Indian economy and it's role

1. - By Pratik Kukade

2. Economics & Economy
Unlimited Desires
Limited Resources
Management of Resources
Theory Based Study Practical Based Study
Economics Economy

3. Economics deals with the management of scarce resources.
ü Economics is the study of how societies use scarce resources to produce valuable
commodities and distribute them among different people.
ü Economics studies how individuals firms, government and other organizations within
our society makes choice.
ü Economics studies the economic activities
Economic Activity
Economic activity consists
of all actions related to
money which includes
production, distribution,
trade, consumption of good
and services.
Economics Economy
Objective:
•for optimal use of resources
•Management of resources
•Study of Demand Supply ratio
Problems:
•Lack of
resources
•Lack of
proper
allocation

4. Factors Definition Result Indian Position
Land Natural resources
used in production
Rent Available
Capital Money &
Technology
Interest Scarcity
Labor Production Power
found in human
brain or body
Wages Available(Skill India)
Entrepreneurship Risk appetite Profit Scarcity
Factors of Economy

5. Sectors Of Economy
On the basis of
economic activities
On the basis of work
On the basis of
ownership
1) Primary
2) Secondary
3) Tertiary
4) Quaternary
5) Quinary
1) Organized Sector
2) Unorganized Sector
1) Public Sector
2) Private Sector

6. On the basis of economic activities
Primary Sector:-
•Production using natural resources.
•Also known as Agricultural or production sector
•Red collar job
•GDP Contribution 17% Population Engaged 55%
•E.g. Agriculture, Fishing, Poultry
Secondary Sector:
§Value addition of primary sector unfinished products.
§Also known as Manufacturing sector.
§Skilled worker: White collar Unskilled worker: Blue collar
§e.g. Steel, Metal industry
Tertiary Sector:
ØThis sector provides support to primary and secondary sectors through various services such
as transport, banking, etc.
ØGDP share: 54%
Sectors 1951 2021
Primary Sector 56% 17%
Secondary Sector 15% 29%
Tertiary Sector 29% 54%

7. Branches of Economy
Microeconomics:
Individual study of
economic activities
Macroeconomics:
Plenary study of economics
activities
•Individual Level
•Demand
•Supply
•Personal Income
•Collective Level
•Aggregate Demand
•Aggregate Supply
•National Income

8. Key components of microeconomics
Consumer behavior theory:- In this, it is studied how a consumer allocates his income
among various components so that maximum satisfaction / happiness can be earned.
Production Theory:- This principle is the study of how goods and services are created or
manufactured.
Costs of Production:- According to this theory, the price of goods or services is
determined by the cost of the resources used during production.
Key components of macroeconomics
•Principles related to employment Fiscal policy
•Monetary policy Inflation and Deflation
•Government budget Money supply and credit creation
•Exchange rate balance of payments

9. On the basis
of
relationship
with world
Based on
Developme
nt
World
bank
Country
group
Based on
ownership
of
resources
Roles of
different
sectors
Based on
planning
•Open
economy
•Closed
economy
•Developed
•Developing
•Least
Developed
•Low
income
•Low
middle
income
•High
middle
income
•High
income
•First
world
•Second
world
•Third
world
•Fourth
world
•Capitalistic
•Socialist
•Mixed
•Agricultu
re
•Industry
•Service
•Planned
•Non
Planned
Types of Economy

10. Based on Inter-Relationship With Outer-World
Open Economy Close economy
§Import and Export
§Policy of Liberalism, Globalization
§No Import and Export
§Policy of Protectionism
Based on Ownership of resources, production
And Role of government
Capitalist Economy Mixed economy
Laissez-faire (market forces -
demand and supply) and
private ownership
E,g, USA, Britain
Government intervention
and ownership
E.g. USSR, Cuba
Socialist economy
Government and private
sector participation
E.g. India, Sweden

