This document provides an overview of the banking system in India. It defines a bank, outlines the key functions of banks which include accepting deposits and lending loans. It then describes the broad classification of banks in India, including scheduled banks, non-scheduled banks, commercial banks, co-operative banks, development banks, and investment banks. The roles of the Reserve Bank of India and various acts related to banking regulation are also summarized. Important public and private sector banks are named. The roles and structures of different types of cooperative banks, development banks, and investment banks are outlined as well.

1. BANK
MANAGEMENT
DR. RICHA SINGHAL
ASSOCIATE PROFESSOR
DEPTT. OF EAFM
S.S.JAIN SUBODH PG COLLEGE
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2. PRESENTATION
CONTENT
 DEFINITION OF A BANK
 FEATURES/FUNCTIONS OF
BANK
 BROAD CLASSIFICATION OF
BANKS IN INDIA
 RBI
 IMPORTANT ACTS OF RBI
 SUBSIDARIES OF RBI
 SCHEDULED BANKS
 NON-SCHEDULED BANKS
 COMMERCIAL BANKS
 CO-OPERATIVE BANKS
 DEVELOPMENT BANKS
 INVESTMENT BANKS
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3. DEFINITION OF A BANK
 A bank is a financial institution which performs the deposit and lending function. A
bank allows a person with excess money (Saver) to deposit his money in the bank
and earns an interest rate. Similarly, the bank lends to a person who needs money
(investor/borrower) at an interest rate. Thus, the banks act as an intermediary
between the saver and the borrower.
 The bank usually takes a deposit from the public at a much lower rate called deposit
rate and lends the money to the borrower at a higher interest rate called lending rate.
 The difference between the deposit and lending rate is called ‘net interest spread’,
and the interest spread constitutes the banks income.
 Banks distribute the medium of exchange. Banking is a business. Banks sell their
services to earn money, and they must market and manage those services in a
competitive field. Banks are financial intermediaries that safeguard, transfer,
exchange, and lend money and like other businesses that must earn a profit to
survive. Understanding this fundamental idea helps you to understand how banking
systems work and helps you understand many modern trends in banking and finance.
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4. FEATURES/FUNCTIONS OF BANK
1- ACCEPTING DEPOSITS
FIXED DEPOSIT ACCOUNT
CURRENTACCOUNT
SAVING BANK ACCOUNTS
2- ADVANCING OF LOANS
CASH CREDIT
LOANS AND ADVANCES
OVERDRAFT
DISCOUNTING OF BILLS OF
EXCHANGE
3- COLLECTION AND PAYMENTS OF
CREDIT INSTRUMENTS
4-UNDERWRITING FUNCTIONS
5- SALE AND PURCHASE OF SECURITIES
6- SAFE CUSTODY OF VALUABLE
GOODS
7- TRUSTEE, ADVISOR AND EXECUTOR
8- GUARANTEER OF LOANS
9-ARRANGEMENT OF PUBLIC DEBTS
10- CAPITAL FORMATION
11- FINANCING FOR TRADE AND
INDUSTRIES
12-MOBILITY OF CAPITAL
13- FLEXIBILITY OF MONETARY
SYSTEM AND PRICE STABILITY
14- EMPLOYMENT GENERATION
15- FINANCE FOR PRIORITY SECTOR
16-INNOVATION
17- DEVELOPING ENTREPRENEURS
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5. BROAD CLASSIFICATION OF BANKS IN INDIA
 Established- 1April 1935
 Nationalized- 1 Jan. 1949.
 Central bank and regulatory body under the jurisdiction
od Ministry of Finance, Govt. of India.
 The RBI is the supreme monetary and banking authority
in the country and has the responsibility to control the
banking system in the country. It supervises, guides and
regulates all the banks that are operating in our country.
It keeps the reserves of all scheduled banks and hence is
known as the “Reserve Bank”.
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6. IMPORTANT ACTS OF RBI
 Reserve Bank of India Act, 1934 is the legislative act under the Reserve Bank Of
India was formed. This act along with the Companies Act , which was amended in
1936, were meant to provide a framework for the supervision of banking firms in
India . It defines schedule banks.
 The Government Securities Act, 2006 is a legislation of the Parliament of India ,
which aims to introduce various improvements in the government
securities market and the management of government securities by the Reserve
Bank of India.
 The Banking Regulation Act, 1949 is a legislation in India that regulates all
banking firms in India. The Act provides a framework under which commercial
banking in India is supervised and regulated.
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7. Cont……
 The Foreign Exchange Management Act, 1999 (FEMA), is an Act of the Parliament of
India.“ to consolidate and amend the law relating to foreign exchange with the objective of
facilitating external trade and payments and for promoting the orderly development and
maintenance of foreign exchange market in India".[1] It was passed in the 29th December
1999 in parliament, replacing the Foreign Exchange Regulation Act.
