INTRODUCTION

BANKING SECTOR
OF INDIA
 WHAT IS BANK?
 A banker or bank is a financial institution
whose primary activity is to act as a payment
agent for customers and to borrow and lend
money.
 An institution where one can place and
borrow money and take care of financial affairs;
A branch office of such an institution.
 The first modern bank was founded in Italy
in Genoa in 1406, its name was (Bank of St.
George).
 FUNCTIONS OF
BANKS
Accepting Deposits from public/others
(Deposits).
Lending money to public (Loans).
Transferring money from one place to
another (Remittances).
Acting as trustees.
Keeping valuables in safe custody.
Government business.
 ACTING AS A TRUSTEES
Banks also act as trustees for various purposes. For example,
whenever a company wishes to issue secured DEBENTURES, it
has to appoint a financial intermediary as trustee who takes
charge of the security for the debenture and looks after the
interests of the debenture holders. Such entity necessarily have
to have expertise in financial matters and also be of sufficient
standing in the market/society to generate confidence in the
minds of potential subscribers to the debenture. While Banks are
the natural choice for the customers, Banks must possess the
following to be effective and retain that:
A track record of sufficient length.
Facilities for safe keeping.
Legal skills to take necessary steps for the trusteeship.
 DEBENTURES
It is define as certicate of agreements of
loans which is given under the companies
stemps and ensure fixed returns on the
basis of interest rate and the principal
amount whenever debenture mature.
TYPES OF DEBENTURES-
1.NCD
2.PCD
3.OCD
4.FCD
 TYPES OF BANKS
Public sector Banks

Private sector Banks

Co-operative Banks

Development Bank/Financial institutions

 Public sector Banks
Some Public Sector Banks in India:
Central Bank of India
Corporation Bank
Dena Bank
Bank of India
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank
 Private sectors Banks
Old generation private banks

New generation private banks

• ICICI Bank
• IDBI Bank
• Axis bank

Foreign banks operating in India

• HSBC BANK
• CITI BANK

• ABN-AMRO BANK
• STANDARD CHARTED BANK
Upcoming foreign bank in India

 RBS(ROYAL BANK OF SCOTLAND GROUP)

 INDUSTRIAL AND COMMERCIAL BANK OF
CHINA

Scheduled co-operative banks

Non-scheduled bank
 CO-OPERATIVE
BANKS
The Co operative banks in India started functioning almost 100
years ago. The Cooperative bank is an important constituent of the
Indian Financial System.They are setup to provide easy loans to
farmers or other persons to set up his buisness.
They are non profitable banks.
Cooperative banks in India finance rural areas under:
Farming
Cattle
Milk
Hatchery
Personal finance

Some example of co-operative banks in India-

IDBI BANK(INDUSTRIAL DEVELOPMENT BANK OF INDIA)
IFCI BANK(INDUSTRIAL FINANCE COOPERATION OF INDIA)
APEX BANK
 Development
Banks/Financial
Institutions
These banks are mainly used for devoloping
industries and countries
Some Examples-
Federal Bank
HDFC Bank
HSBC
ICICI
Bank Indian Overseas Bank
ING Vysya Bank
WHO CONTROLS OVER BANKS?
 The Reserve Bank of India
(RBI)

History:-

 Become operational on April 1,1935

 Nationalized in the Year 1949.

Major objectives:-

 Regulate the issue of banknote.

 Maintain reserves with a view to securing monetary
stability.
 To operate the credit and currency system of the country to
its advantage.
 Functions of RBI

The fuctions are classified into three heads:-

Traditional functions

 Promotional functions

Supervisory functions
 Traditional functions
Monopoly of currency notes issue
Banker to the Government (both the central
and state)
Fight against economic crisis and ensures
stability of Indian economy.
Controller of ForEx and credit
Maintaining the external value of domestic
currency
 Promotional functions
Extension of the facilities for the small
scale industries
Innovating the new banking business
transactions.
Extension of the facilities for the provision
of the agricultural credit through NABARD
 Supervisory functions

Granting licence to Banks.

Periodical review of the work of the
commercial banks.
Control the non-banking finance
corporation.
 HOW IT CONTROLS BANK &
ECONOMY
TOOLS:-
 CRR( CASH RESERVE RATIO): 5.5%

 REPO RATES(RR):7.5%

 REVERSE REPO RATE(RRR): 6.0%

 STATUTORY LIQUIDTY RATIO (SLR):24%

 BANK RATE: 6.0%

Overview of Indian Banking Sector
 A Glimpse of Banking sector
 Phase-1
Early phase from 1786 to 1969 of Indian Banks

 Phase-2
 Nationalization of Indian Banks and up to 1991
prior to Indian banking sector Reforms
 Phase-3
New phase of Indian Banking System with the
advent of Indian Financial & Banking Sector
Reforms after 1991
 Phase-1
 GENERAL BANK OF INDIA 1786(FIRST BANK)

 RESERVE BANK OF INDIA 1935

 SLOW GROWTH AND PERIODIC FAILURE

 THE BANKING COMPANY ACT 1949

 PEOPLE Mostly SAVE IN POSTAL DEPOSITS

 Phase-2
 Nationalization of imperial bank of India and
formation of sate bank of India(1955)

 Nationalization of SBI and Subsidiaries(1960)

 Insurance cover extended to deposits

 Creation of credit guarantee corporation

 Creation of regional rural banks

 Phase-3
 Entry of Foreign Banks

 Phone Banking and Net-Banking

 Shelter from external macroeconomic shock

 System become more convenient and swift

 Challenges faced by Indian
banks
 Lack of product expertise
Traditionally focused on limited range of products
Primarily for corporate clients
Need for acquiring skills in
Retail, structured finance
 Lack of distribution expertise
Reliance on branch channel and human intervention
Relatively high unit cost of delivery given small
transaction sizes
 Limited use of technology
Across both customer-facing and
internal functions
 Continued
Inefficient capital allocation

Competition in market
Post office
 Insurance
Financial Institution
Foreign Banks
 Ways Ahead
Technological Advancement

Rural Banking

Improving Risk Management

Developing a flexible model for rapid

scale-up at optimal cost
 FACTS AND FIGURES
 Indian banking sector has 6th rank in all over the world.
 SBI has 6500+ ATMs all over the country.
 ICICI bank has 3500+ ATMs all over the country.
 RBI had printed 6,39,948 lakhs crore notes till 6TH Nov
2008.
 IN Indore SBI has 45+ ATMs .
 SBI provides the facility and it is tie with 9200+ banks to
use their ATMs.
 Acc. To business magazine survey the no. of ATMs grew
28% yearly.
 Inspite of it India has 23+ ATMs per million people,
China has 55+ ATMs and South Korea has 1600+ ATMs
per million people.
 Transaction done through ATMs is around 70,000 crore
in a year.
ICICI bank has largest no. branches in foreign also.
Queries ?
THANK YOU