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INDIAN BANKING STRUCTURE

RBI

Commercial Banks

Co-operative Banks

Banking Institutions

NBFIs

Public Sector Banks

Primary urban coop

All India Development Banks

Housing Finance Companies

Private Sector Banks

State and central coop banks

State Finance Companies

Non - Bank Finance Companies

Foreign Banks

Primary Agricultural Credit Societies

Specialized Institutions

Regional Rural Banks

Land Development Banks

NABARD / NHB / EXIM

RBI ( reserve bank of India)


Indian Banking System headed by RBI. Monetary Authority Of India Central Bank of Country Came into being by the Reserve Bank of India Act 1934 Took over the function of currency issue from the GOI Current Governor: Dr. D Subbarao

Functions Of RBI
Issue Of bank notes: Issues and exchanges or destroys currency and coins not fit for circulation. Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality. 1. issue department 2. Banking department ( replenish currency) Currency Chest Offices of the issue department in ten cities

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Currency chests are boxes or containers in which stocks of new or re-issuable notes and coins are stored. Acts as a bankers, agent and advisor to government Acts as bankers bank Monetary Authority: Formulates, implements and monitors the monetary policy. Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors. Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within which the country's banking and financial system functions.

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Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public. Manager of Foreign Exchange Manages the Foreign Exchange Management Act, 1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. Controller of credit (changing the bank rate) Developmental role Performs a wide range of promotional functions to support national objectives.

In addition some powers


License Opening of a new branch-permission Effective control on credit system Inspect the accounts of any commercial bank Holds the cash reserves of all the scheduled banks. How banks may function Sanction schemes of amalgamation Power to recommend the liquidation of weak banking companies

Commercial Banks

1. 2. 3. 4. 5. 6. 7.

Most important depositories of public savings and the most important lenders. the commercial banking in India has social control and public ownership. Their objective is to make profit. Commercial bank include : Scheduled banks Non Scheduled banks Indian banks Foreign banks Public sector Private sector Regional rural banks

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1. 2. 3. 4. Indian banking can be broadly classified into Nationalized Private Co-operative banks Specialized banking RBI as the centralized body monitoring any discrepancies and shortcomings in the system.

SCHEDULED AND NON-SCHEDULED BANKS


A bank in order to be designated as a schedule bank should have a paid up capital and reserves of 5 lakhs. To start a commercial bank today the RBI has prescribed a minimum capital of RS 100 crores and its business must be managed in a manner which in the opinion of RBI is detrimental to the interest of its depositors. Schedule bank need to maintain CRR At prescribed rate. Privileges are given to scheduled bank.

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They are entitled to receive refinance facilities from RBI. They also get currency chest facilities. In case of emergencies they can obtain fianc from the RBI Scheduled banks have to submit several returns to the RBI. Obliged to comply with the directions received from RBI. Closely watched and controlled by RBI. Nationalized banks are included in scheduled banks.

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After nationalization these banks started rendering various types of services assuming social responsibilities. Government implement various welfare schemes through these banks. They are also known as public sector banks. The commercial banks which are not included in the 2nd schedule of The RBI act 1934 are called non-schedules banks. Not eligible for refinance, rediscounting facilities from RBI.

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They do not get the privileges that are available to the scheduled banks. They are mainly engaged in money lending, discounting and collecting bills and various other agency services. Therefore they insist higher security for loans.

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1. Profitability Liquidity Safety Social welfare PUBLIC SECTOR BANKS: These are banks which the government either owns or has a majority stake in. 2. These came into being through nationalization. 3. Imperial bank was nationalized in 1955 and became SBI 4. Later in 1960 other banks were also nationalized.

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Apart from undertaking the functions of a commercial bank the SBI is also authorized to act as a agent of the RBI at all places in INDIA. PSU were established for local concern. Some called it political gimmick.

FOREIGN BANKS
These are branches of banks incorporated outside India. EX. Standard Chartered, Citibank, ABN Amro etc. Focus of large corporate accounts Assessing the viability of joint ventures of Indian firms with foreign companies. Information on local taxation Ownership issues Structuring of project cost. Financing exports and imports Entry norms are expected to be easy.

Private sector banks


These are banks which are not government owned or controlled. Their shares are freely traded in the stock market. They may be sub divided into: 1. Old private sector banks such as Federal bank, Dhanalakshmi bank etc. 2. New generation bank such as HDFC bank,IDBI bank. 3. The most recent include Kotak mahindra etc. New Private sector banks have been aggressive in business expansion and highly comptitive.

Regional Rural Banks


RRB came into existence on October 2 1975. It was established after the enactment of the RRB act 1975. These banks were established to bridge the gap in rural credit and for granting of loans and advances to small and marginal farmers, artisans, small entrepreneurs. To help the rural public. To develop rural economy These banks are small banks. Each RRB is sponsored by commercial bank.

Co-operative Banks
Co-operative banking started in India in 1904. Financing rural and agricultural development. They also work on no profit no loss State co-operatives Central co-operatives Urban co-operatives Primary agriculture credit societies Land development banks. Guidelines issued by RBI Can take part in Money market and capital market

Rural co-operatives
Provide short term credit to farmers and other small borrowers for productive purposes at the grass root level at the villages