Growth of Foreign Bank in India

International Journal of Trend in Scientific
Research and Development (IJTSRD)

International Open Access Journal
ISSN No: 2456 - 6470 | www.ijtsrd.com | Volume - 2 | Issue – 5
Growth of Foreign Bank in India

Suhasini Jaiswal
B.B.A, LL.B. (Hons
(Hons), Indore Institute of Law,
Indore, Madhya Pradesh, India
ABSTRACT
Finance and banking is the life blood of trade, business done in the country (deposits and advances)
commerce and industry. Now –a-days,
days, banking sector has been hovering between 5 and 7 per cent during the
acts as the backbone of modern business. In current Past decade. After the set up foreign banks in India,
faster lifestyle peoples may not do proper transitions the banking sector in India also become competitive
without developing the proper bank network. And the and accurative. A new rule is also announced by the
Indian financial sector has also incessantly faced the Reserve Bank of India for the foreign banks in India
rapid change in the banking system. And we can also in this budget have put great hopes among foreign
say that before the reform period, Indian banking banks which allow them to grow unfettered. And
industry was neither perfect nor flexible. In order to foreign banks in India are also permitted to set up
create the more diversified, efficient and the elastic local subsidiaries. There are twenty-nine
twenty foreign
banking system, in 1992, government of India banks are present in India through 273 branches and
commenced inclusive banking reforms. Foreign bank 871 offsite ATMs. Besides there
th are the 34 foreign
in India captured a large number of the customer base banks operating through representative offices. Four
due to their speedy and well organized working style are set up shop in the past one year. Standard
and better customer service. Foreign bank have also Chartered Bank, the oldest foreign bank that came to
brought the newest technology and new banking India 150 years ago, and now operate the maximum
practices to India which has helped the domestic number of the branches, 83. It is followed by HSBC,
banks to improve their performance and the provide which entered India in 1867, with 47 branches.
better the customer service. After the entry of the Citibank has the 39 branches and ABN Amro, 28
foreign bank in India, the Indian banking sector has branches. The only other banks have that the double
become more competitive and the proficient. And in digit branch presence is Deutsche, 11.
the Asia Pacific zone, India is considered to be most
leading investment market due to the growth of the List of some foreign banks in India
Indian economy and the assortment of income streams ABN-AMRO Bank
and product lines which gives them the sturdiness to Abu Dhabi Commercial Bank
grow. Foreign banks have a progressive positio
position in Bank of Ceylon
India banking system after financial reforms. BNP Paribas Bank
Citi Bank
INTRODUCTION China Trust Commercial Bank
It is well known fact that from Earliest, time in the Deutsche Bank
Indian possessed a system of indigenous banking. A HSBC
large number of foreign banks are now also keep on JPMorgan Chase Bank
opening shop in India to gain a critical mass by April, Standard Chartered Bank
2009. And when private banking space is expe
expected to Scotia Bank
open up for the foreign banks in India always brought Taib Bank
an explanation about the various prompt services to Bank of America
customers. And the share of the foreign banks in the Doha Bank
@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 5 | Jul-Aug

