INTRODUCTION

BANKING SECTOR
OF INDIA

WHAT IS BANK?
A banker or bank is a financial institution
whose primary activity is to act as a payment
agent for customers and to borrow and lend
money.
An institution where one can place and
borrow money and take care of financial affairs;
A branch office of such an institution.
The first modern bank was founded in Italy
in Genoa in 1406, its name was (Bank of St.
George).

FUNCTIONS OF
BANKS

Accepting Deposits from public/others

(Deposits).
Lending money to public (Loans).
Transferring money from one place to
another (Remittances).
Acting as trustees.
Keeping valuables in safe custody.
Government business.

ACTING AS A TRUSTEES
Banks also act as trustees for various purposes. For example,
whenever a company wishes to issue secured DEBENTURES, it
has to appoint a financial intermediary as trustee who takes
charge of the security for the debenture and looks after the
interests of the debenture holders. Such entity necessarily have
to have expertise in financial matters and also be of sufficient
standing in the market/society to generate confidence in the
minds of potential subscribers to the debenture. While Banks are
the natural choice for the customers, Banks must possess the
following to be effective and retain that:
A track record of sufficient length.
Facilities for safe keeping.
Legal skills to take necessary steps for the trusteeship.

DEBENTURES
It is define as certicate of agreements of
loans which is given under the companies
stemps and ensure fixed returns on the
basis of interest rate and the principal
amount whenever debenture mature.
TYPES OF DEBENTURES1.NCD
2.PCD
3.OCD
4.FCD

TYPES OF BANKS
Public sector Banks
Private sector Banks
Co-operative Banks
Development Bank/Financial institutions

Public sector Banks

Some Public Sector Banks in India:
Central Bank of India
Corporation Bank
Dena Bank
Bank of India
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank

Private sectors Banks

Old generation private banks
New generation private banks

ICICI Bank
IDBI Bank
Axis bank

Foreign banks operating in India

HSBC BANK
CITI BANK
ABN-AMRO BANK
STANDARD CHARTED BANK

Upcoming foreign bank in India

RBS(ROYAL BANK OF SCOTLAND GROUP)
INDUSTRIAL AND COMMERCIAL BANK OF CHINA

Scheduled co-operative banks

Non-scheduled bank

CO-OPERATIVE
BANKS
The Co operative banks in India started functioning almost 100
years ago. The Cooperative bank is an important constituent of the
Indian Financial System.They are setup to provide easy loans to
farmers or other persons to set up his buisness.
They are non profitable banks.
Cooperative banks in India finance rural areas under:
Farming
Cattle
Milk
Hatchery
Personal finance
Some example of co-operative banks in IndiaIDBI BANK(INDUSTRIAL DEVELOPMENT BANK OF INDIA)
IFCI BANK(INDUSTRIAL FINANCE COOPERATION OF INDIA)
APEX BANK

Development
Banks/Financial Institutions
These banks are mainly used for devoloping
industries and countries
Some ExamplesFederal Bank
HDFC Bank
HSBC
ICICI
Bank Indian Overseas Bank
ING Vysya Bank

WHO CONTROLS OVER BANKS?

The Reserve Bank of India

(RBI)
History:-

Become operational on April 1,1935

Nationalized in the Year 1949.
Major objectives:-

Regulate the issue of banknote.

Maintain reserves with a view to securing monetary

stability.
To operate the credit and currency system of the country to
its advantage.

Functions of RBI
The fuctions are classified into three heads:-

Traditional functions
Promotional functions
Supervisory functions

Traditional functions
Monopoly of currency notes issue
Banker to the Government (both the central
and state)
Fight against economic crisis and ensures
stability of Indian economy.
Controller of ForEx and credit
Maintaining the external value of domestic
currency

Promotional functions
Extension of the facilities for the small
scale industries
Innovating the new banking business
transactions.
Extension of the facilities for the provision
of the agricultural credit through NABARD

Supervisory functions
Granting licence to Banks.
Periodical review of the work of the
commercial banks.
Control the non-banking finance
corporation.

HOW IT CONTROLS BANK &

ECONOMY
TOOLS: CRR( CASH RESERVE RATIO): 5.5%

REPO RATES(RR):7.5%
REVERSE REPO RATE(RRR): 6.0%
STATUTORY LIQUIDTY RATIO (SLR):24%
BANK RATE: 6.0%

Overview of Indian Banking Sector

A Glimpse of Banking sector

Phase-1
Early phase from 1786 to 1969 of Indian Banks
Phase-2
Nationalization of Indian Banks and up to 1991 prior
to Indian banking sector Reforms
Phase-3
New phase of Indian Banking System with the
advent of Indian Financial & Banking Sector
Reforms after 1991

Phase-1
GENERAL BANK OF INDIA 1786(FIRST BANK)
RESERVE BANK OF INDIA 1935
SLOW GROWTH AND PERIODIC FAILURE
THE BANKING COMPANY ACT 1949
PEOPLE Mostly SAVE IN POSTAL DEPOSITS

Phase-2
Nationalization of imperial bank of India and formation of sate bank of
India(1955)

Nationalization of SBI and Subsidiaries(1960)

Insurance cover extended to deposits
Creation of credit guarantee corporation
Creation of regional rural banks

Phase-3
Entry of Foreign Banks
Phone Banking and Net-Banking
Shelter from external macroeconomic shock
System become more convenient and swift

Challenges faced by Indian

banks
Lack of product expertise
Traditionally focused on limited range of products
Primarily for corporate clients
Need for acquiring skills in
Retail, structured finance

Lack of distribution expertise

Reliance on branch channel and human intervention
Relatively high unit cost of delivery given small
transaction sizes

Limited use of technology

Across both customer-facing and
internal functions

Continued
Inefficient capital allocation
Competition in market
Post office
Insurance
Financial Institution
Foreign Banks

Ways Ahead
Technological Advancement
Rural Banking
Improving Risk Management
Developing a flexible model for rapid
scale-up at optimal cost

FACTS AND FIGURES

Indian banking sector has 6th rank in all over the world.
SBI has 6500+ ATMs all over the country.
ICICI bank has 3500+ ATMs all over the country.
RBI had printed 6,39,948 lakhs crore notes till 6 TH Nov 2008.
IN Indore SBI has 45+ ATMs .
SBI provides the facility and it is tie with 9200+ banks to use
their ATMs.
Acc. To business magazine survey the no. of ATMs grew
28% yearly.
Inspite of it India has 23+ ATMs per million people, China
has 55+ ATMs and South Korea has 1600+ ATMs per million
people.
Transaction done through ATMs is around 70,000 crore in a
year.
ICICI bank has largest no. branches in foreign also.

THANK YOU