11. Capitalist Economy:
vPropounded by:- Scottish Economist Adam Smith
vBook :-The Wealth of Nation (1776)
vLaissez faire theory in economics
vDemand supply ratio(mrket forces)
vPrivate sector ownership
Features:-
qCompetition
qPurpose: Maximum profit
qMarket freedom
qconsumer has options
qEconomic Inequality
Socialist Economy:
vPropounded by:- German Economist Karl Marx
vBook :-Das Capital (1867)
vGovernment drives economy
vDemand supply ratio(msrket forces)
vPublic sector ownership
Features:-
qObjective -Public welfare
qLack of market
competition
qAdministrative prices
instead of market prices
qEconomic equality
Mixed Economy:
vPropounded by:- British Economist John keynes
vBook :-The theory of employment, Interest &
money, (1927)
vMixed form of Capitalistic and Socialist Economy
Features:-
qObjective -Public welfare
qEconomic Planning
qSocial Justice

12. Based on World bank(Per capita Income)(2016)
Based on different stages of development
Developed Least Developed
Developing
•High industrial development
•High per capita income
•High technical knowledge
•Industrialization process late
•Low per capita income
•Low tech
•Lack of infrastructure
•Early stage of development

13. Indian Economy
qMixed Economy
qPer capita income: $ 2120
qAgrarian economy as 53% population
depend on Agriculture which is 19% of
GDP
qUnemployment
qHDI index rank: 131st
q65% youth population
qLack of Technology, capital
qEconomic Inequality
qLack of literacy
qPopulation overload
qConservative / Orthodox society
qPlanning commission
qDependence on Imports

14. Circular flow of income
The circular flow of income or
circular flow is a model of the
economy in which the major
exchanges are represented as
flows of money, goods and
services, etc. between economic
agents.

15. Firm Household
Circular flow of income and financial institution or two-
cycle flow
Sell
Income
Expediture
Labour
Expenditure Income
Financial
Institution
saving
Loan
saving
Loan
It shows the mobility of resources, which is necessary for the operation of the economy.

16. Firm Household
Circular flow of income and financial institution or Tri-cycle flow
Sell
Income
Expediture
Labour
Expenditure Income
Financial
Institution
saving
Loan
saving
Loan
It shows the mobility of resources, which is necessary for the operation of the economy.
Government

17. IMPORTANCE
Shows the mobility of resources
BANK GROWTH
FIRM PRODUCTION Employment Income
Family Spending Demand

18. 1. Mixed economy means
A. Where both agriculture and industry are given
equal importance
B. Where public sector as well as private sector exist
in the national economy
C. Where the process of globalization in the national
economy is heavily influenced by Swadeshi
D. Where the Center and States have equal
participation in economic planning and development
Ans –B
2. Which of the following is a major feature of the
Indian economy
A. capitalist economy
B. Socialist economy
C. mixed economy
D. neither of the above
Ans –C
3. It will be true that India is defined
A.As a food scarcity economy
B.As a labor-intensive economy
C.As a trade surplus economy
D.As a capital surplus economy
Ans –B
4. Which of the following correctly explains that
India is a rudimentary economy?
1)Uneven distribution of income
2)High dependency rate
3)Slow rate of growth in national income
4)Changes in Bank and Financial Sector
Choose the correct answer
A.1,3 and 4
B.1,2 and 4
C.1 and 4
D.All of the above
Ans –D
5. Which of the following is an uneconomic element
in the growth of the country
A.Social behavior
B.natural resources
C.Power resources
D.Capital resources
Ans – A
6. How is India's economy
A.Backward
B.Developed
C.Developing
D.Rudimentary
Ans - C

19. 7. A common feature of a rudimentary economy is
1)Low income per person
2)Low rate of capital formation
3)Low dependency ratio
4)Having more workforce power in the third sector
Code
A.1 and 2
B.2 and 3
C.3 and 4
D.1 and 4
Ans –A
8. Indian model of development protects whose
interests
A.person
B.State
C.Both individual and state
D.neither of the above
Ans –C
9. Which of the following is not a part of the second
generation of economic reforms identified by the
Government
A.Oil sector reform
B.Public sector reform
C.Reform of justice system
D.Reforms in government and public institutions
Ans –C
10. With reference to the various sectors of the
economy, make the following statements
1. Primary sector includes agriculture, forest, fishery
and mining.
2. The secondary sector covers manufacturing,
construction, hydropower and gas supply.
3. Trade and transport come under tertiary sector
Which of the above statement is correct
A.only 1
B.2 and 3 only
C.1 and 3 only
D.1, 2 and 3
Ans -D
11. Which of the following factors are factors of
production Are considered
1. Land
2. Labor
3. Capital
4. Entrepreneurship
5. Benefits
Choose the correct answer
A.1,2,3 and 4
B.2,3,4 and 5
C.1,2,3 and 5
D.1,2,3,4 and 5
Ans -A

