presentation 97-03

8/7/2019 presentation 97-03

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INTRODUCTION

* Commercial banks are very important

segment of the money market .

* They play a very important role in theeconomy by mobilizing savings from various

sectors, which is the foundation for the

growth and development of economy .

* With the growth and development of the

economy the commercial banks grow along



STRUCTURE OF INDIAN

BANKING SYSTEM IT CAN BE EASILY CLASSIFIED INTO TWO

CATEGORIES:

Organized sector Unorganized sector



INDIAN

BANKINGSYSTEM



RESERVE BANK OF INDIA

Reserve bank is the central bank of India and

hence, is the leader of the Indian banking

system

Reserve bank of India came into existence in

1935

It is making efforts for the improvement of

banking system ever since.



ORGANISED SECTOR

Main constituents of the organized sector arecommercial banks .

These may be scheduled or non scheduledbanks.

In the present scenario there is only one bankin the non scheduled banks while all the other

banks come under scheduled category . Out of the scheduled banks the public banks

hold an important place



Public sector banks

They stared with the setting up of state bank

of India ,in 1955,by taking over IMPERIAL

BANK OF INDIA

In next 5 years the princely states banks were

made associated with the STATE BANK OF

INDIA. These banks taken together were

known as State Bank of India Group or SBI

GROUP . Thus the group consists of :



State bank of India

State bank of Hyderabad

State bank of Patiala

State bank of Travancore

State bank of Bikaner & Jaipur State bank of Mysore

State bank of Saurashtra

State bank of Indore



N ationalizedbank

In JULY 1969 , 14 banks with a deposit base of

Rs. 50 crores or more were nationalized

In 1980 ,six more private sector banks werenationalized bringing up the total number of

the banks nationalized to 20 . These banks

were :



1. BANK OF BARODA

2. PUNJAB NATIONAL BANK3. BANK OF INDIA

4. CANARA BANK

5. CENTRAL BANK OF INDIA6. UNION BANK OF INDIA

7. INDIAN BANK

8. INDIAN BANK OVERSEAS9. SYNDICATE BANK

10.U C O BANK



11.ALLAHABAD BANK

12.UNITED BANK OF INDIA13. ORIENTAL BANK OF COMMERCE

14.CORPORATION BANK

15.VIJAYA BANK16.DENA BANK

17.BANK OF MAHARASHTRA

18.ANDHRA PRADESH19.PUNJAB & SIND BANK

20.NEW BANK OF INDIA



Later on new bank of India merged with

Punjab National Bank ,in 1993-94



Re asons responsible for the

strain in the banking sector1. Stress on the quantitative and hurried increase in loanswithout proper assessment and the expense of quality of assets

2. Politically motivated or influenced sanctions of loans ,loan

melas and waiver of loan3. Indiscriminate expansion of banking activities ignoring the

canons of the banking that is , safety , productivity andprofitability .

4. Diversificaton of banking operations in the unconventional

areas without giving proper attention either tosystematic development to back up successfulimplementations of these new activities or to building upinfrastructure facilities



5. Lack of expertise within the banks to handle this complexbanking scenario and not much effort to improve the

quality of personnel within the banking sector byequipping to handle the growing challenges effectively

6. Lack of effective management information system andcontrol leading to blurred accountability at all the levels

7. Pressure on achieving the targets mechanically due to

somewhat political pressure in decision making in certainareas , and the interference of the midddlemen in thefield of loans to weaker sections of the society leading tounethical practices in the banking

8. Growing complacent attitude of the trade unions of both

officers and workmen staff ,which has partially led to thedeterioration of customer services



FEATURES1. Area of the RRB is limited only to the region ,

comprising of some districts of the state

2. They grant loan only to the rural agriculturesector and small artisans

3. Lending rate would be lesser than thecommercial banks

4. Intended to eliminate money lenders

5. They are supplement to the effort of co-

operative banks6. RRBs are sponsored by commercial banks



Banks in those days mainly focussed upon the agro

sector. Regional rural banks in India penetrated

every corner of the country and extended a helpinghand in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as

RRBs. The rural banks of SBI is spread in 13 statesextending from Kashmir to Karnataka and Himachal

Pradesh to North East. The total number of SBIs

Regional Rural Banks in India branches is 2349(16%). Till date in rural banking in India, there are

14,475 rural banks in the country of which 2126

(91%) are located in remote rural areas.



