The document provides information on various topics related to the management of financial services and institutions in India. It discusses the role and functions of banks, the evolution of the banking system in India, various types of bank accounts, the nationalization of banks in 1969, the Indian banking structure, and the functions and objectives of the Reserve Bank of India (RBI).

1. Management of financial service
and institutions
Unit 1
Prepared by:
Pushpendra Nauhwar
GLA University, Mathura

2. Bank
• Bank is a lawful organization, which accepts
deposits that can be withdrawn on demand. It
also lends money to individuals and business
houses that need it.
• Primary service:- excepting deposits, Grauting
loan .
• Secondary:- Debit card, Home loan, Credit
Card, Car loans etc

3. Banking industries in india
• Bank of Hindustan was established in 1770 and
liquidated in 1829-32
• The General Bank of India coming into existence
in 1786.
• Bank of Bengal obtains charter in 1809, Bank of
Bombay and the Bank of Madras were
established in 1840 and 1843, were merged into
the Imperial Bank of India (IBI) under the Imperial
Bank of India Act, 1920 which is now known as
the State Bank of India.

4. Accounts of Bank
• CASA= Current Account Saving Account
• Current Account:- Use o l usi ess holder’s
overdrafts facilities only for current A/c
• Saving Account:- Minimum amount maintain, Int.
provide mini. age 10 years
• RAFA= Recurring Account, Fixed Account
• Recurring Account:- Fixed time period 5years, Mini
time – 3 months, Max time – 10 years
• Fixed Accounting:- Maximum interest in this account
mini time – 7 days maximum time – 10 years

5. Nationalization of Banks
• All banks were nationalized in 19 july 1969.
• A statement passed all bank under the SBI
• 14 Banks Nationalized in 1969
- Allahabad Bank - Syndicate Bank
- Central Bank - union bank of India
- Bank of Maharashtra – United bank of India
- Punjab National Bank - Indian Bank
- Bank of Baroda - Indian oversees bank
- Bank of India - UCO Bank
- Dena Bank - Canara Bank

7. Indian Banking Structure
• RBI:- The RBI is the supreme monetary and banking authority
in the country and controls the banking system in India.
• Commercial Bank:-Commercial banks in India are largely
Indian-public sector and private sector with a few foreign
banks & available to large and small industrial and trading
units mainly for working capital requirements.
• Scheduled and Non-Scheduled Banks: The scheduled banks
are those which are enshrined in the second schedule of the
RBI Act, 1934.
• Regional Rural Banks: The emphasis is on providing such
facilities to small and marginal farmers, agricultural laborers,
rural artisans and other small entrepreneurs in rural areas.

8. • Cooperative Banks: Cooperative banks are so-
called because they are organized under the
provisions of the Cooperative Credit Societies Act
of the states. The cooperative credit institutions
operating in the country are mainly of two kinds:
agricultural (dominant) and non-agricultural.
• Public sector Bank:- National bank and state bank
of India
• Private Bank:- ICICI, HDFC, Exis Bank
• Foreign Bank:- HSBC, Royal Bank of Scotland
• Development bank:- IFCI (Indian financial
corporation of India)
SFC (State Financial Corporation)

10. Function of bank
A. Pri ary Fu ctio s of Ba ks ↓
1. Accepting Deposits(Saving Deposits, Fixed Deposits,
Current Deposits, Recurring Deposits)
2.Granting of Loans and Advances(Overdraft, Cash Credits,
Loans, Discounting of Bill of Exchange)
B. Seco dary Fu ctio s of Ba ks ↓
• 1. Agency Functions (Transfer of Funds, Collection of
Cheques, Periodic Payments, Portfolio Management,
Periodic Collections, Other Agency Functions
• 2. General Utility Functions (Issue of Drafts, Letter of
Credits, etc.,Locker Facility, Underwriting of Shares, Dealing
in Foreign Exchange, Project Reports, Social Welfare
Programmers, Other Utility Functions

11. Intermediates
• Company of land Scope of India.
• Term landing institutions
• Non – Banking financial companies
• Insurance company
• Mutual funds

12. Based III norms
• Based committee on banking and supervision to avoid 100
polis in its capital rules.
• According to new Basel-III norms, which kick in from March
2019, Indian banks need to maintain a minimum capital
adequacy ratio (CAR) of nine per cent, in addition to a
capital conservation buffer, which would be in the form of
common equity at 2.5 per cent of the risk weighted assets.
• The government estimates that state-run lenders would
require Rs 1.8 lakh crore over the next four years. Banks
would have the onus to raise the balance Rs 1.1 lakh crore
from the market. This is because the finance ministry has
promised to pump into PSBs Rs 25,000 crore each in FY16
and FY17 and Rs 10,000 crore ea h i FY1 a d FY1 . RBI’s
move on Tuesday will serve in meeting the capital
requirements.

