Commercial Banking Notes
Commercial Banking Notes
Commercial Banking Notes
B ) Advancing of loan
Cash credit
Call loans
Over draft
Bills discounting
Main function of commercial banks cont-
C) Agency function
Collecting receipts
Making payments
Buy and sell securities
Trustee and executor
9
Development Banks
A development bank may be defined as a financial
institution concerned with providing all types of
financial assistance to business units in the form of
loans, underwriting, investment and guarantee
operations and promotional activities-economic
development in general and industrial development in
particular
A development bank is basically a term lending
institution. It is a multipurpose financial institution
with a broad development outlook.
The industrial finance corporation of India, the first
development bank was established in 1948.
Subsequently many other institutions were set-up. Ex.
IDBI, IFCI, SIDBI etc. 10
Functions of Development Banks
Fostering industrial growth
Providing Long term assistant
Balanced development
Providing Promotional services
Infrastructure building
Entrepreneur Development
Fulfilling Socio economic objectives
11
Investment Banks
Meaning: Financial intermediaries that acquire the
savings of people and direct these funds into the
business enterprises seeking capital for the acquisition
of plant and equipment and for holding inventories are
called investment banks.
Features: Long term financing, Security, merchandiser,
Security middlemen, Insurer
Functions: Capital formation, Funding, Purchase of
securities, Selling of securities, Advisory services,
Acting as dealer.
12
Merchant Banks
Meaning: Institution that render wide range of services
such as the management of customers securities,
portfolio management, counseling, insurance, etc are
called Merchant Banks.
Functions: Sponsoring issues, Loan syndication,
Servicing of issues, Portfolio, management, Arranging
fixed deposits, Helps in merger& acquisition
13
List of commercial banks
Public sector bank
State Bank of India Punjab & Sind Bank
Dena Bank Bank of Maharashtra
Allahabad Bank Punjab National Bank
Indian Bank Canara Bank
Andhra Bank Syndicate Bank
Indian Overseas Bank Central Bank of India
Bank of Baroda Union Bank of India
Oriental Bank of Commerce Corporation Bank
Bank of India United Bank of India
IDBI Bank UCO Bank
Vijaya Bank
Indian private banks
*Axis Bank *IndusInd Bank
*Bank of Rajasthan *ING Vysya Bank
*Bharat Overseas Bank *Jammu & Kashmir Bank
*Catholic Syrian Bank *Karnataka Bank Limited
*Centurion Bank of Punjab *Karur Vysya Bank
*City Union Bank *Kotak Mahindra Bank
*Development Credit Bank *Lakshmi Vilas Bank
*Dhanalakshmi Bank *Nainital Bank
*Federal Bank *Ratnakar Bank
*SBI Commercial and International Bank
*Ganesh Bank of Kurundwad
*HDFC Bank *South Indian Bank
*ICICI Bank *Tamilnad Mercantile Bank Ltd.
*YES Bank
List of Foreign banks in India
ABN-AMRO Bank
Abu Dhabi Commercial Bank Ltd
American Express Bank Ltd
Citibank
DBS Bank Ltd
Deutsche Bank
HSBC Ltd
Standard Chartered Bank
The Role of Reserve Bank of India (RBI)
-Bankers Bank
The Reserve Bank of India (RBI) is the central bank
of India, and was established on April 1, 1935 in
accordance with the provisions of the Reserve Bank of
India Act, 1934. Since its inception, it has been
headquartered in Mumbai. Though originally privately
owned, RBI has been fully owned by the Government
of India since nationalization in 1949.
RBI is governed by a central board (headed by a
Governor) appointed by the Central Government.RBI
has 22 regional offices across India. The Reserve
Bank of India was set up on the recommendations of
the Hilton Young Commission.
Functions of RBI
Monetary Authority
Formulates, implements and monitors the monetary policy.
Objective: maintaining price stability and ensuring adequate
flow of credit to productive sectors
Regulator and supervisor of the financial system
Prescribes broad parameters of banking operations within
which the countrys banking and financial system functions.
Objective: Maintain public confidence in the system, protect
depositors interest and provide cost-effective banking
services to the public. The Banking Ombudsman Scheme
has been formulated by the Reserve Bank of India (RBI) for
effective redressal of complaints by bank customers
Functions of RBI cont-
Manager of Foreign Exchange and Control
Manages the foreign exchange through Foreign
Exchange Management Act, 1999.
