In early nineteenth century three Presidency Banks, "The Bank of Bengal", "Bank of Bombay" and "The Bank of Madras" were established.

First major event in banking history in India took place in 1919 when the presidency banks were amalgamated and ''Imperial Bank of India" was set up. Banking companies Inspection ordinance was passed in January, 1946 and in February, 1946 the Banking Companies Restriction of Branches Act was passed.

In 1949, the Banking Companies Act was passed which was later amended to read as Banking Regulation Act. On 19th July 1969, an Ordinance was issued by the Government acquiring ownership and control of 14 major banks in the country. This was done to bring commercial banks in to the main stream of economic development with definite social obligations and objectives.

Later, on 5th April 1980, six more commercial banks were nationalized. After submission of recommendations of the committee headed by M. Narasimham, a comprehensive reform of the banking system was introduced in 1992-93. The main aim of the reform measures was to ensure that the balance sheets of banks reflected their actual financial health.

In recent years there has also been considerable change in the functioning of banks. There has been an increase in the amount of technology used by these institutions e.g. some banks use cash dispensers and offer twenty four hours cash withdrawal facility, instant account details and money transfer through computer network.

Because of much more competition in the banking sector, services have to be sold in ways never done earlier. Today, customers do all their banking transactions while sitting at home. Banks are introducing Automatic Teller Machine (ATM) cards and lately, debit cards as well. This promises to change the face of banking forever.

There is a growing need for banking facilities due to nationwide growth, international trade and industrial liberalization which have all contributed to changes in the banking environment.

From the regular banking operation, termed as 'House Keeping', balancing of books and reconciliation of inter-branch and intra-branch entries of simple money transaction, commercial banks are diversifying their priorities. Merchant banks, leasing companies, mutual funds and venture capital companies have come into existence.

Commercial banks too have joined the hub of capital market activities. Hence, there has been a transformation in the services offered by banks and this has led to considerable change in the type of manpower recruited.

However, with demand of profit, in the banking industry, particularly in the international banking sector the total concept of seniority and promotion has been changed. In this scenario pay scales have gone up and the number of employees has gone down. Banks have set right their organizational structure for efficient services.

Computers have taken over and recruitment pattern has been favorable to more technical manpower. Management graduates, Chartered Accountants, Chartered Financial Analysts are hence in greater demand in the banking sector.

Presently, emphasis is on specialization and diversification. To cater to the needs of a growing industry for marketing its shares and debentures, public sector banks and financial institutions have started their own Merchant Banking divisions. Many industrial houses too have started their own Merchant Banking, companies, acting as lead managers for public issues of shares and debentures, e.g. Tata Finance etc.

Corporate and Merchant Banking: Corporate and Merchant Banking are business related activities. Corporate Banking incorporates corporate finance i.e. credit risk assessment and technical aspects such as raising capital, business mergers and acquisitions as well as all banking activities related to large organizations while Merchant Banking implies investment management e.g. management of trusts, securities, mutual and pension funds, public issue management and international funds.

Merchant Banking involves offering advisory services to corporate clients on capital structure decisions, public issue management, underwriting, raising funds through public issues and from overseas markets, project appraisals besides mergers and acquisitions. With mergers and acquisitions as well as joint ventures and alliances being formalized by corporate for the sake of expansion, opportunities for merchant bankers have grown.

Investment Banking: Investment Banking activities are associated with financial activities such as securities underwriting, markets and arranging mergers, acquisitions and restructuring. Investment Bankers work in retail banking with corporate clients and institutional banking.

These banks hold large financial assets as they manage dealer activities and in trading and distribution of securities. The function is advisory and the bank support financial activities through lending to customers using securities as collateral or for repurchase agreements where in they use their own securities.

Investment Banking is fund based and not only fee based while Merchant Banking, on the other hand, is fee based.

In India, some of the top investment Bankers are PNB Capital Services, IFCI Financial Services, IDBI Capital Markets, SBI Capital & JM Financial and Investment.

The role of Investment Banks is to participate in direct markets by bringing financial claims for sale. They operate to help businesses and governments sell their new security issues. Once the securities are sold investment bankers make secondary markets for securities as brokers and dealers. They are largely doing underwriting business.

Investment Banking can be carried on as part of the normal range of business activities. In India ICICI Bank can be regarded as an investment banking.