20. 12. With reference to different types of economy,
consider the following statements
1. The principle of market demand and supply does
not apply in a socialist economy.
2. Government and private sector have a participative
role in mixed economy.
3. In the capitalist economy, special emphasis is
placed on market competition.
Which of the statements given above is / are correct
A.only 1
B.1 and 2 only
C.2 and 3 only
D.1, 2 and 3
Ans :-D
13. What factors were responsible for the election of
mixed economy in India
1. Social Justice Fulfillment
2. Connecting Indian Economy with Global Economy
3. Reducing the burden of government
4. Establishing government ownership over resources
Choose the correct answer
A.2 and 3 only
B.1, 2 and 3 only
C.1, 3 and 4 only
D.1, 2, 3 and 4
Ans -B
14. With reference to closed economy, consider the
following statements
1. It prohibits import and export of goods and services.
2. This economy follows a liberal policy
3. Only exports here
4. This economy supports protectionist policy
Which of the statements given above is / are correct
A.only 1
B.1 and 4 only
C.1 and 2 only
D.3 and 4 only
Ans –B
15. Which of the following statements is not correct
with reference to the role of various sectors in the
Indian economy
A.The share of agriculture in India's GDP has
decreased since independence.
B.India still could not come under the category of
industry based economy.
C.The services sector accounts for about 54% of
India's GDP.
D.The second phase is underway in India in the
growth stages of the development process.
Ans –D

21. Financial System
Finance
Right to use currency
Base: Interest / Dividend
Financial system :- Financial system is actually a combination of financial services,
financial instruments and financial markets, where the facility of exchange of
finance is available.
A. Financial Services :-Banking services, investment consulting etc.
B. Financial Institutions :-Banks, insurance, non-bankinginstitutions etc.
C. Financial Instruments :-Shares, Checks, Bonds etc.
Financial exchange :-loan transaction action

22. Financial Market
An institutional arrangement where buyers and sellers transact finance
Money Market Capital Market

23. 1. Lack of integrated market
2. Lack of logical interest rate
structure
3. Absence of organized finance
market
4. Lack of fundsin the money
market
5. Inadequate banking facilities
Characteristics of Indian
money market
Liquidity

24. History of banking in india
1. 1157 :-Bank of Venice in Italy
2. 1694 :-Bank of England
3. 1770 :-Bank of Hindustan by Alexander & Co. in collaboration with foreign capital,
India's first bank based on European banking system
4. 1806 :-Bank of Bengal
5. 1840 :-Bank of Bombay
6. 1843 :-Bank of madras
7. 1865:-Allahabad Bank –Kolkata
8. 1881 :-Awadh Commercial Bank (First bank operated by Indians on limited
liability basis)
9. 1894 :-Punjab National Bank (First Indian Bank Lala Lajpat Rai and DayalSingh)
–New Delhi
10. 27 January1921 :-Imperial Bank of India (Bengal + Bombay + Madras) (it was
functioning as a central bank till 1934)
11. 1926 :- Hilton Young Commission recommends to create central bank
12. 1930 :-Central banking inquiry committee
13. 1 April 1935 :-Establishment of RBI as central bank by RBI Act
14. 1 Jan 1949 :-Nationalization of RBI –Mumbai
15. 1 July 1955 :-Imperial Bank of India was nationalized and named State Bank of
India. –Mumbai

