Workshop on Modern Banking

B.V.Raghunandan, Faculty of Commerce, SVS College, Bantwal. Kavery College, Virajpet 08-03-2013

Meaning of Banking
InvestorWords.com defines bank as,

an organisation, which does most or all of the following: receives demand deposits and time deposits, pays interest on them, and honours instruments drawn on them, discounts notes, makes loans, and invests in securities; collects cheques, drafts and notes; certifies depositors cheques; and issues drafts

Chapter I:Introduction
Functions & Characteristics 1) Accepting Deposits 2) Lending or Investment 3) Nature of Repayment 4) Mode of Withdrawal 5) Joint Stock Company 6) License from RBI

Significance of Banks
Savings Mobilisation Remittance of Funds Development of Bill Market Well Developed Money market Development of Capital Market

Public Finance Financing the Nation Risk Free Investment Corporate Services Social Banking

Evolution of Banking in India

Presidency Banks: Bank of Bengal in 1809,Bank of Bombay in 1840 & Bank of Madras in 1843 Imperial Bank of India -1921 Reserve Bank of India-1935 State bank of India-1955

Nationalisation of 14 Banks1969 Second Dose of Nationalisation 1980 Narasimham Committee Reforms-1990s ICICI Merger- 2003

Composition of Indian Banking System

Reserve Bank of India Commercial Banks Development Banks Regional Rural Banks Co-operative Banks NABARD Land Development Banks Exim Bank

Reserve Bank of India

Established in 1935 Central Board of Directors with 20 members 1local Board for each of the four regions Traditional central banking functions Regulatory functions Promotional functions

Commercial Banks
Public Sector Banks: 1+7+14+6=28 Private Sector Banks: Indian,foreign & New Generation Banks Scheduled & NonScheduled banks

Development Banks
IFCI Ltd in 1948 ICICI Ltd in 1955 18 SFCs Industrial Investment Bank of India (IRCI in 1971 and reincorporated in 1997 IDBI in 1964

Regional Rural Banks

Product of 20 point programme of the govt.(1975) Scheduled Banks & Non-Scheduled Banks Treated as cooperative societies Sponsored by a public sector bank 196 RRBs covering 451 districts spread over 23 states having 14,552 branches Area Restriction

Functions of RRBs
Accepting Deposits Lending & Investment: CRR 3%-small & marginal farmers, SHG, AgriCo-ops, small entrepreneurs, small traders and small industries MicroFinance Authorised Dealers in Foreign Exchange

Co-operative Banks
Three Tier Structure Different Economic Groups Most of the Functions of Commercial Banks

NABARD

Set-up in 1982 Took over ARC Refinance Inspection of RRBs Routing Branch Expansion applications of RRBs Asscn with World Bank & others

Linking SHGs and NGOs Kisan Credit Card Scheme in collab with RBI,Comm. Banks, Coop Banks Micro-Finance Initiative

Land Development Banks

Long-term finance to agriculture Co-operative institutions Mortgage is created on the land 50% of the market value of the land given as loan Severe criticisms

EXIM Bank
Providing Loans & Advances Export Facilitation Non-Funded Activities Financing Capital Equipments Promoting Joint Ventures Merchant Banking Marketing Facilitation Factoring and Farfaiting Services Part Financing Consultants Providing Venture Capital

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