A bank is a financial institution and a financial intermediary that
accepts deposits and channels those deposits into lending activities, either directly
by loaning or indirectly through capital markets. A bank links together customers
that have capital deficits and customers with capital surpluses
Functions of Bank
•Receipt of Deposits
•Lending of money
•Agency services 1) Dividend payment
2) Insurance premium payment
•General services eg deposit valves
What is Bank ????
• Factors that influence organisations to change their
performance and the responses as perthe
demands made on them
of land, labor, capital, and entrepreneurship that a
country possesses and can exploit
for manufacturing at each stage of development
• Financial structures may be better suited to growth
at certain stages of development but they may be
less well suited in other
Rather than the nature of financial structure, it is the financial
system’s level of development that matters for growth
•In developing countries where economic development is hampered by
insufficient and inadequate access to financial services in rural areas, local
banks could improve financing opportunities to small and medium size
enterprises and encourage entrepreneurship.
•Economies at different stages of development require different blends of
financial services to operate effectively.
•Depending upon the structure and needs of an economy, the country’s
banking system should be dynamic and competitive to cater to the diverse
needs of the economy.
Financial inclusion is the delivery of financial services at affordable
costs to sections of disadvantaged and low-income segments
of society, in contrast to financial exclusion where those services are
not available or affordable
In other words, whether we need small number of large banks
or large number of small banks to promote financial inclusion ?
• Attract people of small means
• Penetration to unbanked areas
• Require less infrastructure due to limited area of operation
• Relationship banking
Small Banks & Financial Inclusion
• Vulnerable to shocks from the local economy
• Cannot finance big-ticket investments
• Small banks are prone to capture by big bank’s
• Lack economies of scale and scope
Types of BANK’S
Public Private Foreign Urban Rural
Legal Framework of Regulation of Banks in India
•Deposits Withdrawal by Check
•Acceptance of Deposits by Non- Banking Entities
This term refers to any financing arrangement that crosses national
borders. Cross border financing could include cross border
loans, letters of credit or bankers acceptances
Cross border financing within corporations can become very
complex, mostly because almost every inter-company loan that
crosses national borders has tax consequences, even when the loans
or credit are extended by a third party such as a bank
United Kingdom, Hong Kong, Singapore, United States of
America, UAE and Bahrain in Middle East account for a sizeable share
(83.81%) in the total assets of Indian banks deployed in overseas
Until nationalization, all major banks were controlled by one or major
houses. These houses used resources given by common people for their
Private ownership of banks resulted in concentration of income and
wealth in few hands.
Since publicly owned banks still perform poorly, privatisation seems to be
an effective policy in improving the performance of Indian banks.
The Reserve Bank of India (RBI) has suggested reorienting the banking structure in
four tiers and encouraging entry of only well-qualified entities to improve the quality
of the banking system and promote competition.
The first tier may consist of three or four large Indian banks with domestic and
international presence along with branches of foreign banks in India
The second tier is likely to comprise several midsized banking institutions including
niche banks with economy-wide presence.
The third tier may encompass old private sector banks, regional rural banks, and multi
state urban cooperative banks.
The fourth tier may embrace many small privately owned local banks and cooperative
Lesser number of banks would help in better monitory policy transmission.”
Nationalization is the process of taking a
private industry or private assets
into public ownership by a national
government or state.
The government decided to nationalize
14 major commercial banks on 19th
All commercial banks with a deposit
base over Rs.50 crores were nationalized
The second dose of nationalisation
came in April 1980 when banks were
Bank of Maharashtra
Bank of India
Punjab National Bank
Bank of Baroda
During 1921, the private banks like Bank of
Bengal, Bank of Bombay and Bank of
Madras were in service, which all together
formed Imperial Bank of India.
There are two categories of the private-
sector banks: "old" and "new".
Not nationalized at the time of
nationalization that took place during 1969
and 1980 are known to be the old private-
The banks, which came in operation after
1991, with the introduction of economic
reforms and financial sector reforms are
called "new private-sector banks"
City Union Bank established in1904
Dhanlaxmi Bank established in 1927
ING Vysya Bank established in1930
Jammu and Kashmir Bank established
Axis Bank (earlier UTI Bank) established in
HDFC Bank established in1994
Kotak Mahindra Bank established 2003
Yes Bank established in 2005