1. BANKING

2. BANKING
 FIVE DIFFERENT MARKETS
 1) MONEY MARKET
 2) STOCK MARKET
 3) FOREX MARKET
 4) COMMODITY MARKET
 5) REAL ESTATE MARKET

3. BANKING
SYLLABUS
 FUNCTIONS OF THE BANK
 VARIOUS KINDS OF DEPOSITS
 VARIOUS KINDS OF ADVANCES
 CRR, SLR, LENDABLE RESOURCES
 BILL CULTURE/ BILL FINANCE
(CHORE COMMITTEE)
 TANDON COMMITTEE

4. BANKING
SYLLABUS
 FINANCIAL SECTOR REFORMS
 INCOME RECOGNITION
 ASSET CLASSIFICATION
 PROVISIONING NORMS
 CAPITAL ADEQUACY

5. BANKING
SYLLABUS
 BASEL COMMITTEE NORMS
 ENTRY OF FOREIGN BANKS /
PRIVATE BANKS, ETC.
 INTERNATIONAL BANKING
 FUNCTIONS OF RESERVE BANK OF
INDIA

6. BANKING
 BANKING IS DIFFERENT FROM
MONEY-LENDING BUT THE TWO
TERMS CARRY SAME SIGNIFICANCE
TO THE LAYMAN.

7. BANKING
 THE WORD “BANK” IS SAID TO BE
OF GERMANIC ORIGIN, COGNATE
WITH THE FRENCH WORD
“BANQUE” AND ITALIAN WORD “
BANCA”
 BOTH THESE WORDS MEAN
“BENCH”
 THE JEWISH MONEY-CHANGERS
USED TO DO THEIR BUSINESS
SITTING ON A BENCH IN MARKET.

8. BANKING
 SIMILARLY THE WORD “BANKRUPT”
IS BELIEVED TO HAVE BEEN
ORIGINATED FROM FRENCH WORD
“BANQUE-ROUTE” AND ITALIAN
WORD “BANCA-ROTTA” MEANING
“BROKEN BENCH”.
 MONEY CHANGER USED TO BREAK
HIS BENCH WHEN HE FAILED.

9. BANKING
 BANKING EXISTED IN INDIA IN ONE
FORM OR THE OTHER FROM TIMES
IMMEMORIAL.
 AMONG EARLIEST BANKS
ESTABLISHED WERE, BANK OF
BENGAL, BANK OF BOMBAY, BANK
OF MADRAS KNOWN AS
“PRESIDENCY BANKS”.

10. BANKING
 ALL THESE BANKS WERE
AMALGAMATED TO FORM IMPERIAL
BANK OF INDIA WHICH WAS
SUBSEQUENTLY CONVERTED INTO
STATE BANK OF INDIA.

11. BANKING
 IN EARLY PHASE INDIGENOUS
BANKERS, NIDHIS AND
MONEYLENDERS ACTED AS
BANKERS.
 THEY WORKED ON ESTABLISHED
NORMS AND TABOOS OF THE
COMMUNITY.

12. BANKING
 IN THE INITIAL STAGES BANKING
COMPANIES WERE REGISTERED
UNDER THE COMPANIES ACT.
 HOWEVER WITH GROWTH OF JOINT
STOCK BANKING IN FIRST
QUARTER OF 19TH CENTURY, IT
BECAME NECESSARY TO CODIFY
RULES AND REGULATIONS.

13. BANKING
 THUS EMERGED THE BANKING
REGULATION ACT IN 1949.
 BANKING LEGISLATION ACT AIMS AT
 PROTECTING INTEREST OF DEPOSITORS
 ENSURING CONTROL OVER CREDIT
 STREAMLINING PROCEDURES
 EVOLVING UNIFORM BANKING PRACTICES
 DEVELOPING BANKING ON SOUND LINES.

14. BANKING
 SECTION 5 C OF THIS ACT DEFINES
A BANKING COMPANYAS “A
COMPANY WHICH CARRIES ON THE
BUSINESS OF BANKING.”

15. BANKING
 SECTION 5 B DEFINES BUSINESS
OF BANKING AS “ ACCEPTING, FOR
THE PURPOSE OF LENDING OR
INVESTMENT, DEPOSITS OF MONEY
FROM THE PUBLIC, REPAYABLE ON
DEMAND OR OTHERWISE AND
WITHDRAWABLE BY CHEQUES,
DRAFTS OR OTHERWISE.”

