Description
MODERN BANKING SYSTEM IN INDIA
BANK AND BANKING
? A bank is a financial institution that serves as a
financial intermediary.
Functions of bank are known as banking.
Evolution of Banking in India
? Presidency Banks: Bank of Bengal in 1809,Bank of ? ? ? ? ? ? ?
Bombay in 1840 & Bank of Madras in 1843 Imperial Bank of India -1921 Reserve Bank of India-1935 State bank of India-1955 Nationalisation of 14 Banks-1969 Second Dose of Nationalisation –1980 Narasimham Committee Reforms-1990s ICICI Merger- 2003
Indian Banking Sector
verview
Economy grew by 8.5% in the last fiscal, central bank raised interest rates 7 times, increasing the repo rate by 1.75% , the reverse repo rate by 2.25%, Indian foreign exchange reserve were US$314.6 BILLION as on july 8,2011
Significance of Banks
? Savings Mobilisation
? Remittance of Funds ? Well Developed Money
? Public Finance
? Financing the Nation ? Risk Free Investment
market ? Development of Capital Market
? Corporate Services
? Social Banking
Composition of Indian Banking System
? Reserve Bank of India
? Commercial Banks
? Development Banks ? Regional Rural Banks
? Co-operative Banks
? NABARD ? Land Development
Banks ? Exim Banks
Functions of commercial banks
A. Primary Functions
a) b)
Accepting Deposits Advancing Loans
B. Secondary Functions
Agency Functions b) General utility Services
a)
a)
Accepting Deposits
1) Fixed or Time Deposit Account 2) Current or Demand Deposit Account 3) Saving Deposit Account 4) Home Safe Saving Account 5) Recurring Deposit Account
b) Advancing Loans
1) Cash credit 2) Overdraft 3) Demand Loans 4) Short Term Loans
Besides many primary functions, these banks also perform many secondary functions..
1. Agency functions: Banks act as an agent to their customers in different ways. 2. General Utility Services: Banks also provide certain services of general utility.
I. Collection and payment of various items: Bank collect cheques,rent,interest and also make payment of taxes, insurance premium. II. Purchase of sale and security: Banks are more knowledgeable with regard of stoke and share business, they provide security to their customers. III. Trustee and Executer: Banks also acts as trustees and executers of the property of their customers.
AGENCY FUNCTIONS
IV. Remitting of Money: Banks remit money at distance place though bank drafts. V. Purchase and sale of foreign exchange: Banks buy and sell foreign exchange, promoting international trade. VI. Letter of Reference: Banks give information about economic position of customers to domestic and foreign traders. VII. Underwriting: Banks Underwrite the sale of new shares.
I. Locker facilities: Banks provide locker facilities to their customers. II. Traveler’s cheque and Letters of credit: Banks issue traveler's cheque and letters of credit to avoid the risk of carrying cash. III. Business Information and Statistics: Banks give advice to customers on financial matters. IV. Help in Transportation of goods: Banks help big businessmen and industrialists in transportation of goods from production centre to consumption centers.
GENERAL UTILITY SERVICES
Difference b/w primary and secondary functions:
Primary Functions 1.These are the main activities of the bank. 2. These are the main source of income of the bank. 3.These are obligatory on the part of bank performance. Secondary functions 1.These are the secondary activities of the bank. 2. These are not main source of income of the bank. 3.These are not obligatory on the part of bank performance.
Central Bank :
It is an apex institution of the monetary and banking structure of a country. A central bank has the authority to regulate and control the banking business and monetary system of a country.
Central bank of india is Reserve Bank of India. RBI was set up in 1935 under the RBI act of 1934.It was nationalized in 1949.
Main functions of RBI are
•Bank of issue •Financial advisor to the state( banker also) •Banker to bank •Custodian of foreign exchange reserves •Lender of the last resort •Bank of central clearance and transfer •Controller of credit
Controller of credit
1.Quantitative Methods
•Bank rate policy •Open market operation •Variable reserve ratio
2. Qualitative control
•
Margin requirement • Credit Rationing • Regulation of consumer credit • Direct action
.
Banking Innovations
Retail Banking Bank as authorized dealer Customer service Lead Bank scheme Service area approach Micro finance Consortium approach Credit cards Local Area Banks
doc_697434098.pptx
MODERN BANKING SYSTEM IN INDIA
BANK AND BANKING
? A bank is a financial institution that serves as a
financial intermediary.
