Development Banks – 01
Punjab National Bank
Punjab National Bank, abbreviated as PNB, is banking and financial service bank owned by the Government of India with its headquarters is in New Delhi, India. The bank was founded in 1894 and is the second largest public sector bank (PSB) in India, both in terms of business and its network. It was the first Swadeshi bank set up with the spirit of nationalism and the first bank purely managed by Indians and Indian capital. It was nationalised in 1969 along with other banks. It has an International branch in UK. Recently it was merged with Oriental Branch of Commerce and Union Bank.
Other nationalized banks
The New Bank of India was merged with Punjab National Bank in 1993. Then the total number of nationalised bank came to 19. In 2020, there were 18 public sector banks in India. The government is recently going for bank mergers and amalgamation of PSBs.
The government is going for merger of large PSB in order to improve its efficiency and reduce the NPA crisis. 10 PSB has been merged into 4 paving the way for the largest consolidation among state owned banks.
- Punjab National bank will take over Oriental bank of Commerce and Union Bank.
- Canara bank will take over Syndicate bank.
- Union bank of India will take over Andhra Bank and Cooperation bank.
- Indian bank will be merged with Allahabad bank.
After the mergers now the total PSB are 12:
- State bank of India
- Punjab National Bank
- Bank of Baroda
- Canara bank
- Union bank of India
- Indian bank
- Bank of Maharashtra
- Punjab and Sindh bank
- Indian Overseas bank
- United Commercial bank
- Central Bank of India
- Bank of India
Development banks are those financial institutions which provide long term capital for industries and agriculture. Industrial Finance Corporations of India (IFCI), Industrial Development Bank of India (IDBI), Industrial Credit and Investment Corporation of India (ICICI) that was merged with the ICICI bank in 2000. Industrial Investment Bank of India (IIBI), Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD), Export Import Bank of India, National Housing Bank (NHB).
The commercial banking network essentially catered to the needs of general banking and for meeting the short-term working capital requirements of industry and agriculture. Specialised development financial institutions (DFIs) such as the IDBI, NABARD, NHB and SIDBI, etc. with majority ownership of the Reserve Bank were set up to meet the long-term financing requirements of industry and agriculture. To facilitate the growth of these institutions, a mechanism to provide concessional finance to these institutions was also put in place by the Reserve Bank. Government utilized the institutions for the achievements in planning and development of the nation as a whole.
S.H. Khan Committee appointed by RBI (1997) recommended transforming the DFI (Development Finance institutions) into universal banks that can provide a menu of financial services and leverage on their assets and talent.
Co-operative bank established by structural lines registered under the co-operative societies Act 1912. Co-operative Banks are organised and managed on the principle of co-operation, self-help and mutual help. Co-operative banks, as a principle, do not pursue the goal of profit maximisation. Co-operative bank performs all the main banking functions of deposit mobilisation, supply of credit and provision of remittance facilities. It provides limited banking products and is functionally specialists in agriculture related products. However, co-operative banks are now providing housing loans also. Co-operative Banks belong the money as well as to the capital market – they offer short term and long term loans.
Urban Co-operative Banks (UCBs) are located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today. Earlier, they essentially lent to small borrowers and businesses. Today, their scope of operations has widened considerably. Urban CBs provide working capital, loans and term loan as well.
Primary agricultural credit societies provide short term and medium term loans. These Co-operative banks operate at Village level. They provide short term loan to agriculture (1 year to 3 years).