For years, banking has been the foothold of any civilization dating right from the romans to medivial Europe to till date’s modern civilization. This industry like any other else industry has evolved, changed adapted as per the changing time and needs. But the base or the foundation still remains the same. In the below write-up we shall look upon History of Banking to modern day Banking in short…..
In simple words, Bank is a business establishment that
safeguards people’s money and uses it to make loans and investments. A Bank
provides many services including checking and savings accounts, loans and the
sale of traveler’s checks, cashier’s checks and money orders. This is a simple
definition of a Bank for any layman who holds account in any Bank. I, too had
the same concept of Banking till I got a job in one of the most prized private
Bank in India. Till then, as in for any layman, Bank for me was just a place to
deposit your money, to avail loans for your needs, to send demand drafts or
money orders to your near and dear ones staying far….
But now today as a Banker with six years of fruitful
experience behind me, the word “Banking” just doesn’t mean accounts and loans.
In the literal sense, a Bank can “change your life”. Right from a salaried
person to a small or big entrepreneur, a Bank is one of the most important
industry looked upon. Again loans and accounts are not the only purpose of the
Bank as stated earlier, for a entrepreneur right from his imports for his
business to his exports of finished goods, a Bank plays a pivotal role by means
of Letters of Credit, Guarantees, Export/Import payments, Bill Discounting.
Basically the roles of a Bank can be broadly classified into two categories;
1. Retail
Banking
2. Commercial
Banking.
History of Banking;
As mentioned
earlier, Baning is nearly as old as
civilisation. The Ancient Romans developed an advanced Banking system to serve
their vast trade network which later disapperead after the fall of Roman epire.
Banking in the modern sense of the word can be traced to medieval and early Renaissance
Italy, to the rich
cities in the north like Florence, Venice and Genoa. The Bardi and Peruzzi families
dominated banking in 14th century Florence, establishing branches in many other
parts of Europe.
The word bank was borrowed in Middle
English from Middle French banque, from Old Italian
banca, from Old High German banc, bank "bench,
counter". Benches were used as desks or exchange counters during the Renaissance
by Florentine
bankers, who used to make their transactions atop desks covered by green
tablecloths.
Banking in
India originated in the
last decades of the 18th century. The first banks were The General Bank of
India, which started in 1786, and Bank of Hindustan, which
started in 1790; both are now defunct. The oldest bank in existence in India is
the State Bank of India, which originated in the Bank
of Calcutta in June 1806, which almost immediately became the Bank
of Bengal. This was one of the three presidency banks, the other two being
the Bank
of Bombay and the Bank of Madras, all three of which were established
under charters from the British East India Company. For many years the
Presidency banks acted as quasi-central banks, as did their successors. The
three banks merged in 1921 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India in 1955.
The “Reserve Bank
of India” India’s central banking authority was established in April 1934, but
nationalised on January 1, 1949 under terms of the Reserve Bank of India Act,
1948 also termed as “Transfer to Public Ownership Act”. In 1949, The Banking Regulation Act empowered
the RBI “to regulate, control and inspect the banks in India”. This very act
has seen to sail off Indian Banking Indusrty in the last depression wave which
hit the world (Bankrutpcy of Lehmann brothers and so on..). The very tight
control of RBI ensured that all the Indian Banks would sail off in these
dangerous waters and still be safe. This has also resulted in winning the trust
of common man about Indian Banking.
Banking in
brief;
Retail Banking
today offers a variety of products to customers to choose upon. Moreover with
the privatisation of Banks from the late 1990’s in India, the customer has
become the King. Each and every Bank now aims in excellence in Customer service
which has ushered in many more retail products other than accounts and loans.
The list includes Wealth Management (Equity/Debt), Locker facilities, Overdraft
facility, Instant Money transfers, Portfolio management, Insurance etc.
Commercial
Banking products range as the needs of the financial institutions or companies.
These include Business Loans, Capital Raising (Equity/Debt/Hybrids/Commerical
Papers), Revoloving Credit o may it be Risk Management like Forex, Commodities
or Derivatives. The recent additions seen in the list are the Cash Management
Services offered.
To put in one
sentence, Banking has, is and will be one of the important faucet of the Human
civilisation.
Before ending, I
would like to bring to your notice about another Bank with which I have been
associated for the past many years now. This Bank actually “changes your life”.
But the basic thing about ths Bank is that this bank does not revolve around MONEY
as do the other banks, though the concept is the same. You deposit and you earn
Interest. So what is exactly required? What do I have to deposit? How do I open
an account in this Bank? So many questions….
We shall exactly
see and review these questions in the next write-up and also find out more
about this bank….
