l11...Commercial Banks
-
Upload
bharat-choudhary -
Category
Documents
-
view
230 -
download
0
Transcript of l11...Commercial Banks
-
7/31/2019 l11...Commercial Banks
1/24
COMMERCIAL BANKS
-
7/31/2019 l11...Commercial Banks
2/24
2Brief History of Banks in India
In the first half of the 19th century, the East Indiacompany established 3 banks The Bank of Bengal in 1809 The Bank of Bombay in 1840 and
The Bank of Madras in 1843.
These 3 banks were also known as Presidency Banks
All the three presidency banks were amalgamatedon 27th. Jan. 1921 and theImperial Bank ofIndia was established
The Bank of Bengal,
which later became the State Bank of India.
http://en.wikipedia.org/wiki/Image:Bank_of_Bengal.jpghttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Image:Bank_of_Bengal.jpg -
7/31/2019 l11...Commercial Banks
3/24
3
COMMERCIAL BANKSIn India, only those bank are called Commercial
Banks which have been established in accordance
with Indian Companies Act 1913.
Bank of Hindustan was the First commercial bankin India.
-
7/31/2019 l11...Commercial Banks
4/24
Meaning An institution which accepts deposits, makes
business loans, and offers related services.
Commercial banks also allow for a variety of depositaccounts, such as checking, savings, and timedeposit.
While commercial banks offer services toindividuals, they are primarily concerned withreceiving deposits and lending to businesses.
-
7/31/2019 l11...Commercial Banks
5/24
A bank is.
A commercial establishment
Aiming at profits
By accepting deposits from public
Which are repayable on demand
Through cheques, drafts etc.
Which are used for lending or investment
-
7/31/2019 l11...Commercial Banks
6/24
6Kinds of Commercial Banks
Scheduled Banks:According to Reserve Bank of India Act 1934,a scheduled bank is that bank which has been included inthe second scheduled of the Reserve Bank
To be include in the schedule, a bank must satisfy thefollowing three condition:
1. It must have a paid up capital and reserves of anaggregate value of at least Rs. 5 lakhs.
2. It must satisfy the RBI that its affairs are not conductedin a manner detrimental to the interest of its depositors.
3. It must be a corporation and not a partnership or asingle owner firm.
-
7/31/2019 l11...Commercial Banks
7/24
7
Non-Scheduled Banks:Banks whose name do
not figure in the second Schedule of theReserve Bank of India Act are non-scheduled
banks.
-
7/31/2019 l11...Commercial Banks
8/24
Functions
1. Primary function:
Accepting deposits
Granting loans
Loans and advances
-
7/31/2019 l11...Commercial Banks
9/24
Modes of short term financialassistance Cash credit
Bank overdraft
Discounting of bills
-
7/31/2019 l11...Commercial Banks
10/24
2. Agencyfunction:
Collection & payment of credit on behalf ofcustomers
Collection of dividend, interest & rent onbehalf of customers.
Purchase & sale of securities Acting as trustee
Acting as agents
-
7/31/2019 l11...Commercial Banks
11/24
3. General utility services:
Issuing letter of credit & traveler's cheques.
Safe-keeping of valuables in safe-depositlocker.
Undertaking foreign exchange business.
Merchant banker services.
-
7/31/2019 l11...Commercial Banks
12/24
12STRUCTURE OF COMMERCIAL BANKS
SCHEDULED BANKS NON-SCHEDULED BANKS
PUBLIC SECTOR
BANKS
PRIVATE SECTOR
BANKS
STATE BANK
OF INDIA
& ITS
SUBSIDIARIES
NATIONALISED
BANKS
REGIONALRURAL BANKS
PRIVATE
BANKS
FOREIGN
BANKS
-
7/31/2019 l11...Commercial Banks
13/24
13
STATE BANK OF INDIA
&ITS SUBSIDIARIES
On the recommendation of All India RuralCredit Survey Committee, Imperial Bank wasnationalized to become State Bank of India onJuly1, 1955.
SBI was established under State Bank of IndiaAct, 1955
-
7/31/2019 l11...Commercial Banks
14/24
14Nationalised Bank The term public sector banks by itself connotes a
situation where the major/full stake in the banksare held by the government.
Nationalised banks have been permitted to offer
their equity shares to the public to the extent of49% of their capital.
Ex: Indian overseas bank, Canara bank, Bank ofIndia.
-
7/31/2019 l11...Commercial Banks
15/24
15Regional Rural Banks
Regional Rural Banks were set up on therecommendation of a working group M.Narasimham in 1975.
The main objective is to extend loan & otherfacilities to the small and marginal farmers,agricultural labourers and artisans.
These are governed byRegional Rural BankAct, 1976.
-
7/31/2019 l11...Commercial Banks
16/24
16
Private Banks
By private sector banks we mean those bankswhere equity is held by private share holders,
that is to say there is no government holding ofthe equity shares.
Ex: ICICI Bank, HDFC Bank, Yes Bank etc.
-
7/31/2019 l11...Commercial Banks
17/24
Investment policy
Allocation of funds such that main objectives ofliquidity, solvency & profitabilityare achieved.
Obligations towards owners, workers,depositors- all are kept in mind while framinginvestment policy.
-
7/31/2019 l11...Commercial Banks
18/24
18
Funds of a bank may be deployedfor: Investment in government and corporate
securities.
Extending loans and advances to the customersin form of cash credits, overdraft, term loans,bills purchased and discounted.
Purchase of fixed assets. Keeping cash in hand and with RBI etc.
-
7/31/2019 l11...Commercial Banks
19/24
Principles of investment policy
1. Liquidity:
Capacity of bank to make cash available ondemand.
Proportion of assets maintained as liquidassets depend on:
Ownership of demand deposits Cash reserve
Banking habits
Seasonal needs
-
7/31/2019 l11...Commercial Banks
20/24
2. Solvency:
Capacity to meets its liabilities in long run.
3. Profitability:
-
7/31/2019 l11...Commercial Banks
21/24
21
E- Banking
Making banking products and services availableto wholesale and retail customers, through an
electronic distribution channel is called e-banking
Devices have been Telephone, personal computers
including ATM.
-
7/31/2019 l11...Commercial Banks
22/24
22
Level of Services
Level-I :
the basic level service is the bank website,which disseminates information on differentproduct and services. This is generally,combined with e-mail to receive and answer
queries.
-
7/31/2019 l11...Commercial Banks
23/24
23
Level-II:
In this type of e-banking customers are
allowed to submit their instruction or applicationor queries on their bank balances or status ofcertain transaction etc.
Level-III:In this banking services are offered throughFully Transactional Web sites.
This permits customers to operate their account
through internet.
-
7/31/2019 l11...Commercial Banks
24/24
24
E-TradingRefers to electronic settlement of trading ofsecurities.
In simple words, it refers to purchase and sale ofsecurities in electronic form.SEBI has made compulsory trading of shares ofall the companies listed in Stock Exchange, in
Demat form with effect from 2nd Jan., 2002.