16. BANKING
 MAIN PROVISIONS OF ACT
 1) BUILT IN SAFEGUARDS
 2) POWERS AND COSEQUENTIAL
FUNCTIONS AND RESPONSIBILITIES
OF RBI.

17. BANKING
 BUILT IN SAFEGUARDS RELATE TO
 1) ORGANISATION
 2) MANAGEMENT
 3) OPERATIONS
OF A BANKING COMPANY.

18. BANKING
ORGANISATIONAL
SAFEGUARDS
 1) PERMITTED BUSINESS
 2) HOLDING IMMOVABLE PROPERTY
 3) FORMATION OF SUBSIDIARY
COMPANIES
 4) USE OF WORD ‘BANK’, ‘BANKING
COMPANY’, ‘BANKER’ AND
‘BANKING’

19. BANKING
ORGANISATIONAL
SAFEGUARDS
 5) PAID UP CAPITAL AND RESERVES
 6) CHANGE OF NAME

20. BANKING
OPERATIONAL SAFEGUARDS
 1) MAINTENANCE OF CASH
RESERVES AND ASSETS
 2) GRANT OF UNSECURED LOANS
AND ADVANCES
 3) OPENING OF NEW BRANCHES

21. BANKING
MANAGERIAL SAFEGUARDS
 1) PREPARE ANNUAL ACCOUNTS IN
THE FORMS PRESCRIBED UNDER
THE ACT
 2) THE ACCOUNTS ARE TO BE
AUDITED BY A QUALIFIED AUDITOR.
 3) PUBLISH AND SEND COPIES TO
RBI
 4) DISPLAY AT IT’S OFFICES.

22. BANKING
FUNCTIONS
 1) PRIMARY FUNCTIONS
 2) AGENCY FUNCTIONS
 3) GENERAL UTILITY FUNCTIONS

23. BANKING
PRIMARY FUNCTIONS
 ACCEPTANCE OF DEPOSITS
 LENDING MONEY
 BORROWING MONEY
 MAKING INVESTMENTS

24. BANKING
AGENCY FUNCTIONS
 COLLECTION AND PAYMENT OF
CHEQUES
 COLLECTION AND PAYMENT OF
BILLS
 REMITTANCE OF FUNDS
 COLLECTION OF GOVERNMENT
TAXES

25. BANKING
AGENCY FUNCTIONS
 UNDERTAKING ADMINISTRATION OF
ESTATES AS EXECUTORS AND
TRUSTEES.

26. BANKING
GENERAL UTILITY FUNCTIONS
 ISSUING OF GUARANTEES
 ISUING OF LETTERS OF CREDIT
 DEALING IN FOREIGN EXCHANGE
 DEALING IN BULLION
 SAFE DEPOSIT VAULT
 SAFE CUSTODY OF ARTICLES

27. BANKING
GENERAL UTILITY FUNCTIONS
 MERCHANT BANKING
 ACQUIRING, HOLDING AND
DEALING WITH PROPERTIES AS
SECURITY FOR ADVANCES.
 ISSUING AND ENCASHING GIFT
CHEQUES
 ISSUING CREDIT / DEBIT CARDS

28. BANKER-CUSTOMER
RELATIONSHIP
 1) DEBTOR AND CREDITOR
 2) BAILER-BAILEE
 3) PRINCIPAL-AGENT
 4) TRUSTEE-BENEFICIARY

29. BANKER-CUSTOMER
RELATIONSHIP
 DEBTOR AND CREDITOR – IN CASE
OF DEPOSIT ACCOUNT BANKER IS
A DEBTOR AND CUSTOMER IS A
CREDITOR

30. BANKER-CUSTOMER
RELATIONSHIP
 BAILER-BAILEE – IN CASE A SEALED
BOX IS DEPOSITED WITH THE BANK
FOR SAFE CUSTODY, THE
CUSTOMER IS A BAILER AND THE
BANK IS A BAILEE.

31. BANKER-CUSTOMER
RELATIONSHIP
 PRINCIPAL-AGENT – IN CASE OF
COLLECTION AND PAYMENT OF
CUSTOMER’S CHEQUES / BILLS,
THE CUSTOMER IS A PRINCIPAL
AND THE BANK IS AN AGENT.

32. BANKER-CUSTOMER
RELATIONSHIP
 TRUSTEE-BENEFICIARY – IF A BANK
IS ASKED TO MANAGE THE
PROPERTY OF A TRUST, THE BANK
IS A TRUSTEE AND THE TRUST IS
THE BENEFICIARY.