Treasury and forex function: With the increase in forex flow in the country and reliance of corporate on the international market in sourcing their fund requirements, the treasury and forex functions are becoming increasingly important.

Since fund management is an important determinant of success of any business, treasury management has become a very important finance function. Knowledge of global money markets and financial instruments such as deposit certificates, treasury bills, forecasting, financial management and manipulation, source evaluation and domestic and foreign currency funds has become critical for managing the treasury profit center.

Treasury and risk management ensures cost effectiveness in planning strategies in this era of deregulation.

Forex marketing technically is an inter banking activity. The job entails two major responsibilities-assessing various markets e.g. stock or money markets on behalf of the bank and customer desk to advise corporate or other banks who require foreign currency. The job entails checking on current prices, keeping abreast with policies of the regulatory bodies, analyzing past trends for making predictions and bids for forex trading. The task is affected by the high volatility of the markets and involves taking risks.

Money Market System In India

The banks functioning in India can be broadly classified into two main categories- Commercial banks and co-operative banks.

Regional Rural Banks are akin to the commercial banks in their methods of operation and organizational set up, even though the area of activity of each Regional Rural Bank is limited to specified districts and its loaning operations are restricted to specified target groups and purpose.

Commercial banks as a group are from the preponderant part of the organized banking system. These banks fall into four classes based on their method of establishment and the pattern of ownership.

The four classes are- Public sector banks, Private sector banks, Foreign banks and Regional Rural banks.

Public sector banks: The public sector banks account for about 90% of the total banking business in India. The State Bank of India is the largest commercial bank. It has close association with the Reserve Bank and by virtue of being the Bank's principal agent. It has been entrusted with the conduct of Government business at a number of its branches. The State Bank has delegated the agency functions to some of the branches of its associate banks. In recent times some of the Reserve Bank's agency functions are being entrusted to these banks also.

Private sector banks: The banks in the private sector are classifies in two categories one the old private sector banks which are essentially regional in character. The second category is new private sector banks set up after 1991 in the wake of financial sector reforms.

Foreign Banks: Foreign banks specialized in the financing of foreign trade and international banking. They also cater for the needs of internal trade and industry and to that extent form an integral part of the domestic banking system.

Regional Rural Banks: The Regional Rural Banks which are State sponsored, regionally based and rural oriented commercial banking institution appeared on the Indian banking scene in 1975. Commercial banks have been involved closely in the setting up of and provision of capital, grant of financial accommodation and extension of organizational support to the Regional Rural Banks established by them.

Scheduled banks and non-scheduled banks: Anther classification of banks which is in common usage is that of scheduled banks and non-scheduled banks, which came in to existence with the coming into force of the Reserve Bank of India Act. Scheduled banks are the banks which are included in the second schedule of the Reserve Bank of India Act and may be broadly compared to the member banks in the United States of America.

Non-Scheduled Banks are banking companies other than those included in the second scheduled to the Reserve Bank of India Act.

Industrial Development Bank of India: Industrial Development Bank of India (IDBI) established under the Industrial Development Bank of India Act, 1964, is the principal financial institution for providing credit and other facilities for development of industry, coordinating working of institutions engaged in financing, promoting or developing industries and assistance to large industrial concerns and also helping small and medium industrial concerns through banks and state-level financial institutions.

Export Import Bank of India: Export Import Bank of India was established on 1st January 1982 for financing, facilitating and promoting foreign trade in India.

National Housing Bank: National Housing Bank (NHB) started its operation from July 1998.

National Bank for Agriculture and Rural Development (NABARD): It was set up in 1982 under an Act of the Parliament by merging the Agricultural Credit Department and Rural Planning and Credit Cell of Reserve Bank of India and the entire undertaking of Agricultural Refinance and Development Corporation (ARDC).

Reserve Bank of India: RBI was established on April 1, 1935, with the basic function to regulate the issue of bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. It is the apex financial institution in India. Its Primary role is to monitor and supervise the functioning of commercial banks and the circulation of currency. The Reserve Bank Services Board conducts examinations for selecting personnel for all branches of the RBI. There are three points of entry in to the RBI - the clerical cadres, Grade A officers and Grade B officers. The candidates are tested in General English, numerical aptitude, mental ability and logical reasoning. The entry point for clerical staff is in the cash department as examiners of notes and coins. They can appear for promotional departmental examination after five years of service. They can then be promoted to the Grade A positions. In another promotional examination, clerical staff with 9-10 years of service are eligible.

