BANKING

“BANKING IS WHAT A BANK DOES”

DEFINITION OF BANKING

Banking Regulation Act 1949 defines banking as, “ACCEPTING FOR THE

PURPOSE OF LENDING AND INVESTMENT, OF DEPOSITS OF MONEY FROM THE

PUBLIC, REPAYABLE ON DEMAND, ORDER OR OTHERWISE AND WITHDRAWABLE BY CHEQUE,DRAFT,ORDER OR OTHERWISE”.

BANK IS PART OF FINANCIAL SYSTEM

Financial system is one which supplies the necessary financial inputs for the production of goods and services. Economic development of any country depends upon the existence of well organized financial system.

Financial system

Financial markets

Financial intermediaries

Financial assets

Financial instruments

BANKS

BANKING SYSTEMThere has been a rapid development in the banking institutions in various countries. With development, various systems of banking have come into

existence. Banks can be classified on the basis of volume of operator,

business pattern & areas of operations.

COMMON BANKINGSYSTEM BRANCH BANKING UNIT BANKINGCORRESPONDANCE BANKNGDEPOSIT BANKINGINVESTMENT BANKNGMIXED BANKINGUNIVERSAL BANKNG

CLASSIFICATION OF BANKING

Banking institutions are indispensable part in a modern developing society.On the basis of functions performed banks can be classified as follows.

BANKING STRUCTURE UNORGANIS

ED

INDIGENIOUS

BANKS

MONEY LENDERS

TRADERS

ORGANISED

COMMERCIAL BANKS

COPOERATIVE BANKSREGIONAL

RURAL BANKSALL INDIA FINANCIAL

INSTITUTIONFOREIGN

BANKSINDUSTRIAL

DEVELOPMENT BANKS

INDIAN BANKING UNIVERSE

INDIAN BANKING UNIVERSE

PUBLIC SECTOR BANKS

26

FOREIGN BANKS

41

PRIVATE BANKS

20

FUNCTIONS OF COMMERCIAL BANK

PRIMARYFUNCTION

SECONDARY

FUNCTION

ACCEPTANCE OF DEPOSITS

ADVANCING OF LOANS & CREDIT

CREATION

INVESTMENT FUNCTION

DEAING IN FOREIGN

EX-CHANGE

PRIMARY FUNCTIO

N

AGENCYSERVICES GENERAL

UTILITY SERVICES

SECONDARY FUNCTIONS

C

RESERVE BANK OF INDIARBI was established in 1st April 1935.Present governor is Duvvuri Subbarao.There are 22 regional offices and most of them in share capital.

CENTRAL BANK OF INDIA

It was started as shareholders bank with a paid up capital of 5crores.It was privately owned. In 1949, RBI was fully owned by government.

FIRST GOVERNOR

Sir OSBORNE A. SMITH. [April 1st 1935 to June 30,1937]

(AUSTRALIA).

FIRST INDIAN GOVERNOR

Sir CHINTAMAN D. DESHMUKA

(August11,1943 to June30,1949).

LIST OF GOVERNOR IN RBI

HE IS MR.YAGA VENUGOPAL REDDY.HE WAS ELECTED AS GOVERNOR FROM PERIOD (6TH SEPTEMBER 2003 TO 5TH SEPTEMBER 2008).

PRESENT GOVERNOR OF RBI

MR.DUVVURI SUBBARAO WAS THE 22ND & CURRENT GOVERNOR OF RBI.HE ELECTED FOR PERIOD OF (5TH SEPTEMBER 2008 TO 4TH SEPTEMBER 2013).

FUNTIONS OF RBI

To regulate the issue of bank notes and keep reserves , with a view to secure monetary stability in India.Generally to operate the currency and credit system of the country.

ORGANISATIONCENTRAL BOARD---MUMBAI.LOCAL BOARD----MUMBAI, DELHI, CHENNAI, KOLKATA.

FUNCTION OF CENTRAL BOARD & LOCAL BOARD

FUNCTION OF CENTRAL BOARD: General superintendence and direction of the bank’s affairs. FUNCTIONS OF LOCAL BOARD: Advise to the Central Board and economic interest of local co-operative indigenous bank.

FUNCTIONS OF RBI

TRADITIONAL FUNCTIONPROMOTIONAL FUNCTIONSUPERVISORY FUNCTION

TRADITIONAL FUNCTION

Monopoly of currency notes issue.Banker to government (both central &state)Agent & Advisor to GovernmentBanker to Banker’sAct as clearing house of countryLender of last resortController of creditCustodian of foreign exchange reserves.

PROMOTIONAL FUNCTIONPromotion of banking habit and expansion of banking system Provider refinance for expert promotionExpansion of facilities for provision of the agricultural credit through NABARDExtension of n facilities for SBIHelping Co-Operative sectorPrescribe minimum statutory requirement.Innovating new banking business transactions.

SUPERVISIORY FUNCTION

Granting license to banksInspects and makes enquiry in various section of RBI and banking regulations.Implement deposit insurance schemePeriodical review of work of the commercial bankGiving directives to commercial bankControl non banking finance corporationEnsuring health of financial corporation system through on site & offsite verification.