33. DEFINITION OF CUSTOMER
 NO STATUTORY DEFINITION IS
AVAILABLE. WE HAVE TO DEPEND
ON JUDICIAL PRONOUNCEMENTS.
 WORD CUSTOMER DERIVES FROM
‘CUSTOM’ MEANING HABIT OF
RESORTING TO SAME PLACE OR
PERSON TO DO BUSINESS.

34. DEFINITION OF CUSTOMER
 ONE WHO MAINTAINS SOME SORT
OF DEPOSIT ACCOUNT
 STATE OF ACCOUNT IS IMMATERIAL
 BY FREQUENTLY PURCHASING
DRAFTS OR CASHING CHEQUES
ONE DOES NOT BECOME A
CUSTOMER

35. DEFINITION OF CUSTOMER
 A CUSTOMER OF ONE BRANCH IS
NOT A CUSTOMER OF ANOTHER
BRANCH OF THE SAME BANK.
 BANKER- CUSTOMER
RELATIONSHIP EXISTS BETWEEN
TWO BANKS, IF ONE HAS AN
ACCOUNT WITH THE OTHER

36. CONTRACTUAL
RELATIONSHIP
 THE BANKER IS ENTITLED TO USE
MONEY WITHOUT BEING CALLED
UPON TO ACCOUNT FOR SUCH
USE.
 LIABILITY TO RETURN THE AMOUNT
 THE BANKER CAN NOT CLOSE
CUSTOMER’S ACCOUNT WITHOUT
GIVING HIM NOTICE.

37. CONTRACTUAL
RELATIONSHIP
 BANKER IS OBLIGED TO KEEP
TRANSACTIONS OF CUTOMER
SECRET, EXCEPT UNDER SPECIAL
CIRCUMSTANCES
 BANKER ENJOYS A RIGHT OF LIEN.
IT IS A LIMITED PLDEGE EXCEPT IN
CASE OF ARTICLES RECEIVED FOR
SAFE CUSTODY

38. CONTRACTUAL
RELATIONSHIP
 BANKER’S RIGHT OF SET OFF
 BANKER HAS A RIGHT FOR
APPROPRIATION OF ACCOUNTS
 BANKER IS ENTITLED TO INTEREST
ON LOANS AND COMMISSION FOR
OTHER SERVICES.

39. CONTRACTUAL
RELATIONSHIP
 TERMINATION OF RELATIONSHIP
 i) VOLUNTARY
 ii) BY PROCESS OF LAW
1) DEATH OF CUSTOMER
2) BANKRUPTCY
3) INSANITY OF CUSTOMER
4) GARNISHEE ORDER

40. EXERCISE
TRUE OR FALSE
 1) THE BANKER IS A PRIVILEDGED
DEBTOR IN AS MUCH AS HE NEED
NOT REPAY HIS DEPOSITORS
UNLESS A DEMAND IS MADE ON
HIM.
 2) BANKER IS AN AGENT WHEN HE
ARRANGES SALE OF SHARES ON
BEHALF OF HIS CUSTOMER

41. EXERCISE
TRUE OR FALSE
 3) THE BALANCE IN THE ACCOUNT
OF THE WIFE CAN BE DISCLOSED
TO THE HUSBAND, BUT NOT VICE
VERSA
 4) BANKER CAN EXERCISE RIGHT
OF SET OFF WITHOUT NOTICE TO
THE CUSTOMER

42. EXERCISE
TRUE OR FALSE
 5) RIGHT OF SET OFF CAN BE
EXERCISED IN RESPECT OF BILLS
DISCOUNTED BUT NOT YET DUE.
 6) IF BANKER FINDS THE ACCOUNT
OF THE CUSTOMER UNDESIRABLE
OR UNREMUNERABLE, HE CAN
CLOSE THE ACCOUNT AND REMIT
THE BALANCE BY A CHEQUE.

43. EXERCISE
TRUE OR FALSE
 7) THE BANK HAS GRANTED
OVERDRAFT FACILITY; THE
ACCOUNT IS IN CREDIT BALANCE.
THE BANKER IS A CREDITOR OF
THE CUSTOMER
 8) THE BANKER IS A BAILEE WHEN
HE PAYS SUBSCRIPTION ON
BEHALF OF CUSTOMER

44. BANKING REGULATION ACT
 GOVERNMENT OF INDIA PASSED A
COMPREHENSIVE BANKING
REGULATION ACT IN 1949 FOR
SAFEGUARDING THE BUSINESS OF
BANKING COMPANIES.

