Circa 2010, your friendly neighbourhood banker will fit into the palm of your hand. She’ll go with you everywhere and she’ll help you to make every transaction as well as providing a virtual safety locker. Of course, “she” will actually be a virtual entity, an intelligent electronic construct, rather than flesh and blood.
That’s the way banking is headed. Banks are already open 24x7 and the range of transactions they enable are astounding. Whether it’s stocks, commodities, mutual funds or insurance products—your bank helps you trade it. It pays your utility bills, settles your taxes, and even offers advisory services that help you manage your savings.
All this has been driven by the power of IT and Internet access. But you still need to log into an Internet account, visit an ATM or call up phonebanking to avail the full range of services. That won’t be necessary a couple of years down the line because the next generation banking software will be more sophisticated and broadband access will be ubiquitous.
Your bank will be accessible anywhere there’s a network and your security will be guarded by biometrics: your retina pattern, thumbprint or voice.
By 2010, the bank will be a one-stop shop for anything that involves transfer of money. Everything will be done instantaneously. The bankers’ ideal will be to allow every customer to live a totally cashless existence without ever visiting a physical branch.
This IT-enabled vision will be the next stop on a long journey that started with the age-old hundi. The last few steps have come at an astonishing speed. Everybody over 30 years will remember the days of 10 am-2 pm banking with the tedious physical verification of signatures and the entry of every transaction into moth-eaten ledgers. Take a look overleaf to see the path Indian banking has traversed over the last three centuries.
1853 Mercantile Bank of India set up as the first foreign private bank in India. Later acquired by the HSBC group in 1859. Oldest surviving foreign bank in India
1861 Paper Currency Act gives government monopoly to issue currency notes
1865: Allahabad Bank opens as the first fully owned Indian bank
1876 Presidency Banks Act gives Presidency status to Bank of Bengal, Bank of Bombay and Bank of Madras. Merged into Imperial Bank in 1921
1906 Government mints coins under Coinage Act
1949 Reserve Bank of India nationalised by Parliament
1955 Imperial Bank of India renamed State Bank of India
1959 Banks of eight erstwhile princely states become subsidiaries of SBI—Bank of Bikaner, Hyderabad, Jaipur, Mysore, Indore, Saurashtra, Travancore and Patiala.
1966 Rupee devalued by 36.5% to Rs 7.50 from Rs 4.76 to $1
1978 Currency notes in denominations of Rs1, 000, Rs 5, 000 and Rs10, 000 are withdrawn from circulation to curb black money
1992 RBI introduces safety measures where banks must provision against risky assets. Dual exchange rate system instituted to enable orderly transition from a managed currency regime to a market determined one
1994 RBI issues time-based guidelines for banks to achieve minimum capital adequacy ratios. Rupee made convertible on the current account.
1995 Banks are allowed to fix own interest rates on domestic term deposits with maturity of two years.
1997 ICICI launches Net banking facilities. RBI sets guidelines on Net banking in 2001 to formalise online banking in India.
1998 Khan Committee on harmonisation of the role of development and banking institutions recommends a gradual move to universal banking. Banks allowed to sell other products like insurance and mutual funds.
1999 HDFC Bank merges with Times Bank in a Rs 200- crore deal to become a major private player
2000 Banks allowed to invest 5% of domestic credit in capital markets. Allowed to enter the insurance business through joint ventures.
2001 Senior citizens offered higher rates of interest. Revised guidelines for licensing of new private banks
2002 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance is passed to allow recovery of bad debts.
Reverse merger of ICICI Bank and ICICI to form a universal bank
2004 IDBI merges with IDBI Bank
2005 Centurion Bank merges with Bank of Punjab.
2006 United Western Bank is taken over by IDBI after RBI orders a shutdown.
Palakkad in Kerala becomes first district where every household has a bank account.
2007 Banks must conform to Basel-II accounting norms by March.
Complete banking of Kerala planned under which every household in the state to have a bank account by June