Objective: to facilitate external trade and payment
and promote orderly development and maintenance of
foreign exchange market in India.
Issuer of currency
Issues and exchanges or destroys currency and coins
not fit for circulation.
Objective: to give the public adequate quantity of
supplies of currency notes and coins and in good
quality
Functions of RBI cont-
Developmental role
Performs a wide range of promotional functions to
support national objectives
Related Functions
Banker to the Government: performs merchant
banking function for the central and the state
governments; also acts as their banker.
Banker to banks: maintains banking accounts of all
scheduled banks.
Owner and operator of the depository (SGL) and
exchange (NDS) for government bonds
Functions of RBI cont-
Supervisory Functions:
In addition to its traditional central functions, the Reserve bank
has certain non-monetary functions of the nature of supervision
of banks and promotion of sound banking in India.
The Reserve Bank Act, 1934, and the Banking Regulation Act,
1949 have given the RBI wide powers of supervision and
control over commercial and cooperative banks, relating to
licensing and establishments, branch expansion, liquidity of
their assets, management and methods of working,
amalgamation, reconstruction and liquidation.
The RBI is authorized to carry out periodical inspections of the
banks and to call for returns and necessary information from
them.. The supervisory functions of the RBI have helped a
great deal in improving the standard of banking in India to
develop on sound lines and to improve the methods of their
Functions of RBI cont-
Promotional Functions:
The Reserve Bank now performs a variety of developmental
and promotional functions. The Reserve Bank promotes banking
habit, extend banking facilities to rural and semi-urban areas,
and establish and promote new specialized financing agencies.
The Reserve bank has helped in the setting up of the IFCI and
the SFC: it set up the Deposit Insurance Corporation of India in
1963 and the Industrial Reconstruction Corporation of India in
1972. These institutions were set up directly or indirectly by the
Reserve Bank to promote saving habit and to mobilize savings,
and to provide industrial finance as well as agricultural finance.
The RBI set up the Agricultural Credit Department in 1935 to
provide agricultural credit. The Bank has developed the co-
operative credit movement to encourage saving, to eliminate
money-lenders from the villages and to route its short term credit
to agriculture. The RBI has set up the Agricultural Refinance and
Development Corporation to provide long-term finance to
Products and Services offered by Banks
The different products in a bank can be broadly
classified into:
Retail Banking
Trade Finance
Treasury Operations.
Retail Banking and Trade finance operations are
conducted at the branch level while the wholesale
banking operations, which cover treasury operations,
are at the hand office or a designated branch.
Retail Banking:
Deposits
Loans, Cash Credit and Overdraft
Negotiating for Loans and advances
Remittances
Book-Keeping (maintaining all accounting records)
Receiving all kinds of bonds valuable for safe keeping
Trade Finance:
Issuing and confirming of letter of credit.
Drawing, accepting, discounting, buying, selling,
collecting of bills of exchange, promissory notes,
drafts, bill of lading and other securities .
Treasury Operations:
Buying and selling of bullion. Foreign exchange
Acquiring, holding, underwriting and dealing in shares,
debentures, etc.
Purchasing and selling of bonds and securities on behalf of
constituents.
The banks can also act as an agent of the Government or local
authority. They insure, guarantee, underwrite, participate in
managing and carrying out issue of shares, debentures, etc.
Apart from the above-mentioned functions of
the bank, the bank provides a whole lot of other services like
investment counseling for individuals, short-term funds
management and portfolio management for individuals and
companies. It undertakes the inward and outward remittances
with reference to foreign exchange and collection of varied
types for the Government
Common Banking Products Available:
To the Customer
Anywhere Banking no matter wherever the customer is in
the world. Balance enquiry, request for services, issuing
instructions etc., from anywhere in the world is possible.
Anytime Banking Managing funds in real time and most
importantly, 24 hours a day, 7days a week.
Convenience acts as a tremendous psychological benefit
all the time.
Brings down Cost of Banking to the customer over a
period a period of time.
Cash withdrawal from any branch / ATM
On-line purchase of goods and services including online
payment for the same.
To the Bank:
Innovative, scheme, addresses competition and present the bank as technology
driven in the banking sector market .
Reduces customer visits to the branch and thereby human intervention