which operate on all india basis. there are government owned banks, privately owned banks and foreign owned banks. there are also small banks with limited areas of operation. credit cooperatives were created to cater to the credit, processing and marketing needs of small and marginal farmers organised on cooperative lines. cooperatives expanded also in urban and semi - urban areas in the form of urban cooperative banks to meet the banking and credit requirements of people with smaller means. regional rural banks were created to bring together the positive features of credit cooperatives and commercial banks and specifically address credit needs of backward sections in rural areas. further, there was an experiment of establishing local area banks, albeit on a smaller scale, to bridge the gap in credit availability and strengthen the institutional credit framework in the rural and semi - urban areas. most recently, we have decided to experiment with new types of banks under our differential licensing policy. accordingly, we have invited applications for small finance banks and payment banks. these banks will operate in their own niche areas of small finance and payments services. 4. in india, the universal banking model is followed. as regards the structure of universal banks, the conglomerate structure is bank - led, i. e., banks themselves are holding companies which operate certain businesses through subsidiaries, joint ventures and bis central bankers ’ speeches affiliates. the general principle in this regard is that para - banking activities, such as credit cards, primary dealer, leasing, hire purchase, factoring etc., can be conducted either inside the bank departmentally or outside the bank through subsidiary / joint venture / associate. activities such as insurance, stock broking, asset management, asset reconstruction, venture capital funding and infrastructure financing can be undertaken only outside the bank. lending activities must be conducted from inside the bank. investment banking services are provided by the banks as an in - house departmental activity or through subsidiary. 5. the indian banking system has grown phenomenally over the years. what has been the actual contribution of banks for mobilizing savings and engineering investments in the indian economy? the aggregate deposits which stood at just ₹ 8 billion as on march 1951, grew to ₹17 billion by march 1961, ₹59 billion by march 1971, ₹380 billion by march 1981, ₹1925 billion by march 1991, ₹9629 billion by march 2001 and ₹52080 billion by march 2011. as at end march 2014, it reached ₹85, 331 billion. the bank credit increased from ₹5 billion as at end march 1951,

r gandhi : public sector banks – at cross road speech by mr r gandhi, deputy governor of the reserve bank of india, at the “ indian psu banking industry : road ahead ” summit, organized by the bengal chamber of commerce and industry, kolkata, 10 january 2015. * * * assistance provided by ms anupam sonal is gratefully acknowledged. ladies and gentlemen! 1. it is a pleasure and privilege to be among the banking and industry participants at this conference on “ indian psu banking industry : road ahead ” organised by the bengal chamber of commerce and industry. the theme of the conference is very contemporary. in recent times, the psbs position in the banking pecking order has been seriously challenged. there are lot of churning of ideas to restore greater strength in them. i thought today i can discuss certain thoughts which i feel are very important for the psbs to seriously consider in that respect. 2. india has a real long history of banking. according to the indian central banking enquiry committee ( 1931 ), money lending activity in india could be traced back to the vedic period, i. e., 2000 to 1400 bc. the existence of professional banking in india could be traced to the 500 bc. kautilya ’ s arthashastra, dating back to 400 bc contained references to creditors, lenders and lending rates. after the independence of the country in 1947, keeping in tune with the then economic policy, banking sector was highly regulated. the public sector banking commenced in india with the nationalisation of the then imperial bank as state bank of india in 1955. one of the defining moments of indian banking industry is the bank nationalisation in 1969, when 14 private sector commercial banks were nationalised. in the aftermath of a balance of payment crisis situation in 1991and with the advent of economic reforms india embarked upon financial sector liberalization in a phased manner. banking industry was deregulated by way of allowing entry of new private sector banks ; ten new private indian banks were set up in 1993, followed by two banks in 2003. other notable features towards deregulation of banking sector included allowing 74 % foreign investment in private sector banks, doing away with licensing of branches of domestic scheduled commercial banks in a phased manner, deregulation of interest rates, widening and deepening of financial markets, etc. 3. indian banking sector comprises of different types of institutions to cater to the divergent banking needs of various sectors of the economy. there are typical commercial banks