Banks

Structure & Types

 RBI

Scheduled Bank Non-Scheduled

Bank

State Co- Commercial Central Co- Commercial

Operative Banks Operative & Banks
Primary
Credit
Societies
Indian Foreign

Public Private
Sector Sector

SBI & its Other Reg. And

Subsidiaries Nationalized Rural Bank
Bank
 Scheduled Bank
• Sec 42(6) of RBI Act 1934
• Must be a corporation and not partnership
or other forms
• Paid up capital + Reserves – Rs.5 Lakh
• Business managed as per RBI guidelines
• Maintain a CRR ( based on time & dd
liabilities) with RBI
• Refinance facility with RBI
• Currency Chest facility
• Bankers Clearing House procedure
 Non Scheduled Bank
• Commercial Bank not included in the
second schedule of the RBI Act
• Not entitled to facilities like refinance,
rediscounting of bills e.t.c
• Mainly engaged in lending money,
discounting and collecting bills and
various agency services
• Insist higher security for loans
 Commercial Banks - Meaning
• CB is a financial intermediary that accepts
deposits of money from the public and
lends them with a view to make profits.
• What differentiates CB from other FIs is –
accepting chequable deposits
 Indian Vs Foreign Banks
• Indian – Incorporated in India and have
head offices in India. May have branches
in foreign countries
• Foreign – Incorporated in a Foreign
Country with head offices outside in India.
Mostly scheduled banks and specialize in
foreign currency
 Public sector Vs Private Sector
• All nationalized bank are called the public
sector bank
• Others are called the private sector bank
• Nationalized Bank – Central government
entered banking business in 1955 with
nationalization of then Imperial Bank now
SBI
 Nationalized Banks
• 14 banks – Rs.50 crores in time & dd
liabilities
• 6 Pvt banks – Limit crossed Rs 200 cr
• Issue shares to the Public ( 49%)
• SBI + 6 associates
PARTICULARS PUBLIC PVT. FOREIGN

No of banks 27 34 43

No. of branches 44906 4716 188

in Crores

Amt of Deposits 350675 31692 30523

Amt of Advances 216063 21588 22756

 Regional Rural Banks
• To develop rural economy
• Authorized Capital of 5 cr
• Issued Capital (< 25 lakh / > 1 Cr)
– 50 % Central Govt
– 15% State Govt
– 35% Sponsor Bank
• Under the Mgt of Sponsor Banks( RBI –
NABARD)
• Responsible for 1 -2 adjoining districts
 Local Area Banks
• Too many agency in the rural credit
system?
• LAB poses a threat to CB & RRBs?
• Dd for Agri Credit > SS
• Industry status to agriculture
• Mobilize rural savings & make it
available
• LAB complement efforts of
Nationalized banks & RRBs
 Meaning of LAB
• To cater to needs of the local people
and to provide efficient and competitive
financial intermediation services in
areas of operation extending over two
or three contiguous districts as also to
tapping retail savings where the
branches of commercial banks are
insignificant.
• 3 LABs one each in Maharashtra,
Karnataka and AP
 Co-Operative Banking System
State Co-operative Banks (Apex)

Central Co-operative Banks ( District )

Agricultural Credit Non – Agricultural Credit

Primary Employees
Farmers Urban
Agricultural Co-Op
Credit Services Co-Op
Credit
Societies Societies Banks Societies
 Universal Banking
• Advocated in 90s by Narashimhan
committee & Khan Committee
• It is a one stop supplier for all financial
products and activities, like deposits,
loans, insurance, investment …etc
• UB prevalent in European countries like
Germany, Swiss, France Italy
• US – Cautiously moving towards UB
now
 Benefits of UB
• Economies of Scale
• Scope for Expanding Operations
• Expertise
• Network of Branches
• Information on Clients
• Customer – Transaction costs & Speed
of Services
 Regulations now
• Bank & IRDA
• Banks can enter Insurance Business as
an agent or as JV with other cos
• Banks can invest only 5 % of their o/s
credit in equity
• Development FI can move into banking