The Banking Sector Of Indi Should Banks Be Privatized? Essay

The Bank of the United States was designed to make money and build an economy. It was designed by men like Alexander Hamilton and Robert Morris, but did not benefit the common citizen as much as wealthy investors. Why did a fledgling government need to borrow millions from overseas in order to invest in a “national” bank, to turn around and then borrow the same money back and pay interest on it? The banking system developed by Alexander Hamilton and Robert Morris was prime pickings for speculators, and laid the groundwork for a history of unscrupulous activity regarding our nation’s money supply that continues to this day. The signatures on the Constitution were barely dry before corruption and

Even before the creation of the Federal Reserve, banks were used by the public just as we use them today. Deposits were made into savings accounts. Loans were taken out to mortgage a home or finance a new business. Banknotes were issued and spent when the public borrowed from the banks. Borrowers spent these banknotes just as paper money is spent today. These bank notes were valued as money since they were backed by the promise that they would be exchanged on demand for either gold or silver.

In 1811, when the first bank of the United States concluded, many banknotes were distributed, but banks were not keeping enough silver and gold to collect when requested. Large number of notes were handed out with different values and collections all at the same time as a result counterfeiting was easy. Congress handled and funded the second bank of the United States in 1816 which were allowed the state bank to issue money but its amount did not authorize

The twenty year charter placed on the First Bank of the United States was done to quell/mitigate the worries of many Americans that a national bank was unconstitutional and would provide too much power to the central government, because once the twenty year period is up, the American people and congress can evaluate the bank’s performance and decide if it served all of its purpose accordingly, and if not, they could choose to not renew the charter for the bank. This exact mechanism/method of mitigating corruption was placed on the Second Bank of the United States, and at the end of its twenty year charter, it was clear that the bank had served to regulate and stabilize the United States’ economy by providing loans to citizens to start businesses, farms, plantations, providing opportunities for international investments and profits; which all served to strengthened the national economy and defense of the

Congress granted the charter for a national bank that would be for 20 years in 1791. It was most likely because George Washington supported the bank, it got the charter which would be headquartered in Philadelphia. However, the president hesitantly signed the charter in realization that a bank was essential for the nation's economic

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.

During the twenty years it was in place the First Bank did change the economic downturn of the country after the war. The First Bank had branches in eight influential port cities and had a wide geographic existence. It influenced the lending policies of the state banks’ lending practices. The First Bank was like the state banks in that it made business loans, accepted deposits, and issued notes that circulated as currency and were convertible into gold or silver. But it differed from the state banks because its

The concept, function, and regulation of a physical currency whether coin or bill, falls under the control of the banks and government of the nation. In the case of Britain, several acts known collectively as the Grenville Acts became notorious for being a catalyst to the American Revolution. Searching for a form of prevention from use of valueless coinage for payment of debts, one act, known as the Currency Act of 1764, disallowed the minting of currency within the British colonies. (Selesky 293). Many problems arose, but in the short-term, a solution had been created to satisfy the needs of the empire temporarily as they progressed in terms of technology and geopolitical power. Along with the many decrees and orders of the government came the bankers, organizations of financially suited individuals who could very well be given the title for consolidating funds into an infrastructure for the whole of Europe! Prior to the 1800s banks privatized ownership and provided long-term loans and more, allowing for the grassroots of infrastructure to develop in Britain. Conveying the role of banks in infrastructure, Philip Cottrell mentions that “security issues [funds for projects] enabled infrastructure… in Europe starting in the 1830s and around the world in the 1850s” (COTTRELL 170). The arrival of a new era of technology and infrastructure in the 19th century brought also a need for financial security and management; aptly put

The First Bank of the United States was established in 1791 by Alexander Hamilton to serve as a central bank for the country to store government funds, to collect taxes, and to issue a standard form of currency. The bank was also established because of the enormous debt from the Revolutionary War. The Second Bank of the United States was chartered in 1816 by the Congress and was supplied one-fifth of its funds of $35 million with the same responsibilities and powers as the First Bank. However, the Second Bank did not enjoy the limited success of the First Bank. The Second Bank was put with poor management. The Bank was supposed to maintain a currency principle, but instead the ratio moved around between 12 and 65 percent. It also quickly divided

Issuing currency was not just limited to the banks now there were many other industries that could as well such as the railroad industry. These issues of banknotes created some major problems. One problem was that because of the different currency there was different sizes and designs on them which made them confusing to read at times. Another problem was that many of the notes traded at a discount, this means that it trades for less than its face value. The amount that the note would be discounted was determined by two key factors. The first was the distance between the issuing bank and the paying bank. The second was the perception the paying bank had about the issuing bank. To try to bring some standard to this, printers would publish banknote reporters. These banknote reporters would allow businessmen to have a better way of measuring the value of the currency that was out there (Philadelphia). Even though there were these banknotes it was still

The Commonwealth Bank was created in 1911 under the Commonwealth Bank Act. It was empowered to conduct both savings and general banking business supported by a Federal government guarantee. The Commonwealth Bank became the first bank involved in both trading and savings bank activities (Peat Marwick 1985:2). The Commonwealth Bank did not specifically have a central banking remit and it was not responsible for note issue, instead it was established as a vehicle to provide competition for commercial banks and to keep accounts of the Commonwealth government.

The Bank of the United States is a symbol of the long held American fear of centralization and government control. The bank was an attempt to bring some stability and control and was successful at doing this. However, both times the bank was chartered, forces within the economy ultimately destroyed it. The fear of centralization and control was ultimately detrimental to the U.S. economy.

Indian Banking System: For the past three decades India's banking system has several outstanding achievements to its credit. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

Simply putting, banks accept deposits from public; keep some of those deposits with them and lend the rest to businesses and individuals. Businesses and individuals in turn pay interest on

Sparing cash in India in the present day sense began in the latest numerous years of the eighteenth century. The among the first banks were Bank of Hindustan, which implicit 1770 and traded in 1829-32; and General Bank of India, secured 1786 yet failed in 1791. The greatest bank, and the most settled still in vicinity, is the State Bank of India. It started as the Bank of Calcutta in June 1806. In 1809, it was renamed as the Bank of Bengal. This was one of the three banks backed by an organization government, the other two were the Bank of Bombay and the Bank of Madras. The three banks were merged in 1921 to structure the Imperial Bank of India, which upon India 's opportunity, transformed into the State Bank of India in 1955. For quite a while the organization banks had gone about as semi national banks, as did their successors, until the Reserve Bank of India was made in 1935, under the Reserve Bank of India Act, 1934. In 1960, the State Banks of India was given control of eight state-related banks under the State Bank of India (Subsidiary Banks) Act, 1959. These are presently called its accomplice banks.