Role of Banks in Economy

8 Pages Posted: 21 Nov 2014

See all articles by Neha Saxena

Neha Saxena

H. L. Institute of Commerce

Dr. Swati Saxena

Shri Chimanbhai Patel Institute of Management & Research

Date Written: September 6, 2014


The concept of bank in India was formalized and conceptualized in the last decades of the 18th century. The first bank in India, though conservative, was established in 1786 in Calcutta by the name of bank of Bengal. The industry saw various ups and downs with failures and with a span of long journey, in the year 1935 RBI was created. Banking industry once again witnessed a makeover with nationalisation of banks in 1969 and a policy change introducing and infusing the LPG movement in the Indian economy. Abolishing the license Raj with LPG movement, in the year 1993, twelve new private sector banks were set up. An era of change entered the Indian Banking industry by infusing the use of technology that changed the face of banks in India and the role. Banks transformed their traditional work culture to an important service provider by performing functions like project appraisal and followup of assisted projects by institutions through various instruments, such as project monitoring and report of nominee directors on the Boards of directors of assisted units. The changed face of banks with new licenses opens up wide scope for the technological industries with a new horizon of growth for the banking industry. The second aspect is the expected new employment opportunity. Thus banks have transformed themselves from a traditional venue of depositor and generating savings for industry to the support system for the global economy.

Keywords: Innovation in technology, Banking and change due to technological innovation

Suggested Citation

Saxena, Neha and Saxena, Swati, Role of Banks in Economy (September 6, 2014). Available at SSRN: or

Neha Saxena

H. L. Institute of Commerce ( email )

Navrangpura, Ahmedabad-380009

Swati Saxena (Contact Author)

Shri Chimanbhai Patel Institute of Management & Research ( email )

Opp. Karnavati Club
S G Highway
Ahmedabad, 380015

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