Sunil Gupta, is the General Manager of a well-known bank. One day he was discussing the banking industry. He said that until a few years ago, banking was a profitable industry. But now it is not so. The main reason for this is the big change that has taken place in the government's policies. As a result of the changes effected in the policies, several new banks have entered the market. Not only this, several foreign banks also are gradually stretching out comfortably. Mr Gupta said that because of these reasons, the banking industry is no longer so profitable. Which particular point of effect on business and industry due to the change in government policies, do you learn about through the above event?
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Modern banking in India originated in the last decade of the 18th century. Among the first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829–32; and the General Bank of India, established in 1786 but failed in 1791.[1][2][3][4]
The largest and the oldest bank which is still in existence is the State Bank of India (SBI). It originated and started working as the Bank of Calcutta in mid-June 1806. In 1809, it was renamed as the Bank of Bengal. This was one of the three banks founded by a presidency government, the other two were the Bank of Bombay in 1840 and the Bank of Madras in 1843. The three banks were merged in 1921 to form the Imperial Bank of India, which upon India's independence, became the State Bank of India in 1955. For many years, the presidency banks had acted as quasi-central banks, as did their successors, until the Reserve Bank of India[5] was established in 1935, under the Reserve Bank of India Act, 1934.[6][7]
In 1960, the State Banks of India was given control of eight state-associated banks under the State Bank of India (Subsidiary Banks) Act, 1959. These are now called its associate banks.[6] In 1969, the Government of India nationalised 14 major private banks; one of the big banks was Bank of India. In 1980, 6 more private banks were nationalised.[8] These nationalised banks are the majority of lenders in the Indian economy. They dominate the banking sector because of their large size and widespread networks.[9]
The Indian banking sector is broadly classified into scheduled and non-scheduled banks. The scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India Act, 1934. The scheduled banks are further classified into: nationalised banks; State Bank of India and its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks.[7] The SBI has merged its Associate banks into itself to create the largest Bank in India on 1 April 2017. With this merger SBI has a global ranking of 236 on Fortune 500 index. The term commercial banks refers to both scheduled and non-scheduled commercial banks regulated under the Banking Regulation Act, 1949.[10]
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Sunil Gupta, the Edward W. Carter professor of business administration at Harvard Business School (HBS), US, was in Mumbai last month in connection with the executive education programme he will conduct in August at the HBS premises in the city. Prof. Gupta has taught courses on digital marketing strategy at HBS, and is currently researching the impact of digital technology on consumer behaviour and company strategy.
He spoke to us about how digital marketing is affecting companies, and why this division is treated as a start-up within organizations. Edited excerpts:
What are the two biggest myths of digital marketing?
There is a lot of excitement about social media and viral networks, but all the research is fuzzy as to whether it pays off or not. I had the chief digital officer of Coke (Coca-Cola) come to my class at Harvard. He was pleased that Coke had 40 million “likes" on Facebook. I said, “What’s the big deal? I can go to India and buy you another 40 million likes!" So marketers are now going back to traditional metrics like impact on sales.