banks for making
the clients managing their account with less efforts . ATM card is a gadget that
permits client who has an ATM card to perform routine banking activity with less
interfacing with human teller. The ATM’s help client to get money as and when he
wants though bank is closed.
 Advantages to Customers :
To Transfer money from one account to another.
To see account related information.
To get money .
ATM's give 24 hrs. 7 days and 365 days a year benefit.
Service is quick and effective
Privacy in transaction
Wider adaptability set up and time of withdrawals.
he exchange is totally secure – you have to enter in Personal Identification
Number (Unique number for each client).
 Advantages to Banks :
Alternative to expand managing an account hours.
Crowding at bank counters significantly lessened.
Alternative to new branches and to decrease working costs.
35
Chapter 1
INTRODUCTION
Relieves bank representatives to concentrate on more explanatory and
inventive work.
ATM's can be introduced anyplace like Airports, Railway Stations, Petrol Pumps, Big
Business arcades, markets, and so forth. Henceforth, it gives simple access to the
clients, for getting money. The ATM was given first by the remote banks like
Citibank, Grind lays bank and now by numerous private and open segment banks in
India like ICICI Bank, HDFC Bank, SBI, UTI Bank and so forth. The ICICI has propelled
ATM Services to its clients in all the Metropolitan Cities in India.
5. Mobile Banking : Mobile Banking (otherwise called M-Banking or SMS

Banking) is a term utilized for performing balance checks, account exchanges,
installments, and so forth., by means of a cell phone, for example, a cell phone. It
was Internet Banking, which introduced another period in keeping money comfort
by conveying the whole operations to the PC, and now portable managing an
account guarantees to take it to the following level.
Mobile Banking tends to this principal restriction of Internet Banking, as it

diminishes the client necessity to only a cell phone. Versatile utilization has seen a
hazardous development in a large portion of the Asian economies like India, China
and Korea. The primary reason that Mobile Banking scores over Internet Banking is
that it empowers 'Anyplace Anytime Banking'.
Mobile Banking has been at the limit of an unrest for quite a while. While
numerous administrators, and in addition banks, had presented versatile managing
36
Chapter 1
INTRODUCTION
an account applications, it never wound up noticeably prominent because of
security concerns. The quantity of individuals utilizing mobile banking has bounced
from under 10,000 to 120,000 of every two years. While the trend is growing, lack
of awareness of services, apart from perceived security issues are inhibiting faster
take-off.
Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI), a
'Working Group on Mobile Banking' to inspect diverse parts of Mobile Banking (M-
managing an account).
 Various Mobile Banking Services to the Consumers
 Account Information
1. Mini-statements and checking of account history
2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements
6. Mutual funds / equity statements
7. Insurance policy management
37
Chapter 1
INTRODUCTION
8. Pension plan management
 Payments & Transfers
1. Domestic and international fund transfers
2. Mobile re-charging
3. Commercial payment processing
4. Bill payment processing
 Investments
1. Portfolio management services
2. Real-time stock quotes
3. Personalized alerts and notifications on security prices
 Support
1. Status of requests for credit, including mortgage approval, and insurance

coverage
2. Check (cheque) book and card requests
3. Exchange of data messages and e-mail, including complaint submission and

tracking
38
Chapter 1
INTRODUCTION
6. Credit card : The credit card can be characterized as a little plastic card that
enables its holder to purchase merchandise and ventures using a loan and to pay at
settled interims through card issuing office. The charge card discharges the clients
frame botheration of conveying money and guarantees wellbeing.
A man who gains a pay of Rs 60,000 for every annum is qualified for card. A
reference from a financier and the businesses of the candidate is demanded.
7. Debit card : Debit cards will offer direct withdrawal of fund from a client's
financial balance. As far as possible is dictated by the client's bank contingent on
accessible adjust in the record of the client. It is a special plastic card connected
with electromagnetic identification that one can use to pay for things purchased
directly from its bank account. Under the system, cardholder’s accounts are
immediately debited against purchase or service to the computer network. Hence,
under debit card the card holder must have adequate balance in his account.
8. Multi City Check : "Multi City Check" or MCC is an office wherein the client can
issue checks drawn at the base branch and payable at any branch. These checks will
be dealt with as nearby checks at the remote branch. There will be no gathering
charges and the credit will be given around the same time, as pertinent to
neighborhood checks. Regardless of the possibility that the check is dropped at
whatever other bank other than the base bank, there won't be any gathering
charges. For instance, if Mr. An is paid a Multi city check by Mr. B at SBI branch in
Delhi, Mr. A can drop the same at any bank in Mumbai where he holds a record,
and there won't be any accumulation charges.
39
Chapter 1
INTRODUCTION
 Payment and Settlement Systems
In recent years, money transfer , especially the development of electronic money

