Professional Documents
Culture Documents
BANKING
BANKING
1.Money market It refers to borrowing and lending. 2 parts organized and unorganized sector –
Organized sector are State Bank, 7 associated banks, 19 Nationalised banks, RRB, Co-operative
Banks, Non Governmental sector and other Banks. Unorganized includes the moneylenders and
indigenous bankers.
2.Development of Indian Banking: Bank of Hindusthan 1779 was first bank at Calcuttaunder
European management-Bank of Bengal 1806 , Bank of Bombay 1840, bank of Madras 1843,
were called Presidency banks. 1881- First Bank with limited liability to be managed by Indian
Board namely the Oudh Commercial bank- 1894- First purely Indian bank was Punjab National
bank- Later Imperial bank 1921 by amalgamating the Presidency banks. RBI created in 1935-
nationalized in 1949 – Imperial Bank, renamed as SBI in 1955- 14 Banks (50 crores)
nationalized6-96 Banks (2 00crores) nationalized 1980 – N.B.I. merged with P.N.B. in 1993.
3.R.B.I: It has Governor and Board of Directors apart from Central Board 4 local boards. It has
following functions: -
Functions:
3.Banker’s Bank : Banking Regulation Act 1949 - Lender to the last
resort.(loan to Commerlised Bank)
5.Custodian of Foreign Reserves: RBI buys & sells the foreign currencies
6.Collecting and publishing the economic data.
(a) Quantitative and Qualitative Credit Control – Bank rate - SLR, CRR, open marker
operations etc., and variation in margin requirements publicity etc.,
(b)Qualitative or Selective Credit Control 1956 – 3 points -fixing margin requirements-
maximum limit of credit and different interest rates.
5.Priority sectors: (a) Houses for slum, credit to formers for purchase, ordinary retailers etc.,
shall be given priority at least 40% to them (b) Differential rate of interest – less interest 4%
rate for weaker sections. It is for those whose income not more than per annum 6400/7200 in
Rural and Urban areas- for lands less than – 2.5-acres/1 acre non irrigated and irrigated land
respectively. (c) New strategy for rural lending – 1987 service area approach.
(The Reserve Bank of India in its mid-term review of the Monetary &
Credit Policy for the year 2005-06 on Tuesday kept the bank rate unchanged
at 6 per cent.However, as expected, in view of the current macroeconomic
and over all monetary conditions, the reverse repo rate has been increased
by 25 basis points with effect from October 26, 2005 to 5.25 per cent from
the current level of 5 per cent. The cash reserve ratio (CRR) kept unchanged
at 5 per cent. Accordingly, the fixed repo rate under Liquidity Adjustment
Facility would be 6.25 per cent with effect from October 26, 2005
(7) IMD- operated by SBI for NRI – 5 years – different interest rates - loan available.
8.5C Formula for Banks: Challenge, competition, credit, customer and control prescribed by
Ministry of Finance
10 Scheduled Banks (i) Paid up capital not less than 5 lakhs and activity will not affect interest of
depositors.(ii)It has following facilities:-1.Eligible to get loan from RBI 2.Membership of
clearing house 3. get rediscount in exchange bills
(b) Non Scheduled banks – not included in scheduled but to follow CRR conditions but no
deposit with RBI and not eligible for loan from RBI.
9)Indian Banks Abroad: Bank of Baroda has the highest with 38 branches and SBI with 22
branches and Bank of India have 18 branches. In U.K. 19 branches and Fiji 9 branches.
12. Regional Rural Banks (RRB)1975 established under RRB Act 1976
*since 1987, no new RRB has been opened (Kelkar committee)
1994-95 M.C.Bhandari Committee: to invest NON – SLR surplus fund in
profitable areas
14.Banking Ombudsman – RBI introduced 1995 – 11 already appointed all except RRB
included. Time limit one month.
A)Scheduled Banks :
1)Listed in 2nd scheduled of RBI Act 1934 2)Paid up capital not less than
Rs.5lakhs 3)Any Activity of the bank will not adversely affect the interest of
depositors.
4)Not eligible for having loan from RBI But eligible in Emergency conditions.
* July 19th 1969 - 14 large commercial banks whose reserves were more
than Rs.50 Crore.
*1980 April 15 – 6 Private Sector banks whose reserves were more than
Rs.200crore.]
*1993 the New Bank of India (1980) merged with Punjab National
Bank(1969)
b) IFCI: 1948 Act -To arrange medium and long term credit for varuois
industrial enterprises- 1993 corpn was converted into a company
Various Funds of UTI: 1) India Fund-1986 (ii) India Growth Fund 1988 (iii)
India Access Fund 1997 (iv) India Debt Fund 1997 (v)Master Value- Index Fund
2 in 1998.
e) EXIM bank: 1982- For financing, facilitating and promoting foreign trade in
India.