Innovations in the Banking Industry in India

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Case Details:

Case Code : BREP005
Case Length : 14 Pages
Period : 1991-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : -
Industry : Banking
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Some of the systems implemented earlier included the electronic clearing service (1995), electronic funds transfer (EFT) facility (1997) and special electronic funds transfer system (2003). Changes in the Indian banking sector in the late 1990s and early 2000s, are expected to create high value for customers as well as the banks involved.

Background Note

While the history of banking in India can be traced back several centuries, banking in the modern sense of the word actually began towards the end of the 1700s.

The Bank of Hindustan, set up in 1770, by the British rulers5 in India was the earliest bank in the country. Over the years, the British set up several other banks, notable among which were the three Presidency Banks in the Presidencies of Bengal (in 1809), Bombay (in 1840) and Madras (in 1843).

These three banks were very powerful in their respective Presidencies and functioned as quasi-central banks, having even the power to issue currency notes.

Innovation Case Studies | Case Study in Management, Operations, Strategies, Innovation Case Studies, Case Studies

Joint stock banking companies with limited liability began to make their appearance in the early-1860s.Allahabad Bank Ltd. was the first joint stock bank established in India. The Swadeshi Movement6 in the early-1900s provided an impetus to the setting up of banks owned by Indians. In 1920, the British government in India passed the Imperial Bank of India Act and amalgamated the three Presidency banks.

After India became independent from British rule in 1947, the newly formed government of the country passed the Banking Regulations Act, 1949, laying down the guidelines for the operation of commercial banks in the country.

This regulation brought RBI under government control (under the RBI Act, 1934, the RBI did not have any government ownership).

The RBI was also made the supervisory and regulatory authority of the banking sector.

In 1955, the Imperial Bank was converted into the State Bank of India (SBI), through the passing of the State Bank of India Act, 1955.

In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them 100% subsidiaries. In 1969, the government of India (GoI) undertook a bank nationalization program with the objective of streamlining the banking operations in the country and strengthening the sector through government support...

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4] Primary care is care provided by general phdysician at clinic. Minor ailments are treated and preventive care such as vaccinations is provided. Secondary care is provided by physicians who have specialized in various areas such as gynaecology, internal medicine, general surgery etc.

5] Tertiary care is highly specialized and is provided by specialists like ENT doctors, cardiac surgeons, neurologists etc. This type of care includes emergency and trauma care, organ transplants, neonatal care, etc.