Indian Banking Sector Review and Top 10 Banks List

The Indian banking sector is quite old in vintage, and has matured over the years. The earliest modern banks in India were established as early as 18th century. Allahabad Bank, which was established in 1865, is the oldest surviving bank in India. Punjab National Bank was started in 1895 in Lahore. Very soon, foreign banks started to arrive, and the first one was Comptoire d’Escompte de Paris, which established its first branch in India in 1860. HSBC established its first Indian branch in 1869 (the year Mahatma Gandhi was born!), and Citibank followed in 1902.

Initially, the banking sector in India remained in the domain of Europeans and industrialists. Greater participation of the general public started only in the beginning of the 20th century, and a large number of banks were established, mostly catering to specific communities. It should be noted that during all this period, the banking sector was almost exclusively in private hands.

Scheduled Banking Structure In India

After Independence in 1947, The RBI was nationalized, though the majority of other banks still remained in the private hands. India chose a socialist path for economic growth, and banks were set to play an important part in the future economic growth. The government took upon itself the onus to nurture the economy, and as a logical corollary, nationalization of banks was also mooted. The idea was actually put into practice much later, when in 1969, Indira Gandhi nationalized the top 14 commercial banks in a sudden move. Another 6 commercial banks were nationalized in 1980, giving the Government of India control over more than 90% of the Indian banking sector.

The scenario has undergone a rapid change since economic liberalization started in 1991, and a spate of private banks were established. A number of foreign banks have also come in and are doing good business here, though their principals are suffering from economic crisis everywhere else. With the much promised economic growth also beginning to manifest, the banking sector is all set to play a greater role in the Indian economy. The maturity of the Indian banking sector can be easily felt in the product range, supply and reach of the banks. The retail banking segment has grown admirably, and other banking services such as investment services and mortgages are also going strong.

Rural India still remains a challenge for the banking sector, especially for the private sector banks. The public sector banks, on the other hand, have done an admirable job in the rural segment. The regional rural banking model evolved in India is one of the best measures that the Government of India has ever taken to extend finance facilities to the rural areas.

The most positive aspects of the Indian banking sector are the admirable autonomy that RBI enjoys, and the fact that RBI has managed to separate conflicting interests, which was one of the main causes of the South-East Asian financial meltdown in the late 1990s.

Top Indian Banks 2010 List

Which are the top banks in India?

Actually, the question can have several answers. The list will differ on different parameters adopted. For example, the top 10 banks list will be different if the assets of the banks are considered, while the  list will differ if profit is the main parameter. Again, different lists will result if parameters like revenue, number of employees or number of branches are considered.

Top 10 Indian Banks in Terms of Assets

Top 10 Indian Banks in Terms of Net Income

Detailed Analysis

If you want a thoroughly detailed analysis of all the banks in India, and their ranking on different parameters such as profitability and efficiency, please refer to a definitive Best Indian Banks Survey Report prepared by Financial Express and Ernst&Young.