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COMMERCIAL BANKS IN THEGROWTH OF ENTERPRISES

AND OTHER RELATED AREAS

CA.FRANCIS AMAL GEORGE

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BANK

It is a financial institution

Deals with deposits and advances and otherrelated services.

Receives money from those who want tosave in the form of deposits and

Lends money to those who need it.

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JOURNEY OF INDIAN BANKING SYSTEM

Early phase -1786 to 1969

Nationalization - up to 1991

New phase - Reforms after 1991.

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FUNCTIONS OF RBI

Monetary policy Regulation and supervision of the banking and non-banking

financial institutions Regulation of money, FOREX and government securities

markets Debt and cash management for Central and State

Governments Management of foreign exchange reserves Foreign exchange management Banker to banks Banker to the Central and State Governments

Oversight of the payment and settlement systems Currency management Developmental role Research and statistics

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TYPES OF BANK

Saving Banks

Commercial Banks

Industrial Banks / Development Banks Central / Federal / National Bank

Co-operative Banks

Exchange Banks Consumers Banks

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COMMERCIAL BANK

Financial Institution Deposits - checking, savings and time deposit. Primary Object -receiving deposits and

lending to business Profit Motive institutions Owned by a group of individuals In India, commercial banks are established

under Companies Act, 1956

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CommercialBanks

Public SectorBanks

SBI &Associates

NationalisedBanks

(incl.IDBI)

Foreign BanksRegional Rural

Banks

OtherScheduled

CommercialBanks

STRUCTURE OF COMMERCIAL BANKS

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FUNCTIONS OF COMMERCIAL BANKS

PRIMARY FUNCTIONS:

Accepting Deposits

Advancing of Loans

Credit Creation

SECONDARY FUNCTIONS:

Agency Function

General Utility Services

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ACCEPTING DEPOSITS

TIMEDEPOSIT

FIXEDDEPOSIT

RECURRING

DEPOSIT

CASHCERTIFICATE

DEMANDDEPOSIT

SAVINGSDEPOSIT

CURRENTACCOUNT

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ADVANCING OF LOANS

OVERDRAFT

CASH CREDIT

DISCOUNTING OF BILLS LOANS AND ADVANCES

HOUSING FINANCE

EDUCATIONAL LOAN

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CREDIT CREATION

Loan through Deposit Account

Withdrawal at Demand

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AGENCY FUNCTION

Collection of cheques, Dividends, andInterests

Payment of rent, Insurance premiums

Dealing in foreign exchange

Purchase and sale of securities

Act as trustee, executor, attorney,correspondent

Preparations of Income-Tax returns

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GENERAL UTILITY SERVICES

Safety Locker facility

Payment Mechanism or Money Transfer

Travelers' cheques Letters of Credit

Acting as Referees

Provides Trade InformationATM facilities

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GENERAL UTILITY SERVICES

Credit cards

Gift Cheques

Accepting Bills Merchant Banking

Advice on Financial Matters

Factoring Service

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EMERGING ROLE

Backbones of the Financial Sector

Capital Formation -UnderdevelopedEconomy

Innovations Adequate & Cheap Credit toEntrepreneur

Finance for Priority Sectors

Medium and Long term Finance

Cheap Money Policy

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..CONTD

Credit to households & government

Credit to weaker sectors of the economy

Market Oriented System Bank on Wheels Facility of Amalgamation

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HINDRANCES

Political uncertainty

Bureaucratic hassles

Shortages of power Infrastructural deficiencies

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STATISTICAL DATA

The total assets of all scheduled commercialbanks by end-March 2010 is estimated at Rs40,90,000 crore.

Gross NPAs as ratio to gross advances forScheduled Commercial Banks as a wholeincreased from 2.25 per cent in 2008-09 to

2.39 per cent in 2009-10.

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IN FUTURE

Indias GDP Growth to make the IndianBanking Industry third largest in the Worldby 2025

Break-out growth in usage of new channels

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