25. 16) 1 July 1964 :- IDBI (Industrial Development Bank of India - Mumbai)
17) 19 July 1969 :- Those 14 banks whose deposits amounted to ₹ 50 crores or more, were
nationalized
18) 15 April 1980 :- Nationalization of 6 more commercial banks (having deposits of 200
crores or more)
19) 1 January 1982 :- EXIM (Export-Import Bank of India, Mumbai)
20) 12 July 1982 :- NABARD (National Bank for Agricultural & Rural Development – Mumbai)
21) 1 July 1988 :- NHB (National Housing Bank – New Delhi)
22) 2 April 1990 :- SIDBI (Small Industries Development Bank of India – Lucknow)
23) 1993 :- New Bank of India merged with Punjab National Bank
24) 1 April 2019 :- Vijaya Bank and Dena Bank merge with Bank of Baroda
25) 30 AUGUST 2019 :- Central Finance Minister Nirmala Sitharaman has announced a grand
plan to amalgamate 10 banks into 4 banks.
▪ Oriental Bank of Commerce and United Bank of India merge with Punjab National Bank
▪ Andhra Bank and Corporation Bank merge with Union Bank of India
▪ Syndicate Bank's in Canara Bank
▪ Allahabad Bank will be merged with Indian Bank

26. Reserve Bank of India
1) 1770 :- Start of modern banks in India
2) 1806 :- Bengal Central Bank
3) 1840 :- Bombay 1921 : Imperial Bank Of India
4) 1843 :- Madras Control Over Other Bank
5) 1926 :- Hilton Young / Royal Commission
Recommendation
6) 1934 :-RBI Act
7) 1 April 1935 :- Formation of RBI

27. Introduction
1)Establishment :-1 April 1935
2)Starting capital :- 5 Crore
3) Acted as central bank of India, Burma and Pakistan
4) Central bank
I. Cash control
II. Regulation of other banks
5) Headquarters
I. Starting :- Culcatta
II. from 1937 ◌े :- Mumbai
6) Symbol :- A palm tree and a tiger
7)Nationalization :- 1 January 1949 (Banking Regulation Act passed at the same time)
8) First governor :- Osborn Smith◌
् (1935 –1937)
9) First Indian Governor : C D Deshmukh(1943 -1949)
10) Present 10th Governor :- shasktikant Das (From 2018)
11) RBI Accounting Year :- 1 July to30 June
12) RBI Museum :- Kolkata
13) Subsidiary institute of RBI :-
DICGC :- Deposit Insurance and Credit Guarantee Corporation – Mumbai
▪ BRBNMPL :- Bharatiya Reserve Bank Note Mudran Private Limited – Bengaluru
▪ ReBIT :- Reserve Bank Information Technology Private Limited – Mumbai
▪ IFTAS :- Indian Financial Technology & Allied Services – Hyderabad & Mumbai

28. Structure of RBI (RBI ACT 1934)
The RBI is governed by a 21-member Central Board of Directors, which is
structured as follows :-
Central board of directors
Official Director (Full Time) Non -official director
One
Governor
Maximum 4
Deputy Governor
Directors of four
local boards
Two
government
officials
10
directors from various
sectors nominated by
the government

29. RBI Functions
As central bank For the development of economy
1) Cash inflow
2) Bank of government
3) Bank of banks
4) Forex Regulation
5) Monetary Policy
6) Management of data
7) License
8) Representation of Indiain IMF
1) Financial Inclusion
2) Modernization of
financial system
3) Financial Awareness and
Literacy
4) Nature of savings

30. Monetary Policy
1) Introduction :- Policies regulating the flow of money in the economy
2) Monetary policy in the Indian economy is framed by the Monetary Policy Committee
under the RBI Act 1934.
3) The monetary policy is reviewed after every 2 months
4) Objective :-
Liquidity Control (Availability of money and credit)
Price stability - Inflation
Economic Growth

31. Monetary policy committee
1) Monetary policy in the Indian economy is framed by the Monetary Policy Committee
under the RBI Act
2) On 29 September 2016, the Monetary Policy Committee was formed by the
Government of India by amending the RBI Act 1934. Earlier it used to make
only monetary policy of RBI
Structure (Section 45ZB of RBI Act, 1934) :-
6 Members
3 RBI 3 Govt

32. Instruments of Monetary Policy
Quantitative Instruments Quanlitative Instruments
Bank Rate
LAF - Liquidity
adjustment
facility
MSF - Marginal
Standing
Facility
Open
market
operations
VRR – Variable
Reserve Ratio
Repo Rate Reverse Repo
Rate
CRR – Cash
Reserve
Ratio
SLR -
Statutory
Liquidity
Ratio
• Fixation of minimum
limit
• Moral Pressure
• Credit rationing

