Productivity in Banking Industry in India

The Indian banking industry has emerged into a complex multi-tier structure with a range of big and small Banks and FIs operating. Way back in 1951, the need to form state sponsored institutions to increase flow of quotation to the campestral areas led to the formation of the plead Bank of India by an act of Parliament passed in May 1955. In 1959, State Bank of India took over the cardinal former state-associated banks as its subsidiaries. A major turning point in the industry was in 1969 with the communisation of 14 major banks, which led to considerable change of direction of bank lending to butt social objectives. In 1980, eight more banks were nationalised. In 1976, the Regional Rural Banks Act came into being that allowed the opening of specialised banks exclusively to meet the credit requirements in the rural areas. These banks were set up jointly by the aboriginal government, commercial banks and the respective state governments. Apart from these, there was a large network of cooperative banks and a few sequestered banks. Thus, till around the 1980s, a large portion of the banking industry was state-controlled; that was recognised to be better adapted to meet the needs of economic planning and aiding the otherwise neglected sectors resembling agriculture and small scale industries.

The period following nationalisation was characterised by rapid rise in banking business and helped in mobilising national savings. Savings rate in the country leapfrogged from 10-12% of gross domestic product in the two decades of 1950-70 to about 25% by 1980. accumulate deposits which registered yearbook growth in the range of 10% to 12% in the 1960s rose to over 20% in the 1980s. Growth of bank credit increased from an average annual growth of 13% in the 1960s to about 19% in the 1970s and 1980s. Branch network expanded importantly leading to increase in banking coverage, especially in the rural areas.. Indian banking, which experienced rapid growth following nationalisation, began to pose pressures on asset quality by the... If you want to get hold a full essay, order it on our website: Orderessay

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