STATE BANK OF INDIA ACTS AS AGENT OF RESERVE BANK OF INDIA.

EVOLUTION OF SBI

EVOLUTION OF SBI CAN BE TRACED BACK TO THE FIRST DECADE ON 19TH CENTURY.IT BEGAN WITH ESTABLISHMENT OF THE BANK OF CALCUTTA ON 2ND JUNE 1806.ON 2ND JANUARY 1809 RENAMED AS THE BANK OF BANGAL.

FIRST JOIINT STOCK BANK IN BRITISH INDIA ESABLISHED UNDER THE SPONSORSHIP OF GOVERNMENT OF BENGAL.FOLLOWED BY BANK OF BENGAL: BANK OF BOMBAY-15TH APRIL1840 BANK OF MADRAS-1ST JULY 1843THESE THREE DOMNIATED MODERN BANKING SCENARIO IN INDIA.

THREE BANKS WERE AMALGAMATED TO FORM THE IMPERIAL BANK OF INDIA ON 27TH JANUARY 1921.TO SERVE THE ECONOMY IN ACCORDANCE WITH FIVE YEAR PLAN (1951), THE ALL INDIA RURAL CREDIT SURVEY COMMITTEE PROPOSED THE TALE OVER OF THE IMPERIAL BANK OF INDIA.

AN ACT WAS PASSED IN PARLIMENT OF INDIA IN MAY 1955 . AS A RESULT THE STATE BANK OF INDIA WAS ESTABLISHED ON 1ST JULY 1955.

ON 1959 SBI [SUBSIDARY BANKS] ACT WAS PASSED . IT ENABLED THE SBI TO MAKE EIGHT STATE ASSOCIATED BANKS AS ITS SUBSIDIARIES.

SUBSIDIARIES OFSBI:

STATE BANK OF BIKANER & JAIPURSTATE BANK OF HYDRABADSTATE BANK OF MYSORESTATE BANK OF PATIALASTATE BANK OF TRAVANGORE

PRODUCTS & SERVICES OF SBI

E-TICKETINGSBI E-TAXEZTRADE @ SBIRTGS/NEFTE-PAYMENTSFUND TRANSFERTHIRD PARTY TRANSFERDEMAND DRAFT

CHEQUE BOOK REQUESTACCOUNT OPENING REQUESTACCOUNT STATEMENTTRANSACTION ENQUIRYDEMAT ACCOUNT DONATIONSTATE BANK VIRTUAL CARDGREEN CHANNEL COUNTERKIOSK BANKING SYSTEM

RISE OF E-MONEY

CHEQUES

2009-10

2011-12

ELECTRONIC PAYMENTS

2009-10

2011-1265%

52%

35%

48%

RECENT TRENDS

RECENT TRENDS IN COMMERCIAL BANKING

BANKING SECTOR IS THE HEART OF ECONOMY.IN 1969, 14 BANKS WERE NATIONALISED AND FOLLOWED BY 6 BANKS IN 1980.BANKING SECTOR WERE FULLY COMPUTERISED IN 1985.SOME OF THE RECENT TRENDS ::

NET BNKING

It is also known as Internet banking or Online Banking. It is the process of conducting Banking transactions over the internet.

MOBILE BANKING

It is also known as M-Banking. The customer can operate his account over the mobile phone.

PHONE BANKING The customer can obtain information about his account quickly, but however deposit and withdrawal cannot be made over the phone. Otherwise the information about his account can obtain.

REAL TIME GROSS SETTLEMENT

It is the system of funds transfer from one to another. The transactions are settled one to one without bunching with any other transactions .Once processed the payments are final and irrevocable. . Minimum amount of remittance is Rs.2 lakhs and no upper ceiling is there.

NATIONAL ELECTRONICFUNDS TRANSFER

It is a system of funds transfer. Its simple, secure, safe, fastest and cost effective pay to transfer of funds. To use this facility they furnish INDIAN FINANCIAL SYSTEM CODE[IFSC], of the beneficiary and also branch name, full account number of the beneficiary. It is chargeable.

MONEYGRAM MoneyGram is a new internet based remittance product. It is cashless money transfer. These facilities available to NRIs to remit money to India.

XPRESS MONEY

X-Press money offered in arrangement with M/s UAE exchange financial service limited for remitting money to India. Money can be remitted from 180 countries across the globe.

MINISTRY OF COMPANY AFFAIRS

This facilities is provided by some banks only. MCA Payments can be done via credit card, internet banking and physical challan currently.

KIOSK BANKING

It performs basic banking activities.

GREEN CHANNEL COUNTER

STATE BANK OF INDIA introduced this services on 1st July 2010 at 57 pilot branches across country.Through this one can do all works in bank without using challen.

CHEQUE TRUNCATION SYSTEM

It is a image based clearing system. It is issued u/s 18 of the payment & settlement system act 2007.

THANKS FOR WATCHING…

by

3 RD B.COM STUDENTS STAFF ADVISOR DR.S.KOTHAI.