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Meaning definition and functions of banking

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  • 1. Workshop on Modern Banking B.V.Raghunandan, Faculty of Commerce, SVS College, Bantwal. Kavery College, Virajpet 08-03-2013
  • 2. Meaning of BankingInvestorWords.com defines bank as, “an organisation, which does most or allof the following: receives demanddeposits and time deposits, pays intereston them, and honours instruments drawnon them, discounts notes, makes loans,and invests in securities; collects cheques,drafts and notes; certifies depositors’cheques; and issues drafts”
  • 3. Chapter I:Introduction Functions & Characteristics1)Accepting Deposits2)Lending or Investment3)Nature of Repayment4)Mode of Withdrawal5)Joint Stock Company6)License from RBI
  • 4. Significance of BanksSavings Mobilisation Public FinanceRemittance of Funds Financing the NationDevelopment of Bill Market Risk Free InvestmentWell Developed Money marketDevelopment of Capital Market Corporate Services Social Banking
  • 5. Evolution of Banking in IndiaPresidency Banks: Bank of Bengal Nationalisation of 14 Banks-in 1809,Bank of Bombay in 1840 1969& Bank of Madras in 1843 Second Dose ofImperial Bank of India -1921 Nationalisation –1980Reserve Bank of India-1935 Narasimham Committee Reforms-1990sState bank of India-1955
  • 6. Composition of Indian Banking SystemReserve Bank ofIndiaCommercial BanksDevelopmentBanksRegional RuralBanksCo-operativeBanksNABARDLand DevelopmentBanksExim Bank
  • 7. Reserve Bank of IndiaEstablished in 1935Central Board ofDirectors with 20members1local Board foreach of the fourregionsTraditional centralbanking functionsRegulatoryfunctionsPromotionalfunctions
  • 8. Commercial BanksPublic SectorBanks:1+7+14+6=28Private SectorBanks:Indian,foreign& NewGenerationBanksScheduled &Non-Scheduledbanks
  • 9. Development Banks IFCI Ltd in 1948 ICICI Ltd in 1955 18 SFCs Industrial Investment Bank of India (IRCI in 1971 and reincorporated in 1997 IDBI in 1964
  • 10. Regional Rural BanksProduct of 20 point programme of the govt.(1975)Scheduled Banks & Non-Scheduled BanksTreated as cooperative societiesSponsored by a public sector bank196 RRBs covering 451 districts spread over 23 states having 14,552branchesArea Restriction
  • 11. Functions of RRBsAccepting DepositsLending & Investment: CRR 3%-small &marginal farmers, SHG, AgriCo-ops, smallentrepreneurs, small traders and smallindustriesMicroFinanceAuthorised Dealers in Foreign Exchange
  • 12. Co-operative BanksThree Tier StructureDifferent Economic GroupsMost of the Functions of Commercial Banks
  • 13. Linking SHGs andNABARD NGOs Kisan Credit Card Scheme in collab with RBI,Comm. Banks, Coop BanksSet-up in 1982 Micro-FinanceTook over ARC InitiativeRefinanceInspection of RRBsRouting BranchExpansionapplications of RRBsAsscn with WorldBank & others
  • 14. Land Development BanksLong-term finance to agricultureCo-operative institutionsMortgage is created on the land50% of the market value of the land given as loanSevere criticisms
  • 15. EXIM Bank Providing Loans & Advances Export Facilitation Non-Funded Activities Financing Capital Equipments Promoting Joint Ventures Merchant Banking Marketing Facilitation Factoring and Farfaiting Services Part Financing Consultants Providing Venture Capital
  • 16. THANK YOU