Presented By : Saju Varghese PGP-1

What is a Bank. Pre-banking Era in India. Overview of Indian Banking Sector. Structure and Composition of Indian Banking System. Types of Banks. Who Controls the Banking System. Challenges faced by Indian Banks. Facts and Figures.

A banker or a bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. A bank is a financial intermediary which connects customers with capital deficits to customers with capital surpluses.

Historical evidences of money lending activities carried on in India during the Vedic Period about 2000 to 1400 year BC. Presence of Shroffs and Hundis. Indigenous Bankers like Jagat Sheths, Mahajan, Sahukar, Chetty, of the 17th and the 18th centuries were quite known for their power and influence.

Phase 1

General

Bank of India 1785 (First Bank). The Imperial Bank of India was formed by amalgamating the Presidency bank of India in the year 1920. Reserve Bank of India 1935. Slow Growth and Periodic Failure. The Banking Companies Act 1949.

Phase 2

Nationalization

of Imperial Bank of India and formation of SBI (1955). Nationalization of 7 subsidiaries of SBI(1959). Nationalization of 14 major banks (1969). Creation of Regional Rural Banks (1975). Nationalization of 7 banks with deposits over 200crores (1980).

Phase 3 Entry of Foreign Banks. Online Banking and Phone Banking. Introduction of Debit and Credit Cards. System became more convenient and swift.

Unorganized Sector. It consists of money lenders, indigenous bankers. Traders and Farmers before the period of Independence mainly were dependent on Unorganized Sector. In 1931 Central Banking Inquiry Committee estimated that the share of indigenous bankers in total credit was about 90%. Some of the famous money lenders of the past were known to us in different names like Shroffs, Sheth, Mahajan, Chetty and Sahukars.

Organized Sector. It consists of Reserve Bank of India, State bank of India and its Associates , Public sector banks , Private banks, Foreign banks, Co-operative banks, Regional rural banks, Development banks.

Public Sector Banks. Private Sector Banks. Foreign Banks. Co-operative Banks. Development Bank/Financial Institutions.

The Andaman and Nicobar State Cooperative Bank Ltd. The Andhra Pradesh State Co-operative Bank Ltd. The Arunachal Pradesh State co-operative Apex Bank Ltd. The Assam Co-operative Apex Bank Ltd. The Bihar State Co-operative Bank Ltd.

HDFC bank. ICICI Bank. Federal Bank. ING Vyasa Bank. HSBC Bank.

Accepting Deposits from Public. (Deposits) Lending money to Public. (Loans) Transferring money from one place to another. (Remittances) Acting as Trustees. Keeping valuables in safe custody. Government Business.

History Started operation on 1st April, 1935. under the Reserve Bank Act of 1934. It was set up with a share capital of Rs 5 crores fully paid up. Nationalized in the year 1949.

 The

functions of RBI are classified into three heads :-

Traditional functions Promotional functions Supervisory functions

Monopoly of printing and issue of currency notes. Banker to the Government both Central and State. Fight against economic crisis and ensure stability of Indian economy. Controller of Forex and Credit Maintaining the External value of domestic currency

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

Granting licenses to the banks. Periodical review of the work of Commercial Banks. Control the non-banking finance corporation.

 Tools:

CRR (Cash Reserve Ratio): 6%. Repo Rate: 6.25%. Reverse Repo Rate: 5.25%. SLR (Statutory Liquidity Ratio): 25%. Bank Rate: 6%.

Lack of product expertise. More focused on Corporate clients. Inefficient capital allocation. Competition in the market. Limited use of technology across both customer facing and internal functions.

RBI has the 10th largest gold reserves in the world after spending US $6.7 billion towards purchase of 200 metric tones of gold from IMF in November 2009. In the annual international ranking conducted by UKbased Brand Finance Plc, 20 Indian banks have been included in the Brand Finance Global Banking 500. In fact, the State Bank of India (SBI) has become the first Indian bank to be ranked among the Top 50 banks in the world, capturing the 36th rank, as per the Brand Finance study. The brand value of SBI increased from US$ 1.5 billion in 2009 to US$ 4.6 billion in 2010. ICICI Bank also made it to the Top 100 list with a brand value of US$ 2.2 billion. The total brand value of the 20 Indian banks featured in the list stood at US$ 13 billion.