45. BANKING
CLASSIFICATION OF BANKS
 CLASSIFICATION OF BANKS CAN BE
DONE IN MANY WAYS.
 BASED ON FUNCTIONING
 COMMERCIAL BANKS
 CO-OPERATIVE BANKS
 DEVELOPMENT BANKS
 RESERVE BANK OF INDIA

46. BANKING
CLASSIFICATION OF BANKS
 COMMERCIAL BANKS
 SCHEDULED BANKS
 NON-SCHEDULED BANKS

47. BANKING
CLASSIFICATION OF BANKS
 SCHEDULED BANKS
 ONE WHICH IS REGISTERED IN THE
SCHEDULE OF RBI.
 COME UNDER PURVIEW OF VARIOUS
CREDIT CONTROL MEASURES OF RBI.
 REQUIRED TO MAINTAIN CERTAIN
MINIMUM BALANCE WITH RBI.
 ENTITLED TO BORROW FROM RBI.

48. BANKING
CLASSIFICATION OF BANKS
 SCHEDULED BANKS
 INDIAN SCHEDULED BANKS
 FOREIGN SCHEDULED BANKS
 SCHEDULED BANKS

PUBLIC SECTOR COMMERCIAL BANKS

PRIVATE SECTOR COMMERCIAL BANKS

49. BANKING
CLASSIFICATION OF BANKS
 PUBLIC SECTOR COMMERCIAL
BANKS
 STATE BANK OF INDIA AND ITS
SUBSIDIARIES; 20 NATIONALISED
BANKS;

50. BANKING
CLASSIFICATION OF BANKS
 PRIVATE SECTOR COMMERCIAL
BANKS
 OTHER INDIAN SCHEDULED BANKS
THAT DO NOT FALL IN THE ABOVE
GROUP

51. BANKING
CLASSIFICATION OF BANKS
 NON-SCHEDULED BANKS
 THOSE WHICH ARE NOT INCLUDED IN
SCHEDULE OF RBI
 THEY ARE NOT ENTITLED TO
BORROWINGS AND REDISCOUTING
FACILITIES FROM RBI

52. BANKING
CLASSIFICATION OF BANKS
 BASED ON OWNERSHIP
 NATIONALISED BANKS
 PRIVATE BANKS
 FOREIGN BANKS
 CO-OPERATIVE BANKS

53. BANKING
EVOLUTION & GROWTH
 DISTINCT PHASES IN BANKING
SYSTEM
 PRIOR TO 1948 - EVOLUTIONARY
PHASE
 1949-1968 - FOUNDATION PHASE
 1969- 1984 - EXPANSION PHASE
 1985- 1990 - CONSOLIDATION
PHASE
 SINCE 1990 - REFORMATORY
PHASE

54. BANKING
EVOLUTION & GROWTH
 EVOLUTION PHASE
 REGULATIONS WERE BEING INTRODUCED
 ROLE CONFINED TO ATTEND TO CREDIT
NEEDS OF SELECTED AND LIMITED
SEGMENTS OF ECONOMY
 OPERATIONS WERE INFLUENCED BY
COMMERCIAL PRINCIPLE AND NOT BY
DEVELOPMENT FACTOR.
 FAILURE OF BANKS WAS COMMON.

55. BANKING
EVOLUTION & GROWTH
 FOUNDATION PHASE
 EMPHASIS ON LAYING FOUNDATION FOR
SOUND BANKING SYSTEM
 AS A CONSEQUENCE BANKING REGULATION
ACT WAS PASSED
 TRANSFORMATION OF IMPERIAL BANK OF
INDIA INTO STATE BANK OF INDIA
 STRONG STRESS ON CLASS BANKING BASED
ON SECURITY THAN ON PURPOSE

56. BANKING
EVOLUTION & GROWTH
 EXPANSION PHASE
 NATIONALISATION BANKS
 14 IN 1969

6 IN 1980
 EXPANSION AT PATHBREAKING PACE
 APPRX 50000 BRANCHES WERE SET UP
 INEFFICIENCY AND LACK OF CONTROL
 QUALITY BECAME A CASUALTY

57. BANKING
EVOLUTION & GROWTH
 DIRECTED LENDING
 INTEGRATED RURAL DEVELOPMENT
PROGRAMME
 VARIOUS SCHEMES ANNOUNCED BY
GOVT.
 BIRTH OF REGIONAL RURAL BANKS IN
1975 AND NABARD IN 1982
 TRANSFORMATION FROM CLASS
BANKING TO MASS BANKING.

