history/evolution of banks?

intro to banks??
meanin
role/function
expl of CBI?
format of b/s and p/l ac of banking company?
explain each heads of da above qts?
schdule 16
contingent liability
shot note on terms like: money @ call andshort notice, borrowings, deposits, advances etc.
other assets etc..
solution of banks?slr
crr
npa's

A bank is a financial intermediary that accepts deposits and channels those deposits
into lendingactivities, either directly or through capital markets. A bank connects customers with
capital deficits to customers with capital surpluses.

Banking is generally a highly regulated industry, and government restrictions on financial

activities by banks have varied over time and location. The current set of global bank capital
standards are calledBasel II. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are usually
the nexus of a cross-share holding entity known as the keiretsu. In Iceland banks had very light
regulation prior to 2008 collapse.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1472.[1]

Banking in the modern sense of the word can be traced to medieval and
early Renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa.
The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing
branches in many other parts of Europe.[2] Perhaps the most famous Italian bank was
the Medici bank, set up by Giovanni Medici in 1397.[3] The earliest known state deposit
bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa,Italy.[4]

Banks can be traced back to ancient times even before money when temples were used to
store commodities. During the 3rd century AD, banks in Persia and other territories in the
PersianSassanid Empire issued letters of credit known as Ṣakks.[citation needed] Muslim traders are
known to have used the cheque or ṣakk system since the time of Harun al-Rashid (9th century)
of the Abbasid Caliphate. In the 9th century, a Muslim businessman could cash an early form of
the cheque in Chinadrawn on sources in Baghdad,[5][verification needed] a tradition that was significantly
strengthened in the 13th and 14th centuries, during the Mongol Empire.[citation needed] Fragments
found in the Cairo Geniza indicate that in the 12th century cheques remarkably similar to our
own were in use, only smaller to save costs on the paper. They contain a sum to be paid and
then the order "May so and so pay the bearer such and such an amount". The date and name of
the issuer are also apparent.

Origin of the word

Silver drachm coin fromTrapezus, 4th century BC

The word bank was borrowed in Middle English from Middle French banque, from
Old Italian banca, from Old High German banc, bank "bench, counter". Benches were used as
desks or exchange counters during the Renaissance by Florentine bankers, who used to make
their transactions atop desks covered by green tablecloths.[6]

The earliest evidence of money-changing activity is depicted on a silver drachm coin from
ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC,
presented in the British Museum in London. The coin shows a banker's table (trapeza) laden
with coins, a pun on the name of the city. In fact, even today in Modern Greek the word Trapeza
(Τράπεζα) means both a table and a bank.
Definition

Cathay Bank in Boston's Chinatown

The definition of a bank varies from country to country. See the relevant country page (below)
for more information.

Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as:[7]

 conducting current accounts for his customers

 paying cheques drawn on him, and
 collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in
relation tonegotiable instruments, including cheques, and this Act contains a statutory definition
of the term banker:banker includes a body of persons, whether incorporated or not, who carry
on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it
is actually functional, because it ensures that the legal basis for bank transactions such
as cheques does not depend on how the bank is organised or regulated.

The business of banking is in many English common law countries not defined by statute but by
common law, the definition above. In other English common law jurisdictions there are statutory
definitions of thebusiness of banking or banking business. When looking at these definitions it is
important to keep in mind that they are defining the business of banking for the purposes of the
legislation, and not necessarily in general. In particular, most of the definitions are from
legislation that has the purposes of entry regulating and supervising banks rather than
regulating the actual business of banking. However, in many cases the statutory definition
closely mirrors the common law one. Examples of statutory definitions:

 "banking business" means the business of receiving money on current or deposit

account, paying and collecting cheques drawn by or paid in by customers, the making of
advances to customers, and includes such other business as the Authority may prescribe for
the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

 "banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other
similar account repayable on demand or within less than [3 months] ... or with a period
of call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers[8]

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct
debit and internet banking, the cheque has lost its primacy in most banking systems as a
payment instrument. This has led legal theorists to suggest that the cheque based definition
should be broadened to include financial institutions that conduct current accounts for
customers and enable customers to pay and be paid by third parties, even if they do not pay
and collect cheques.[9]

[edit]Banking

Banking in India
From Wikipedia, the free encyclopedia
Structure of the organised banking sector in India. Number of banks are in brackets.

Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now
defunct. The oldest bank in existence in India is the State Bank of India, which originated in the
Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was
one of the three presidency banks, the other two being the Bank of Bombay and the Bank of
Madras, all three of which were established under charters from the British East India Company.
For many years the Presidency banks acted as quasi-central banks, as did their successors.
The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and
still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that
issues stock and requires shareholders to be held liable for the company's debt) It was
not the first though. That honor belongs to the Bank of Upper India, which was established in
1863, and which survived until 1913, when it failed, with some of its assets and liabilities being
transferred to theAlliance Bank of Simla.

When the American Civil War stopped the supply of cotton to Lancashire from theConfederate
States, promoters opened banks to finance trading in Indian cotton. With large exposure to
speculative ventures, most of the banks opened in India during that period failed. The
depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking
in India remained the exclusive domain of Europeans for next several decades until the
beginning of the 20th century.

Foreign banks too started to arrive, y in Calcutta, in the 1860s. The Comptoire d'Escompte de
Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches
in Madras and Puducherry, then a French colony, followed. HSBC established itself inBengal in
1869. Calcutta was the most active trading port in India, mainly due to the trade of the British
Empire, and so became a banking center.

The Bank of Bengal, which later merged with the Bank of Bombay and the Bank of Madras to form the Imperial Bank
of India in 1921.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881
in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahorein
1895, which has survived to the present and is now one of the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a relative period
of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial
and other infrastructure had improved. Indians had established small banks, most of which
served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks
and a number of Indian joint stock banks. All these banks operated in different segments of the
economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign
trade. Indian joint stock banks were generally under capitalized and lacked the experience and
maturity to compete with the presidency and exchange banks. This segmentation let Lord
Curzon to observe, "In respect of banking it seems we are behind the times. We are like some
old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome
compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by
the Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established then
have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of
Baroda, Canara Bank and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina
Kannada and Udupi district which were unified earlier and known by the name South
Canara ( South Kanara ) district. Four nationalised banks started in this district and also a
leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of
Indian Banking".

During the First World War (1914-1918) through the end of the Second World War (1939-1945),
and two years thereafter until theindependence of India were challenging for Indian banking.
The years of the First World War were turbulent, and it took its toll with banks simply collapsing
despite the Indian economy gaining indirect boost due to war-related economic activities. At
least 94 banks in India failed between 1913 and 1918 as indicated in the following table:

Number of banks Authorised capital Paid-up Capital

Years
that failed (Rs. Lakhs) (Rs. Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1

Post-independence
The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal,
paralyzing banking activities for months. India'sindependence marked the end of a regime of
the Laissez-faire for the Indian banking. The Government of India initiated measures to play an
active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. This resulted into greater involvement of the
state in different segments of the economy including banking and finance. The major steps to
regulate banking included:

 In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,
and it became an institution owned by the Government of India.
 In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank
of India (RBI) "to regulate, control, and inspect the banks in India."
 The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
common directors.

However, despite these provisions, control and regulations, banks in India except the State
Bank of India, continued to be owned and operated by private persons. This changed with the
nationalisation of major banks in India on 19 July 1969.
The RBI was nationalized on January 1, 1949 in terms of the Reserve Bank of India (Transfer to
Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]

By the 1960s, the Indian banking industry had become an important tool to facilitate the
development of the Indian economy. At the same time, it had emerged as a large employer, and
a debate had ensued about the possibility to nationalise the banking industry. Indira Gandhi,
the-then Prime Minister of India expressed the intention of the GOI in the annual conference of
the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The
paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and
the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from
the midnight of July 19, 1969.Jayaprakash Narayan, a national leader of India, described the
step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance,
the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill,
and it received the presidentialapproval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery. With
the second dose of nationalization, the GOI controlled around 91% of the banking business of
India. Later on, in the year 1993, the government merged New Bank of India with Punjab
National Bank. It was the only merger between nationalized banks and resulted in the reduction
of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised
banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

