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this is about the banking system in india

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PRESENTATION BY:-KIRAN BHATT : PRESENTATION BY:-KIRAN BHATT BANKING SECTOR IN INDIA : BANKING SECTOR IN INDIA BANKING STRUCTURE IN INDIA : BANKING STRUCTURE IN INDIA Prior to introduction of banking people used to keep their money in post offices or in piggy bank and lend money from sahukars. : Prior to introduction of banking people used to keep their money in post offices or in piggy bank and lend money from sahukars.

How did sahukar lend??? : How did sahukar lend??? Borrower is known Very little documentation Sahukar usually a very bad guy compounded shorter intervals Records tampered Mostly mortgage lending on land, properties, jewels etc In year 1930, government started direct intervention and led to the birth of banking system in India : In year 1930, government started direct intervention and led to the birth of banking system in India Banking is "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheques, draft, order or otherwise." : Banking is "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheques, draft, order or otherwise." Banking in India has evolved through four distinct phases: : Banking in India has evolved through four distinct phases: Foundation phase Expansion phase Consolidation phase Reforms phase Foundation phase can be considered to cover 1950s and 1960s till the nationalization of banks in 1969. The focus during this period was to lay the foundation for a sound banking system in the country. As a result the phase witnessed the development of necessary legislative framework for facilitating re-organization and consolidation of the banking system, for meeting the requirement of Indian economy. A major development was transformation of Imperial Bank of India into State Bank of India in 1955 and nationalization of 14 major private banks during 1969. : Foundation phase can be considered to cover 1950s and 1960s till the nationalization of banks in 1969. The focus during this period was to lay the foundation for a sound banking system in the country. As a result the phase witnessed the development of necessary legislative framework for facilitating re-organization and consolidation of the banking system, for meeting the requirement of Indian economy. A major development was transformation of Imperial Bank of India into State Bank of India in 1955 and nationalization of 14 major private banks during 1969. Expansion phase had begun in mid-60s but gained momentum after nationalization of banks and continued till 1984. A determined effort was made to make banking facilities available to the masses. Branch network of the banks was widened at a very fast pace covering the rural and semi-urban population, which had no access to banking hitherto. Most importantly, credit flows were guided towards the priority sectors. However this weakened the lines of supervision and affected the quality of assets of banks and pressurized their profitability and brought competitive efficiency of the system at a low ebb. : Expansion phase had begun in mid-60s but gained momentum after nationalization of banks and continued till 1984. A determined effort was made to make banking facilities available to the masses. Branch network of the banks was widened at a very fast pace covering the rural and semi-urban population, which had no access to banking hitherto. Most importantly, credit flows were guided towards the priority sectors. However this weakened the lines of supervision and affected the quality of assets of banks and pressurized their profitability and brought competitive efficiency of the system at a low ebb. Consolidation phase: The phase started in 1985 when a series of policy initiatives were taken by RBI which saw marked slowdown in the branch expansion. Attention was paid to improving house-keeping, customer service, credit management, staff productivity and profitability of banks. Measures were also taken to reduce the structural constraints that obstructed the growth of money market. : Consolidation phase: The phase started in 1985 when a series of policy initiatives were taken by RBI which saw marked slowdown in the branch expansion. Attention was paid to improving house-keeping, customer service, credit management, staff productivity and profitability of banks. Measures were also taken to reduce the structural constraints that obstructed the growth of money market. Reforms phase The macro-economic crisis faced by the country in 1991 paved the way for extensive financial sector reforms which brought deregulation of interest rates, more competition, technological changes, prudential guidelines on asset classification and income recognition, capital adequacy, autonomy packages. The Narsimham Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices. The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks. : Reforms phase The macro-economic crisis faced by the country in 1991 paved the way for extensive financial sector reforms which brought deregulation of interest rates, more competition, technological changes, prudential guidelines on asset classification and income recognition, capital adequacy, autonomy packages. The Narsimham Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices. The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks. Liberalization : Liberalization It covered the areas of interest rates deregulation and directed credit rules. Statutory preemption and entry deregulation for both domestic and foreign banks. Lowering CRR and SRR Interest rate liberalization. Do away with entry barriers Banking Segment in India functions under the umbrella of Reserve Bank of India - the regulatory, central bank. This segment broadly consists of: :

