Helpful for Financial Institutions

1. PRESENTED BY:- Pawan Singh Raikhola
MBA INTEGRATED 5TH sem
ROLL NO:- 1664880012

2.  “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 institution which are in the business
of banking are called financial institution.

3.  Commercial Banks are like other financial
institutions (e.g.:- money lenders, indigenous
bankers, cooperative societies, agricultural
and industrial credit institutions) which are in
the business of lending and borrowing of
money or credit.
 Commercial Banks are the most important
credit institutions in the country in the
business of lending and borrowing of money
and credit creation.

4.  In 1786, British East India Company’s employees in
Calcutta formed India’s first corporate venture, the
General Bank.
 In 1863 first native Indian bank formed at Rawul Pindee
by Punjabi Hindus.
 In 1862, Presidency banks entered an agreement to
distribute currency, receiving treasury deposits.
 By 1876, the Presidency banks were privatized.
 The Presidency banks merged in 1921 to form the
Imperial Bank of India, a commercial bank that acted as
a government bank until RBI in India established in
1935.
 In 1955, parliament established the State Bank of India.

5. Primary Functions Secondary Functions
1. Accepting deposits
2. Granting loans
A. Public utility services
 Transfer of funds
 Dealing in foreign
exchange
 Issue of letter of credit
 Undertaking of shares
 Locker facility
 Agency service

6.  The process of Transferring ownership and
operational rights of a banks from private or trusts
to the government in the country.
 In India also, 14 leading banks were nationalized
on July 18, 1969.
 Each one deposits were more than Rs 50crores.
 Their share in total deposits and advances were
almost two third of all scheduled banks in nation.

7.  To reduce concentration of economic powers with only
a few industrial magnets and to prevent monopolies.
 Mobilize resources even from backward and rural areas.
 To prevent corruption and misuse of firms: the trustees
were only benefiting from huge resources and it was at
the cost of general development in the country.
 To provide aid to the poor, small artisans and small
scale industries. Small scale industries contributed 40%
of industrial output but received only 4% of bank funds.
 To fulfill credit needs of farmers:- hardly 2.2% of funds
were available for agriculture.

9.  Time to Time, Commercial Banks have to
represent their details regarding financial
conditions, lending situations, and details
related to staff member to the R.B.I & every
other aspects related to banks have to be
represent to R.B.I.

10.  RBI regulates the commercial banks threw the provision of
banking regulation act 1949.
 Department of Banking Operation and Development (DBOD)
frames regulations for commercial banks.
 Department of Banking Supervision (DBS) undertakes
supervision of commercial banks, including the local area
banks and all-India financial Institutions.
 Department of Non-banking Supervision (DNBS) regulates
and supervises the Non-Banking Financial Companies
(NBFCs).
 Urban Banks Department (UBD) regulates and supervises the
Urban Cooperative Banks (UCBs).
 Regulation of Regional Rural Banks (RRBs) and the Rural
Cooperative Banks is done by Rural Planning and Credit
Department (RPCD).

12.  Rural India still remains a challenge for private sector
and foreign banks.
 Demand for banking services-especially retail banking,
mortgage and investment services are expected to be
strong.
 RBI announced norms in 2005 any stake holder
exceeding 5% in the private sector banks would be
vetted by them.
 Currently, India has 88 scheduled commercial bank
(SCBs) – 28 public sector banks, 29 private sector banks
and 31 foreign banks.
 Commercial lending activity is very intense in today’s
scenario.

14.  Problem of pressure on profitability.
 Problem of low productivity.
 Problem of Non performing assets.
 Problem from customer.
 Problem from New Banks.
 Competition from global majors.