International Day of Banks 2024: Date, History and Significance

The International Day of Banks, celebrated annually on December 4, highlights the crucial role that banks play in driving sustainable growth, improving living standards, and stabilizing economies. In India, despite enduring challenges like geopolitical tensions, the banking and financial sectors have demonstrated remarkable resilience and adaptability.

History and Significance

The United Nations General Assembly (UNGA) officially designated December 4 as the International Day of Banks through resolution 74/245 on December 19, 2019. This resolution recognizes the pivotal contributions of multilateral development banks and international development institutions in financing sustainable development and sharing essential knowledge and expertise.

The day also emphasizes the indispensable role of domestic banking systems in Member States, particularly their ability to uplift living standards. According to the UN website, banks act as vital enablers for fostering economic stability and growth by ensuring access to financial resources and enhancing economic opportunities.

Banking Sector in India: A Beacon of Stability and Growth

The Indian banking sector has emerged as a cornerstone of economic resilience, showcasing strong performance indicators even amidst global uncertainties. The following factors have contributed to the sector’s success:

1. Enhanced Asset Quality

Indian banks have demonstrated a significant improvement in asset quality, attributed to:

• Improved borrower selection processes.
• More effective mechanisms for debt recovery.
• Greater awareness of debt obligations among large borrowers.

2. Strengthened Governance and Transparency

The focus on qualitative aspects such as enhanced disclosures, robust codes of conduct, and transparent governance structures has strengthened the trust in India’s banking system.

3. Regulatory Support from RBI and the Government

The Reserve Bank of India (RBI) and the Government of India have implemented macro- and micro-prudential measures, ensuring the banking system’s stability. These measures include:

• Increased risk absorption capacity.
• Stringent capital and liquidity requirements.

This robust framework ensures that Indian banks remain resilient even during challenging economic cycles.

Role of the RBI in Strengthening Banking Systems

The Reserve Bank of India (RBI) has played a pivotal role in ensuring the stability and efficiency of the banking system. Established under the Reserve Bank of India Act, 1934, its objectives include:

• Regulating currency and reserves to maintain monetary stability.
• Managing the credit system for the nation’s advantage.
• Operating within a modern monetary policy framework to address the complexities of an evolving economy.

By consistently implementing innovative policies, the RBI has ensured that Indian banks remain prepared to navigate both domestic and international challenges.

Indian Capital Markets: A Reflection of Economic Strength

India’s capital markets have emerged as a global powerhouse, supported by a robust primary market. With a stock market capitalization-to-GDP ratio ranked fifth globally, India has positioned itself as a key player in global financial markets.

Impressive Fund Mobilisation in FY24

During Financial Year 2023-24 (FY24), the Indian primary market facilitated capital formation worth ₹10.9 lakh crore, marking a significant growth from ₹9.3 lakh crore in FY23. Key highlights include:

• A 24.9% increase in equity-based fundraising.
• A 12.1% rise in debt mobilization.
• A staggering 513.6% growth in hybrid fundraising methods.

This robust capital formation underscores the confidence investors and stakeholders have in the Indian financial ecosystem.

Significance of Indian Banks in Global and Domestic Contexts

India’s banking system holds strategic importance in both domestic and international contexts.

1. Maritime Financing and Trade Security: Banks play a pivotal role in securing India’s trade routes and boosting the economy’s global footprint.
2. Economic Inclusivity: By funding sustainable projects and offering access to credit in rural and underserved regions, banks help bridge economic disparities.
3. Crisis Management: Whether during financial crises or natural disasters, Indian banks have consistently proven their ability to safeguard national economic stability.

Key Takeaways

• The International Day of Banks celebrates the transformative role of banking institutions in enabling sustainable development.
• In India, asset quality improvements, governance reforms, and regulatory frameworks have strengthened the banking system’s resilience.
• The RBI continues to lead the charge in enhancing monetary stability and financial inclusivity.
• India’s capital markets and their strong performance in FY24 highlight the growing strength of the economy.

As we celebrate International Day of Banks 2024, the focus remains on acknowledging the banking sector’s contributions while envisioning a future where banks play an even greater role in driving inclusive and sustainable growth.

Summary of the News: International Day of Banks 2024

Category	Details
Why in News	The International Day of Banks, celebrated on December 4, recognizes the vital role of banks in sustainable growth, improving living standards, and economic stability.
History and Significance	– Established by UNGA Resolution 74/245 on December 19, 2019. – Highlights contributions of multilateral development banks in financing sustainable development. – Recognizes the role of domestic banking systems in fostering economic growth and improving living standards.
Performance of Indian Banks	– Improved asset quality due to better borrower selection, debt recovery, and awareness among borrowers. – Focus on governance with transparency, robust codes of conduct, and enhanced disclosures.
Regulatory Support	– RBI and Government introduced macro- and micro-prudential measures. – Increased risk absorption and stringent capital/liquidity requirements ensure stability.
Role of RBI	– Ensures monetary stability under the RBI Act, 1934. – Manages currency and credit systems for the nation’s advantage. – Implements a modern monetary policy framework for economic complexities.
Capital Market Strength	– India’s stock market capitalization-to-GDP ratio ranks fifth globally. – Primary market capital formation reached ₹10.9 lakh crore in FY24 (up from ₹9.3 lakh crore in FY23). – Fundraising growth: Equity (+24.9%), Debt (+12.1%), and Hybrid (+513.6%).
Global and Domestic Importance	– Maritime Financing: Secures trade routes and boosts the global footprint. – Economic Inclusivity: Funds rural/underserved projects and bridges economic disparities. – Crisis Management: Proves resilient during financial and natural crises.
Key Takeaways	– Celebrates banks’ role in sustainable development. – Recognizes RBI’s role in financial stability and inclusivity. – Highlights India’s capital market strength and its growing global position.