Development Banks & Commercial Banks

This PPT is useful for SYBMS Finance Specialization students
CLASS: SYBMS (FINANCE)
SUB:- BASICS OF FINANCIAL SERVICES
CHP:- 4 Development Banks &
Commercial Banks

1. Basics of Financial Services Development Banks & Commercial Banks Prof. Yuti Nandu

2. The term  commercial bank  refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses . It can also refer to a bank, or a division of a large bank, which deals with corporations or large/middle-sized business to differentiate it from a retail bank and an investment bank. Commercial banks include private sector banks and public sector banks

3. BALANCE SHEET OF COMMERCIAL BANKS LIABILITY ASSETS

4. INVESTMENT POLICY OF COMMERCIAL BANKS

5. NON PERFORMING ASSETS (NPA) A non performing asset ( NPA ) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days A nonperforming asset ( NPA ) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments are late or missed. A loan is in default when the lender considers the loan agreement to be broken and the debtor is unable to meet his obligations.

6. CAUSES OF NPA TYPES OF NPA

7. Gross NPA  is the summation of all loan assets that are classified as  NPA  as per RBI guidelines.  Gross NPA  Ratio is the ratio of total  gross NPA  to total advances (loans) of the bank.  It reveals the quality of loans made by banks. Gross NPAs Ratio = GrossNPAs Gross Advances Net  non-performing assets =  Gross NPAs  – Provisions.  Net NPA  to Advances (loans) Ratio is the ratio of  Net NPA  to advances. It is used as a measure of the overall quality of the bank's loan book Gross NPAs Ratio = Gross NPAs – Provisions Gross Advances – Provisions for asset classification

8. CLASSIFICATION OF ASSETS/NPA CATEGORIES

9. STANDARD ASSETS

10. SUB-STANDARD ASSETS

11. DOUBTFUL ASSETS

12. LOSS ASSETS

13. BASIS CENTRAL BANK COMMERCIAL BANK Meaning The apex body which regulates the supply of money in the economy and administers the banking system operations in a country A financial institution which initiate deposits, provide loans and invest the public's money to earn profits Ownership Public Public or private Banking System Apex Institute Constituent Unit Bank Chief Governor Chairman Number of Banks Single Many Customers Other banks and government General public Motive or Objective Controlling credit system Profit earning Foreign currency Functions Guardian of foreign currency Dealer of foreign currency Governing Body in India Reserve Bank of India Act 1934 Banking Regulation Act 1949

14. BASIS CENTRAL BANK COMMERCIAL BANK Loans Lender of the last resort for commercial banks Lending commercial loans, personal loans, housing loans, trade finance, vehicle loans and mortgage loans Other Functions Issuing government bonds, formulates banking regulations and fund clearance among member banks Safe deposits service, foreign exchange provision and letter of credit Note Printing Authority Yes No Monetary Authority Yes No Monetary Supply Function Yes No Monopoly Yes No Example with Reference to India Reserve Bank of India (RBI) State Bank of India (SBI), Central Bank of India (CBI), Canara Bank, etc.