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Commercial Banks:
The modern commercial banking (CB) originated in India during the 19 thand
the early 20thcenturies mainly due to the develoment o! !oreign trade and the
emergence o! the organi"ed Commercial and industrial sector#
The !oreign banks $ere the !irst banks to be established in india% and $ere
kno$n as e&change banks# '!ter $orld $ar I the domestic enterrises also
develoed $hich led to the develoment o! Indian banks#
Thus% by the late 190s the Indian banks began to dominate the !ield o!
banking#
CB tructure:
The CB structure in India is classi!ied into:
cheduled commercial banks
*on+cheduled commercial banks
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's a result o! the recent birth o! ne$ rivate sector banks% the
e&isting domestic banking system is reclassi!ied as !ollo$s:
,ublic sector banks: they are% BI - its 'ssociates and
*ationalised Banks#
,rivate ector Banks: they are: old Indian rivate sector banks%
*e$ Indian ,rivate sector banks% .oreign banks#
cheduled Banks in India constitute those banks $hich have
been included in the econd schedule o! /BI 'ct 19#
*on+cheduled Banks means a banking comany as de!ined inClauseo! ection o! the Banking /egulation 'ct 199 $hich
is not a scheduled bank#
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The Indian commercial banking system% as seen today% is brie!ly described
belo$:
/BI
,ub ector Banks (1)
BI (1): BI 'ssociates (): *ationalised Banks (19): //Bs (10)
,rivate ector Banks (32)
Indian ,vt Banks (): .oreign Banks (29)
4ld Indian ,vt Banks (20):*e$ Indian ,vt Banks (9):
*on+cheduled Banks ()
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/ole o! Commercial Banks in Industrial .inance:
The CBs too have become an imortant source o! !inance# 't resent about 05 o!
the total loans and advances granted by the CBs go to industry#
The I has been recogni"ed as a very imortant roductive sector o! the economy
deserving secial suort !rom the banking institutions# There!ore% various
concessions and !acilities have been available to this sector !rom the banks# The
!ollo$ing are the imortant !acilities granted to Is#
The I is included in the riority sector !or bank !inance#It has been directed that they should not insist on margins and guarantees !rom
borro$ers in this sector and no viable scheme should be turned do$n merely !or
$ant o! margin or collateral security#
It has been given concessional rates o! interest !or term loans as $ell as !or $orking
caital#
The reayment eriods are not !i&ed on an adhoc basis but are related to thesurlus generating caacity o! the unit#
's a !inancing institution% a develoment bank rovides !inance to industries in
various $ays# 67uity articiations% rovision o! medium and long term loans%
subscrition to bonds or debentures issued by them and guaranteeing o! loans raised
!rom !oreign or domestic sources are the usual !orms in $hich they rovide !inance#
CBs rovide various kinds o! technical and managerial assistance% undertake
economic and technical research conduct surve $ork etc#