Download - Indian banking system
INDIAN BANKING SYSTEM
Introduction to Bank
The word of “Bank” is said to be of Germanic origin , cognate with the French word “Banque” and the. Italian word “Banca” , both meaning “bench”.
A bank is an institution that deals with money and credit . Banks are service organizations selling banking services.
History
1870 – Bank of Hindustan – First
Bank
Presidency Banks - Bank of Calcutta,
Bank of Bombay and
Bank of Madras
1921 - All 3 banks
amalgamated and became
Imperial Bank of India
1934 – RBI was
Constituted
1949 – RBI came under government
control
1955 – Imperial Bank became State bank of India
Cont….
Banking activitiesThe banking activities can be classified as :
• Accepting Deposits from public/others (Deposits)• Lending money to public (Loans) • Transferring money from one place to another
(Remittances) • Acting as trustees • Acting as intermediaries • Keeping valuables in safe custody • Collection Business • Government business
Banking Regulation act 1949
Banking in India is governed by BR Act,1949 and RBI
Act,1934
Banking in India is controlled/monitored by
RBI and Govt. of India
The controls for different banks are different
based on whether the bank/s is/are statutory corporation , a banking
company and a cooperative society
Cont…
BR Act covers banking companies
and co-operative banks, with certain
modifications.
BR Act is not applicable to
primary agricultural credit societies and land development
banks
BR Act allows RBI (Sec 22) to issue
license for banks .
Types Of Banks
Reserve Bank Of India
Central Bank• Reserve bank of India is a bank which is entrusted with the
functions of guiding and regulating the banking system of a country is known as its Central bank. Following are the functions of central banks.
• Bank of Issue• Bankers' Bank and Lender of the Last Resort• Controller of Credit• Custodian of Foreign Reserves
Scheduled Banks
These are the banks which are included in the second schedule of reserve bank of India and having a paid-up-capital and reserve together of Rs 5 lakhs and above. This scheduled banks can be further classified into two categories:-1. Commercial banks2. Co-operative banks
Commercial banks
Commercial banks are those banks which perform all
kinds of banking business and generally finance ,trade and commerce. Commercial
banks are basically into public sector bank, private sector bank and Foreign
banks.
Public sector banks are those banks which are owned and controlled by government . In India the nationalized banks and regional and rural banks
come under this category. Eg:- SBI and associates of
SBI , central bank of India etc.
Private sector banks are those banks which are
owned by private individuals or corporations and not by
the government or co-operative societies. Eg:- city
union bank, dhanalaxmi bank, Federal bank etc.
Foreign Banks
Foreign banks are those banks which
provide foreign exchange for import trade. These are the
banks which are incorporated in foreign
countries but have opened their branches
in India.
These banks are also known as exchange banks because they
make payments through purchase and sale of exchange bills
and convert home currency into foreign
currency and vice versa.
They discount foreign exchange bills which are for foreign trade.
Examples :- Citi bank , Royal bank of
Scotland , HSBC bank ,Federal bank etc.
Development banks
These banks came into existence in the
middle of 20th century .
These banks are most active in
capital financial markets all over the world and India too.
These banks are also known as financial
institutions because they are primarily
engaged in providing long term financial
assistance to the industrial units.
Examples:- IDBI , IFCI, ICICI, IRBI etc.
Co-operative Banks
A co-operative bank is an financial entity which belongs to local or professional community to meet their common, economic ,social and cultural needs.
Provide the members with a wide range of banking and financial services like loans, deposits and banking accounts.
In India co-operative banks are regulated with the RBI and governed by banking regulation act of 1949 and co-operative societies act of 1955.
Functions of co-operative banks
They provide short term and medium term
loans.
They provide crop loans to agriculture in
order to purchase seeds and fertilizers.
They also arrange finance for warehousing
, grading and marketing.
Co-operative banks in India
provide finance for
farming ,cattle, milk ,etc.
Types of Co-operative banks
State co-operative banks
Central co-operative banks
Rural co-operative banks
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