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INDIAN BANKING SYSTEM
AND ITS EMERGING
ROLL NO- 140423301
Dr. Dheeraj Joshi
ESTABLISHMENT OF BANKS IN
June 2, 1806: The Bank of Calcutta
April 15, 1840: Bank of Bombay
July 1, 1843: Bank of Madras
1861: Paper Currency Act passed.
January 27, 1921
• TAKEN OVER BY SBI
FUNCTIONS OF BANKING
FUNCTIONS OF BANKS
of Bills of
INVENTIONS AND FACILITIES FOR EASING OF BANKING IN
THIS MODERN ERA
AUTOMATIC TELLER MACHINE
LATEST TRENDS IN BANKING
GLOBALISATION OF BANKING
• Globalization has emerged as a prime mover in the
Indian banking system.
• This has come about as a result of the policy of
liberalization and opening up of banking and other
sectors pursued after 1991 in India.
• Foreign banks that wish to set up their
offices/branches in India have been granted
licenses by RBI on liberal and on reciprocal basis.
• Similarly, Indian banks are also opening their
offices/branches abroad, particularly in countries
whose banks have opened offices in India
• Satellite banking is an upcoming technological
innovation in the Indian banking industry.
• It is expected to help in solving the problem of
weak terrestrial communication links in many
parts of the country.
• The use of satellites for establishing
connectivity between branches will help banks
to reach rural and hilly areas in a better way,
and offer better facilities, particularly in relation
to electronic funds transfers.
• With the advancement of technology and the
birth of competition, banks are in the race of
becoming the best in the country.
• The advancement in the technology has helped
the banks to reduce the workload.
• There are so many activities, which are taken
over by machines. Employees are no more
loaded with paper work.
• Pick up the phone to access a host of Bank
services, day or night.
• Phone and mobile banking are a fairly recent
phenomenon for the Indian banking industry.
• Phone banking channels function through an
Interactive Voice Response System (IVRS) or
tele-banking executives of the banks.
• Online banking (or Internet banking) is a term
used for performing transactions, payments etc.
over the Internet through a bank, credit union or
building society's secure website.
• This allows customers to do their banking
outside of bank hours and from anywhere
where Internet access is available.
Features of online banking
• Online banking usually offers such features as:
• Bank statements.
• Electronic bill payment
• Funds transfer.
• Loan applications and transactions, such as
• Account aggregation
REAL TIME GROSS SETTLEMENT
• RTGS is a large value funds transfer system .
• Transfer of money takes place from one bank to
another on a “real time” and on “gross basis”.
• Money can be transferred only to those
branches in which RTGS is enable
Benefits of RTGS
• full value of individual
• Real time immediate value transfer
• 1. No bundling up of transactions,
• 2. No netting
• 3. No deferral of final settlement
Participant Payment Participant Payment Participant Payment
• Bancassurance is the term used to describe the
sale of insurance products in a bank.
• The word is a combination of "banque or bank"
and "assurance" signifying that both banking and
insurance is provided by the same corporate entity.
• Banks gives you peace of mind with
• One receive coverage and save money at the
same time. You can choose the right option which
benefits you the most.
Core banking solutions(CBS)
• Core banking (stand for "centralized online
real-time exchange") is a banking services
provided by a group of networked bank
• Here customers may access their bank
account and perform basic transactions from
any of the member branch offices.
• Larger businesses are managed via
the Corporate banking division of the institution.
Electronic fund transfer (EFT)
• Electronic Funds Transfer (EFT) is a system of
transferring money from one bank account directly
to another without any paper money changing
• It is used for both credit transfers, such as payroll
payments, and for debit transfers, such as
• The growing popularity of EFT for online bill
payment is paving the way for a paperless universe
where checks, stamps, envelopes, and paper bills
Benefits of EFT
• reduced administrative costs
• increased efficiency
• simplified bookkeeping
• greater security
Electronic clearing system
• ECS is an electronic mode of funds transfer from
one bank account to another.
• It can be used by institutions for making payments
such as distribution of dividend interest, salary,
pension, among others.
• It can also be used to pay bills and other charges
such as telephone, electricity, water.
• For making equated monthly installments
payments on loans as well as SIP investments.
ECS can be used for both credit and debit
Electronic data interchange (EDI)
It facilitates computer to-computer exchange
of electronic documents (such as purchase
orders, advance shipment notices and without
human intervention or human readable (paper
or electronic documents)..
• Indian banks have extended their activities beyond
the national boundaries.
• The extension may take place in the form of
borrowings as well as lending and it may take place
through official or private or commercial channel.
• In the process of internationalization, the domestic
financial institutions participate in foreign financial
markets and the foreign institutions participate in
domestic market to a significant extent.
• Syndicated loans
• Large loans that enable borrowers to obtain
large amounts of funds and lenders can
diversify their credit risk. Lead bank can earn
fee income for management services.
• Letters of credit
• Import letters of credit are issued by a bank in
favor of a firm in most cases. An export letter of
credit is issued by a foreign bank to a firm in the
Letters of credit
• The letter of credit is a document from a bank
that says it will pay the exporter when the
conditions in the letter are met.
• In effect, the bank’s credit is substituted for the
• The issuing bank pays the seller through the
advising (paying) bank.
• The importer pays the issuing bank a fee for its
Foreign exchange markets
• Interbank market of money center banks and
major foreign banks.
• Foreign exchange brokers facilitate currency
• Credit risk associated with the counterparty
(bank or broker) failing to meet its obligations.
CRMs and any branch banking
• Customer relationship management (CRM) is a
system for managing a company’s interactions with
current and future customers.
• It often involves using technology to organize,
automate and synchronize sales, marketing,
customer service and technical.
• Any branch banking
• All the branches are inter-connected and are
capable of providing online, real-time transactions
to its customers.
• Customers can Deposit/Withdraw freely without
any tariff charge i.e. free ABBS facility.
• The financial sector in various economies like
that of India are undergoing a monumental
change factoring into account world events
such as the ongoing Banking Crisis across the
• Risk management in Indian banks is a
relatively newer practice, but has already
shown to increase efficiency in governing of
these banks as such procedures tend to
increase the corporate governance of a
POINT OF SALE TERMINAL
• A type of electronic-transaction terminal.
• Point-of-sale terminals typically include a
computer, a cash register and other equipment
or software used to sell goods or services.
• They also transmit sales data to be posted to
• It is an electronic payment system involving
electronic fund transfers based on the use of
payment cards, such as debit or credit, at
payment terminals located at point of sale.
• A presentation by-