Meaning definition and functions of banking

1. Workshop on Modern Banking
B.V.Raghunandan,
Faculty of Commerce,
SVS College, Bantwal.
Kavery College,
Virajpet
08-03-2013

2. Meaning of Banking
InvestorWords.com defines bank as,
“an organisation, which does most or all
of the following: receives demand
deposits and time deposits, pays interest
on them, and honours instruments drawn
on them, discounts notes, makes loans,
and invests in securities; collects cheques,
drafts and notes; certifies depositors’
cheques; and issues drafts”

3. Chapter I:Introduction
Functions &
Characteristics
1)Accepting Deposits
2)Lending or Investment
3)Nature of Repayment
4)Mode of Withdrawal
5)Joint Stock Company
6)License from RBI

4. Significance of Banks
Savings Mobilisation
Remittance of Funds
Development of Bill Market
Well Developed Money market
Development of Capital Market
Public Finance
Financing the Nation
Risk Free Investment
Corporate Services
Social Banking

5. Evolution of Banking in India
Presidency Banks: Bank of Bengal
in 1809,Bank of Bombay in 1840
& Bank of Madras in 1843
Imperial Bank of India -1921
Reserve Bank of India-1935
State bank of India-1955
Nationalisation of 14 Banks-
1969
Second Dose of
Nationalisation –1980
Narasimham Committee
Reforms-1990s
ICICI Merger- 2003

6. Composition of Indian Banking System
Reserve Bank of
India
Commercial Banks
Development
Banks
Regional Rural
Banks
Co-operative
Banks
NABARD
Land Development
Banks
Exim Bank

7. Reserve Bank of India
Established in 1935
Central Board of
Directors with 20
members
1local Board for
each of the four
regions
Traditional central
banking functions
Regulatory
functions
Promotional
functions

8. Commercial Banks
Public Sector
Banks:
1+7+14+6=28
Private Sector
Banks:
Indian,foreign
& New
Generation
Banks
Scheduled &
Non-
Scheduled
banks

9. Development Banks
IFCI Ltd in 1948
ICICI Ltd in
1955
18 SFCs
Industrial
Investment Bank
of India (IRCI in
1971 and
reincorporated in
1997
IDBI in 1964

10. Regional Rural Banks
Product of 20 point programme of the govt.(1975)
Scheduled Banks & Non-Scheduled Banks
Treated as cooperative societies
Sponsored by a public sector bank
196 RRBs covering 451 districts spread over 23 states having 14,552
branches
Area Restriction

11. Functions of RRBs
Accepting Deposits
Lending & Investment: CRR 3%-small &
marginal farmers, SHG, AgriCo-ops, small
entrepreneurs, small traders and small
industries
MicroFinance
Authorised Dealers in Foreign Exchange

12. Co-operative Banks
Three Tier Structure
Different Economic Groups
Most of the Functions of Commercial Banks

13. NABARD
Set-up in 1982
Took over ARC
Refinance
Inspection of RRBs
Routing Branch
Expansion
applications of RRBs
Asscn with World
Bank & others
Linking SHGs and
NGOs
Kisan Credit Card
Scheme in collab
with RBI,Comm.
Banks, Coop Banks
Micro-Finance
Initiative

14. Land Development Banks
Long-term finance to agriculture
Co-operative institutions
Mortgage is created on the land
50% of the market value of the land given as loan
Severe criticisms

15. EXIM Bank
Providing Loans &
Advances
Export Facilitation
Non-Funded Activities
Financing Capital
Equipments
Promoting Joint Ventures
Merchant Banking
Marketing Facilitation
Factoring and Farfaiting
Services
Part Financing Consultants
Providing Venture Capital

16. THANK YOU