Channels
Banks offer many different channels to access their banking and other services:

 ATM is a machine that dispenses cash and sometimes takes deposits without the need for a
human bank teller. Some ATMs provide additional services.
 A branch is a retail location
 Call center
 Mail: most banks accept check deposits via mail and use mail to communicate to their customers,
eg by sending out statements
 Mobile banking is a method of using one's mobile phone to conduct banking transactions
 Online banking is a term used for performing transactions, payments etc. over the Internet
 Relationship Managers, mostly for private banking or business banking, often visiting customers
at their homes or businesses
  Telephone banking is a service which allows its customers to perform transactions over the
telephone without speaking to a human
 Video banking is a term used for performing banking transactions or professional banking
consultations via a remote video and audio connection. Video banking can be performed via purpose
built banking transaction machines (similar to an Automated teller machine), or via
a videoconference enabled bank branch.

Contingent liability
From Wikipedia, the free encyclopedia

Contingent liabilities are liabilities that may or may not be incurred by an entity depending on
the outcome of a future event such as a courtcase. These liabilities are recorded in a
company's accounts and shown in the balance sheet when both probable and reasonably
estimable. A footnote to the balance sheet describes the nature and extent of the contingent
liabilities. The likelihood of loss is described as probable, reasonably possible, or remote. The
ability to estimate a loss is described as known, reasonably estimable, or not reasonably
estimable.

[edit]Examples

 outstanding lawsuits
 Accounts payable: Accounts payable is a file or account that contains money that a
person or company owes tosuppliers, but has not paid yet (a form of debt), sometimes
referred as trade payable. When aninvoice is received, it is added to the file, and then
removed when it is paid. Thus, the A/P is a form of credit that suppliers offer to their
purchasers by allowing them to pay for a product orservice after it has already been
received.

Legal liability: Legal liability is the legal bound obligation to pay debts.[1]

 In law a person is said to be legally liable when they are financially and legally responsible for
something. Legal liability concerns both civil law and criminal law. See Strict liability. UnderEnglish
law, with the passing of the Theft Act 1978, it is an offense to evade a liability dishonestly. Payment
of damages usually resolved the liability. Vicarious liability arises under the common law doctrine
of agency – respondeat superior – the responsibility of the superior for the acts of their subordinate.
 
 Liquidated damages: Liquidated damages (also referred to as liquidated and
ascertained damages) are damages whose amount the parties designate during the
formation of a contract for the injured party to collect as compensation upon a specific
breach (e.g., late performance).
 Tort: A tort (originally from the French, meaning "wrong") is a wrong that involves a
breach of a civil duty owed to someone else. It is differentiated from criminal wrongdoing
which involves a breach of a duty owed to society, and also does not include breach of
contract.
 Bills Discounted with bank

Unliquidated damages: Liquidated damages (also referred to as liquidated and ascertained damages)
are damages whose amount the parties designate during the formation of a contract for the injured party
to collect as compensation upon a specific breach (e.g., late performance).

When damages are not predetermined/assessed in advance, then the amount recoverable is said to be
'at large' (to be agreed or determined by a court or tribunal in the event of breach).


 Destruction by Flood
 product warranty

Non Performing Asset means an asset or account of borrower, which has been classified by
a bank or financial institution as sub-standard, doubtful or loss asset, in accordance with the
directions or guidelines relating to asset classification issued by The Reserve Bank of India.

