Banking

Group ‘7’
Agenda
01 INTRODUCTION

02 HISTORY

03 MARKET SIZE

04 TYPES

05 KEY RATES
Banking - INTRODUCTION

 The banking sector is the lifeline of any modern economy. It is one of the important fina
ncial pillars of the financial sector

 They play an important role in the mobilization of deposits and disbursement of credit to
various sectors of the economy

 The strength of an economy depends on the strength and efficiency of the financial syste
m, which in turn depends on a sound and solvent banking system

 The current global crisis that hit every country raised various issue regarding efficiency a
nd solvency of banking system in front of policy makers
Banking - HISTORY
 The Banking system in India can be categorized in two phases

 Pre-Independence Phase (1786-1947)

 The origin of the Banking system in India can be traced with the foundation
of Bank of Calcutta in 1786

 Three presidency banks Bank of Bengal, Bank of Bombay and Bank of Madra
s established in the 19th Century under the charter of the British East India C
ompany.

 State-owned Imperial bank of India was the only bank existing

 In 1935 , RBI was establish as the central bank of country

 Post- Independence Phase (1947 to till date)
 In 1955 the Imperial Bank of India was nationalized and named the State Bank o
f India.

 The Banking Regulation Act enacted in 1949.

 In 1969, Government of India nationalized 14 major banks whose national depo

sits were more than 50 crores.

 Six more banks further nationalized in the year 1980. With the second wave of
nationalization, the target of priority sector lending was also raised to 40%.

 Kotak Mahindra Bank and Yes Bank got a license from RBI to entry in the system
in the year 2003 and 2004.

 In 2014, RBI grants in-principle approval to IDFC and Bandhan Financial Services
to set up banks.
Section Break
Banking - Market Size
 The Indian banking system consists of
 27 public sector banks
 21 private sector banks
 49 foreign banks
 56 regional rural banks
 1,562 urban cooperative banks
 94,384 rural cooperative banks
 In FY07-18, total lending increased at a CAGR of 10.94 per cent
 Total deposits increased at a CAGR of 11.66 per cent.
 India’s retail credit market increased to US$ 281 billion on December
2017 from US$ 181 billion on December 2014.
Banking - GDP Contribution
 The Indian Banking industry is currently worth Rs. 81 trillion (US $ 1
.31 trillion)

 Roughly, the Contribution of the banking sector to GDP is about 7.7

% of GDP

 Banking sector has generated employment in the economy for abou

t 1.5 million people.
Section Break
Banking - Types
 Retail / Consumers Banks  Indigenous Banks

 Commercial Banks  Co-operative Banks

 Central Bank  Exchange Bank

 The World Bank

 Industrial Banks

 Agricultural Banks
Banking - Types
 Payments Bank
A payments bank is like any other bank which carry most banking operation
s on a small scale without involving any credit risk.
CRR, SLR & Repo Rate Reverse Repo
Rate
 CRR (cash reserve
ratio)
 Under CRR a certain percen
tage of the total bank deposi
ts has to be kept in the curre
nt account with RBI
 which means banks do not h
ave access to that much am
ount for any economic activit
y or commercial activity
 The current rates are (as of
June 2018) CRR is 4 %
SLR (statutory liquidity
ratio)
 SLR, statutory liquidity ratio is th
e amount of money that is invest
ed in certain specified securities
predominantly central governme
nt and state government securiti
es.
 The current rates are (as of June
2018) 19.5%
 Repo Rate
The term ‘Repo’ stands for ‘Re
purchase agreement’. It is the r
ate at which Reserve Bank of In
dia lends money to all the com
mercial banks in the country in t
he event of scarcity of funds.
Current repo rate is 6.25%.
Reverse Repo Rate
Reverse Repo rate is the rate at wh
ich Reserve Bank of India borrows f
unds from all the other commercial
banks in the country. Current revers
e repo rate is calculated at 6%.
Thank you