Indian Banking System Introduction

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<p>Introduction to BankingINDIAN BANKING SYSTEMy PUBLIC SECTOR BANKS = SBG + PSBs + IDBI Bank y PRIVATE SECTOR BANKS IN INDIA (Old + New) y Cooperative Banks; Regional Rural Banks (RRBs) y INDIAN BANKS OPERATIONS ABROAD y Local Area Banks (LABs)</p> <p>4 are functional now! y PRE-REFORMS DEVELOPMENT y CREDIT GUARANTEE FUND TRUST FOR SMALL INDUSTRIES2/20/2012 BANKING 2009 1</p> <p>BANKING DEFINEDy DERIVED FROM FRENCH WORD BANQUE MEANING A BENCH y ALSO, FROM GERMAN WORD BACK MEANING A JOINT STOCK FUND y HISTORY .. BANK OF ENGLAND 1694 AD y BANK OF HINDUSTAN, INDIA 1770 y LARGE SCALE CLOSURES DURING 1929-32 y THREE PRESIDENCY BANKS BANK OF BENGAL (1809), BANK OF BOMBAY (1840) AND BANK OF MADRAS (1843) IN CALCUTTA, BOMBAY AND MADRAS . ALL 3 MERGED AS IMPERIAL BANK OF INDIA IN 1919 LATER BECAME STATE BANK OF INDIA IN 1955</p> <p>2/20/2012</p> <p>BANKING 2009</p> <p>2</p> <p>DEVELOPMENTSy MANY MORE BANKS ALSO OPENED y CRISIS BETWEEN 1913-1917</p> <p>588 BANKS FAILED y BANKING COMPANIES (INSPECTION ORDINANCE) ISSUED IN JANUARY 1946; BANKING COMPANIES (RESTRICTION OF BRANCHES) ACT PASSED IN FEBRUARY 1946 y THE BANKING COMPANIES ACT PASSED IN FEB 1946 y AMENDED AS BANKING REGULATION ACT, 1949</p> <p>2/20/2012</p> <p>BANKING 2009</p> <p>3</p> <p>DEVELOPMENTS 2RBI ACT, 1934 WAS PASSED (1ST APRIL, 1935) FIRST CENTRAL BANK OF THE COUNTRY TOOK OVER FUNCTIONS FROM IMPERIAL BANK RBI NATIONALISED ON 01.01.1949 IMPERIAL BANK OF INDIA PARTIALLY NATIONALISED AS STATE BANK OF INDIA IN 1955 y IN 1959, SEVEN SUBSIDIARIES ADDED TO STATE BANK GROUP BIKANER &amp; JAIPUR, HYDERABAD, INDORE, MYSORE, PATIALA, SAURASHTRA AND TRAVANCORE .y y y y y2/20/2012 BANKING 2009 4</p> <p>DEVELOPMENTS 3y 19TH JULY, 1969</p> <p>GOI TOOK OVER CONTROL OF 14 PRIVATE BANKS WITH DEPOSITS OVER Rs 50 CRs y 15TH APRIL, 1980 SIX MORE BANKS WITH DTL EXCEEDING Rs 200 CRORES NATIONALISED y IN 1993, NEW BANK OF INDIA WAS MERGED WITH PUNJAB NATIONAL BANK (BOTH ARE PSBs) y NOW, WE HAVE SBI + SIX SUBSIDIARIES AS SBGROUP (AFTER MERGER OF SB SAURASHTRA WITH SBI), 19 PUBLIC SECTOR BANKS, AND IDBI BANK LTD (AFTER REVERSE MERGER WITH IDBI)2/20/2012 BANKING 2009 5</p> <p>PRIVATE BANKS IN INDIAy RBI (1934) NATIONALISED IN 1948 y IMPERIAL BANK OF INDIA (1919) WAS CONVERTED TO STATE BANK y y y y y y y y</p> <p>OF INDIA IN 1955 14 PRIVATE BANKS NATIONALISED IN 1969 AGAIN, 6 MORE NATIONALISED IN 1980 BANK OF RAJASTHAN, DHANALAKSHMI, FEDERAL, SOUTH INDIAN, CATHOLIC SYRIAN, J&amp;K, KARNATAKA, KARUR VYSYA (Old Private Banks) ECONOMIC AND BANKING SECTOR REFORMS IN 1991-93 NEW GENERATION BANKS IN 1994 CAPITAL OF Rs 100 / Rs 300 CRORES HDFC FIRST TO SET UP A NEW PVT BANK FOLLOWED BANK OF PUNJAB, CENTURION BANK, GLOBAL TRUST BANK, ICICI BANK, IDBI BANK, INDUSIND BANK, TIMES BANK, UTI BANK (NOW AXIS) LATER, KOTAK MAHINDRA BANK AND YES BANK . 