[edit]Ninety days overdue

With a view to moving towards international best practices and to ensure greater transparency,
it has been decided to adopt the '90 days overdue' norm for identification of NPAs, form the year
ending March 31, 2004. Accordingly, with effect form March 31, 2004, a non-performing
asset (NPA) shall be a loan or an advance where:
 1. interest and /or installment of principal remain overdue for a period of more than
90 days in respect of a Term Loan,
2. the account remains 'out of order' for a period of more than 90 days, inrespect of
an overdraft/ cash Credit(OD/CC),
3. the bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted,
4. interest and/ or installment of principal remains overdue for two harvest seasons
but for a period not exceeding two half years in the case of an advance granted for
agricultural purpose, and

[edit]Out of order
An account treated as 'out of order' if the outstanding balance remains continuously in excess of
the sanctioned limit/ drawing power. In case where the outstanding balance in the principal
operating account is less than the sanctioned limit/ drawing power, but there are no credits
continuously for six months as on the date of balance sheet or credits are not enough to cover
the interest debited during the same period, these account should be treated as 'out of order'.

Crr:
The reserve requirements (or cash reserve ratio) is a state bank regulation that sets the
minimum reserves each bank must hold to customer deposits and notes. It would normally be in
the form of fiat currency stored in a bank vault (vault cash), or with a central bank.

The reserve ratio is sometimes used as a tool in the monetary policy, influencing the country's
economy, borrowing, and interest rates[1]. Western central banks rarely alter the reserve
requirements because it would cause immediate liquidity problems for banks with low excess
reserves; they prefer to use open market operations to implement their monetary policy.
The People's Bank of China uses changes in reserve requirements as an inflation-fighting tool,
[2]
and raised the reserve requirement nine times in 2007. As of 2006 the required reserve ratio
in the United States was 10% on transaction deposits (component of money supply "M1"), and
zero on time deposits and all other deposits.

An institution that holds reserves in excess of the required amount is said to hold excess
reserves
NATIONALISATION OF BAN KS:
Nationalised banks dominate the banking system in India.
The history of nationalised banks in India dates back to
mid-20th century, when Imperial Bank of India was
nationalised (under the SBI Act of 1955) and re-
christened as State Bank of India (SBI) in July 1955. Then
on 19th July 1960, its seven subsidiaries were also
nationalised with deposits over 200 crores. These
subsidiaries of SBI were State Bank of Bikaner and Jaipur
(SBBJ), State Bank of Hyderabad (SBH), State Bank of
Indore (SBIR), State Bank of Mysore (SBM), State Bank of
Patiala (SBP), State Bank of Saurashtra (SBS), and State
Bank of Travancore (SBT).

However, the major nationalisation of banks happened in

1969 by the then-Prime Minister Indira Gandhi. The major
objective behind nationalisation was to spread banking
infrastructure in rural areas and make cheap finance
available to Indian farmers. The nationalised 14 major
commercial banks were Allahabad Bank, Andhra Bank,
Bank of Baroda, Bank of India, Bank of Maharashtra,
Canara Bank, Central Bank of India, Corporation Bank,
Dena Bank, Indian Bank, Indian Overseas Bank, Oriental
Bank of Commerce (OBC), Punjab and Sind Bank, Punjab
National Bank (PNB), --------------------Syndicate Bank, UCO
Bank, Union Bank of India, United Bank of India (UBI), and
Vijaya Bank.
In the year 1980, the second phase of nationalisation of
Indian banks took place, in which 7 more banks were
nationalised with deposits over 200 crores. With this, the
Government of India held a control over 91% of the
banking industry in India. After the nationalisation of
banks there was a huge jump in the deposits and
advances with the banks. At present, the State Bank of
India is the largest commercial bank of India and is
ranked one of the top five banks worldwide. It serves 90
million customers through a network of 9,000 branches.

Without a sound and effective banking system in India it cannot have a healthy economy. The banking
system of India should not only be hassle free but it should be able to meet new challenges posed by the
technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its credit.
The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in
India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of
the main reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalisation of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for
withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank
transferred money from one branch to other in two days. Now it is simple as instant messaging or dial a
pizza. Money have become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of
Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

• Early phase from 1786 to 1969 of Indian Banks

• Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
• New phase of Indian Banking System with the advent of Indian Financial & Banking Sector
Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III.

Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank.
The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of
Madras (1843) as independent units and called it Presidency Banks. These three banks were
amalgamated in 1920 and Imperial Bank of India was established which started as
private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd.
was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of
India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of
India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures between
1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and
activities ofcommercial banks, the Government of India came up with The Banking Companies Act, 1949
which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of
1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in india as
the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit mobilisation was
slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer.
Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it
nationalised Imperial Bank of India with extensive banking facilities on a large scale specially in rural and
semi-urban areas. It formed State Bank of india to act as the principal agent of RBI and to handle banking
transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July, 1969, major
process of nationalisation was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira
Gandhi. 14 major commercial banks in the country was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with seven more
banks. This step brought 80% of the banking segment in India under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking Institutions in the
Country:

• 1949 : Enactment of Banking Regulation Act.

• 1955 : Nationalisation of State Bank of India.
• 1959 : Nationalisation of SBI subsidiaries.
• 1961 : Insurance cover extended to deposits.
• 1969 : Nationalisation of 14 major banks.
 • 1971 : Creation of credit guarantee corporation.
• 1975 : Creation of regional rural banks.
• 1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to approximately
800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence
about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its reforms
measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which
worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The entire system
became more convenient and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered
by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a
flexible exchangerate regime, the foreign reserves are high, the capital account is not yet fully convertible,
and banks and their customers have limited foreign exchange exposure. `

Definition: Statutory Liquidity Ratio is the amount of liquid assets, such as cash, precious metals
or other short-term securities, that a financial institution must maintain in its reserves. The
statutory liquidity ratio is a term most commonly used in India

Objective

The objectives of SLR are:

1. To restrict the expansion of bank credit.

2. To augment the investment of the banks in Government securities.
3. To ensure solvency of banks. A reduction of SLR rates looks eminent to
support the credit growth in India.

The SLR is commonly used to contain inflation and fuel growth, by increasing or decreasing it
respectively. This counter acts by decreasing or increasing the money supply in the system
respectively. Indian banks’ holdings of government securities (Government securities) are now
close to the statutory minimum that banks are required to hold to comply with existing
regulation. When measured in rupees, such holdings decreased for the first time in a little less
than 40 years (since the nationalisation of banks in 1969) in 2005-06.

While the recent credit boom is a key driver of the decline in banks’ portfolios of G-Sec, other
factors have played an important role recently.
These include:

1. Interest rate increases.

2. Changes in the prudential regulation of banks’ investments in G-Sec.

Most G-Sec held by banks are long-term fixed-rate bonds, which are sensitive to changes in
interest rates. Increasing interest rates have eroded banks’ income from trading in G-Sec.

Recently a huge demand in G-Sec was seen by almost all the banks when RBI released around
108000 crore rupees in the financial system. This was by reducing CRR, SLR & Repo rates. This
was to increase lending by the banks to the corporates and resolve liquidity crisis. Providing
economy with the much needed fuel of liquidity to maintain the pace of growth rate. However
the exercise became futile with banks being over cautious of lending in highly shaky market
conditions. Banks invested almost 70% of this money to rather safe Govt securities than lending
it to corporates.

Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a
banking institution that allows money to be deposited and withdrawn by the account holder.
These transactions are recorded on the bank's books, and the resulting balance is recorded as a
liability for the bank, and represent the amount owed by the bank to the customer. Some banks
charge a fee for this service, while others may pay the customer interest on the funds deposited.

Major types

• Checking accounts: A deposit account held at a bank or other financial

institution, for the purpose of securely and quickly providing frequent access
to funds on demand, through a variety of different channels. Because money
is available on demand these accounts are also referred to as demand
accounts or demand deposit accounts.

• Savings accounts: Accounts maintained by retail banks that pay interest but
can not be used directly as money (for example, by writing a cheque).
Although not as convenient to use as checking accounts, these accounts let
customers keep liquid assets while still earning a monetary return.

• Money market account: A deposit account with a relatively high rate of

interest, and short notice (or no notice) required for withdrawals. In the
United States, it is a style of instant access deposit subject to federal savings
account regulations, such as a monthly transaction limit.

