2. BANK AND BANKING
A bank is a financial institution that serves as a
financial intermediary.
Functions of bank are known as banking.
3. Evolution of Banking in India
Presidency Banks: Bank of Bengal in 1809,Bank of
Bombay in 1840 & Bank of Madras in 1843
Imperial Bank of India -1921
Reserve Bank of India-1935
State bank of India-1955
Nationalisation of 14 Banks-1969
Second Dose of Nationalisation –1980
Narasimham Committee Reforms-1990s
ICICI Merger- 2003
4. Indian Banking Sector:overview
Economy grew by 8.5% in the last fiscal,
central bank raised interest rates 7 times,
increasing the repo rate by 1.75% ,
the reverse repo rate by 2.25%,
Indian foreign exchange reserve were US$314.6 BILLION
as on july 8,2011
5. Significance of Banks
Savings Mobilisation Public Finance
Remittance of Funds Financing the Nation
Well Developed Money Risk Free Investment
market Corporate Services
Development of Capital Social Banking
Market
6. Composition of Indian Banking System
Reserve Bank of India
Commercial Banks
Development Banks
Regional Rural Banks
Co-operative Banks
NABARD
Land Development
Banks
Exim Banks
7.
8. Functions of commercial banks
A. Primary Functions
a) Accepting Deposits
b) Advancing Loans
B. Secondary Functions
a) Agency Functions
b) General utility Services
9. a) Accepting Deposits
1) Fixed or Time Deposit Account
2) Current or Demand Deposit Account
3) Saving Deposit Account
4) Home Safe Saving Account
5) Recurring Deposit Account
11. Besides many primary functions, these
banks also perform many secondary
functions..
1. Agency functions:
Banks act as an agent to their
customers in different ways.
2. General Utility Services:
Banks also provide certain
services of general utility.
12. AGENCY FUNCTIONS
I. Collection and payment of various items:
Bank collect cheques,rent,interest and also make
payment of taxes, insurance premium.
II. Purchase of sale and security:
Banks are more knowledgeable with regard of
stoke and share business, they provide security to
their customers.
III. Trustee and Executer:
Banks also acts as trustees and executers of the
property of their customers.
13. IV. Remitting of Money:
Banks remit money at distance place though bank
drafts.
V. Purchase and sale of foreign exchange:
Banks buy and sell foreign exchange, promoting
international trade.
VI. Letter of Reference:
Banks give information about economic position
of customers to domestic and foreign traders.
VII. Underwriting:
Banks Underwrite the sale of new shares.
14. GENERAL UTILITY SERVICES
I. Locker facilities:
Banks provide locker facilities to their customers.
II. Traveler’s cheque and Letters of credit:
Banks issue traveler's cheque and letters of credit
to avoid the risk of carrying cash.
III. Business Information and Statistics:
Banks give advice to customers on financial
matters.
IV. Help in Transportation of goods:
Banks help big businessmen and industrialists in
transportation of goods from production centre
to consumption centers.
15. Difference b/w primary and secondary
functions:
Primary Functions Secondary functions
1.These are the main 1.These are the secondary
activities of the bank. activities of the bank.
2. These are the main 2. These are not main
source of income of the source of income of the
bank. bank.
3.These are obligatory on 3.These are not obligatory
the part of bank on the part of bank
performance. performance.
16.
17. Central Bank :
It is an apex institution of the monetary and banking structure of
a country. A central bank has the authority to regulate and
control the banking business and monetary system of a country.
Central bank of india is Reserve Bank of India. RBI was set up in
1935 under the RBI act of 1934.It was nationalized in 1949.
18. Main functions of RBI are
•Bank of issue
•Financial advisor to the state( banker also)
•Banker to bank
•Custodian of foreign exchange reserves
•Lender of the last resort
•Bank of central clearance and transfer
•Controller of credit
20. 2. Qualitative control
• Margin requirement
• Credit Rationing
• Regulation of consumer credit
• Direct action
.
21. Banking Innovations
Retail Banking
Bank as authorized dealer
Customer service
Lead Bank scheme
Service area approach
Micro finance
Consortium approach
Credit cards
Local Area Banks
