INDIAN BANKING SYSTEM

Lecture 1

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 AGENDUM
1. Attendance
2. Assessing the Video Viewing + Oral Test - MCQ – in the presentation) -
(Approximately 6-10 Questions). Attendance Order Link Internal Mark - 10
Minutes.
3. Review of Previous Class Topic – 3 Minutes
4. Today’s Class Topic (30 Minutes)
5. Mid-Class Assessment -1 : Approximately 5 MCQ Questions. (Repeat the Class if
Not Satisfied with Students Answers) – 5 Minutes
6. Today’s Class Topic (30 Minutes)
7. Mid-Class Assessment – 2 : Approximately 5 MCQ Questions. (Repeat the Class
if Not Satisfied with the students Answers) - 5 Minutes
8. Class Work – Applications - Problem Solving – 10 minuets
9. Homework – Assignment + Discussing the Solution for Assignment – 10 to 12
Minutes
10. Intro of “ Next Topic ” 5 Minutes

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Attendance

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Assessing the Video Viewing

1. What is Structure?
2. Why Structure is used in Programming?
3. A user defined data type, which is used to assign names to integral
constants is called ____________
4. Which operator connects the structure name to its member name?
5. Predict the output of following C program
#include<stdio.h>
struct Point
{
int x, y, z;
};

int main()
{
struct Point p1 = {.y = 0, .z = 1, .x = 2};
printf("%d %d %d", p1.x, p1.y, p1.z);
return 0;
}
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Topic Outcome

• Student shall able to use Struct and

Enumeration in the program.
• Ability to bundle the mixed data
type in one container.
• Able to handle large quantity of
mixed data.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Introduction

• A bank is a financial institution that provides

banking and other financial services to their
customers such as accepting 12/8/2012
deposits and providing loans.

• A banking system also referred as a system

provided by the bank which offers cash
management services for Indian Banking
System customers, reporting the transactions
of their accounts and portfolios, through out
the day.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 The banks safeguards the money and
valuables and provide loans, credit, and
payment services, such as checking
accounts, money orders, and cashier’s
cheques. The banks also offer
investment and insurance products.
Established in 1935 Apex body of Indian
banking system Headquarters is in
Mumbai India’s monetary authority
Supervisor of financial system Issuer of
currency Banker to bank Banker to
government Maintains financial stability

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 HISTORY OF BANKING IN INDIA

The first bank in India was established in

1786. From 1786 till today it has gone
through three distinct phases
 Phase1: Early phase from 1786 to 1969
 Phase2: Nationalization of Indian Banks
and up to 1991prior to Indian banking
reforms
 Phase3: New phase of Indian Banking
system with the advent of the Indian
Financial Banking sector reforms after 1991
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Try yourself
• Create a structure for Student personal data
storing

• Create a structure for CIA test performance

assessment

• Create a structure for Employee details

storing

• Create a structure for your family earning

details.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 PHASE 1

• The General Bank of India was

established in 1786.
• Then came the Bank of Hindustan
and Bengal Bank.
• The East India company established
Bank of Bengal (1809), Bank of
Bombay (1840), Bank of Madras
(1843) and these banks called as
Presidency Bank.
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 • These three banks were amalgamated in
1920 and named as the Imperial Bank of
India, which was started as the as the
private shareholder bank mostly European
shareholder
• In 1865 Allahabad Bank was established
and first time exclusively by Indians,
Punjab National Bank Ltd was setup in
1894 with headquarter in Lahore. Between
1906 to 1913 many banks were established
namely Canara bank, Central bank, Bank
of India, Bank of Baroda, Indian Bank,
Bank of Mysore were established.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 • There were approximately 1100
banks mostly small was established.
• To streamline the banks and to gain
control over the banks Govt. of India
came up with The Banking
Companies Act in 1949 which was
later changed to Banking Regulation
Act 1949.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 PHASE2

• Govt. took some major steps to bring

reforms in the Indian banking sector
after independence. In 1955, it
nationalized The Imperial Bank of India
with extensive banking facilities on a
large scale especially in rural and Semi-
urban areas. It form SBI to act as the
principal agent of RBI.
• In 1969 late Prime Minister Mrs. Indira
Gandhi nationalized 14 commercial
banks.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 • In 1980 seven more banks were
nationalized which brings around
80% banks under the control of
Govt. Govt. took the following steps:-
• 1949: Enactment of Banking
Regulation Act
• 1955: Nationalization of SBI
• 1959: Nationalization of SBI
Subsidiaries
• 1961: Insurance cover extended to
deposits
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 • 1969:Nationalization of 14
commercial banks
• 1971:Creation of credit guarantee
corporation
• 1975:Creation of Regional Rural
Banks (RRB)
• 1980:Nationalization of banks with
deposits over 200 crore