Apart from SBI, there are many other banks which function for the

development of the rural areas in India. These banks are listed below:

Andhra PradeshBiharAndhra Pradesh Grameena Vikas Bank

Andhra Pragathi Grameena Bank Deccan Grameena Bank

Chaitanya Godavari Grameena Bank

Saptagiri Grameena Bank

ChhattisgarhChhattisgarh Gramin Bank

Surguja Kshetriya Gramin Bank

Durg-Rajnandgaon Gramin Bank Satpura Kshetriya Gramin Bank

Madhya Bharath Gramin Bank

Chambal-Gwalior Kshetriya Gramin Bank

Rewa-Sidhi Gramin Bank

Sharda Gramin Bank GujaratDena Gujarat Gramin Bank

Baroda Gujarat Gramin Bank

Saurashtra Gramin Bank



Gurgaon Gramin Bank

Jammu & KashmirJammu Rural Bank

Ellaquai Dehati Bank

Kamraz Rural Bank

AssamAssam Gramin Vikash Bank

Langpi Dehangi Rural Bank

JharkhandJharkhand Gramin Bank

Vananchal Gramin Bank

Madhya PradeshNarmada Malwa Gramin Bank Satpura Kshetriya Gramin Bank

Madhya Bharath Gramin Bank



Rewa-Sidhi Gramin Bank

Sharda Gramin Bank

Ratlam- Mandsaur Kshetriya Gramin Bank Vidisha Bhopal Kshetriya Gramin Bank

Mahakaushal Kshetriya Gramin Bank

Jhabua Dhar Kshetriya Gramin Bank

Chambal-Gwalior Kshetriya Gramin Bank

Madhya Bihar Gramin Bank

Bihar Kshetriya Gramin Bank

Uttar Bihar Kshetriya Gramin Bank

Kosi Kshetriya Gramin Bank

Samastipur Kshetriya Gramin Bank



KarnatakaKarnataka Vikas Grameena Bank

Pragathi Gramin Bank

Cauvery Kalpatharu Grameena Bank

Krishna Grameena Bank

Chikmagalur-Kodagu Grameena Bank

Visveshvaraya Gramin Bank

Ra jasthanBaroda Rajasthan Gramin Bank

Marwar Ganganagar Bikaner Gramin Bank Rajasthan Gramin Bank

Jaipur Thar Gramin Bank

Hodoti Kshetriya Gramin Bank

Mewar Anchalik Gramin Bank OrissaKalinga Gramya Bank

Utkal Gramya Bank

Baitarani Gramya Bank

Neelachal Gramya Bank

Rushikulya Gramya Bank



Uttar PradeshPurvanchal Gramin Bank

Kashi Gomti Samyut Gramin Bank

Uttar Pradesh Gramin Bank

Shreyas Gramin Bank

Lucknow Kshetriya Gramin Bank

Ballia Kshetriya Gramin Bank

Triveni Kshetriya Gramin Bank

Aryavart Gramin Bank

Kisan Gramin Bank

Kshetriya Kisan Gramin Bank

Etawah Kshetriya Gramin Bank

Rani Laxmi Bai Kshetriya Gramin Bank

Baroda Western Uttar Pradesh Gramin Bank

Devipatan Kshetriya Gramin Bank Prathama Bank

Baroda Eastern Uttar Pradesh Gramin Bank



ManipurManipur Rural Bank

MizoramMizoram Rural Bank UttaranchalUttaranchal Gramin Bank

Nainital Almora Kshetriya Gramin Bank

NagalandNagaland Rural Bank

TripuraTripura Gramin Bank

West BengalBangiya Gramin Vikash Bank

Paschim Banga Gramin Bank

Uttar Banga Kshetriya Gramin Bank MeghalayaKa Bank Nogkyndong Ri Khasi- Jaintia

Arunachal PradeshArunachal Pradesh Rural Bank



PRIVATE SECTOR BANKS

On recommendations of the NARSIMHAMCOMMITTEE (which focused on the ways toimprove the structure , organization ,

functions, and procedures of financial sectorat large) RESERVE BANK OF INDIA , in 1993 ,announced guidelines for the entry of newcommercial banks .

As a result following banks started theiroperations:



Indus In Bank Ltd