Functions of bank are known as banking.
Evolution of Banking in India
? Presidency Banks: Bank of Bengal in 1809,Bank of ? ? ? ? ? ? ?
Bombay in 1840 & Bank of Madras in 1843 Imperial Bank of India -1921 Reserve Bank of India-1935 State bank of India-1955 Nationalisation of 14 Banks-1969 Second Dose of Nationalisation –1980 Narasimham Committee Reforms-1990s ICICI Merger- 2003
Indian Banking Sector
verviewEconomy grew by 8.5% in the last fiscal, central bank raised interest rates 7 times, increasing the repo rate by 1.75% , the reverse repo rate by 2.25%, Indian foreign exchange reserve were US$314.6 BILLION as on july 8,2011
Significance of Banks
? Savings Mobilisation
? Remittance of Funds ? Well Developed Money
? Public Finance
? Financing the Nation ? Risk Free Investment
market ? Development of Capital Market
? Corporate Services
? Social Banking
Composition of Indian Banking System
? Reserve Bank of India
? Commercial Banks
? Development Banks ? Regional Rural Banks
? Co-operative Banks
? NABARD ? Land Development
Banks ? Exim Banks
Functions of commercial banks
A. Primary Functions
a) b)
Accepting Deposits Advancing Loans
B. Secondary Functions
Agency Functions b) General utility Services
a)
a)
Accepting Deposits
1) Fixed or Time Deposit Account 2) Current or Demand Deposit Account 3) Saving Deposit Account 4) Home Safe Saving Account 5) Recurring Deposit Account
b) Advancing Loans
1) Cash credit 2) Overdraft 3) Demand Loans 4) Short Term Loans
Besides many primary functions, these banks also perform many secondary functions..
1. Agency functions: Banks act as an agent to their customers in different ways. 2. General Utility Services: Banks also provide certain services of general utility.
I. Collection and payment of various items: Bank collect cheques,rent,interest and also make payment of taxes, insurance premium. II. Purchase of sale and security: Banks are more knowledgeable with regard of stoke and share business, they provide security to their customers. III. Trustee and Executer: Banks also acts as trustees and executers of the property of their customers.
AGENCY FUNCTIONS
IV. Remitting of Money: Banks remit money at distance place though bank drafts. V. Purchase and sale of foreign exchange: Banks buy and sell foreign exchange, promoting international trade. VI. Letter of Reference: Banks give information about economic position of customers to domestic and foreign traders. VII. Underwriting: Banks Underwrite the sale of new shares.
I. Locker facilities: Banks provide locker facilities to their customers. II. Traveler’s cheque and Letters of credit: Banks issue traveler's cheque and letters of credit to avoid the risk of carrying cash. III. Business Information and Statistics: Banks give advice to customers on financial matters. IV. Help in Transportation of goods: Banks help big businessmen and industrialists in transportation of goods from production centre to consumption centers.
GENERAL UTILITY SERVICES
Difference b/w primary and secondary functions:
Primary Functions 1.These are the main activities of the bank. 2. These are the main source of income of the bank. 3.These are obligatory on the part of bank performance. Secondary functions 1.These are the secondary activities of the bank. 2. These are not main source of income of the bank. 3.These are not obligatory on the part of bank performance.
Central Bank :
It is an apex institution of the monetary and banking structure of a country. A central bank has the authority to regulate and control the banking business and monetary system of a country.
Central bank of india is Reserve Bank of India. RBI was set up in 1935 under the RBI act of 1934.It was nationalized in 1949.
Main functions of RBI are
•Bank of issue •Financial advisor to the state( banker also) •Banker to bank •Custodian of foreign exchange reserves •Lender of the last resort •Bank of central clearance and transfer •Controller of credit
Controller of credit
1.Quantitative Methods
•Bank rate policy •Open market operation •Variable reserve ratio
2. Qualitative control
•
Margin requirement • Credit Rationing • Regulation of consumer credit • Direct action
.
Banking Innovations
Retail Banking Bank as authorized dealer Customer service Lead Bank scheme Service area approach Micro finance Consortium approach Credit cards Local Area Banks
doc_697434098.pptx