33. Quantitative Instruments
LAF - Liquidity
adjustment
facility
MSF - Marginal
Standing
Facility
Open
market
operations
VRR – Variable
Reserve Ratio
Repo Rate
Reverse Repo
Rate
CRR – Cash
Reserve
Ratio
SLR -
Statutory
Liquidity
Ratio

34. LAF - Liquidity adjustment facility
1. Introduction :- Short term liquidity adjustment is done by the Reserve Bank of India
2) Instrument
3) Objective
Repo Rate
Reverse Repo Rate
Short term liquidity adjustment
Balance of economic system
Regulation of interest rates

35. 1) Introduction :- Interest rate at which the Reserve Bank provides overnight liquidity
to banks against the collateral of government and other
approved securities
2) Objective :- Liquidity control
3) Current RR :- 4%
4) Effect :-
Effect Repo rate Increases Repo rate Decreases
Bank Interest Rate Increase Reduce
Liquidity Reduce Increase
Expenditure and
Investment
Reduce Increase
Inflation Reduce Increase
Growth Rate Reduce Increase
Repo Rate

36. Reverse Repo Rate
1) Introduction :- interest rate at which the Reserve Bank absorbs liquidity, on an
overnight basis, from banks
2) Objective :- Liquidity control
3) Current RR :- 3.75%
4) Effect :-
Effect Reverse Repo rate
Increases
Reverse Repo rate
Decreases
Bank Interest Rate Increase Reduce
Liquidity Reduce Increase
Expenditure and
Investment
Reduce Increase
Inflation Reduce Increase
Growth Rate Reduce Increase

37. VRR - variable Reserve Ratio
1)Introduction :- According to the RBI Act 1934, every scheduled commercial bank has
to reserve some amount of its money in the Reserve Bank which keeps on changing.
2) Instrument
CRR – Cash Reserve Ratio
SLR - Statutory Liquidity Ratio
3) The ratio of the amount changes continuously daily or at a given time, due to this
reason the changing reserve ratio is called

38. -: Securities :-
q All the documents by which capital is collected from the market are called securities.
q Government securities issued (G- Sec)are called government securities.
-: NDTL - Net Demand and Time Liability:-
• Net demand and time liability is the sum of the demand and time liabilities of
public and other banks.
• To calculate NDTL of any bank ,we have to subtract savings at other bank from
the Demand and Time Liability.
• CRR, SLR & LAF are calculated on NDTL

39. Bank
Deposit Loan
Asset
Liability
DL: Demand
Liability
TL: Time
Liability
ODTL: Other
Time &
Demand
Liability
DL + TL + ODTL = Gross Liabilities
Saving account
Current account
FD
RD
bill
Unpaid Dividends
NDTL = DL + TL +
ODTL - IBL
Deposit in other banks
A bank’s liabilities with other
banks are its inter-bank liabilities
(IBL)

40. 1) Introduction :- The average daily balance that a bank is required to maintain with
the Reserve Bank as a share of such per cent of its Net demand and time liabilities
(NDTL)
2) No interest is paid by RBI on this
3) Current RR :- 4%
CRR – Cash
Reserve Ratio
Effect Cash Reserve
Ratio Increases
Reverse Repo rate
Decreases
Bank Interest Rate Increase Reduce
Liquidity Reduce Increase
Expenditure and
Investment
Reduce Increase
Inflation Reduce Increase
Growth Rate Reduce Increase

41. SLR – Statutory
Liquidity Ratio
Effect SLR Increases SLR Decreases
Bank Interest Rate Increase Reduce
Liquidity Reduce Increase
Expenditure and
Investment
Reduce Increase
Inflation Reduce Increase
Growth Rate Reduce Increase
1) Introduction :- The share of NDTL that a bank is required to maintain in safe and
liquid assets, such as, unencumbered government securities, cash and gold.
Introduced in BRA, 1969
2) Current SLR :- 18%

42. Bank Rate
MSF - Marginal Standing Facility
1) Introduction :- The rate of interest on which RBI provides long-term loans to
commercial banks.
2) Current BR :- 4.25%
3) Effect :-It is also related to credit creation like repo rate.
1) Introduction :- The rate of interest on which RBI provides long-term loans to
commercial banks.
2) MSF introduced in 2011-12
3) Borrow from the Reserve Bank of India by pledging government securities at a rate
of 1% above the repo rate.
4) Under the MSF banks can borrow money from the Reserve Bank up to 1% of their
net demand and time liabilities.