The UTI Bank Ltd.

HDFC Bank Ltd.

The ICICI Bank Ltd.

Global Trust Bank Ltd.

Centurion Bank Ltd.

The Times Bank Ltd.

IDBI Bank Ltd.

The Development Co-operative Bank Ltd.

The bank Of Punjab Ltd.



Private banking in India was practiced since the

begining of banking system in India. The first

private bank in India to be set up in Private Sector

Banks in India was IndusInd Bank. It is one of the

fastest growing Bank Private Sector Banks in India.

IDBI ranks the tength largest development bank inthe world as Private Banks in India and has

promoted a world class institutions in India.



The first Private Bank in India to receive an in

principle approval from the Reserve Bank of India wasHousing Development Finance Corporation Limited,

to set up a bank in the private sector banks in India as

part of the RBI's liberalisation of the

Indian Banking Industry. It was incorporated in August

1994 as HDFC Bank Limited with registered office in

Mumbai and commenced operations as

Scheduled Commercial Bank in January 1995.



FEATURES OF PRIVATE BANKS

Introduce superior levels of technology andcustomer satisfaction

They are strategic in thinking and operations

They target specific products and customergroups rather than the entire financial sector

Most of them are targeting midsized corporate

They are specialized in certain segments likeinvestment , banking , trade finance and foreignexchange services



CO-OPER ATIVE BANKS It consists of those banks which represent those

group of societies registered under the acts of thestates relating to the cooperative societies

IN 1949 a system of agricultural co-operativecredit was brought into being

Under this scheme , the short term credit hasbeen organized with the federal lined agriculturalprimary societies as the base , the district as the

federal organization at the intermediate level ,and the state co-operative banks as the apexinstitution .



Co operative Banks in India are registered under the

Co-operative Societies Act. The cooperative bank is

also regulated by the RBI. They are governed bythe Banking Regulations Act 1949 and Banking Laws

(Co-operative Societies) Act, 1965.

Cooperative banks in India finance rural areas

under:Farming

Cattle

Milk

Hatchery

Personal finance



Cooperative banks in India finance urban

areas under:Self-employment

Industries Small scale units

Home finance

Consumer finance

Personal finance

Some facts about Cooperative banks inIndiaSome cooperative banks in India are more

forward than many of the state and private

sector banks.



According to National Federation of Urban Co-

operative Banks & Credit Societies Ltd

(NAFCUB) the total deposits & lendings of Cooperative Banks in India is much more than

Old Private Sector Banks & also the New Private

Sector Banks.

This exponential growth of Co operative Banks

in India is attributed mainly to their much

better local reach, personal interaction with

customers, their ability to catch the nerve of

the local clientele.



