This includes sectors such as technology, renewable energy, and biotechnology, which are essential for sustainable economic growth. The economic reforms initiated by the Government since July 1991 in the industry, trade and financial sector have led to the development of the economy. Several projects have been conceived since then and almost all the major groups in the country have announce their intentions to set-up mega projects in infrastructure sector envisaging investment of thousands of crores. This has led to a sharp growth in the Merchant Banking business in the last 2 years.
Today a merchant banker is who has the ability to merchandise that is, create or expand a need and fulfill capital requirements. The schedule by SEBI also comprises of the format of substantial forms and reports and states the fees that are required to be paid for different purposes. One of the most important things to remember is that no organization would be able to become a merchant banker until and unless they get a certificate of registration from formal merchant banking activity in india was originated in SEBI. Plus, he must get himself registered under these regulations if they want to persevere any of the merchant banker activities. Additionally, the 19th century witnessed the rise of joint-stock banks like the Punjab National Bank and the Central Bank of India, which began to serve the Indian populace. This period also saw the formation of the Indian Association in 1870, aimed at advocating for Indian interests in banking and trade.
History of Banking in India – Year by Year Breakdown
These changes aimed at promoting inclusive economic growth and adapting to the dynamic financial landscape. In the early days, banking was primarily a local affair, rooted in community trust and relationships. The introduction of formal banking institutions in the 18th century marked a significant turning point, laying the groundwork for the diverse banking landscape India boasts today.
Ancient and Medieval Banking Practices
Thus, the history of banking in India shows that with time and the needs of people, major developments have been brought about in the banking sector with an aim to prosper it. This post Independence phase was the one that led to major developments in the banking sector of India and also in the evolution of the banking sector. At the time when India got independence, all the major banks of the country were led privately which was a cause of concern as the people belonging to rural areas were still dependent on money lenders for financial assistance. They can neither undertake issue management of their own nor they act as co-manager. All good qualities in merchant bankers are difficult to be defined so elaborately.
Essay: Evolution of merchant banking in India and the future
Co-operative banks serve the banking needs of both urban and rural populations, offering services like savings and credit facilities. Prominent private sector banks in India include ICICI Bank, HDFC Bank, and Axis Bank. Nationalisation aimed to spread banking services to all regions of the country, ensuring financial inclusion and reducing regional imbalances. The government’s nationalisation campaign of 14 significant private banks in 1969 was a watershed moment in Indian banking history.
- For example, commercial banks generally accept deposits and give loans, but merchant banks only offer consultation and management for a certain charge.
- These regulations include requirements for registration, maintaining capital adequacy, and adhering to ethical standards.
- Moneylenders played a crucial role in the ancient and medieval Indian financial landscape.
- Commercial banks are permitted to report either realized or unrealized gains on their merchant-banking portfolios, as long as they are consistent in the reporting.
Post-independence, the nationalisation of banks in 1969 radically transformed the sector, focusing on inclusive growth and increasing access to financial services. The introduction of economic reforms in the 1990s further liberalised the banking sector, enabling private players to enter the market. Today, India boasts a diverse banking landscape that includes traditional banks, digital wallets, and fintech companies, shaped by technological advancements and changing consumer preferences.
These were some of the causes that hastened the increase of Merchant Banking in India. Let us also know the services that merchant banking offers to corporate and big business houses. These banks bring global expertise, diverse financial products, and an international perspective to the Indian banking sector. The government could exercise greater regulatory control over nationalised banks to ensure prudent banking practices and prevent systemic risks. Indian banks were nationalised in two phases – first in 1969 and then in 1980, rather than 1991. The nationalisation of banks in India was a significant policy move undertaken by the Indian government to address various socio-economic and developmental challenges.