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Prof. Nijumon K John, Christ University, Bangalore
Prof. Nijumon K John, Christ University, Bangalore
1/19/2014
Meant for providing short-term credit to trade and industry. They are now providing credit to agriculture, SSIs and other neglected sections of the economy.
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Scheduled banks are those whose names are included in the 2nd schedule to the RBI Act. As per under sec 42(6) of the RBI Act, a banking institution can claim for its name to be included in the schedule, if - It satisfies RBI that its affairs are not being conducted in a manner detrimental to the interests of its depositors - Its paid up capital and reserves have an aggregate value of not less than Rs.200 Crores.
Refinancing of loans Rediscounting of bills Maintenance of accounts by RBI Remittance facilities between different branches through RBI (they are required to maintain statutory reserve with RBI)
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As per the banking regulation Act 1949, every banking company wanting to commence business after enactment of this act, has to obtain a license from RBI.
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Lending of money Loan(secured or unsecured) Cash credit(with security) Overdraft(without security) Discounting and purchasing of bills
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Agency service Collection of drafts, bills, cheques, dividend etc. on behalf of customers Execution of the standing orders of the cusomers. Eg. Rent, bills etc Conducting stock exchange transactions Acting as a correspondent or representative of customers, and other banks Functioning as an executor of a customer
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General utility service LoC Travellers cheque Accepting valuables for safe custody Acting as a referee for the customers Advisory services Issue of credit cards Providing information through bullettins
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Capital; represents Nationalised banks: capital owned by central govt Foreign banks: amount brought by bank by way of start up capital Other banks: amount contributed by shareholders of the bank
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Reserves and surplus Statutory reserve Capital reserve Share premium Revenue and other reserves
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Deposits: constitutes 80% of a commercial banks funds Borrowings Other liabilities Bills payable(eg.bank draft) Interest accrued Inter office adjustments Others(proposed dividend, surplus provision for bad debts, staff security etc)
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Current deposit Savings deposit Fixed deposit Borrowings Refinancing from financial institutions
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Cash in hand and with RBI Cash balance maintained by a bank with itself(non earning asset) Cash with reserve bank
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Balance with other banks Money at call and short notice Investments(Investment in securities) Advances (more than 50% of the funds are used and it contributes to more than 80% of the income) Fixed assets Contingent liabilities
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* Commercial banks - Public sector banks # State bank group # Nationalised banks - Private sector banks # Indian banks # Foreign banks * RRBs Co-operative banks - Primary credit societies # primary agricultural credit societies # primary urban co-operative banks - Secondary credit institutions # district co-operative banks # state co-operative banks
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Development banks - All India level development banks(IFCI,ICICI,SIDBI) - State level development banks (SFCs,SIDCs, etc.)
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Export Credit & Guarantee Corporation of India Deposit Insurance and Credit Guarantee Corporation of India
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Discount and Finance House of India Ltd Stock Holding Corporation of India Ltd Securities Trading Corporation of India Ltd
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Credit Rating Information & Services of India Ltd Investment Information and Credit Rating Agency of India Credit Analysis and Research Ltd
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An organisation of banks constituted for the purpose of settling inter-bank liabilities due to transfer of deposits by a customer of a particular bank to that of another bank.
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Every bank of the locality prepares a bank-wise list of cheques received from customers and drawn on different banks An official of each bank visits clearing house with the cheques in the morning. He delivers it to the officials of respective banks. He also receives cheques drawn on his bank from the officials of other banks. Officials return to their banks to meet again in the afternoon to return any dishonoured instruments. The official of each bank computes the final balance payable or receivable The final settlement is effected by the supervisor of the clearing house by debiting or crediting.
Prof. Nijumon K John, Christ University, Bangalore
1/19/2014