Banking Segment in India functions under the umbrella of Reserve Bank of India - the regulatory, central bank. This segment broadly consists of: Co-operative Banks Commercial Banks co-operative Banks : co-operative Banks Role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-operative banks. While the co-operative banks in rural areas mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal finance etc. along with some small scale industries and self-employment driven activities, the cooperative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, consumer finance, personal finance, etc Example of co-operative banks - Saraswat Co-operative Bank , Jankalyan Sahakari Bank etc There are two main categories of the co-operative banks: : There are two main categories of the co-operative banks: short term lending oriented co-operative Banks - within this category there are three sub categories of banks viz state co-operative banks, District co-operative banks and Primary Agricultural co-operative societies. long term lending oriented co-operative Banks - within the second category there are land development banks at three levels state level, district level and village level . COMMERCIAL BANK- -- An institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses. The commercial banking structure in India consists of: : COMMERCIAL BANK- -- An institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses. The commercial banking structure in India consists of: Scheduled Commercial Banks Scheduled commercial Banks constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. Unscheduled Banks - Unscheduled banks are those banks which are not defined in the scheduled second of the rbi act 1934... Commercial bank sector can broadly be classified into: : Commercial bank sector can broadly be classified into: Public sector Private sector Foreign banks The following are the Scheduled Banks in India (Public Sector): : The following are the Scheduled Banks in India (Public Sector): State Bank of India State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Saurashtra State Bank of Travancore Andhra Bank Allahabad Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank The following are the Scheduled Banks in India (Private Sector): : The following are the Scheduled Banks in India (Private Sector): ING Vysya Bank Ltd Axis Bank Ltd Indusind Bank Ltd ICICI Bank Ltd South Indian Bank HDFC Bank Ltd Centurion Bank Ltd Bank of Punjab Ltd IDBI Bank Ltd The following are the Scheduled Foreign Banks in India: : The following are the Scheduled Foreign Banks in India: American Express Bank Ltd. ANZ Gridlays Bank Plc. Bank of America NT & SA Bank of Tokyo Ltd. Banquc Nationale de Paris Barclays Bank Plc Citi Bank N.C. Deutsche Bank A.G. Hongkong and Shanghai Banking Corporation Standard Chartered Bank. The Chase Manhattan Bank Ltd. Upcoming Foreign Banks In India : Upcoming Foreign Banks In India Royal Bank of Scotland Switzerland's UBS US-based GE Capital Credit Suisse Group Industrial and Commercial Bank of China Type and size of banks : Type and size of banks The major Indian Banks fall into three categories: Public sector (State Bank of India, Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank), Private sector (ICICI Bank, HDFC Bank) and Foreign Banks (Citibank, Standard Chartered Bank) Non-interest income of banks : Non-interest income of banks RBIs shareholding in State Bank of India (SBI) transferred to Government of India in accordance with Narasimhan Committee IIs report that RBI should not own the institutions it regulates Banks in India earn a significant portion (75%-85%) of their income from interest Features of commercial bank :

Features of commercial bank Banks deal in credit. Banks deal with money. They accept deposit and advances loans. The aim of commercial bank is to earn profit. Bank can create money. Functions of BANK : Functions of BANK Accepting Deposits from public/others (Deposits) Lending money to public (Loans) Transferring money from one place to another (Remittances) Acting as trustees Acting as intermediaries Keeping valuables in safe custody Collection Business Government business Credit creation Credit creation is the multiple expansions of banks demand deposits. The single bank cannot create credit. It is the banking system as a whole which can expand loans by many times of its excess cash reserves. Further, when a loan is advanced to an individuals or a business concern, it is not given in cash. The bank opens a deposit account in the name of the borrower and allows him to draw upon the bank as and when required. The loan advanced becomes the gain of deposit by some other bank. Loans thus make deposits and deposits make loans : Credit creation is the multiple expansions of banks demand deposits. The single bank cannot create credit. It is the banking system as a whole which can expand loans by many times of its excess cash reserves. Further, when a loan is advanced to an individuals or a business concern, it is not given in cash. The bank opens a deposit account in the name of the borrower and allows him to draw upon the bank as and when required. The loan advanced becomes the gain of deposit by some other bank. Loans thus make deposits and deposits make loans Example of commercial bank : Example of commercial bank HDFC BANK : HDFC BANK History of HDFC bank : History of HDFC bank Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a bank in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412 branches and over 3275 ATMs across India. Amalgamations of HDFC BANK : Amalgamations of HDFC BANK In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became the first two private banks in the New Generation Private Sector Banks to have gone through a merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFC Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while the Advances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore. Tech-Savvy feature of hdfc bank : Tech-Savvy feature of hdfc bank HDFC Bank has always prided itself on a highly automated environment, be it in terms of information technology or communication systems. All the braches of the bank boast of online connectivity with the other, ensuring speedy funds transfer for the clients. At the same time, the bank's branch network and Automated Teller Machines (ATMs) allow multi-branch access to retail clients. The bank makes use of its up-to-date technology, along with market position and expertise, to create a competitive advantage and build market share. Its features like ngpay, mchek make it different from others. Capital Structureof HDFC bank : Capital Structureof HDFC bank At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of this the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Group holds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about 17.6% is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the Stock Exchange, Mumbai and National Stock Exchange, while its American Depository Shares are listed on the New York Stock Exchange (NYSE), under the symbol 'HDB'. Products and services of hdfc bank : Products and services of hdfc bank Savings Accounts Salary Accounts Current Accounts Fixed Deposits Demat Account Safe Deposit Lockers Loans Credit Cards Debit Cards Prepaid Cards Investments & Insurance Forex Services Payment Services Net Banking Insta Alerts Mobile Banking Insta Query ATM Phone Banking For NRI customers Rupee Savings Accounts Rupee Current Accounts Rupee Fixed Deposits Foreign Currency Deposits Accounts for Returning Indians Quick remit (North America, UK, Europe, Southeast Asia) India Link (Middle East, Africa) Cheque Lock Box Telegraphic / Wire Transfer Funds Transfer through Cheques / DDs / TCs Mutual Funds Private Banking Portfolio Investment Schemes Loans Payment Services Net Banking Insta Alerts Mobil Banking Insta Query ATM Phone Banking WHO CONTROLS OVER THE BANK???? :