SBI And Other Nationalized Banks: The Central Recruitment Board,  H/2 Shiv Sagar Estate, Dr.Annie Besant Road, Worli, Mumbai is responsible for selecting probationer officers for the branches of SBI in all parts of the country. Degree holders in the age group of 18- 26 years have to clear a written test and interview. The test is in 2 parts the format being similar to the RBI examination. The test is followed by an interview. Clerical staff is recruited through the regional boards. The eligibility and test format are the same as for PO examination.

Nationalized Commercial Banks: Commercial Banks regularly recruit probationary officers (PO). They advertise through their Banking Service Recruitment Boards (BSRB). Recruitment is carried out by a regional office of BSRB. Regional recruitment system is only a matter of administrative convenience as the selected officers get an all India exposure of work situations. Eligibility is a graduate degree in any discipline and maximum age of 28 years.

Nature Of Work

Branch Managers- They work in branch offices which can vary in size from a small branch with limited staff, to large one with a big staff. They spend time visiting customers at their offices, factories or farms and visiting large client companies. Bank managers have the responsibility for running the branch, managing their staff and for generating profits.

Banks have to compete with other banks and with other financial institutions. A good service increases business and generates profits. Hence, managers are required to know their region well, the type of customers they are catering to as well as the services they will require. They have a good knowledge of all the services the bank can offer such as personal loan schemes and saving schemes etc. Managers have to motivate their staff so that they give the customers the best possible service. Managers spend time in seeing customers for personal or business loans meeting the chief executive of a large company who wishes to increase his borrowing or he could be involved in giving his customer safe investment advice. Managers are also responsible for taking decisions regarding credit to customers by analyzing the risk and ensuring that the money is repaid. They spend time out of the office viewing properties that they have taken as security for a loan or visiting factories and businesses to see new equipment in operation, purchased from bank loan.

Staff in Banks- Staff keep moving from branch to branch on transfer and may have to change specific tasks in the same branch. Both men and women work in banks, keeping record of business, personnel accounts, installment loans, mortgages or the bank's own accounts and providing customer service such as payrolls and inventory accounting. These are the regular jobs of bank- Clerks, Typists, Secretaries, File clerks, custodians, Messengers, Receptionists and Safe Deposit Attendants. In larger banks each employee specializes in one job. In smaller institutions, responsibilities may not be too specific. For example, a transit clerk might fill in for a teller in rush hours or vacations and a messenger might take collection letters to other banks and help post interest in savings accounts pass books.

Staff, recruited through selection tests, is trained in various operational divisions of the banks. These are consumer credit department, commercial and industrial loans, security analysts, other trust departments, market research, public relation and customers services or may trained as bank tellers, transit clerks, book-keeping and other bank works. Banks have to constantly increase and sell services for competitive reasons and there is a growing field in banking for people who can do market research and plan business extension programs.

Professionals with Banks: Lawyers, engineers, agriculturists, language specialists all work in banks and there are others too. Lawyers in banks advise on laws and regulations affecting the operation of the institutions. Large banks have engineers to work with industries and businesses. In the bank, people with electronic engineering training are more in demand for planning, programming and maintaining computers and other electronic equipment. Banks may employ chemists, home economists, textile experts, teachers, personnel experts and even social scientists, depending upon the communities and customers they serve. Another very rapidly growing field for the bank employment, available for both men and women trained in modern methods of agriculture, is Agro-banking.

Work Environment: Work environment on banks located in large cities is comparable to a corporate office. Multinational banks have an elitist style both in work and conveniences.

Personal Characteristics

Most of the same aptitudes, interests and educational qualifications useful in banking are also utilized in other financial institutions such as bank clearing house associations, insurance companies, saving and loan associations, credit unions, installment loan companies, investment and mortgage houses, financial and fiscal departments of corporations and in such government institution as Reserve Bank, Life Insurance Corporation and the Export-Import Bank.

Persons joining as officers should be able to lead their team, manage and motivate staff. Communication skills in speech and writing are vital for their contact with customers and management of their staff. Managing staff need integrity and honesty in all their dealings with money, customers and staff. Integrity means more than merely being honest when handling the bank's money. Frequently, employees in banks take part in confidential transactions that should be discussed only with the customer or the appropriate bank officer.