11 NEW PRIVATE BANKS STARTED BUT TODAY 6 ONLY!BANKING 2009 6</p> <p>2/20/2012</p> <p>INDIAN BANKS ABROADy OCT 20, 2005 : 14 INDIAN BANKS OPERATING ABROAD y 9 PUBLIC SECTOR</p> <p>(BOB, SBI, BOI, PNB, IB, UCO, CANARA, SYNDCIATE BANK) AND 5 PRIVATE SECTOR BANKS (ICICI BANK, INDUSIND, BANK OF PUNJAB, HDFC BANK and Bharat Overseas Bank) y SPREAD ACROSS 42 COUNTRIES WITH 101 BRANCHES y INCLUDE 6 OFFSHORE UNITS, 6 JOINT VENTURES, 17 SUBSIDIARIES, 30 REPRESENTATIVE OFFICES y PL SEE RBI WEBSITE FOR LATEST POSITION .</p> <p>2/20/2012</p> <p>BANKING 2009</p> <p>7</p> <p>LOCAL AREA BANKSy LAUNCHED BY RBI ON 24.08.1996 (PC as Fin Min) y TO DEVELOP BACKWARD AND LESS DEVELOPED</p> <p>DISTRICTS IN THE COUNTRY y MINIMUM CAPITAL OF Rs 500 LAKHS y INDIVIDUALS, TRUSTS, SOCIETIES AND CORPORATES AS PROMOTERS y TO OBTAIN IN PRINCIPLE APPROVAL FROM RBI y TO APPROACH REGISTRAR OF COMPANIES y TO COVER THREE CONTIGUOUS DISTRICTS</p> <p>2/20/2012</p> <p>BANKING 2009</p> <p>8</p> <p>LOCAL AREA BANKS 21. COASTAL AREA LAB LTD., VIJAYAWADA, AP 2. CAPITAL LAB LTD., PHAGWARA, NAVSARI, GUJARAT 3. KRISHNA BHIMA SAMRUDDHI LAB LTD.,</p> <p>MAHABOOBNAGAR, AP 4. SUBHADRA LAB LTD., KOLHAPUR, MAHARASHTRA5. SOUTH GUJARAT LAB SUFFERED LOSSES AND WAS</p> <p>MERGED WITH BANK OF BARODA ON JUNE 25, 2004 RBI REVIEWED POLICY AND DECIDED TO STOP LABs2/20/2012 BANKING 2009 9</p> <p>PRE-REFORMS1. 2. 3. 4.1. 2. 3. 4. 5. 6.</p> <p>LEAD BANK SHEME, DECEMBER 1969 COOPERATIVE BANKS URBAN AND RURAL REGIONAL RURAL BANKS, OCT 02, 1975 (196 - now 96) SOME IMPORTANT FINANCIAL INSTITUTIONSNABARD EXIM BANK NHB HUDCO HDFC IDBI 7.IFCI 8.IIBI 9.ICICI 10.SIDBI 11.IDFC 12.PFC 13.LIC 14.UTI 15.DICGC 16.CGTSME 17.ECGCBANKING 2009 10</p> <p>2/20/2012</p> <p>Indian Financial System(Source: RBI)</p> <p>Indian Financial SystemMoF,GOI, New Delhi RBI/SIDBI/NABARD SEBI / NHB / IRDA / PFRDA</p> <p>Development Finance Institutions IFCI, IDBI, ICICI, IIBI, IDFC EXIM Bank, IL&amp;FS,2/20/2012</p> <p>Banks SB Group, Public / RRBs / Private-Old &amp; New/ Foreign / LAB / CoopFinancial Services : IFS</p> <p>NBFCs, Chit Funds, Nidhi Cos, Postal / Natl Small Savings / Ins Cos/HFCs/CRAs/ Credit Card Cos12</p> <p>Indian Financial SystemyCommercial Banksy 27 Public Sector (7 SB Group,</p> <p>19 Nationalised &amp; IDBI Bank) y 23 Private Sector (17 Old and 6 New) y 2,800 plus Co-operative Banks ! y 96 RRBs, 4 Local Area Banks !! y 29 Foreign Banks</p> <p>y More than 70,000 bank branchesy Average popln served per branch : 15,000 !!! y Over 35,000 ATMs on-site, off-site &amp; Bio-MetricFinancial Services : IFS 13 2/20/2012</p> <p>Indian Financial System (2)y Development