 The Securitisation and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 (also known as the SARFAESI Act) is an Indian law. It
allows banks and other financial institution to auction residential or commercial properties
(of Defaulter) to recover loans.
 Credit Information Companies (regulation) Act,2005 -An Act to provide for
regulation of credit information companies and to facilitate efficient distribution of
credit
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8. SUBSIDARIES OF RBI
Deposit Insurance and Credit Guarantee Corporation
of India (DICGC)
Bharatiya Reserve Bank Note Mudran Private Limited
(BRBNMPL)
Reserve Bank Information Technology Private Limited
(ReBIT)
Indian Financial Technology and Allied Services
(IFTAS)
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9. SCHEDULED BANKS
• Any bank listed in the 2nd schedule of the Reserve Bank of India Act, 1934
• Paid-up capital of Rs. 5 Lakh and above.
• Covered under the depositor insurance program of Deposit Insurance and
Credit Guarantee Corporation (DICGC)
• A bank requires to satisfy the central bank that its affairs are not carried out
in a way that causes harm to the interest of the depositors.
• A bank should be a corporation rather than a sole-proprietorship or
partnership firm.
• Must satisfy the CRAR norms as prescribed by the RBI.
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10. NON-SCHEDULED BANKS
• Not listed in the 2nd schedule of the RBI Act, 1934.
• Banks with a reserve capital of less than 5 lakh rupees qualify as non-
scheduled banks.
• Unlike scheduled banks, they are not entitled to borrow from the RBI for
normal banking purposes, except, in emergency or “abnormal
circumstances.”
• These banks are also required to maintain the cash reserve requirements,
not with the RBI, but with them.
• Jammu & Kashmir Bank is an example of a non-scheduled commercial
bank.
• Not under any obligation to fulfil CRAR norms or keep reserves.
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11. COMMERCIAL BANKS
 Regulated under the Banking Regulation Act 1949.
 34 banks functioning in India of which 12 are public
sector banks and rest 22 are private sector banks
 Accepting deposits, granting loans, overdraft facility,
Agency functions, general utility functions ………
PUBLIC SECTOR BANKS(12)
PRIVATE SECTOR BANKS (22)
FOREIGN BANKS
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12. PUBLIC SECTOR BANKS(12)
• SBI
• SBI ASSOCIATES
• RRBS (43)
• NATIONALIZED BANKS
PRIVATE SECTOR BANKS (22)
• OLD BANKS
• NEW BANKS
FOREIGN BANKS
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13. CO-OPERATIVE BANKS
Registered under the Co-operative Societies Act, 1912.
Also come under the Banking Regulations Act, 1949 and the Banking Laws
Act, 1955.
An Autonomous Body
Founded by collecting funds through shares, accept deposits and grant loans.
Shares of unlimited liability.
One shareholder carries one vote .
Basis on No profit – No loss .
Provides loan to serve entrepreneurs.
Mainly agriculture finance.
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This Photo by Unknown Author is licensed under CC BY-SA

14. 1) Urban Co-operative Banks (56)
2) Rural Co-operative Banks
(A) Short Term
(i)State Co-operative Banks (32) (state level)
(ii) Central Co-operative Banks (370)(district level)
(iii) Primary Agriculture Credit (92789)(village level)
(B) Long term
(i) State Co-operative and Agriculture Development
Bank(SCARDB) (20)
(ii) Primary Co-operative and Agriculture Development
Bank(PCARDB)(702)
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15. DEVELOPMENT BANKS
• Enterprise Creation
• Long term and medium term loan
• Major development banks working in India as follows:
 National Bank of Agriculture and Rural Development (NABARD) 1982
NABARD BILL- 1981
Agriculture Refinance facility
50% paid up capital RBI and 50% by the Central Government
 Industrial Finance corporation of India Limited (IFCI) July 1, 1948
 Industrial Development Bank of India (IDBI) July 1, 1964
 Small Industries Development Bank of India. (SIDBI) April 1990.
 Export Import Bank of India.(EXIM) Jan 1, 1982.
 State Finance Corporations (SFCS)
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16. INVESTMENT BANKS
 An Investment company is a company whose principal business is the
acquisition of shares, stocks, debentures or other securities.
 The basic object is to diversity by the small outlays of its shareholders or
unit- holders, by operating the collective fund so accumulated through the
medium of a large portfolio.
UNIT TRUST OF INDIA (UTI,1964)
LIFE INSURANCE CORPORATION OF INDIA (LIC,1956)
GENERAL INSURANCE CORPORATION OF INDIA (GIC, 1972)
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17. THANKS
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