43. Open market operations
1) Introduction :- These include both, outright purchase and sale of government
securities, for injection and absorption of durable liquidity, respectively.
2) Effect :- Purchase of government securities - putting money in the
economy
Sale of government securities - drawing money from the economy

44. Quanlitative Instruments
Credit rationing Moral Pressure Direct action
Minimum
limitation
Fixation
Consumer
credit
regulation
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45. 1) Introduction :- Rationing of credit is a method by which the Central Bank seeks
to limit the maximum amount of loans and, also in
certain cases, fix ceiling for specific categories of loans
2) Objective :- Increase in
credit flow in priority sector and control of credit flow in unwanted areas
Credit rationing
Margin minimum limit
1) Loans are given by banks to loan
recipients against certain securities (collateral)
2) Generally, the total value of the security is higher than
the loan sanctioned.
3) Loan margin is
the difference between the value of the security given for the loan sanctioned
and the loan given on its basis.
4) The minimum margin limit on a loan is
determined by the RBI.
5) Changes in margins also change banks' risk

46. Priority sector credit control
All scheduled commercial banks and foreign banks (with a sizable presence in
India) are mandated to set aside 40% of their Adjusted Net Bank Credit
(ANDC) for lending to these sectors
40 %
18%- Agriculture
10%- micro
enterprise
7.5%- weaker
sections

47. Terminology related to Monetary policy
BPLR
Base
Rate
MCLR EBR
Benchmark Prime Lending Rate
1) Rates used by commercial banks to provide credit to their trusted customers
2) Result – Fail
Deepak Mohanty Committee closed it in 2010
Base Rate
1) Introduction :- The lowest interest rate below which commercial banks cannot
provide loans to customers
2) The base rate is determined by commercial banks.
3) RBI fixes the base rate range
Monetary transmission problem

48. MCLR - Marginal Cost of Funds Based Lending Rate
•This method was introduced by RBI from 1 April 2016.
•Under this arrangement, banks will have to base the marginal cost of the fund
in determining the lending rate, that is, in case of reduction in repo rate, banks
will also have to reduce their base rate.
•Dr. Janak Raj Committee abolished it.
Cost of Production of Unit Goods - Marginal Cost

49. EBR - External Benchmark Rate
It was recommended to introduce external benchmark rate under the
chairmanship of Dr. Janak Raj
From 1 October 2019, the Reserve Bank of India has made it mandatory for
all banks to link to the external benchmark rate.
Banks must link their interest rates with any of the three grounds.
1) Repo Rate
2) Interest on government securities
3) Any other benchmark rate published by FBIL (Financial Benchmark India
Limited) Decided every 3 month

50. MSS - Market stabilization scheme
Under the market stabilization scheme, the Reserve Bank
absorbs excess cash from the market and issues treasury bills
and dated securities in lieu of it.
MSS was introduced in 2004 for monetary management
Open Market Operations (OMO) is buying and selling of
Government securities to manage money supply in the
economy. Thus, it is used to both inject and withdraw liquidity
while MSS is only selling of Government securities
to withdraw excess liquidity

51. Banks and other financial institutions in India
Bank : According to the Indian Banking Companies Act 1949, banking refers to
depositing public money for lending or appropriation, which can be withdrawn
on demand and withdraw by check, draft and other orders.
Classification of banks
Scheduled bank Non-scheduled Bank
Commercial Bank Co-operative Bank
PSU Private Foreign RRB
Nationalised SBI Other
Urban Rural