58. BANKING
EVOLUTION & GROWTH
 CONSOLIDATION PHASE
 EXTENSION OF EARLIER PHASE
 IMPROVING HOUSEKEEPING,
CUSTOMER SERVICE, CREDIT
MANAGEMENT, STAFF PRODUCTIVITY
AND PROFITABILITY.
 BANKS ENDED UP IN CONSOLIDATING
LOSSES RATHER THAN THE GAINS.

59. BANKING
EVOLUTION & GROWTH
 REFORMATORY PHASE
 UNPRECEDENTED ECONOMIC CRISIS
ENGULFED THE ECONOMY
 INDIA ALMOST DEFAULTED ON ITS
INTERNATIONAL COMMITMENTS
 INTERNATIONAL CREDIT RATING
DOWNGRADED
 BREAKDOWN OF FISCAL DISCIPLINE

60. BANKING
EVOLUTION & GROWTH
 REFORMATORY PHASE (CONTD)
 HENCE TO REDRESS THE
IMBALANCES VARIOUS MACRO
ECONOMIC STRUCTURAL
REFORMATORY MEASURES WERE
UNDERTAKEN BY GOVERNMENT IN
THE FIELD OF TAX SYSTEM,
INDUSTRIAL POLICY, FINANCIAL
SECTOR AND FOREIGN TRADE.

61. BANKING
 IN VIEW OF THIS BANK
TRANSACTIONS ARE BROADLY
CLASSIFIED IN FOLLOWING 3 WAYS
 1) CASH TRANSACTIONS
 2) TRANSFER TRANSACTIONS
 3) CLEARING TRANSACTIONS

62. BANKING
 MOST VULNERABLE AND RISKY
AREA
 THEFT
 FORGED NOTES
 SOILED NOTES
 SHORT RECEIPT
 EXCESS PAYMENT

63. BANKING
 CASH TRANSACTIONS ARE
BALANCED ON DAILY BASIS AS
UNDER:
CLOSING CASH = OPENING CASH +
CASH RECEIPTS DURING THE DAY –
CASH PAYMENTS MADE DURING THE
DAY

64. BANKING
 TO PREVENT FRAUDS, THE
PARCTICE OF MAINTAINING A
SCROLL OF ALL CASH RECEIPTS IS
FOLLOWED BY THE BANK.
 AN OFFICIAL (NOT ATTACHED TO
CASH DEPARTMENT) WILL KEEP A
RECORD OF ALL CASH RECEIPTS

65. BANKING
 AT THE END OF THE DAY THIS WILL
BE TALLIED WITH CASH
DEPARTMENT
 THIS ENSURES THAT ALL THE CASH
TENDERED BY THE CUSTOMERS IS
ACCOUNTED FOR.

66. BANKING
 AS AN ABUNDANT PRECAUTION (FOR
HIGH VALUE TRANSACTIONS), SAME
TRANSACTION IS PASSED THROUGH
SECOND OFFICIAL.
 ARMED GUARDS ARE PLACED
 BURGLAR ALARMS ARE PLACED.
 THE BUTTONS ARE KEPT IN STRATEGIC
PLACES IN BRANCH PREMISES.
 DIRECTLY CONNECTED TO NEAREST POLICE
STATION

67. BANKING
 CASH RECEIVED FROM
CUSTOMERS IS IDLE MONEY FOR
THE BANK.
 AFTER KEEPING SUFFICIENT CASH
FOR DAY TO DAY OPERATIONS,
THE BRANCHES DEPOSIT THE
EXCESS CASH WITH THE NEAREST
CURRECY CHEST
 THERE BY THEY EARN INTEREST.

68. BANKING
 IF THE AMOUNT OR FUNDS ARE
TRANSFERRED FROM ONE
ACCOUNT TO ANOTHER ACCOUNT
IN THE SAME BRANCH OR
ANOTHER BRANCH OF THE SAME
BANK.
 TRANSFER SCROLL IS MAINTAINED
 DEBIT TRANSFER AND CREDIT
TRANSFER MUST TALLY.

69. BANKING
 WHEN A CUSTOMER DEPOSITS A
CHEQUE IN HIS ACCOUNT WHICH IS
DRAWN ON ANOTHER BANK, THEN
IT NEEDS TO BE CLEARED BEFORE
CREDITING THE AMOUNT TO THE
ACCOUNT OF THE CUSTOMER.
 INWARD CLEARING AND OUTWARD
CLEARING