13. • What are the objectives:-
→ i prove the a ki g se tor's a ilit to a sor sho ks arisi g
from financial and economic stress, whatever the source
→ improve risk management and governance
→ strengthen banks' transparency and disclosures.
• How Does Basel III Requirements Will Affect Indian Banks :-
The Basel III which is to be implemented by banks in India as per
the guidelines issued by RBI from time to time, will be
challenging task not only for the banks but also for GOI. It is
estimated that Indian banks will be required to raise Rs 6,00,000
crores in external capital in next nine years or so i.e. by 2020
(The estimates vary from organization to
organization). Expansion of capital to this extent will affect the
returns on the equity of these banks specially public sector
banks. However, only consolation for Indian banks is the fact
that historically they have maintained their core and overall
capital well in excess of the regulatory minimum.

14. • Relaxation of branch authorization policy:-
• Section 23 of the Banking Regulation Act, 1949.
• In line with this rationalization, and in order to allow
banks greater operational
• freedom, the instructions regarding merger, closure,
shifting, part shifting, opening of extension counters
and reporting requirements have been reviewed.
• Merger/Closure/ Shifting of branches:-Banks may
shift, merge or close all branches except rural branches
and sole semi urban branches at their discretion.
• Opening of Extension Counters:-Presently banks can
open Extension Counters in the premises of institutions
where they are the principal bankers, or obtain a NOC
from the principal banker.

15. • Relaxation in KYC Norms:-Even for a opening a
savings bank account, our banks require detailed
information about the account holder including a
recent photograph, address proof, identity proof
and the account opening form. Some banks also
require introduction for any account holder with
the same bank before opening a new account.
• Users need not submit two dedicated documents
for address and identity proof and a single
document would be acceptable by all banks.
• Single Document Proof to Suffice.
• Small Accounts Permissible without KYC
Documents.

16. • Non Frills accounts:-A no-frills account is a bank
account that can be opened and maintained with a
zero balance, levies zero or nominal charges and does
away with the unnecessary services or frills. The
downside of such an account is that most of the
facilities offered are limited. Once this limit is exceeded,
the bank charges for these services.
• A no-frills account is a real zero balance account in that
there is no need to keep any minimum balance in the
account and non-maintenance charges are not levied.
Zero balance accounts, on the other hand, do allow you
to open the account without any minimum balance, but
you may need to subsequently fulfill the minimum
balance requirements of the bank or you are charged
non-maintenance penalties.

17. • CBS = Core Banking Solutions:-Core Banking
Solution (CBS) is networking of branches, which
enables Customers to operate their accounts, and
avail banking services from any branch of the
Bank on CBS network, regardless of where he
maintains his account. The customer is no more
the customer of a Branch. He becomes the Bank's
Customer.
• CBS Softwares
• Finacle (by Infosys)
• TCS BaNCS (by Tata Consultancy Services (TCS))
• HCL BancMate (by HCL Info systems)
• FinnOne (by Nucleus Software), etc.

18. • RBI= Reserve Bank of India:-The Reserve Bank of India is India's
central banking institution, which controls the monetary policy of
the Indian rupees.
• Address: Central Office Building, Shahid Bhagat Singh Road, Fort,
Mumbai, Maharashtra 400001
• President: Urjit Patel
• Founded: April 1, 1935, Kolkata
• Reserve: 363 billion USD
• Branches and support bodies:-The Reserve Bank of India has four
zonal offices at Chennai, Delhi, Kolkata and Mumbai.[35] It has 19
regional offices and 10 sub-offices. Regional offices are located in
Ahmedabad, Bangalore, Bhopal, Bhubaneswar, Chandigarh,
Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kochi,
Kolkata, Lucknow, Mumbai, Nagpur, Patna and
Thiruvananthapuram. It also has 9 sub-offices located in Agartala,
Dehradun, Gangtok, Panaji, Raipur, Ranchi, Shillong, Shimla and
Srinagar. Recently the RBI has opened two more sub-offices at
Aizawal and Imphal.