52. Nationalized bank :- 11
1) Meaning:- Banks in wehich govt takes more than 51 % of share
2) Current number :-11
3) Nationalization by Indira Gandhi Government
▪ 19 July 1969 :- banks with more than 50 crore deposit
▪ 15 April 1980 :- banks with more than 200 crore deposit
4) Nationalization objective :- ▪ Financial inclusion
▪ credit availability for primary sector
▪ Green Revolution
▪ Development of micro and small scale industries
▪ Leaning towards socialist / state based economy
19 July 2019:- 50 yrs to
Nationalization
Presently Nationalised
banks have 70% share in
baking economy

53. Bank Current situation Bank Current situation
Bank Of India Indian Overseas
Bank
Union Bank Of india Allahabad Bank Merge with Indian
Bank
Bank of Baroda Uniterd Bank of
india
merge with Punjab
National Bank
Bank of
Maharashtra
Dena Bank Merge with BOB
Central Bank of
India
Andhra Bank Merge with UBI
Syndicate Bank Merge with Canara
Bank
corporation Bank Merge with UBI
United commercial
Bank
New Bank of India Merge with PNB
Punjab National
Bank
Oriental Bank of
Commerce
Merge with PNB
Indian Bank Vijaya Bank Merge with BOB
Canara Bank Punjab & sindh
Bank

54. State Bank of India
1) Largest public sector bank
2) Establishment :- 1 JULY 1955 (SBI ACT◌
् Gorewalla recommendation)
3) Headquarters :- Mumbai
4) Current chairman :- Dinesh kumar khara
5) As per SBI Act, minimum government
holding in SBI should be 51%.
6) Tagline :- With you all the way
7) First commercial bank in
the country to enter the life insurance sector (with Cardiff SA of France)
8) 28 countries 59 branches◌
ं
Made from Merger of following Bank:
1. State Bank of Saurashtra: july 2008
2. State bank of Indore: June 2009
3. State bank of Bikaner and Jaipur: April 2017
4. state bank of hydrabad
5. state bank of mysore
6. state bank of patiyala
7. state bank of travankor
8. bharatiya mahila bank

55. Regional rural bank :- 43

56. GOVERNMENT
1) SARFAESI Act 2002 :
• SARFAESI Act 2002 :- Securitization and
Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002
• The Act empowers banks to acquire the assets of the customer
in the case of NPAs
• Regulated by RBI
2) Debt Recovery Tribunal (DRT)
• DRT mainly deals with disputes related to NPAs.
• If dissatisfied with its decision, an appeal can be made to the Debt
Recovery Appellate Tribunal.
• Type: Civil Court

57. 3) Asset restructuring company (ARC)
• The company that acts as an agent of the bank restructures the assets of
the bank
• It was established under the SARFAESI Act 2002 to address problematic
debts.
• It is a private sector company that collects debt from customers as a
bank representative.
• In this process, the bank transfers the right to recover its loan to the ARC,
according to an agreement, a certain amount is paid to the bank by the
ARC.
4) 4R - NPA Policy
4R - NPA Policy
Reform Resolution Recognition Recapitalization

58. 4) Project Sashakt
• By-Ministry of Finance
• Recommendation - Sunil Mehta
• Purpose - to correct the balance sheet of banks
• In this scheme, the recovery process of NPA is classified according to the
amount
50 Cr NPA : Bank steering committee
50 to 500 Crore : Inter creditor Agreement
Resolution within 180 days by lead bank
Transfer to NCLT
More than 500 Cr : Asset Management Company

59. 6) Prompt Corrective Action-PCA
Rapid corrective action is a framework under which banks with weak financial
systems are kept under RBI supervision.
Indicators used by RBI for quick corrective action are
(Capital to Risk-Weighted Assets Ratio, CRAR) :- CRAR for banks 9%
has been fixed, C.R.A.R. In case of fluctuations, it is decided to put the bank in
the system of Rapid Corrective Action (PCA).
(Net NPA) :- If the net NPA of a bank If the amount lent by him
exceeds 6%, then RBI That bank got P.C.A. Let's put in the system.
(Return on Assets) :- This means how much return a bank is getting
on the amount of money it has lent or invested elsewhere. If a bank's 'Return on
Assets' remains negative for two consecutive years, then in this situation the
bank will get PCA.

60. 7) Mission Indradhanush :
Appointment
Bank Board Bureau
Capitalisation
Destressing
Empowerment
Framework
Governance Reforms
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5
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