schemes, have been gaining popularity. While electronic money has the ability to
take over from cash for making small-value payments, making such transactions are
becoming easier and cheaper for both consumers and banks. The evolution of peer-
to-peer money transfer mechanisms poses a challenge to current role of banks as
gatekeepers to traditional payment systems. Robust payment systems, therefore,
are a key requirement in maintaining and promoting financial stability with
technology playing both a facilitating and disruptive role in them.
Reserve Bank’s initiatives for electronic payments and banking
As part of its public policy objective of promoting a safe, secure, sound and efficient
payment system, the Reserve Bank has taken several initiatives to develop and
promote electronic payments infrastructure. Towards this end, the RBI introduced
the following:
1. Electronic Clearing Service (ECS) : With a view to upgrading payment

system to the international banking standards, the Reserve Bank of India took the
initiative and set up Electronic Clearing Service in India, in the mid 1990s, which is
the counterpart of the automated clearing house (ACH) system in certain other
countries. It has two variants –
40
Chapter 1
INTRODUCTION
ECS - Credit Clearing and ECS - Debit Clearing. : While the Credit Clearing
operates on the principle of ‘single debit-multiple credits’ and is used for making
payment of salary, pension, dividend and interest, etc. The Debit Clearing functions
on the principle of ‘single credit-multiple debits’ and is used for collecting payments
by utility service providers like electricity, telephone bills as well by banks for
receiving principal / interest repayments for housing and personal loans from the
borrowers.
At present, about 18 million transactions done through the ECS system every
month. This facility is currently available at 70 different centers in the country.
2. Real Time Gross Settlement System : The payment system in the our country
largely follows the deferred net settlement system, under which the net amount is
settled between the banks, on a deferred basis. Such a dispensation entails an
element of settlement risk. Hence, as a step towards risk mitigation in the large
value payment systems, the RTGS was operationalised by the RBI in March 2004,
which enables settlement of transactions in real time, on a gross basis. Almost all
the inter-bank transactions in the country and many time-critical customer
transactions are now settled through this system.
RTGS is fully secured electronic funds transfer system where banks and
customers can receive payments on real time basis. The outreach of RTGS
transactions has also grown geographically. Out of about 75,000 bank branches in
the country, more than 48,300 bank branches now accept requests for remittance
41
Chapter 1
INTRODUCTION
through RTGS system for customer transactions as well as inter-bank
transactions.The daily average of transactions is over 34,000 by volume and over
Rs.2 lakh crore by value. The RBI also provides collateralised Intra-Day-Liquidity
(IDL) support to the member banks for the RTGS operations.
3. National Electronic Fund Transfer: The NEFT was launched by the RBI in
November 2005 as nation-wide retail electronic payment system to facilitate funds
transfer by the bank customers, between the networked bank branches in the
country. It has, however, been observed that the public sector banks are not active
users of NEFT and the majority of NEFT outward transactions are carried by a few
new-generation private sector banks and foreign banks.
For instance, in June 2008, while these banks, as a segment, accounted for a
little over 43 per cent each of the aggregate volume of outward and inward NEFT
transactions, the share of public sector banks in total outward NEFT transactions
was rather low at a little over 12 per cent, of which half the volume was the
contribution of the State Bank of India. The RBI has been pursuing the matter with
the PSBs for increasing their participation in the NEFT system in terms of the
number of NEFT-enabled branches and the number of NEFT transactions originated
by them.
.In order to popularize the e-payments in the country, the RBI, on its part,
has waived the service charges to be levied on the member banks, till March 31,
2009, in respect of the RTGS and NEFT transactions. The RBI also provides, free of
42
Chapter 1
INTRODUCTION
charge, intra-day liquidity to the banks for the RTGS transactions. The service
charges to be levied by banks from their customers for RTGS & NEFT have, however,
been deregulated and left to discretion of the individual bank.
4. Cheque Truncation System (CTS) : The latest electronic payment product

introduced by the RBI is the Cheque Truncation System, which was launched, on a
pilot basis, in the National Capital Region of New Delhi on February 1, 2008, with
the participation of 10 banks. At present all the banks are participating in the
system through 53 direct member banks.
The main objective of the CTS is to improve the efficiency and substantially
reduce the cheque processing time in the system. The traditional clearing system
requiring the physical presentation of cheques in the clearing house for payment
and settlement, inevitably entails consequential inefficiencies in terms of clearing
time and infrastructure required.
In contrast, the main advantage of cheque truncation is that it eliminates the

