Commercial banks are financial institutions that collect deposits from savers and lend money to borrowers. They perform primary functions like accepting deposits and granting loans, as well as secondary functions including funds transfers, foreign exchange, and other services. The history of banking in India includes the establishment of the General Bank in 1786 and various other banks leading up to the nationalization of 14 major banks in 1969. The Reserve Bank of India regulates commercial banks and frames policies through various departments to promote development and control risks in the banking sector. Commercial banks face ongoing challenges to expand services rurally and maintain profitability amid competition.

1. PRESENTED BY:- Pawan Singh Raikhola
MBA INTEGRATED 5TH sem
ROLL NO:- 1664880012

2.  “Bank is an institution which collects money
from those who have in spare or who are
saving it out of their income; and lend this
money out to those who require it.”
 All those institution which are in the business
of banking are called financial institution.

3.  Commercial Banks are like other financial
institutions (e.g.:- money lenders, indigenous
bankers, cooperative societies, agricultural
and industrial credit institutions) which are in
the business of lending and borrowing of
money or credit.
 Commercial Banks are the most important
credit institutions in the country in the
business of lending and borrowing of money
and credit creation.

4.  In 1786, British East India Company’s employees in
Calcutta formed India’s first corporate venture, the
General Bank.
 In 1863 first native Indian bank formed at Rawul Pindee
by Punjabi Hindus.
 In 1862, Presidency banks entered an agreement to
distribute currency, receiving treasury deposits.
 By 1876, the Presidency banks were privatized.
 The Presidency banks merged in 1921 to form the
Imperial Bank of India, a commercial bank that acted as
a government bank until RBI in India established in
1935.
 In 1955, parliament established the State Bank of India.

5. Primary Functions Secondary Functions
1. Accepting deposits
2. Granting loans
A. Public utility services
 Transfer of funds
 Dealing in foreign
exchange
 Issue of letter of credit
 Undertaking of shares
 Locker facility
 Agency service

6.  The process of Transferring ownership and
operational rights of a banks from private or trusts
to the government in the country.
 In India also, 14 leading banks were nationalized
on July 18, 1969.
 Each one deposits were more than Rs 50crores.
 Their share in total deposits and advances were
almost two third of all scheduled banks in nation.

7.  To reduce concentration of economic powers with only
a few industrial magnets and to prevent monopolies.
 Mobilize resources even from backward and rural areas.
 To prevent corruption and misuse of firms: the trustees
were only benefiting from huge resources and it was at
the cost of general development in the country.
 To provide aid to the poor, small artisans and small
scale industries. Small scale industries contributed 40%
of industrial output but received only 4% of bank funds.
 To fulfill credit needs of farmers:- hardly 2.2% of funds
were available for agriculture.

9.  Time to Time, Commercial Banks have to
represent their details regarding financial
conditions, lending situations, and details
related to staff member to the R.B.I & every
other aspects related to banks have to be
represent to R.B.I.

10.  RBI regulates the commercial banks threw the provision of
banking regulation act 1949.
 Department of Banking Operation and Development (DBOD)
frames regulations for commercial banks.
 Department of Banking Supervision (DBS) undertakes
supervision of commercial banks, including the local area
banks and all-India financial Institutions.
 Department of Non-banking Supervision (DNBS) regulates
and supervises the Non-Banking Financial Companies
(NBFCs).
 Urban Banks Department (UBD) regulates and supervises the
Urban Cooperative Banks (UCBs).
 Regulation of Regional Rural Banks (RRBs) and the Rural
Cooperative Banks is done by Rural Planning and Credit
Department (RPCD).

12.  Rural India still remains a challenge for private sector
and foreign banks.
 Demand for banking services-especially retail banking,
mortgage and investment services are expected to be
strong.
 RBI announced norms in 2005 any stake holder
exceeding 5% in the private sector banks would be
vetted by them.
 Currently, India has 88 scheduled commercial bank
(SCBs) – 28 public sector banks, 29 private sector banks
and 31 foreign banks.
 Commercial lending activity is very intense in today’s
scenario.

14.  Problem of pressure on profitability.
 Problem of low productivity.
 Problem of Non performing assets.
 Problem from customer.
 Problem from New Banks.
 Competition from global majors.