Page 48 - Banking Finance June 2023

ARTICLE

formally took over these responsibilities from the then
Imperial Bank of India. The Reserve Bank was nationalized
in 1947. It is responsible for development and supervision
of the constituents of Indian financial system which
comprises of banks and other non-banking financial
institutions. Indian Banking system can be displayed in a
structure as shown in Fig 2.

There is a comprehensive legal system which governs and
deals with the banking system in the country. The major
laws governing the banking operations and activities in the
country are given illustratively below.
The Reserve Bank of India Act,1934

Banking Regulation Act, 1949
State Bank of India Act 1955
The Companies Act, 1956
State Bank of India (Subsidiary Banks) Act, 1959
Fig 1. Responsibilities of Auditors
Banking Companies (Acquisitionand Transfer of
Undertakings) Act, 1970
Banking Structure in India
Regional Rural Banks Act,1976
The structure of banking system in India is created keeping
Banking Companies (Acquisitionand Transfer of
in mind the country's unique geographic, social and
Undertakings) Act, 1980
economic characteristics. The role of central banking in India
Information Technology Act, 2000
is taken care of by the Reserve Bank of India, which in 1935
Prevention of Money
Laundering Act, 2002
Securitization and
Reconstruction of Financial
Assets andEnforcement of
Security Interest Act,2002
Credit Information
Companies Regulation Act,
2005

Banking Business-
Changing Orientation
The primary business of banking
is to accept deposits and to do
lending and investment
activities. However, the
competition amongst the Banks
coupled with technology thrust
has pushed banks to look into
various additional activities.
Fig. 2- Banking Structure in India

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