physical presentation of the cheque to the clearing house; instead, the electronic
image of the cheque would be sent to the clearing house. The CTS would enable
the realisation of cheques on the same day, and provide a more cost-effective
mode of settlement than manual and MICR clearing. Smaller banks, which may find
it unviable to set up the infrastructure, could utilise the services of service bureaus
set up for this purpose by a few larger banks.
43
Chapter 1
INTRODUCTION
5. National Electronic Clearing Service (NECS) ; The National ECS is a product
being developed by the RBI to enable centralised processing of the ECS
transactions, in contrast to the existing ECS system that has decentralised
operations at 70 locations, spread all over the country.
Under the National ECS, the processing of all the ECS transactions would be
centralised at the National Clearing Cell at Nariman Point, Mumbai and sponsor
banks would need to only upload the relative files to a web server, with online data
validation facility. Destination banks would receive their inward clearing data / file
at a central location, through the web server.
The National ECS would leverage the Core Banking platform of the
commercial banks, to enable around 50,000 core-banking-enabled branches of the
various banks, to avail of this service. The system would facilitate end-to-end
seamless posting of the NECS transactions in a straight-through-processing (STP)
environment. This would help the users and member banks to send, receive and
process the data files at one centralised place, thereby improving the efficiency of
the payment system.
6. Negotiated Dealing System : The system which became operational

during Feb 2002 facilitates the submission of bids/applications for
auctions/floatation of govt. securities through pooled terminal facility located at
Regional Offices of Public Debt Offices across the country and through member
44
Chapter 1
INTRODUCTION
terminals. The system can be used for daily Repo and Reverse Repo auctions under
Liquidity Adjustment Facility.
1.9 CORPORATE DEFAULTERS & NON PERFORMING

ASSETS :
Indian banks have started a big steps towards bad loans armed with the
Insolvency and bankruptcy code (IBC). The attack on the non-performing assets
(NPAs) began in 2015 when the Reserve Bank of India (RBI) stipulated norms for
early recognition of stressed assets in the banking sector. Subsequently, in March
2017 the RBI came with a new deadline for banks to clean-up their balance sheets
by disclosing all the hidden NPAs. While this exercise pushed banks to account for
a big chunk of impaired assets, the recovery of money still remained a major
concern for the sector and the policymakers.
Under the insolvency & Bankruptcy code, the majority lenders agree, banks can
take companies to National Company Law Tribunal (NCLT) with a request for time
bound resolution plan. If the resolution process fails within a maximum of 270
days, insolvency process is initiated against the concerned company. Under a
mutually agreed framework between banks and other stakeholders in the firm,
the proceeds from the liquidation process will be shared.
After the NDA government’s demonetisation move in November 8 many small &
medium sectors struggling to repay the loan . The gross non-performing assets
45
Chapter 1
INTRODUCTION
(NPA) surged to Rs 6, 14,872cr as on march 2017. Despite the Reserve Bank of
India (RBI) announcing numerous restructuring schemes, the bad loans have
increase up to Rs 261,843cr by 135 per cent in last two years.
The Reserve Bank of India (RBI) is doing to resolve the bad loan crisis with an
Internal Advisory Committee (IAC) of the RBI having identified 12 accounts of
corporate loan borrowers who owe over Rs 5,000 crore each — and overall
involve an amount of close to Rs 175,000 crore — for insolvency proceedings
under the newly enacted Insolvency and Bankruptcy Code 2016 (IBC).
The RBI committee has recommended for IBC reference all accounts with fund and
non-fund based outstanding amounts in excess of Rs 5,000 crore, with 60 per cent
or more (Rs 3,000 crore or more) classified as non-performing by banks as on
March 31, 2016.
Five banks have reported gross NPA ratios of over 15 per cent. Indian Overseas
Bank’s (IOB) gross NPA ratio reads 22.42 per cent, which means Rs 22.42 out of Rs
100 lent by the bank will be classified as bad loan. Similarly, UCO bank posted NPA
ratio of 17.18 per cent, United Bank of India (UBI) read 15.98 per cent, IDBI bank
read 15.16 per cent and Bank of Maharashtra read 15.08 per cent.
State Bank of India (SBI) managed to restrict NPAs to Rs 1.08 lakh crore for
December quarter compared to Rs 1.06 lakh crore for September quarter.
46
Chapter 1
INTRODUCTION
However, they posted a 134 per cent rise in Q3 net profit. While banks like Punjab
National Bank (PNB) and Bank of Baroda (BoB) reported a decline in NPA.
47
 Refference :
1. http://economictimes.indiatimes.com/articleshow/52468717.cms?
utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
2. http://www.historyworld.net/wrldhis/PlainTextHistories.asp?
groupid=2453&HistoryID=ac19&gtrack=pthc#ixzz4moDffZbj
3. https://sol.du.ac.in/mod/book/view.php?id=1225&chapterid=856
4. https://data.gov.in/keywords/performance-public-sector-banks
5. http://www.bankexamstoday.com/2017/02/banking-system-in-india-
explain.html
6. http://www.yourarticlelibrary.com/banking/indian-banking-system-structure-
and-other-details-with-diagrams/23495/
7. http://www.jagranjosh.com/general-knowledge/structure-of-banking-sector-
in-india-1448530019-1
8. https://rbidocs.rbi.org.in/rdocs/notification/PDFs/45MCIRAC280610.pdf
9. http://www.mca.gov.in/MinistryV2/defaultercompanieslist.html
10.www.sbi.co.in
11.www.pnbindia.in
12.www.bankofbaroda.co.in
13.www.bankofindia.com
14.www.canarabank.in
15.www.centralbankofindia.co.in
16.www.idbi.com
17.www.indianbank.in
18.www.unionbankofindia.co.in
19.www.vijayabank.com