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 PHASE3

This phase brought many more facilities in

the banking sector.
• In 1991, under the chairmanship of Mr.
M Narasimham, a committee was set up
which work for the liberalization of
banks in India
• During this country is flooded with the
Foreign banks and ATMs. Phone Baking
and Net banking was introduced
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 BEGINNING OF MODERN BANKING IN INDIA
• In 1786, English Agency House had
established The General Bank of India.
This was the beginning of the modern
banking in India.
PRE- INDEPENDENCE
• On the eve of independence in 1947 there
were 648 commercial banks comprising of
97 scheduled and 551 non-scheduled
banks.
• The number of banks office stood at 2,987,
total deposit at Rs 100,800 million and
advances Rs 4750 million.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Mid Assessment

1. Which of the following are themselves

a collection of different data types?
A. String
B. Structure
C. Char
D. All of the mentioned

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Mid Assessment

2. Which of the following structure

declaration will throw an error?
A. struct temp{}s; main(){}
B. struct temp{}; struct temp s; main(){}
C. struct temp s; struct temp{}; main(){}

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 RBI

• RBI (Reserve Bank of India) came into

existence in 1935 as the central
banking authority of India with a
share capital of Rs 5 crores on the
basis of recommendation of Hilton
Young Commission. RBI was
nationalized in 1949.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 BANKING DEVELOPMENT

PRE-NATIONALIZATION
• Credit was excessively skewed in favor
of large borrowers
• Agriculture Sector got only 2% of total
bank credit
• Features with the goal of achieving
the equitable allocation of credit and
relative priorities set out in the five
years plan
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 NATIONALIZATION OF BANKS
• In July 1969 Govt. of India nationalized
14 major scheduled commercial banks,
each having the minimum deposit of Rs
500 million.
RATIONAL FOR NATIONALIZATION
• Removal of control of few large Industrial
and Business houses
• Provision for adequate credit for
Agriculture, Small Industries, exports etc
• Giving Professional bent to management

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 • Encouraging a new class of entrepreneurs
• Change over from class banking to mass
banking
IMPACT OF NATIONALIZATION
• Unprecedented growth in the branch
network of the commercial banks
• Rapid growth in deposit mobilization and
expansion of credit
• However commercial banks faces decline
in profitability Directed lending and less
flexibility Increase cost of operations

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Mid Assessment

3. size of union is size of the longest

element in the union
A.Yes
B.No

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Mid Assessment

4. Is it necessary that the size of all

elements in a structure should be
same?
A.Yes
B.No

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Need of the Banks

• To provide the security to the savings

of customers.
• To control the supply of money and
credit. 12/8/2012
• To encourage public confidence in the
working of the financial system,
increase savings speedily and efficiently.
Indian Banking System

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 To avoid focus of financial powers in
the hands of a few individuals and
institutions.
• To set equal norms and conditions
(i.e. rate of interest, period of lending
etc.) to all types of customers.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Products and Services offered by Banks

The different products in a bank can be

broadly classified into:
Retail Banking
Trade Finance
Treasury Operations.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Retail Banking:
Deposits
Loans, Cash Credit and Overdraft
Negotiating for Loans and advances
Remittances
Book-Keeping (maintaining all
accounting records)
Receiving all kinds of bonds valuable
for safe keeping

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Trade Finance:
• Issuing and confirming of letter of
credit.
• Drawing, accepting, discounting,
buying, selling, collecting of bills of
exchange, promissory notes, drafts,
bill of lading and other securities.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Treasury Operations:
• Buying and selling of bullion.
Foreign exchange
• Acquiring, holding, underwriting
and dealing in shares, debentures,
etc.
• Purchasing and selling of bonds and
securities on behalf of constituents

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Common Banking Products Available:
• Credit Card
• Debit Cards
• Automatic Teller Machine
• Electronic Funds Transfer (EFT)
• Tele-banking
• Mobile Banking
• Internet Banking