• Time deposit: A money deposit at a banking institution that cannot be

withdrawn for a preset fixed 'term' or period of time. When the term is over it
can be withdrawn or it can be rolled over for another term. Generally
speaking, the longer the term the better the yield on the money.
FORM �A�
Form of Balance Sheet

Balance Sheet of __________________________ (here enter name of the Banking

Company)
Balance Sheet as on 31st March (Year) (000�s
omitted)
Schedule As on 31.3__ As on 31.3__
(current year) (previous year)
Capital & Liabilities
Capital 1
Reserves & Surplus 2
Deposits 3
Borrowings 4
Other liabilities and provisions 5
Total
Assets
Cash and Balances with Reserve 6
Bank of India
Balances with banks and money at 7
call and short notice
Investments 8
Advances 9
Fixed Assets 10
Other Assets 11
Total
Contingent Liabilities 12
Bills for Collection
Schedule I
Capital
As on 31.3__ As on 31.3__
(current year) (previous year)
I. For Nationalised Banks
Capital (Fully owned by Central Government)
II. For Banks Incorporated Outside India
Capital (The amount brought in by banks by way
of start-up capital as prescribed by RBI should
be shown under this head.)
Amount of deposit kept with RBI under section
11(2) of the Banking Regulation Act, 1949
Total
III. For Other Banks
Authorised Capital
 (��. shares of Rs�. each)
Issued Capital
(�� shares of Rs�.. each)
Subscribed Capital
(�..shares of Rs�.. ..each)
Called-up Capital
(��. shares of Rs� each)
Less: Calls unpaid
Add: Forfeited shares
Total
Schedule 2

Reserves & Surplus

As on 31.3__ As on 31.3__
(current year) (previous year)
I. Statutory Reserves
Opening Balances
Additions during the year
Deductions during the year
II. Capital Reserves
Opening Balances
Additions during the year
Deductions during the year
III. Share Premium
Opening Balances
Additions during the year
Deductions during the year
IV. Revenue and Other Reserves
Opening Balance
Additions during the year
Deductions during the year
V. Balance in Profit and Loss Account
Total (I, II, III, IV and V)
Schedule 3
Deposits
As on 31.3__ As on 31.3__
(current year) (previous year)
A. I. Demand Deposits
(i) From banks
(ii) From others
II. Savings Bank Deposits
III. Term Deposits
(i) From banks
(ii) From others
Total
 (I, II and III)
B. (i) Deposits of branches in
India
(ii) Deposits of branches
outside India
Total

Schedule 4
Borrowings
As on 31.3__ As on 31.3__
(current year) (previous year)
I. Borrowings in India
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
II. Borrowings outside India
Total (I & II)
Secured borrowings included in I & II above � Rs.

Schedule 5
Other Liabilities and Provisions
As on 31.3__ As on 31.3__
(current year) (previous year)
I. Bills payable
II. Inter-office adjustments (net)
III. Interest accrued
IV. Others (including provisions)
Total

Schedule 6
Cash and Balances with Reserve Bank of India
As on 31.3__ As on 31.3__
(current year) (previous year)
I. Cash in hand
(including foreign currency notes)
II. Balances with Reserve Bank of India
(i) in Current Account
IV. (ii) in Other Accounts
Total (I & II)

Schedule 7
Balances with Banks and Money at Call & Short Notice
 As on 31.3__ As on 31.3__
(current year) (previous year)
I. In India
(i) Balances with banks
(a) in current accounts
(b) in other deposit
accounts
(ii) Money at call and short notice
(a) with banks
(b) with other institutions
Total (i & ii)
II. Outside India
(i) in current accounts
(ii) in other deposit accounts
(iii) Money at call and short notice
Total
Grand Total (I & II)

Schedule 8
Investments
As on 31.3__ As on 31.3__
(current year) (previous year)
I. Investments in India in
(i) Government securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and bonds
(v) Subsidiaries and/or joint ventures
(vi) Others (to be specified)
Total