Banking in India : Origin & Evolution

The banking industry has over the years evolved from simple to large and complex organization. They have grown from one street building into having multiple branches some of which are international. Their clients range from individual and institutions to governments and other banks. Banks do not manufacture physical things. Their work is simply services for money (Koch & MacDonald 2010). Such services include storing, lending and managing money. All people and institutions, as well as governments, need money to operate accordingly.

The history of central banking in America is a very interesting topic that carries a direct impact on today’s banking. The paper focuses on how the centralized banking system started with special emphasis on the First and the Second banks of America and the inception of the Federal banking system. Highlighted also are the circumstances that led to the established of the financial organs alongside the relevance of the Federal Reserve today (Fischer, 2015). The topic directly impacts on how financial crisis and all the economic challenges are being handled today. The Federal Reserve is still the one which regulates all the fiscal activities of America. The Federal Reserve refers to the centralized banking organization of America. The banking system was established early in the 20th century through the adoption of the Federal Reserve legislation. The inception of the central system was majorly triggered by a sequence of fiscal worries specifically the famous 1907 fright. The Federal Reserve Act had notably passed through several hearings, debates alongside changes and was upheld by the majority in the congress. The Federal Reserve System came as the third central banking system of America, after the first and the second banks of America (Bordo, 2015).

✓ Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single

These banks should ideally be divested of any sort of commercial interest, and must act in the best interest of its nation’s economic stability. A lot of meaning is carried out in being identified as ‘independent’ authority, where the bank possess powers to take its own decisions, approve its own legislature, follow its own policies and offer stability to the nation’s economy.

Banking can be defined as the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit. The invention of banking came before coinage. Banking originated in ancient Mesopotamia where people used to bank their grains for safe keeping and security provided by the royal palaces and temples. Thus people would take their grains or commodities to the royal place or temple for safe keeping and receipts would be given to the original debtors and also to third parties. This type of banking was basically done almost all over the world, eventually rules and regulations were introduced.

Banking can be defined as a process through which the finances of a country is controlled and created. These finances are loaned to gain profit through interest. In recent times banks perform varied functions like ATM cards, safeguarding of valuable things, providing lockers, credit cards and online banking. Banks and banking Katy and in other American cities has helped the world economy. The simple method of safeguarding money and lending it to the borrowers leads to a productive flow of money. This process has helped in the development of economies of varied countries.

The banking industry is a huge sector of business and finance that has existed in human civilization in some form for thousands of years. In the modern world, banks/financial institutions have become foundations of our economy for several reasons. They transfer risk, provide liquidity, facilitate both major and minor transactions and provide financial information to individuals and organizations.

Similar to other countries across the globe, banks are important aspects of the financial system and sector in the United States. This is largely because they contribute to the growth and development of the country's economy as they contribute to the payment mechanism and credit system throughout the nation. As a result of the contribution they make to the economic growth and development of the United States, banks are among the most regulated firms in the country. Given that the United States began as a confederation of constituent states, the regulation of banks in the country developed in a unique manner. This has led to the dual regulatory system for banks in states and federal government charters.

The banking system and ways that people can withdraw and/or spend their money has changed over the years and continues to do so. People originally made payments with physical money which moved onto credit cards, debit cards and contactless cards (Lambert, 2011). From 1971 electronic commerce appeared which brought along digital wallets like Paypal (van Ketel and Nelson, 2005).The banking system, includes commercial, investment and national central banks, has also been changing. Exposed weaknesses have been exploited and created

• Ensuring that the parent bank or bank holding organization have set up proper controls over bookkeeping and different frameworks, including catastrophe recuperation programs identified with the protection deals line of business

Economic Development: Banks facilitate the development of saving plans and are instruments of the government’s monetary strategic policies among others. They also provide credit provision, liquidity provision, and risk management services, remittance of money, rapid economic development, and promotion of

The idea of Banking was germinated due to the need to formalize a loan that was until 2000 BC more or less informal (barter system). People, who were wealthy, loaned out a certain sum to the needy in return for some valuable (later, gold) that would be kept as a deposit. This phenomenon existed worldwide and this was the advent of banking (in isolation). This form of banking was dominated by few individuals, mostly merchants.

Banks also play an integral role in society, affecting not only spending by individual consumers, but also the growth of entire industries. A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. Banking means engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc.

There is acute shortage of capital and led People lack initiative and enterprise. Means of transport are undeveloped and Industry is also depressed. Keeping this in view, commercial banks play a major role by lending hand in overcoming these obstacles and promoting economic development

From the very beginning of the bank history, we already know that the main operation of bank is to take loan and to make deposit. Since the first bank established in 12th century, bank is no more a simple institution where we exchange money but an agency considered to be speculative and hopeful. There is no doubt that the prosperity in modern society benefits a lot from the development of commercial activities, where bank plays a main role in. People make money through work or investment. So they divide their income into two major parts : one part is considered as profit ,with which people may consume or do reinvestment or put it