This document provides an overview of commercial banking. It defines commercial banks as institutions that accept deposits and extend credit to meet business and individual needs. The document outlines traditional commercial banking functions like accepting deposits and lending funds, as well as modern functions such as intermediation, transaction, and transformation services. It also discusses different types of banks, including commercial, cooperative, and specialized banks. The structure of banking in India is reviewed, including public sector banks, private sector banks, and cooperative banks. Credit planning in India is also summarized.

1. PRESENTATION ON MONEY,BANKING&
FINANCIAL MARKETS

2. TOPIC:”COMMERCIAL BANKING”

3. INTRODUCTION
“Commercial Banking is the banking system which
deals in providing funds and lending money for the
commercial purposes and activities. Commercial
banking is established in order to promote the
commercial activities like buying and selling of goods
in the country. The objective of commercial bank is to
make profit. ”

4. BANK,BANKER AND BANKING
BANK: A bank is a financial institution which primary
deals with accepting money and lending the same to
the needy.
BANKER: Banker refers to a particular individual who
undertakes to carry on the functions of a bank.
BANKING: Banking refers to the activities undertaken
by bank to carry on its operations.

5. DEFINITION OF BANKING
The American Definition: By “Banking” we mean the
business of dealing in credits and by a “bank” we include
every person, firm or company having a place of business
where credits are opened by the deposits or collection of
money or currency, subject to be paid or remitted on draft,
check or order, or money is advanced or loaned on
stocks,bonds,bullion,bills of exchange or promissory notes are
received for discount or sale.
Hart’s Definition: Dr.Herbert L. Hart, the author of well-
known treatise, Law of Banking says “A banker is one who in
ordinary course of his business,honours cheques drawn upon
him by persons from for he receives money on current
accounts.”

6.  TYPES OF BANKS
Commercial Banks
Co-operative Banks
Specialized Banks

7. Commercial Banks: Commercial banks are joint
stock companies dealing in money and credit.
Co-operative Banks: Co-operative banks are a
group of financial institutions organized under the
provisions of the Co-operative Societies Act of the
states.
Specialized Banks: Specialized banks are foreign
exchange banks, industrial banks, development banks,
export-import banks catering to specific needs of
these unique activities. These banks provides financial
aid to industries, heavy turnkey projects and foreign
trade.

8. MEANING AND DEFINITION OF A
COMMERCIAL BANK:
Commercial banks are institutions that primarily
accept deposits and extend credit to serve customer
and corporate needs for capital. It creates credit by
making by making advances out of the funds received
and thus mobilizes the savings in the economy.
Commercial banks are primary vehicles through which
credit and monetary policies are transmitted to the
economy.

9. FUNCTIONS OF COMMERCIAL
BANKING
TRADITIONAL FUNCTIONS
MODERN FUNCTIONS

10. TRADITIONAL FUNCTIONS
ACCEPTING DEPOSITS
-Deposits in Current Account
-Deposits in Savings Account
-Deposits in Fixed Account
LENDING OF FUNDS
-Money at Call and Short Notice
-Advances
-Cash Credit
-Discounting of Bills

11. MODERN FUNCTIONS
-INTERMEDIATION FUNCTION
-TRANSACTION SERVICES
-TRANSFORMATION SERVICES
-OTHER FINANCIAL SERVICES

12. INTERMEDIATION FUNCTION: Commercial banks play
a vital role in the process of financial intermediation where
funds or savings of the surplus sectors are channeled to
deficit sectors.
TWO TYPES OF INTERMEDIARY SERVICES—
BROKERAGE
ASSET TRANSFORMATION

13. TRANSACTION SERVICES: Commercial banks offer
three types of transaction services such as- banks convert
deposits into notes and coins to enable holders of deposits to
carry out transactions in cash, bank deposits are used as a
means of settling debts, in the absence of exchange controls,
banks exchange cash and deposits from one currency into
cash and deposits of another currency.

14. TRANSFORMATION SERVICE
-Payment and Settlement System
-Real-time Gross Settlement

15. OTHER FINANCIAL SERVICE
-Advisory Services
-Transaction Support
-Custodial Services

16. ON THE BASIS OF OPERATION
-BRANCH BANKING
-UNIT BANKING

17. ADVANTAGES OF BRANCH BANKING
-DISTRIBUTION OF CAPITAL
-HUGE RESOURCES
-DIVERSIFICATION
-ECONOMY
DISADVANTAGES OF BRANCH BANKING
-RED TAPE
-LOCAL ISSUES
-CONCENTRATION OF RESOURCES

18. ON THE BASIS OF SCOPE OF OPERATION
-NARROW BANKING
-UNIVERSAL BANKING

19. ON THE BASIS OF OTHER SYSTEMS
-CORRESPONDENT BANKING
-GROUP BANKING
-CHAIN BANKING
-DEPOSIT BANKING
-INVESTMENT BANKING
-MIXED BANKING

20. THE STRUCTURE OF BANKING SYSTEM IN INDIA
-PUBLIC SECTOR BANKS
-PRIVATE SECTOR BANKS
-CO-OPERATIVE SECTOR BANKS
-DEVELOPMENT BANKS

21. CREDIT PLANNING IN INDIA
-EXPANSION OF RURAL BRANCHES
-CREDIT EXPANSION
-CREDIT GUARANTEE SCHEMES FOR SMALL SCALE INDUSTIES
-DISTRICT CREDIT PLAN
-SERVICE AREA APPROACH

22. WEAKNESSES OF CREDIT PLANNING IN INDIA
-It is difficult for the commercial banks to identify the-small
and marginal farmers and the small-scale and cottage
industries, to evaluate their needs properly, to distribute
loans equitably, monitor their use and finally recover them.
-Political pressure plays a hand in the distribution of bank
loans to the weaker sections.
-The “social banking” responsibilities of the commercial banks
are one of the major factors for the poor financial position of
commercial banks.

23. THANK YOU