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History of Banking

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Chapter 1

The banking sector is the lifeline of any modern economy. development of a

 Greek and Roman financiers: from the 4th century BC :

 Religion and banking: 12th - 13th century :

The Christian restriction on usury in the end gives a chance to brokers of

 Bankers to Europe's kings: 13th - 14th century :

 Banks and cheques: from the 16th century :

 National banks: 17th - 18th century :

Paper currency makes its first appearance in Europe in the seventeenth

1.3 HISTORY OF BANKING ( INDIA ) :

 Pre- Independence Period : (Before 1947)

Major changes occurred in the keeping money area as the economy

In 1969, motivated by a huge social reason, 14 noteworthy banks were

 Post-Liberalization Period (1991-till date)

The shortcomings of the saving money framework was broadly examined by

Banks were likewise coordinated to recognize issue advances on their

 Narasimham Committee's Recommendations:

Against this scenery, a Committee under the chairmanship of M. Narasimham was

1.4 INTRODUCTION TO INDIAN BANKING SYSTEM :

In a present day economy, banks are to be viewed as not as merchants in cash

The present procedure of change ought to be seen as a chance to change over

 Structure of Indian Banking System

The Indian financial framework includes an extensive number of business and

Public Private Foreign Regional Scheduled Urban Scheduled State

Nationalized SBI & its Old Private Sector New Private

1. Reserve Bank of India (RBI)

3. It aims at the stabilization of the price level at average prices.

4. Stabilization of the exchange rate is also essential.

5. It should aim for the promotion of economic activities.

1. Welfare of the public

2. To maintain the financial stability of the country.

3. To make the financial transactions safely and effectively.

4. To develop & grow the financial infrastructure of the country.

5. To distribute the funds effectively without any partiality.

1. Currency issuing authority

2. Monitoring & Surveillance authority

3. Banker to the Central & State Government

4. Foreign exchange control authority

5. Promoting & Development authority.

 Scheduled Banks and Non-Scheduled Banks

1. Public Sector Banks

1. Axis bank 17. South Indian Bank

4. Regional Rural Banks (RRBs):

The Co-operative Banking structure in India is Subdivided into Five Category

1.5 TOP TEN PUBLIC SECTOR BANKS PROFILE :

1. State Bank of India

It has capture 29th position in most reputed company in world by Forbes in

Bank of Baroda (BoB) was founded by Maharaja Sayajirao Gaekwad in July

3. Punjab National Bank

It is Founded as 'Canara Bank Hindu Permanent Fund' in 1906, by late Shri

5.Central Bank of India

As on 31 March 2015, the bank's stores and surplus remained at ₹ 283030

Bank of India was established on seventh September, 1906 by a gathering of

Indian Bank is an government owned bank set up in 1907 and

Industrial Development bank of India (IDBI) was constituted under

It is right now tenth biggest advancement bank on the planet as far as

9.Union Bank of India

Union Bank of India (UBI) was enlisted on 11 November 1919 as a restricted

“A Non Performing Asset means an asset or account of a borrower, which

A non-performing asset (NPA) is a classification used by financial

Non Performing Asset means an asset or account of borrower, which has

 TYPES OF NON-PERFORMING ASSETS

Standard Asset It does not create any problem while paying