COOPERATIVE

BANKING

STRUCTURE

Agricultural credit

Short term and

medium term

credit

State co-operative

banks

Central co-

operative banks

Primary

a ricultural credit Grain banks

Long term credit

Central land

development

banks

Primary land

development

banks

Non-agricultural

credit

State co-operative

banks

Central co-

operative bank

Primary non

agricultural

societies

Employees co-

o erative creditUrban co-

State industrial

banks

Central industrial

co-operative

banks



1. STATE CO-OPER ATIVE BANK

RBI is not in a condition to deal directly withprimary credit societies or central co-operativebanks because of their large number

It provides funds to these societies through stateco-operative societies

The district or central co-operative cannotdirectly deal with each other

The major part of the share capital is provided bymember societies , the rest is generallycontribution from the state



The main source of their deposits is again the

member societies and central co-operativebanks

As much as 98%of the advance of co-operativesocieties are to these societies

Of the total advances approximately 75%areshort term and 25%are medium termadvances

Almost two third of the advances of thestate co-operative banks is for agriculturalpurposes



2. Central (district)co-operative banks

Central (district )co-operative banks

Federations of the

co-operative

societies

Co-operative societieswhose membership

may be acquired by

the co-operative

societies or individuals



The main function of central co-operative

bank is to provide credit to the member

primary co-operative credit societies

They make give loan to individuals also



3. PRIMARY CREDIT SOCIETIES

They have direct root with they people theyintend to serve

In rural areas they mainly serve cultivators

In urban areas they mainly serve theartisans,etc

The success of co-operative movement

depend upon them Share value being naminal is the main source

of the funds



The lending is only to the members of the

society and every one can be a member

A large amount of 40% of the total also

perform non-credit functions

The interest rates are very low

These societies provide cheapest possible

credit to the members



STRUCTURE

They have a two tier system

The apex body in the state is the state land developmentbank

At public contact level there are central land mortgage

banks or primary land development banks or braches of central land development bank

The organisation of these banks are differs from state tostate

At the national level ,state land development banks have

formed an association named ALL-INDIA LANDDEVELOPMENT BANKS UNION



Ordinary debentures are fully guaranteed the

state government

The RBI contributes 20% of each debenture

series or the shortfall in the public

subscription , whichever is lower



INDIGENOUS BANKERS

These are individuals and partnership firmsperforming the banking function

They also act as FINANCIAL INTERMIDIARIES

They are much larger than the commercial banks

According to the INDIAN CENTRAL BANKINGENQUIRY COMMITTEE (1931),

an indigenous banker is any individual or private firm receiving deposits and dealing in

hundies or lending money



They provide finance for productive purposes

directly to trade and industries , and indirectly

, through money lenders and traders to

agriculturists w it whom they find it difficult to

establish direct relations

They keep in touch with the traders and small

industrialists and finance marketing on asizable scale



MONEY LENDERS

Money lenders may be rural or urban ,

professional or non professional

They include large farmers , merchants ,

traders, arcadias, goldsmiths , village

shopkeepers , sardars of laborers ,etc

The methods and areas of operations differ

from money lender to money lender



M AIN CHARACTERISTICS OF

M ONEY LENDERS

1. Their funds are their own

2. Their clients are mainly the weaker sections

of the society

3. Their loans are highly exploitative. They

charge very high rates of interest

4. Their operations are entirely unregulated

5. The credit is prompt and flexible



FOREIGN BANKS They are here since British days. Some of them are as under

1. American Express Bank Ltd.

2. ANZ Grid lays Bank Plc.

3. Bank of America NT & SA

4. Bank of Tokyo Ltd.5. Banquc Nationale de Paris

6. Barclays Ban Deutsche Bank A.G.

7. Hongkong and Shanghai Banking Corporation

8. Citi Bank N.C.

9. Standard Chartered Bank.10. The Chase Manhattan Bank Ltd.

11. Dresdner Bank AG k Plc

Such new banks are :



Such new banks are :

Barclays bank

Bank of ceylon

Bank indonesia international

State commercial bank of Mauritius

Development bank of Singapore

Overseas Chinese bank corporation China trust commercial bank

Krug Thai banking public company ltd

Cho hung bank Fuji bank

Toronto dominion bank

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