The reform models

In 1791, the Congress chartered the first bank. Initially, only states were allowed to float banks. But in 1837, when the industry was opened to all, their numbers shot up from 24 to 712. About half of them failed, prompting the Government to create a system of national banks, with more stringent norms. There were more instances of banking panics because of over-lending, inadequate reserves, which led to the creation of the Federal Reserve. In the 1930s, commercial banks were banned from the securities and the insurance business.

Deregulation started in the 1980s. Interstate banking was allowed in 1985; in 1999, banks were allowed back in the securities and insurance business; interest rates plunged; global banking and capital market services proliferated. All this, and the rush for size, sparked of a spree of M&As, leading to the big getting bigger. The biggest of them in the US: Citigroup, with $1,494 of assets.

United Kingdom

Brazil

The country's oldest surviving bank is Banco do Brasil, founded in 1808. The bank was the monetary authority till 1967, when it passed on this function to the

Central Bank of Brazil. There were once about 340 commercial banks in Brazil, but subsequent reforms reduced their numbers significantly.

Restructuring took place in three stages, beginning 1994. The first phase was characterised by state intervention and liquidation. In the second phase, restructuring of private and state-owned banks took place, with the objective of strengthening the banking system and reducing the role of the state. The third phase marked the entry of foreign banks.

Reaching out to the unbanked

Sweet deal. ICICI offers DSCL’s supplier-farmers a line of credit, at 9-9.5 per cent, against their produce. DSCL knows how much cane a farmer supplies, based on which ICICI sets a credit limit for him. Of every Rs 100 spent by him, he has to...