INTRODUCTION OF A BANK

The Banking Companies Act of 1949,define Banking company as a company which transacts the business of banking in India. It defines banking as, accepting for the purpose of lending or investment of deposit money from the public, repayable on demand or otherwise.

A bank as an institution dealing in money and credit. It safeguard of the savings of the public and gives loans and advances.

Origin of Banking
Origin of Banking The word of Bank is said to be of Germanic origin. cognate with the French word Banque and the Italian word Banca , both meaning bench. Banking is as old as the authentic history and origins of modern Commercial banking tare traceable to ancient times. The New Testament mention about activities of the money changers in the temple of Jerusalem. In ancient Greece around 2000 B.C . The famous temples of Ephesus, Delphi and Olympia were used as depositories for peoples surplus funds and these temples were the centers of Money lending transaction.

Post Independence Banking system of India

In the post-independence period, India observed the emergence of large number of institutions for providing finance to different sectors of the economy. There were two nationalizations of banks in India, one in 1969 and the other in 1980. The entry activities of private sector and foreign banks were restricted through branch licensing and regulation norms.

Post Independence Banking system of India

The over regulated and over administered polices eroded the capital base of most of the public Sector banks and recapitalization of 19 nationalized banks was made by government through of budgetary provision Nevertheless, acute problem arises in productivity, efficiency and profitability front of the commercial banks. The policy of directed investment in the form high SLR and CRR, directed credit programs, extra administrative interference in credit decision making, high operating costs, regulated interest rates, non-transparent accounting system coupled Non existence of operational flexibility, internal autonomy and absence of competition contaminated the health of the commercial banks and threatened their future survival.

Post Independence Banking system of India

It abolished administered interest rate regime by allowing banks to determine lending and deposit rates. Competition has infused by allowing the operation of new private sector banks and more liberal entry of foreign banks. Measures to broaden the ownership base of PSBs have also taken. The system has also observed greater levels of transparency and standards of disclosure. It introduced ratification of the legal structure to strengthen banks position in the areas of loan and default loan.