Finance Institutionsy LIC, GIC &amp; its 4 Subsidiaries y UTI, DICGC, ECGC, EXIM Bank, ICICI,</p> <p>IFCI, IDBI, IIBI, NABARD, SIDBI, NHB, SHCIL, NSDL, CDSL, IIFCL y SFCs, SIDCs, ITCOs, AFC, etc y STCI, DFHI, IDFC, IL &amp; FS, etcFinancial Services : IFS 14 2/20/2012</p> <p>Indian Financial System (3)yGovernment Sectory National Savings Organisation y (NSCs, NSS, IVPs, KVPs, PPF etc) y Post Office Savings, RD Accounts y Employees Provident Fund Orgn., etc.</p> <p>Financial Services : IFS</p> <p>15</p> <p>2/20/2012</p> <p>Indian Financial System (4)y Non Banking Financial Companiesy Nidhi Companies y Chit Fund Companies y Investment Companies y Hire Purchase Companies y Lease Finance Companies y Housing Finance Companies y Stock Exchanges,., Broking Cos y Credit Rating Agencies, RNBCs.,etc.,etc. y Mutual Funds, CIBIL, ARCs, Insurance Cos</p> <p>Financial Services : IFS</p> <p>16</p> <p>2/20/2012</p> <p>State Bank Groupy STATE BANK OF INDIA 1955 y Seven Subsidiaries in 1957 y STATE BANK OF HYDERABAD y STATE BANK OF MYSORE y STATE BANK OF BIKANER &amp; JAIPUR y STATE BANK OF TRAVANCORE y STATE BANK OF INDORE y STATE BANK OF PATIALA y STATE BANK OF SAURASHTRA* (since merged with SBI)</p> <p>Financial Services : IFS</p> <p>17</p> <p>2/20/2012</p> <p>Reserve Bank of India Scheduled BanksCommercial banksForeign Banks (29) RRBs (96) Urban Co-operatives (52) Local Area Banks 4</p> <p>Co-operativesState CO-operatives (16)</p> <p>Public Sector Banks (27)</p> <p>Private Sector Banks (23) New (6)</p> <p>Old (17)</p> <p>State Bank of India &amp; Associates (7)Com Bkg 2008 ALM 2008</p> <p>IDBI Bank</p> <p>Nationalised &amp; PSBs (19)18</p> <p>BALANCE SHEET OF A BANKBanks Economic Factors Economic PoliciesBalance Sheet of a Bank Liabilities Capital Reserves and Surplus Deposits Borrowings Other Liabilities and Provisions Contingent Liabilities Assets Cash and Balances at RBI Balance with banks and money at call and short notice Investments Advances Fixed Assets Other Assets19</p> <p>Com Bkg 2008</p> <p>ALM 2008</p> <p>EVOLUTION OF BANKING SINCE 1950Year Deposits (Rs.in Crores) Credit (Rs.in Crores) Total Business (Rs.in Crores) Credit/ Deposit Ratio(%) 62 77 79 66 60 53 74</p> <p>1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2006-07</p> <p>882 1736 5,906 37,988 1,92,541 9,62,618 25,94,259</p> <p>547 1336 4,684 25,371 1,16,301 5,11,434 19,23,192</p> <p>1,429 3,072 10,590 63,359 3,08,842 14,74,052 45,17,451</p> <p>Com Bkg 2008</p> <p>ALM 2008</p> <p>20</p> <p>RBI Data as on June 26, 2009Agg Deposits Rs 39,71,651 crores Investments Rs. 12,74,935 crores Bank Credit Rs. 27,57,210 crores</p> <p>Cash-Deposit Ratio : 6.04</p> <p>Credit-Deposit Ratio : 69.42</p> <p>Com Bkg 2008</p> <p>ALM 2008</p> <p>21</p> <p>Bank Credit (% to GDP)y</p>