19. • The bank has also two training colleges for its
officers, viz. Reserve Bank Staff College,
Chennai and College of Agricultural Banking,
Pune. There are three autonomous
institutions run by RBI namely National
Institute of Bank Management (NIBM), Indira
Gandhi Institute of Development Research
(IGIDR), Institute for Development and
Research in Banking Technology (IDRBT).[38]
There are also four Zonal Training Centres at
Mumbai, Chennai, Kolkata and New Delhi.

20. • Main functions:-
• Monetary Authority:-Monetary authority or monetary
policy refers to the use of instruments under RBI
control to regulate availability, cost and use of money
and credit and providing the citizens the appropriate
available monetary facilities. Central bank does this to
maintain pricing stability, low & stable inflation as well
as promoting economic growth of country.
• Issuer of Currency:-Reserve bank of India is the sole
body who is authorized to issue currency in India.
While coins are minted by GoI, the RBI works as an
agent of GoI for distributing and handling of coins. For
printing currency, RBI has four facilities at Dewas,
Nasik, Mysore and Salboni. New notes of Rupees 500
and 2000 have been issued on 8th Nov 2016

21. • Banker and Debt Manager to Government:-Just like
individuals need a bank to carry out their financial
transactions effectively & efficiently, Governments also
need a bank to carry out their financial transactions. RBI
serves this purpose for the Government of India (GoI). As a
banker to the GoI, RBI maintains its accounts, receive
payments into & make payments out of these accounts. RBI
also helps GoI to raise money from public via issuing bonds
and government approved securities.
• Banker's bank and supervisor:-RBI also works as banker to
all the scheduled commercial banks. All the banks in India
maintain accounts with RBI which helps them in clearing &
settling inter bank transactions and customer transactions
smoothly & swiftly. Maintaining accounts with RBI help
banks to maintain statutory reserve requirements. RBI also
acts as lender of last resort for all the banks.

22. • Regulator of the Banking System:-RBI has the responsibility of
regulating the nation's financial system. As a regulator and
supervisor of the Indian banking system it ensures financial stability
& public confidence in the banking system. RBI uses methods like
On-site inspections, off-site surveillance, scrutiny & periodic
meetings to supervise new bank licenses, setting capital
requirements and regulating interest rates in specific areas. RBI is
currently focused on implementing Basel III norms.
• Manager of Foreign Exchange:-With increasing integration of the
Indian economy with the global economy arising from greater trade
and capital flows, the foreign exchange market has evolved as a key
segment of the Indian financial market and RBI has an important
role to play in regulating & managing this segment. RBI manages
forex and gold reserves of the nation. On a given day, the foreign
exchange rate reflects the demand for and supply of foreign
e ha ge arisi g fro trade a d apital tra sa tio s. The RBI’s
Financial Markets Department (FMD) participates in the foreign
exchange market by undertaking sales / purchases of foreign
currency to ease volatility in periods of excess demand for/supply of
foreign currency.

23. • Regulator and Supervisor of the Payment and Settlement
Systems:-Payment and settlement systems play an important role in
improving overall economic efficiency. The Payment and Settlement
Systems Act of 2007 (PSS Act) gives the Reserve Bank oversight
authority, including regulation and supervision, for the payment
and settlement systems in the country. In this role, the RBI focuses
on the development and functioning of safe, secure and efficient
payment and settlement mechanisms. Two payment systems
National Electronic Fund Transfer (NEFT) and Real Time Gross
Settlement (RTGS) allow individuals, companies and firms to
transfer funds from one bank to another. These facilities can only be
used for transferring money within the country.
• NEFT operates on a deferred net settlement (DNS) basis and settles
transactions in batches. The settlement takes place for all
transactions received till a particular cut-off time. It operates in
hourly batches — there are 12 settlements from 8 am to 7 pm on
weekdays and SIX between 8 am and 1 pm on Saturdays. Any
transaction initiated after the designated time would have to wait
till the next settlement time. In RTGS, transactions are processed
o ti uousl , all through the usi ess hours. RBI’s settle e t ti e
is 9 am to 4:30 pm on weekdays and 9 am to 2:00 pm on Saturdays

24. • Developmental Role:-This is one of the most
critical role RBI plays in building the country's
financial structure. Key tools in this effort
include Priority Sector Lending such as
agriculture, micro and small enterprises
(MSE), housing and education. RBI work
towards strengthening and supporting small
local banks and encourage banks to open
branches in rural areas to include large section
of society in banking net.

25. Internet banking and mobile banking