Commercial Banks

in India

Crowthers Definition banking?

Bank is an institution which collects

money from those who have in spare
or who are saving it out of their
income and lend this money out to
those who require it.
All those institutions which are in the
business of banking are called
financial business institutions.

Introduction

Commercial Banks are those profit seeking

institutions which accept deposits from general
public and advance money to individuals like
household, entrepreneurs, businessmen etc. with
the prime objective of earning profit in the form
of interest, commission etc.

Examples of commercial banks ICICI Bank,

State Bank of India, Axis Bank, and HDFC Bank

Working of Commercial banks after

Nationalization

Expansion of Branches: increased 8262 in

1969 to 66, 514 in 2003
Population per bank has reduced from
55000 in 1969 to 16000 in 2003
22% of rural areas were covered in 1969 by
banks and increased to 50% in 2003
Priority area lending to agriculture, small
scale industry & small retail trade
increased from 14% to 42 % in 1969-2003
period

Structure of Banking System in India

Scheduled
Banks

Non-Scheduled
Banks
Central Coop.
Banks and primary
credit societies

State Coop.
Banks

Commercial
Banks

Public Sector
Banks

Private Sector
Banks
Old(17)

SBI &
Associate
Banks(7)

patpedhi

Other
Nationalized
Banks(20)

New(8
)

Foreign
Banks(31)

Classifications of Banks
Scheduled banks :- Banks which have been included in the
Second Schedule of RBI Act 1934. They are categorized as
follows:
Public Sector Banks :- E.g.. SBI, PNB, Syndicate Bank,
Union Bank of India etc.
Private Sector Banks :- E.g.. ICICI Bank, IDBI Bank,
HDFC Bank, AXIS Bank etc.
Foreign Banks :- E.g.. Citi Bank, Standard Chartered
Bank, Bank of Tokyo Ltd. etc.
Non scheduled banks :- Banks which are not included in the
Second Schedule of RBI Act 1934

State bank of India and its

associates
Sl. No. Name of bank
Year of
incorporation
1

1966

State Bank of Bikaner &

Jaipur
State Bank of Hyderabad

State Bank of India

1955

State Bank of Indore

1960

State Bank of Mysore

1913

State Bank of Patiala

1917

State Bank of Travancore

1945

1941

Nationalized Commercial Banks

Sl. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Name of bank
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank Ltd
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Punjab National Bank
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank

Year of incorporation
1865
1923
1908
1906
1935
1906
1911
1906
1938
1994
1907
1937
1943
1908
1895
1925
1943
1919
1950
1931

Old Private Sector Commercial Banks

Sl. No. Name of bank

Year of incorporation

Catholic Syrian Bank

1920

City Union Bank

1904

Development Credit Bank

1995

Dhanalakshmi Bank

1927

Federal Bank

1931

6
7

ING Vysya Bank

Jammu & Kashmir Bank

1930
1938

8
9
10

Karnataka Bank
Karur Vysya Bank
Lakshmi Vilas Bank

1924
1926
1926

11
12

Lord Krishna Bank

Nainital Bank

1940
1922

13
14

Ratnakar Bank
Sangli Bank

1943
1948

15
16
17

SBI Comm. & Intl. Bank

South Indian Bank
Tamilnad Mercantile Bank

1993
1929
1921

New Private Sector Commercial Banks

Sl. No. Name of bank

Year of
incorporation

Centurion Bank

1994

HDFC Bank

1994

ICICI Bank

1994

IndusInd Bank

1995

Kotak Mahindra Bank

1985

Axis Bank

1994

Yes Bank

2003

Functions of bank

Banking
functions

Accepting
Deposits

Subsidiary
Functions

Utility Services

Agency Functions

Creation of
money

Safe deposits

Collections of
cheques, bills
etc.

Advancing Money

Issuing letters of
credit

Payment of
premium Tax

Transfer of Funds

Gift Cheque

Sale of stock &

security

BANKING FUNCTIONS
Accepting Deposits
Accepts deposits.
Deposits by mobilizing the saving.
Accepts deposits from every class of people.

Creation of Money
Provides loans to customers and gets the same
amount along with the interest.
It does not advance the loan in cash but opens an
account of the customer.
This helps in enabling the bank to create more money.