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Banking Services

Banking covers many services, these

basic services have always been
recognized as the hallmark of the
genuine banker. These are…
The receipt of the customer’s deposits
The collection of cheques drawn on
other banks
The payment of the customer’s
cheques drawn on himself
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 There are other various types of banking services
like:
 Advances – Overdraft, Cash Credit, etc.
 Deposits – Saving Account, Current Account,
etc.
 Financial Services – Bill discounting etc.
 Foreign Services – Providing foreign currency,
travelers cheques, etc.
 Money Transmission – Funds transfer etc.
 Savings – Fixed deposits, etc.
Services.
 Services of place or time – ATM
Status – Debit Cards, Credit Cards,
etc.
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Bank Lending

• Banks extend credit to different

categories of borrowers for a wide
variety of purposes.
• Bank credit is provided to
households, retail traders, small and
medium enterprises (SMEs),
corporates, the Government
undertakings etc. in the economy.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Principle of Lending:
• Safety
• Liquidity
• Profitability
• Risk diversification

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Try yourself

• Write a program for accessing

student performance detail using
structure.

• Write a program for storing and

retrieving employee details using
structure.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Government policy on banking industry

• To protect the safety of the public’s

savings.
• To control the supply of money and
credit in order to achieve 12/8/2012 a
nation’s broad economic goal.
• To ensure equal opportunity and
fairness in the public’s access to credit
and other vital financial services. Indian
Banking System

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 • To promote public confidence in the
financial system, so that savings are
made speedily and efficiently.
• To avoid concentrations of financial
power in the hands of a few
individuals and institutions.
• Provide the Government with credit,
tax revenues and other services.
• To help sectors of the economy that
they have special credit needs for eg.
Housing, small business and
agricultural loans
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Questions for Attendance

• Is enumeration is a data type?

• Shall enumeration included in the

structure.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Classification of Banking Industry
• Indian banking industry has been divided
into two parts, organized and unorganized
sectors. The organized 12/8/2012 sector
consists of Reserve Bank of India,
Commercial Banks and Co-operative
Banks, and Specialized Financial
Institutions (IDBI, ICICI, IFC etc.). The
unorganized sector, which is not Indian
Banking System homogeneous, is largely
made up of money lenders and indigenous
bankers.
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 An outline of the Indian Banking
structure may be presented
asfollows:- 12/8/2012
1. Reserve banks of India.
2. Indian Scheduled Commercial
Banks.
a) State Bank of India and its
associate banks.
b) Twenty nationalized banks.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 c) Regional rural banks.
d) Other scheduled commercial banks.
3. Foreign Banks
4. Non-scheduled banks.
5. Co-operative banks.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Reserve Bank of India

• The reserve bank of India is a central

bank and 12/8/2012 was established in
April 1, 1935 in accordance Indian
Banking System with the provisions of
reserve bank of India act 1934.
• The central office of RBI is located at
Mumbai. since nationalization in 1949,
RBI is fully owned by the Government of
India. It was inaugurated with share
capital of Rs. 5 Crores divided into 11
shares of Rs. 100 each fully paid up.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 • The RBI Act 1934 was commenced on
April 1, 1935. The 12/8/2012 Act,
1934 provides the statutory basis of
the functioning of the bank. The bank
was constituted for the need of Indian
Banking System following:- To regulate
the issues of banknotes.- To maintain
reserves with a view to securing
monetary stability- To operate the
credit and currency system of the
country to its advantage.
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Mid Assessment

5. State the use of structure by

comparing the Union & Array.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Functions of RBI
• Bank of Issue: The RBI formulates,
implements, and monitors the monetary
policy. Its main objective is maintaining price
stability and ensuring adequate flow of credit
to productive 12/8/2012 sector.
• Regulator-Supervisor of the financial
system: RBI prescribes Indian Banking
System parameters of banking operations
within which the banking and financial
system functions.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Their main objective is to maintain public
confidence in the system, protect depositor’s
interest and provide cost effective banking
services to the public.
• Issuer of currency: RBI issues and
exchanges or destroys the currency and coins
that are not fit for circulation. His main
objective is to give the public adequate
quantity of supplies of currency notes and
coins and in good quality.
• Developmental role: The RBI performs the
wide range of promotional functions to
support national objectives such as
12/8/2012 contests, coupons maintaining
good public relations and many more.

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1

 Controller of Credit: RBI performs the
following tasks: Indian Banking System
It holds the cash reserves of all the
scheduled banks.
It controls the credit operations of banks
through quantitative and qualitative
controls.
It controls the banking system through the
system of licensing, inspection and calling
for information.
It acts as the lender of the last resort by
providing rediscount facilities to scheduled
banks.
1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1
 Next topic for Lect. 24

• File Handling

1BCS33A – Indian banking system | Even Semester 2019-20 | Lecture 1 | Page 1