TYPES OF BANKS

Types of Banks
Commercial banks/Nationalized banks Cooperative banks Land Development Banks Regional Rural banks Foreign banks Private Sector banks Development banks NABARD EXIM Bank National Housing Bank

Commercial Banks
Mobilize Deposits from the public which are repayable on demand or at short notice. They lend to general public , traders and manufacturers. They provide working capital to the business in the form of overdraft and cash credit. No. of agency services like; collection of cheque, bills, safe keeping for valuables, issue of letter of credit, etc.

Investment Bank or Industrial Bank

Provide medium-term and Long-term finance to industries to meet their Fixed capital requirements. For existing industries , they lend for expansion and modernization . Help to promote new industries by underwriting the issue of securities. The industrial bank secure funds through share capital and debentures. They also receive deposits from the public for longperiods.

Exchange Banks
Specialized in financing the foreign trade. Supply Necessary foreign exchange required for settlement of transactions in foreign trade. Now a days commercial banks themselves undertake foreign exchange business so, there is no separate foreign exchange bank.

Savings Banks
Collects savings from poor and middle income people of the society. These banks primarily intended to encourage habits of thrift and savings among people with small incomes. Depositors are allowed to withdraw the amount in times of needs. The govt. runs savings bank and they are managed by postal department.

Co-operative Banks
Formed on the principle of co-operation. Provide short-term credit to agriculturists, artisans, small farmers and small scale industries. Accept all kind of deposits and make loan to the members at lower rate of interest.

Land Development Banks

Provide Long-term loans to Agriculturists for purchasing tools and equipments and cattle and making permanent improvement on land. Granted against the security of land. Organized on co-operative basis in India. The banks raise their resources in the form of shares and by issuing long-term securities. These banks are presently known as Agriculture and Rural Development Banks.

Central Bank
Acts as leader of the money market; supervising, controlling, and regulating the activities of commercial banks and other financial institutions. Enforces monetary discipline in the countrys economy. Manage the issue and circulation of currency to safeguard financial stability in the country. Functions in close touch with the government and assists in the implementation of its economic policies. It serves as banker, agent and advisor to the government.

Types of Banking
Core Banking Core

Banking

A centralized branch computerization model in which branches are connected to a central host. It incorporates branch automation modules and online multiple delivery channels like ATM, Debit card, Telebanking, Internet Banking, etc., under one roof. In core banking there is a central database for the bank and transactions done centrally, online. It offers integrated products and services to customers round the clock.

Retail Banking
Retail banking refers to banking in which banks undergo transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and checking accounts, mortgages , personal loans, debit cards, credit cards, etc.

Investment Banking

Financial intermediary that performs a variety of services Like, underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients.

Electronic Banking

With the introduction of computers in Indian Banks and with the arrangements of ATMs, the services are provided across the banks. Customers need not necessarily visit the Bank to do banking transactions when their banker provides them tele-banking or remote-banking facility. This type of banking is called electronic banking . Anytime Banking Any where Banking Home banking (corporate and personal)

Corporate Banking
Corporate customers are especially big business/industrial houses. For getting these types of services from the banks , the customers requires a computer, a telephone connection and a modem and could be utilized at the time of performing banking transactions.

Personal Banking

By using tele-banking facility, the customer get the connectivity to the branchs designated computer. The software provided in the machine will be interactive with the customer asking him to dial the code number of the service required by him and suitably answer him. A customer can have access to his balance, and also can place order for statement of accounts, cheque books and other selected services through this tele (phone) banking.

hole Sale Banking

Banking services between merchant banks and other financial institutions. In other words, business to business banking (B2B).

Other Banking are:

- Mobile Banking - Internet Banking, etc.

Present Era
The last decade experienced a complete reform in the Banking sector. With the advancement of technology, banking sector has become more EASY, FAST , ACCURATE and also TIME SAVING. ATMs, Mobile Banking, Net Banking are the tools to facilitate the customers of the bank.

SOME BANKING CONCEPTS

NPA KYC Basel I & II Bancassurance Money Laundering Banking Sector Reforms Derivatives Merchant Banking Repo Rate and Reverse Repo Rate CRR & SLR Risk Management Venture Capital Recovery management Overdraft

Government Securities SEBI Lease Financing FDI (Foreign Direct Investment) FII (Foreign Institutional Investment) Credit Rating Agencies Commercial Paper Certificate of Deposit Equity Bonds Mutual funds Close ended and Open ended schemes Cash Credit

Cont.
Bill of exchange Discounting of bills Promissory note Mortgage Interest warrant Dividend warrant Clearing house Underwriting Hire-purchase finance Bill of lading Material alteration Budla Transactions or carry over Factoring services Commercial paper Certificate of Deposits

WHAT IS BANKING ?

Definition of a Bank
Under English law, a Bank is defined as a person who carries on the business of banking , which is specified as; Conducting current accounts for his customers Paying cheques drawn on the bank, and Collecting cheques for the customers.

In India
Section 5 (b) of Banking Regulation Act 1949 Accepting for the purpose of lending and investment, of deposits of money from the public, repayable on demand, order or otherwise and withdrawal by cheque, draft order or otherwise.

Primary or Traditional Functions

The major functions of banks are: 1. Acceptance of Deposits 2. Lending of money 3. Creation of credit, and 4. Transferring of money and other related activities

Ancillary Services
Safe custody of Valuables Safe deposit Vault Purchase and sale of securities Collection of interest on securities/debentures and dividend on shares, etc Remittance of Funds Bank drafts, Mail Transfers, Telegraphic Transfers Agent and Trustee

Cont.
Personal tax assistance Investment facilities Underwriting, banker to new issues, Guidance to Investment, etc. Credit Transfers Travelers' Cheques and Gift Cheques,etc.

Kinds of business that cannot be done

Section 8 of the Banking Act, prohibits a bank from carrying on trading activities which are not incidental to banking business. For example, it can buy or sell securities for the purpose of realizing them, can deal with stocks, shares, bullion, etc., and can act as Trustees, Executor, Administrator, etc.

ROLE PLAYED BY BANKS

Role of Banks
Economic Development Mobilization of Savings Balanced Regional Development Extension of credit Creation of money Facilitate Commerce and Trade

Cont..
Banks contribute to the operation and growth of the economy through various roles, including that of intermediary and provider of payment settlement facilities. Promote confidence and stability in the system. Transfer of funds with minimal risk to the parties. Efficient allocation of resources in an economy through lending to businesses and individuals.

Cont Provide 24 hour access to funds and facilities to Save / Invest with safety. Banks must continually upgrade their technologies, products and services in order to facilitate economic transactions and economic growth.

Social Responsibility of Commercial Banks

Banking facilities to unbanked areas Deployment of credit to neglected sections of the society (priority sectors) Bank finance to small-scale industries Small business finance (self-employed) Financing of agriculture Assistance to women Welfare of minorities Assistance to students And many more

Changing Profile of Indian Banking

Organizational Changes Change from wholesale character to retail character Purpose orientation in Lending Credit Planning Reduction of regional imbalances Development of banking habits Increase in volume of credit Increase in advances to priority sector and weaker sections Housing finance leasing Innovations Venture capital financing

QUESTIONS