BANKING INDUSTRY

A Glimpse of Banking sector

Phase-1Early phase from 1786 to 1969 of Indian Banks

Phase-2 Nationalization of Indian Banks and up to 1991 prior

to Indian banking sector Reforms Phase-3New phase of Indian Banking System with the advent

of Indian Financial & Banking Sector Reforms after 1991

Phase-1

GENERAL BANK OF INDIA 1786(FIRST BANK)

RESERVE BANK OF INDIA 1935

Slow growth and periodic failure

THE BANKING COMPANY ACT 1949

People mostly save in postal deposits.

Phase-2

Nationalization of imperial bank of India and formation of sate bank of India(1955)

Nationalization of SBI and Subsidiaries(1960)

Insurance cover extended to deposits

Creation of credit guarantee corporation

Creation of regional rural banks

Phase-3

Entry of Foreign Banks

Phone Banking and Net-Banking

Shelter from external macroeconomic shock

System become more convenient and swift

WHAT IS BANK?

A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. An institution where one can place and borrow money and take care of financial affairs; A branch office of such an institution. The first modern bank was founded in Italy in Genoa in 1406, its name was (Bank of St. George).

FUNCTIONS OF BANKSAccepting Deposits from public/others (Deposits).Lending money to public (Loans).Transferring money from one place to another (Remittances).Acting as trustees.Keeping valuables in safe custody.Government business.

RBI

Scheduled

Commercial

Public Private Foreign RRB

Cooperative

Urban Rural

Unscheduled

TYPES OF BANKS

Public sector BanksPrivate sector BanksCo-operative BanksDevelopment Bank/Financial institutions

Public sector Banks

Some Public Sector Banks in India: Central Bank of India Corporation Bank Dena Bank Bank of IndiaIndian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank

Private sectors Banks

New generation private banks

• ICICI Bank

• IDBI Bank

• Axis bank

Foreign banks operating in India

• HSBC BANK

• CITI BANK

• ABN-AMRO BANK

• STANDARD CHARTED BANK

CO-OPERATIVE BANKSThe Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is an important constituent of the Indian Financial System.They are setup to provide easy loans to farmers or other persons to set up his buisness.They are non profitable banks.Cooperative banks in India finance rural areas under: •Farming •Milk •Personal finance Some example of co-operative banks in India-•IDBI BANK(INDUSTRIAL DEVELOPMENT BANK OF INDIA)•IFCI BANK(INDUSTRIAL FINANCE COOPERATION OF INDIA)•APEX BANK

The Reserve Bank of India

History:-

Become operational on April 1,1935 Nationalized in the Year 1949.

Major objectives:-

Regulate the issue of banknote. Maintain reserves with a view to securing monetary stability. To operate the credit and currency system of the country to its

advantage.

Functions of RBI

The fuctions are classified into three heads:-

Traditional functions

Promotional functions Supervisory functions

Traditional functions

Monopoly of currency notes issueBanker to the Government (both the central

and state) Fight against economic crisis and ensures

stability of Indian economy.Controller of ForEx and credit Maintaining the external value of domestic

currency

Promotional functions

Extension of the facilities for the small scale industries

Innovating the new banking business transactions.

Extension of the facilities for the provision of the agricultural credit through NABARD

Supervisory functions

Granting licence to Banks. Periodical review of the work of the

commercial banks. Control the non-banking finance corporation.

HOW IT CONTROLS BANK & ECONOMY

TOOLS:-CRR( CASH RESERVE RATIO): 5.5%

REPO RATES(RR):7.5%

REVERSE REPO RATE(RRR): 6.0%

STATUTORY LIQUIDTY RATIO (SLR):24%

BANK RATE: 6.0%