Aug 2018 Page: 954
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Barclays Bank Result and Discussion
DBS Bank Concept of Banking
Royal Bank of Scotland A bank is financial institution which deals with
Deutsche Bank deposits and advances and other related services. It
also receives the money from those who want to save
The story of foreign banks in India goes back to the in the form of deposits and it lends money for those
19th century when the colonial economy brought with who need it. The term bank is either derived from old
it the need for modern banking services, uniform Italian word banc or from a French word banque both
currency and remittances by British army personnel a mean a bench or the money exchange table. Now-a
and civil servants. The earliest banking institutions, days, banking sector act as the backbone of the
joint stock banks, agency houses and the presidency modern business. And we can also say that in olden
banks, established by the merchants during the East days, European money lenders or money changers
India Company regime largely catered to this growing used to show the coins of different countries in the big
need. While the agency houses and joint stock banks quantity on benches or the table for the purpose of
largely failed and disappeared, the three presidency lending or exchanging. And we can also say that the
banks would later merge to form the State Bank of bank is the establishment for the custody of money,
India, India’s largest lender. British owned and which it pays out on customer’s orders. And the bank
controlled, these early banks may be considered is the financial institution which deals with other
India’s first ‘foreign banks’. It was decades after their people’s money. A bank lends out the money in the
establishment that the first bank owned and controlled form of the loans to those who requires it for different
by Indians, the Allahabad Bank, would be established. purpose. A bank may be a firm, person or a company.
Milestone events for banking in India such as the Banks accept money from the various people in the
passing of the Reserve Bank of India (RBI) Act, 1934, form of the deposits which is the usually repayable on
the creation of the central bank in 1935, bank demand or after the expiry of a fixed period. It also
nationalization in 1969 and 1980 did not impact gives safety to the deposits of its customers. It also
foreign banks much. They adapted well to the acts as the custodian of funds of its customers. A
changing economy and retained their niche as service bank also provide the easy payment and withdrawal
providers and employers of the elite; bringing capital, facility to the customers in the form of the cheques
innovation and best practices from their home and drafts, it also brings the bank money in the
countries. circulation. And bank also includes the general utility
services and agency services. A bank is the profit
The first phase of banking reforms, triggered by seeking institution having services oriented approach.
recommendations of the Narasimhan Committee in A bank act as the connecting link between the
1991 and the licensing of the new private sector banks borrowers and lenders of the money. Banks collect the
through the next two decades inaugurated an era of money from those who have surplus money and give
change. Meanwhile, the opening-up of the economy the same to those who are in the need of the money.
to increased participation by foreign players created
greater opportunities for foreign banks to work with History of Banking
their multinational clients in India. In the more recent The origin of western type commercial Banking in
past, foreign banks have followed Indian corporate India dates back to the 18th century. The story of
entities in their outbound expansions. The survival of banking starts from Bank of Hindustan established
the banking system in India through the financial in 1770 and it was first bank at Calcutta under
crisis has demonstrated its strengths and most foreign European management. It was liquidated in 1830-32.
banks present in India believe that India is a market From Bank of Hindustan in 1770, the evolution of
with undeniable potential. However, like their banking in India can be divided into three different
predecessors, they continue to look for the best periods as follows:
possible role they can play amidst the challenging Phase I: Early phase of primitive Indian banks to
political economy, heightened competition and Nationalization of Banks in 1969
changing financial services regulations. 1 Phase II: From Nationalization of India banks in
1969 up to advent of liberalization and banking
reforms in 1991
1
www.pwc.in
@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 5 | Jul-Aug 2018 Page: 955
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Phase III: From Indian Financial and Banking Enhanced provision of foreign currency to
Sector Reforms 1991 onward corporation.
Foreign banks participation in foreign exchange
In 1786 General Bank of India was set up. and money market contribute for deepening of
financial system.
Since Calcutta was the most active trading port in
India, mainly due to the trade of the British Empire, it Reason for foreign bank enter in India
became a banking centre. Three Presidency banks India’s GDP is seen growing at a robust pace of
were set up under charters from the British East India round 7% over the next few years, throwing up
Company- Bank of Calcutta, Bank of Bombay and the opportunities for the banking sector to profit from.
Bank of Madras. These worked as quasi central banks The credit of banks has risen by over 25% in
in India for many years. 2004-05 and the growth momentum is expected to
continue over the next four to five years.
The Bank of Calcutta established in 1806 immediately Participation in the growth curve of the Indian
became Bank of Bengal. In 1921 these 3 banks economy in the next four years will provide
merged with each other and Imperial Bank of foreign banks a launch pad for greater business
India got birth. Imperial Bank of India was later expansion when they get more freedom after April
renamed in 1955 as the State Bank of India. Thus, 2009.
State bank of India is the oldest bank of in India. In RBI is following a liberal branch licensing policy
1839, there was a fruitless effort by Indian merchants for those foreign banks who want to go to the
to establish a Bank called Union Bank. It failed within unbaked pockets. They have started sensing
a decade. Next came Allahabad Bank which was enormous business opportunities in financing
established in 1865 and working even today. The trade and small and medium sectors in small
oldest Public sector Bank in India having branches all towns in the worlds second fastest growing
over India and serving the customers for the last 145 economy.3
years is Allahabad Bank. Allahabad bank is also
known as one of India’s Oldest Joint Stock Bank. Conclusion
However, the Oldest Joint Stock bank of India was Foreign Banks in India always brought an explanation
Bank of Upper India established in 1863 and failed in about the prompt services to customers. After the set
1913. up foreign banks in India, the banking sector in India
also become competitive and accurate. The history of
The first Bank of India with limited Liability to be Indian banking system is associated with foreign
managed by Indian Board was Oudh Commercial banks. The post 1990 economic liberalization period
Bank. It was established in 1881 at Faizabad. This in India resulted in increasing number of foreign bank
bank failed in 1958. The first bank purely managed by operations. Foreign banks contributed to the banking
Indians was Punjab National Bank, established in sector and entire economy. The growth in Indian
Lahore in 1895. The Punjab national Bank has not economy coupled with emerging educated middle
only survived till date but also is one of the largest class showed that the banking sector could have
banks in India. However, the first Indian commercial further potential for foreign banks in India. Though
bank which was wholly owned and managed by their advantage foreign bank has been criticized for
Indians was Central Bank of India which was their profit supremacy over social banking.
established in 1911. So, Central Bank of India is
called India’s First Truly Swadeshi Bank. 2 References
Websites Referred:
The Role of foreign bank in India 1. www.pwc.in
Enhance the competition in the banking sector. 2. www.gktoday.in
Technology and skill transfer. 3. www.indianmba.com
Both Foreign and local banks has been investing 4. www.thehindubusinessline.com.
on finical innovation.
Modern banking services expanded.
2 3
www.gktoday.in www.indianmba.com
@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 5 | Jul-Aug 2018 Page: 956

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International Journal of Trend in Scientific

Research and Development (IJTSRD)

Growth of Foreign Bank in India

@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 5 | Jul-Aug

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