WHO CONTROLS OVER THE BANK???? ANS:--THE CENTRAL BANK IS THE HEAD OF THE BANKING SYSTEM OF THE COUNTRY. IT HAS THE POWER OF SUPERVISION AND CONTROL OVER ALL OTHER BANKS IT IS THE SYMBOL OF FINANCIAL SOVEREIGNITY AND STABILITY OF THE COUNTRY. : ANS:--THE CENTRAL BANK IS THE HEAD OF THE BANKING SYSTEM OF THE COUNTRY. IT HAS THE POWER OF SUPERVISION AND CONTROL OVER ALL OTHER BANKS IT IS THE SYMBOL OF FINANCIAL SOVEREIGNITY AND STABILITY OF THE COUNTRY. IN INDIA, CENTRAL BANK IS KNOWN AS RESERVE BANK OF INDIA. THE RESERVE BANK OF INDIA : THE RESERVE BANK OF INDIA HISTORY:--- + RBI Become operational in april1,1935. + RBI Nationalised in year 1949. Objectives of RBI : Objectives of RBI Regulate the issue of bank note. Maintain the reserves with a view to securing monetary security. To operate the credit and currency of the country to its advantage. Functions of central bank (RBI) : Functions of central bank (RBI) Monopoly of note issue Banker to the government Its a bankers agent Lender of last resort Controller credit Maintain the stability of exchange rate Promotional and development functions Credit control of central bank : Credit control of central bank Price stability attainment of full employment Growth with stability Stability in the foreign exchange rate to safeguard the countrys gold reserve against external drain. Methods of credit control : Methods of credit control Cash reserve ratio (CRR)- 7.5% Current Repo Rate -5.0% Reverse Repo Rate - 3.5% Bank Rate 6.00% Statutory liquidity ratio (SLR)- 25% What is a CRR rate? : What is a CRR rate? Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. CURRENLTY CRR- 7.5% What is a Repo Rate? : What is a Repo Rate? Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. CURRENTLY REPO RATE -5.0% What is a Reverse Repo Rate? : What is a Reverse Repo Rate? Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. Banks are always happy to lend money to RBI since their money are in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. It can cause the money to be drawn out of the banking system. Due to this fine tuning of RBI using its tools of CRR, Bank Rate, Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for common man. CURRENTLY REVERSE REPO RATE -3.5% what is bank rate? : what is bank rate? Bank rate is also called as the discount rate. It is the rate of interest which a central bank charges on the loans and advances provided to commercial banks. What is SLR Rate? : What is SLR Rate? SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit. New initiatives by banks : New initiatives by banks Marketing orientation Change in ambience Recruitment of specialists Tie-ups, sharing networks and strategic alliance technology in banking : technology in banking IT spend by banking and financial services industry in us is 7% of the revenue as against around1%by the Indian banks. Shared atm network to reduce cost, increase reach. Cheque truncation system to change the speed of the banking transaction. Adoption of technology to lead the business transformation and cost advantage in long term. LATEST DEVELOPMENT IN BANKING :

LATEST DEVELOPMENT IN BANKING Mobile Banking Net Banking Insta Alerts Phone Banking Email Statements ngpay mChek bill payment Human resource : Human resource In order to meet the global standards and to remain competitive, banks are recruiting more specialist in the various fields such as treasury management, credit risk management, it related services, HRM. Fast track merit and performance based promotion from within would have to be institutionalized to inject dynamism and youthfulness in the work force . FINANCE MINISTER OF INDIA- MR PRANAB MUKHERJEE : FINANCE MINISTER OF INDIA- MR PRANAB MUKHERJEE FACTS AND FIGURES : FACTS AND FIGURES INDIAS BANKING SECTOR HAS THE 6TH RANK IN ALL OVER THE WORLD. SBI is the 2nd bank in the world to have more than 10,000 branches, after Chinas ICBC ICICI IS THE INDIAS LARGEST PRIVATE BANK SBI HAS THE LARGEST NO OF ATM IN INDIA Challenges ahead : Challenges ahead Competition and improving profitability Deploying latest technology Risk management Customers relations Cooperative governance International standards Social responsibility Queries????? : Queries?????

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