Indianbankingsystem

INDIAN BANKING SYSTEM
Introduction
Need of the Banks
Structure of Indian Banking system
Functions of Bank
What is Bank ?
•A bank is a financial institution that

provides banking and other financial
services to their customers such as
accepting deposits and providing loans.
What is Banking system ?
• A banking system also referred as a

system provided by the bank which
offers cash management services for
Indian Banking System customers,
reporting the transactions of their
accounts and portfolios, through out
the day.
Need of the Banks
To provide the security to the savings

of customers.
 To control the supply of money and
credit.
To set equal norms and conditions (i.e.
rate of interest, period of lending etc.)
to all types of customers.
FUNCTIONS OF BANK
Primary Functions of Banks
Accepting Deposits
•
The bank collects deposits from the
public. These deposits can be of
different types, such as :-
 Saving Deposits
 Fixed Deposits
 Current Deposits
 Recurring Deposits
Saving Deposits
• This type of deposits encourages saving
habit among the public.
• The rate of interest is low.
• Withdrawals of deposits are allowed
subject to certain restrictions.
• This account is suitable to salary and wage
earners.
Fixed Deposits
• Lump sum amount is deposited at one
time for a specific period.
• Higher rate of interest is paid, which
varies with the period of deposit.
• Withdrawals are not allowed before
the expiry of the period.
Current Deposits
• This type of account is operated by

businessmen.
• Withdrawals are freely allowed.
• No interest is paid.
• The account holders can get the
benefit of overdraft facility.
Recurring Deposits
• This type of account is operated by

salaried persons and petty traders.
• A certain sum of money is periodically
deposited into the bank.
• Withdrawals are permitted only after
the expiry of certain period.
• A higher rate of interest is paid.
 Granting of Loans and Advances
•
The bank advances loans to the
business community and other
members of the public. The rate
charged is higher than what it pays on
deposits. The types of bank loans and
advances are :-
 Overdraft
 Cash Credits
 Loans
•
Secondary Functions of Banks
 Agency Functions
•
The bank acts as an agent of its
customers. The bank performs a
number of agency functions which
includes :-
 Transfer of Funds
 Collection of Cheques
 Periodic Payments
 Portfolio Management
 General Utility Functions
•
The bank also performs general utility
functions, such as :-
 Locker Facility
 Underwriting of Shares
 Dealing in Foreign Exchange
 Project Reports
 Social Welfare Programmes
STRUCTURE OF INDIAN
BANKING SYSTEM
RBI- Reserve Bank Of India
 Reserve Bank of India is the Central

Bank of our country. It was
established on 1 st April 1935
 RBI performs various developmental
and promotional functions.
 It has given wide powers to supervise
and control the banking structure.
Scheduled banks
 Banks that are included in the second
schedule of the Reserve Bank of India
Act,
o Such a bank becomes eligible for
debts/loans on bank rate from the RBI
Non-scheduled banks
•All banks which are not included in the

second section of the Reserve Bank of
India Act, 1934 are Non-scheduled
Banks
Commercial Banks
 Commercial bank is an institution that
accepts deposit, makes business loans
and offer other financial services to
the customers
 These institutions run to make profit.

Public Sector Banks:
 In Public Sector Banks the majority

stake is held by the government.
 After the recent amalgamation of
smaller banks with larger banks, there
are 12 public sector banks in India as
of now.
 An example of Public Sector Bank is
State Bank of India.
Private Sector Banks
 Private Sector Banks are banks where

the major stakes in the equity are
owned by private stakeholders or
business houses.
 A few major private sector banks in

India are HDFC Bank, Kotak Mahindra
Bank, ICICI Bank etc.
Foreign Bank
 A Foreign Bank is a bank that has its

headquarters outside the country but
runs its offices as a private entity at
any other location outside the
country.
 An example of Foreign Bank in India is
Citi Bank.
Regional Rural Banks
 The aim of ensuring sufficient

institutional credit for agriculture and
other rural sectors.
 RRBs are owned jointly by the
Government of India, the State
Government and Sponsor Banks.
 An example of RRB in India is
Arunachal Pradesh Rural Bank.
Cooperative Bank
 A Cooperative Bank is a financial
entity that belongs to its members,
who are also the owners as well as
the customers of their bank.
 Cooperative banks are the primary

supporters of agricultural activities,
some small-scale industries and self-
employed workers.

Indianbankingsystem

Uploaded by

Copyright:

Available Formats

Indianbankingsystem

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Indianbankingsystem

Uploaded by

Copyright:

Available Formats

INDIAN BANKING SYSTEM

•A bank is a financial institution that

• A banking system also referred as a

To provide the security to the savings

• This type of account is operated by

• This type of account is operated by

 Reserve Bank of India is the Central

•All banks which are not included in the

 These institutions run to make profit.

 In Public Sector Banks the majority

 Private Sector Banks are banks where

 A few major private sector banks in

 A Foreign Bank is a bank that has its

 The aim of ensuring sufficient

 Cooperative banks are the primary

You might also like