meaning definition and functions of banking
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Workshop on Modern Banking
B.V.Raghunandan,
Faculty of Commerce,
SVS College, Bantwal.
Kavery College,
Virajpet
08-03-2013
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Meaning of BankingInvestorWords.com defines bank as,
“an organisation, which does most or all of the following: receives demand deposits and time deposits, pays interest on them, and honours instruments drawn on them, discounts notes, makes loans, and invests in securities; collects cheques, drafts and notes; certifies depositors’ cheques; and issues drafts”
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Chapter I:Introduction
Functions &
Characteristics
1)Accepting Deposits
2)Lending or Investment
3)Nature of Repayment
4)Mode of Withdrawal
5)Joint Stock Company
6)License from RBI
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Significance of Banks
Savings Mobilisation
Remittance of Funds
Development of Bill Market
Well Developed Money market
Development of Capital Market
Public Finance
Financing the Nation
Risk Free Investment
Corporate Services
Social Banking
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Evolution of Banking in India
Presidency Banks: Bank of Bengal in 1809,Bank of Bombay in 1840 & Bank of Madras in 1843Imperial Bank of India -1921Reserve Bank of India-1935State bank of India-1955
Nationalisation of 14 Banks-1969Second Dose of Nationalisation –1980Narasimham Committee Reforms-1990sICICI Merger- 2003
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Composition of Indian Banking SystemReserve Bank of India
Commercial Banks
Development Banks
Regional Rural Banks
Co-operative Banks
NABARD
Land Development Banks
Exim Bank
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Reserve Bank of IndiaEstablished in 1935
Central Board of Directors with 20 members
1local Board for each of the four regions
Traditional central banking functions
Regulatory functions
Promotional functions
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Commercial BanksPublic Sector Banks: 1+7+14+6=28
Private Sector Banks: Indian,foreign & New Generation Banks
Scheduled & Non-Scheduled banks
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Development BanksIFCI Ltd in 1948
ICICI Ltd in 1955
18 SFCs
Industrial Investment Bank of India (IRCI in 1971 and reincorporated in 1997
IDBI in 1964
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Regional Rural Banks
Product of 20 point programme of the govt.(1975)
Scheduled Banks & Non-Scheduled Banks
Treated as cooperative societies
Sponsored by a public sector bank
196 RRBs covering 451 districts spread over 23 states having 14,552 branches
Area Restriction
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Functions of RRBs
Accepting Deposits
Lending & Investment: CRR 3%-small & marginal farmers, SHG, AgriCo-ops, small entrepreneurs, small traders and small industries
MicroFinance
Authorised Dealers in Foreign Exchange
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Co-operative BanksThree Tier Structure
Different Economic Groups
Most of the Functions of Commercial Banks
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NABARD
Set-up in 1982Took over ARCRefinanceInspection of RRBsRouting Branch Expansion applications of RRBsAsscn with World Bank & others
Linking SHGs and NGOs
Kisan Credit Card Scheme in collab with RBI,Comm. Banks, Coop Banks
Micro-Finance Initiative
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Land Development BanksLong-term finance to agriculture
Co-operative institutions
Mortgage is created on the land
50% of the market value of the land given as loan
Severe criticisms
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EXIM BankProviding Loans & Advances
Export Facilitation
Non-Funded Activities
Financing Capital Equipments
Promoting Joint Ventures
Merchant Banking
Marketing Facilitation
Factoring and Farfaiting Services
Part Financing Consultants
Providing Venture Capital
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THANK YOU