What is banking?
“ Bank is an institution which trades in money, an establishment for the deposits,custody and issue of money,as also for making loans and discounts and facilitating the transmission of remittances from one place to another”.

Types of bank in India
 Commercial

Banks  Industrial Banks  Agricultural Banks  Exchange Banks  Central Banks  Indigenous Bankers

Main reforms in banking sector
 Government

equity in banks has been reduced and strong banks have been allowed to access the capital market raising additional capital.  Bank now enjoying the operational freedom in terms of opening of new branches and bank having good track record of profitability given flexibility in recruitment.

Main reforms in banking sector
 New

private sector banks have been set up and foreign banks are allowed to expend their function in India including through subsideries.  Banks are also allowed to set up off shore banking units in SEZ.  new instrument have been introduced for better flexibility and better risk management like interest rate exchange, cross currency forward contract.

Main reforms in banking sector
 New

areas open like-:  Insurance  Credit card  Infrastructure financing  Gold banking  Investment banking

Main reforms in banking sector
 Several

new institution have been set up-:  National securities depositor limited  Central depositors service limited  Credit information bureau India limited
 Limits

for overseas investment have been liberalized.  The overseas investment for corporate have been raised to hundred percent

Main reforms in banking sector
 Universal

banking has been introduced.  Adoption of global standard-:  Prudential norms for capital adequacy, Assets classification , income recognization, best accounting system, settlement system are adopted

Competition enhancing measures
 Freedom

in operation  Disinvestment of public ownership in public sector bank  Transparent norms for private and foreign bank  Permission for FDI and portfolio investment in banking

Measures enhancing the role of market forces
 Interest

rate on domestic term has been deregulated  Reduced pre-emption.  Enhanced transparency and disclosure.

Instutional and legal measure
 Strengthening

creditors right.  Passed the recovery of debt act in 1993 to facilitate and speed up .  Six special tribunals have been set up And appellate Tribunal has also been set up in mumbai.  Improved framework for payment and settlement.

of credit information and

Techenological Related measures
 Dedicated

communication as bakbone for

banks.  Introduction of product through communication network.  Electronic funds transfer .  Centralised banking or core banking .  Structured financial messaging solution.

Measure in Interest rates slab
 Prime

landing rate of SBI and other banks of over Rs 2 lakhs has been reduced .  Rate of interest on bank loans above Rs 2 lakhs has been fully decontrolled .  The interest rates on deposits and on advance of all co-operative bank have been deregulated.  Interest rate on domestic term deposits has been decontrolled .

Supervisory measures
 Setting

up an autonomous body for supervision provision  Introduction of off-site surveillance  Monitoring systematically, important financial institutions

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