Over the years, India has emerged to become one of the major economies in the world. The recent economic slowdown has proved the integrity of the Indian economy as the country, compared to the other countries in the world, suffered less during the recession. The Indian banking and financial sector has played a very crucial role in strengthening the economic base of the country.
In a country like India, the banking sector plays a very crucial role in helping the Government in employing its monetary policies. As a result, India has one of the advanced and organized banking sectors in the world.
History of Indian Banking Industry
The banking sector of the country has an extensive history that is spread over a period of 200 years. The first generation Indian banks came into being during the concluding years of the 18th century. The General Bank of India (1786) and the Bank of Hindustan (1790) were the first two Indian banks. State Bank of India, which is regarded as the oldest functioning bank in India, commenced operations in 1806 in Calcutta by the name of The Bank of Bengal. It was one of the three Presidency banks established under the charter from the British East India Company. During the initial phase of Indian banking industry, Calcutta had remained the most thriving destination mainly because it was the busiest port of British India at that time.
Before 1947, the private and foreign banks remained the major players in the Indian banking sector. There was no regulatory authority to exert control over the activities of banks. As a result, the Indian government decided to take control over the banks to stabilize the economic condition of the nation after independence. The Reserve Bank of India was nationalized during 1949. The Reserve Bank of India or the RBI acts as the central bank of the country and is responsible for monitoring and managing both the inflow and outflow of money in the country. The Banking Regulation Act of 1948 also ensured that no bank can be established without availing license from the RBI. In 1969, 14 banks were nationalized and were brought under the direct purview of the government.
The liberalization policies of the Government introduced in 1990 once more opened the banking sector for both private and foreign players. As a result, there are currently 31 private sector banks and 38 foreign banks operative in India. More are awaiting the green signal from the RBI to enter the market.
Current scenario of Indian banking sector
Today, the banking sector of India is also regarded as one of the major industries which create a significant number of employments for the youths. Following is a list of the major public, private, and international banks operating in the country:
- Allahabad Bank
- Andhra Bank
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Oriental Bank of Commerce
- Punjab & Sind Bank
- Punjab National Bank
- State Bank of India
- State Bank of Bikaner & Jaipur
- State Bank of Hyderabad
- State Bank of Indore
- State Bank of Mysore
- State Bank of Saurashtra
- State Bank of Travancore
- State Bank of Patiala
- Syndicate Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
Private sector banks
- Axis Bank
- Bank of Rajasthan
- City Union Bank
- Development Credit Bank
- Dhanalakshmi Bank
- Federal Bank
- HDFC Bank
- ICICI Bank
- IndusInd Bank
- ING Vysya Bank
- Jammu and Kashmir Bank
- Karnataka Bank
- Karur Vysya Bank
- Kotak Mahindra Bank
- Lakshmi Vilas Bank
- South Indian Bank
- United Western Bank
- UTI Bank
- Yes Bank
Foreign banks in India
- Abu Dhabi Commercial Bank
- American Express Bank Ltd.
- Bank of America
- Bank of Ceylon
- Barclays Bank PLC
- BNP Paribas Bank
- China Trust Commercial Bank
- Deutsche Bank
- HSBC (The Hongkong and Shanghai Banking Corporation Limited)
- JPMorgan Chase Bank
- Standard Chartered Bank
- Royal Bank of Scotland
The present scenario of the banking sector of India seems quite positive. The revenue earning of the banks has shown steady growth rate over the years. The first quarter of the financial year (FY) 2011-12 shows that revenue earning of Indian banks has grown by 25%.
Similar to the banking sector in India, the insurance industry of India also has a long tradition. Over the years, it has gone through many transitions to emerge as a modern insurance sector. The first insurance company to do business in India was the Oriental Life Insurance Company, which was established in 1818 in Kolkata by Anita Bhavsar. The oldest insurance company which is still into business in India is the National Insurance Company Ltd., which became operative in the year 1906. The Indian Government nationalized the life insurance sector in the year 1956 and the Life Insurance Corporation of India (LICI) came into existence. Till the year 1999 when the government allowed private and foreign investment in the insurance sector, the LICI enjoyed absolute monopoly in the life insurance industry of India. It is still a key player in the industry though it’s facing tough competition from the new entrants in the market. The competition from foreign and private insurance companies has compelled the Life Insurance Corporation of India to diversify its business and introduce more modern insurance policies such as market-linked plans for customers. The general insurance business was also nationalized in 1973 and all general insurers were amalgamated under four groups of companies:
- National Insurance Company Ltd.
- New India Assurance Company Ltd.
- Oriental Insurance Company Ltd.
- United India Insurance Company Ltd.
The current trends of the insurance industry are looking very positive. Compared to the developed countries like USA, only 2% of the Indian population is covered under insurance policies. This implies a large section is yet to receive the benefits of insurance thus allowing the insurance companies to penetrate into the virgin market. According to the recent available data, the number of life policies has increased 12-fold whereas the growth rate for health policies has been 25-fold in the current year. According to the report published by IRDA (Insurance Regulatory and Development Authority), the first year premium collection by 23 life insurance companies stood at INR 18,282.86 crore (US$ 4.1 billion) during April-June 2011. The industry experts are anticipating premium earning by the insurance companies to grow by US$ 350-400 billion in 2020. As a consequence, the Indian insurance industry is also expected to grow to become a key employment generator in the country.
Major life insurance companies in India
- Life Insurance Corporation of India
- Aviva Life Insurance Co. India Pvt. Ltd.
- Bajaj Allianz Life Insurance Company Limited
- Bharti AXA Life Insurance
- Birla Sun Life Insurance Co. Ltd
- Future Generali Life Insurance
- HDFC Standard life Insurance Co. Ltd
- ICICI Prudential Life Insurance Co. Ltd.
- ING Vysya Life Insurance Company Ltd.
- Max New York Life Insurance Co. Ltd
- Met Life India Insurance Company Ltd.
- Kotak Mahindra Old Mutual Life Insurance Limited
- SBI Life Insurance Co. Ltd
- Reliance Life Insurance Company Limited
- Tata AIG Life Insurance Company Limited
Other articles on Banking and Insurance Industry