CREDIT CREATION

Transfer Of Funds
Facility for transferring money.
This is processed through cheque system.
Funds are transferred through internal
arrangement of a bank.

Advancing Money
Advances loan to various people, units and
organization.
Direct loans and advance loans advances are
made to all types of persons.
Overdraft facilities.
Provide cash Credits.

SUBSIDIARY FUNCTIONS
A. Utility Services
Safe Deposits
.Popularly known as licker facilities.
.Safe keeping of documents,jewels.
.These are small receptables fitted in steel racks.
.Available on half or annually rental basis.

Issuing Letter of Credit

Guarantee card of the exporter.
Provide creditworthiness of the importer.
Merchant Banking
Underwriting of security.
Underwriting security ensures the excepted minimum
subscription.

B. AGENCY FUNCTIONS
.
.
.
.
.

Collection of cheques, dividends, interests

Payment of rent, insurance premiums
Dealing in foreign exchange
Puchase and sale of securities
Preparation of income tax result

Sources of Fund

Deposits
Reserve Funds
Shareholders Capital
Retained Earnings

Banking Products

Banks receives money from the

public by way of deposits. The
following types of deposits are
usually received by banks.

Fixed deposits a/c

Saving deposits a/c
Recurring deposits a/c
Current deposit a/c

Fixed Deposit Account

The term fixed deposit means that the deposits are fixed and
are repayable only after a special period over.
Provide higher rate of interest.
The amount can be deposited only once.
The period of fixed deposit range is from 15-10 years.
Withdrawals are not allowed.
In case of emergency bank allow to close the fixed amount
prior to the maturity date(1% of bank payable interest is

deducted).

Saving Deposit Account

Saving account is generally opened by fixed income people.

Accounts are opened to encourage the people to save and
collect their savings.
At present the interest rate is 3.50% in India.
No loan facility is provided.
Saving account is continuing nature. There is no maximum
period.

Recurring Deposit
Account
Develop regular saving
habit
Deposit for minimum 6
& maximum 10 years
Highest rate of interest
No withdrawals
Provide loan upto 75%
of the amount

Current Deposit Account

Opened by businessmen
Deposits & Withdrawals unlimited
Overdraft facility

Bank Financing
Fund
Based

Non
Fund
based

Bills purchased
Bills
discounted
Overdraft
Cash credit

Letters of
Guarantee
Letters of
Credit
Deferred
Payment
Guarantee

CONTROL OF R.B.I OVER

COMMERCIAL BANKS

TIME TO TIME , COMMERCIAL BANKS

HAVE TO REPRESENT THEIR DETAILS
REGARDING FINANCIAL CONDITIONS,
LENDING SITUATIONS, AND DETAILS
RELATED TO STAFF MEMBERS TO THE
R.B.I & EVERY OTHER ASPECTS
RELATED TO BANKS HAVE TO BE
REPRESENT TO THE R.B.I.

Recent Development in Commercial

Banking

Interest rate deregulation

Electronic Clearing Services (ECS)
Electronic Funds Transfer (EFT)
The opening of new clearing houses,
interconnection of clearing houses
through the Indian Financial Network
(INFINET)
The development of a Real-Time Gross
Settlement (RTGS) System
Centralized Funds Management System
(CFMS)

Continue.

E-banking
E-payment
Automated teller
machines(ATM)
Negotiated Dealing
System (NDS)
The Structured
Financial Messaging
System(SFMS).

WEAKNESSES

NON PERFORMING ASSETS

PUZZLING FETURES
PUBLIC SECTOR WORKERS
STRUGGLE
THE STRUGGLE AGAINST NEW
ECONOMIC POLICY
OVERCOMING THE ORGANISATIONAL
STRUCTURE

FUTURE PLANS

TO PROVIDE BEST SERVICES TO THE

CUSTOMERS
TO REACH TO THAT PERSON WHO
YET NOT GET THE SERVICES OF
BANKS
AFTER ALL, TO MAINTAIN & EXPAND
THE BUSINESS OF THE BANK IN THIS
COMPETATIVE CLIMATE

GROUP MEMBERS

MINANKI MODI
VARSHA SINGH
DEEPIKA WAGHELA
SHWETA BANDRE
SHIVANI

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