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Pratap Synopsis
Pratap Synopsis
Pratap Synopsis
ON
2010-2012
INTRODUCTION
Definitions of banks
The term bank is derived from the French word Banco which means a Bench or Money exchange table. In olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging. A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it. An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks. A financial institution that is licensed to deal with money and its substitutes by accepting time and demand deposits, making loans, and investing in securities. The bank generates profits from the difference in the interest rates charged and paid. "A bank is an institution, usually incorporated with potheyr to issue its promissory notes intended to circulate as money (known as bank notes); or to receive the money of others on general deposit, to form a joint fund that shall be used by the institution, for its own benefit, for one or more of the purposes of making temporary loans and discounts; of dealing in notes, foreign and domestic bills of exchange, coin, bullion, credits, and the remission of money; or with both these potheyrs, and with the privileges, in addition to these basic potheyrs, of receiving
special deposits and making collections for the holders of negotiable paper, if the institution sees fit to engage in such business."
Before nationalization, our banks could not play this constructive role expected of them. But after nationalization, the entire banking machinery has now been geared to the economic development of the country. They have started looking after the needs of the small farmer and the new entrepreneur. It is earnestly hoped that the Government will take some more positive steps to ensure that the real benefits of an organized banking system percolate down to the poor illiterate masses of India.
Role of banks
Primary roles
a) Issuing letters of credit, travelers cheques , circular notes etc. b) Undertaking safe custody of valuables, important documents, and Securities by providing safe deposit vaults or lockers; c) Providing customers with facilities of foreign exchange. d) Transferring money from one place to another; and from one branch to another branch of the bank. e) Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc. f) Collecting and supplying business information; g) Issuing demand drafts and pay orders; and, h) Providing reports on the credit worthiness of customers
REVIEW OF LITERATURE
Since the financial reforms of 1991, there have been significant favorable changes in Indias highly regulated banking sector. It concludes that the financial reforms have had a moderately positive impact on reducing the concentration of the banking sector (at the lotheyr end) and improving performance. The empirical estimation shotheyd that regulation lotheyred the profitability and cost efficiency of public-sector banks at the initial stage of the reforms, but such a negative impact disappeared once they adjusted to the new environment. Profitability turned positive in 1997-2000, cost efficiency steadily improved over the reform period, and the gap in performance compared with foreign banks has diminished. (Biikrram De11 in 2003)
One of the major objectives of Indian banking sector reforms was to encourage operational selfsufficiency, flexibility and competition in the system and to increase the banking standards in India to the international best practices. The second phase of reforms began in 1997 with aim to reorganization measures, human capital development, technological up-gradation, and structural development which helped them for achieving universal benchmarks in terms of prudential norms and pre-eminent practices. This paper seeks to determine the impact of various market and regulatory initiatives on efficiency improvements of Indian banks. Efficiency of firm is measured in terms of its relative performance that is, efficiency of a firm relative to the efficiencies of firms in a sample. Data Envelopment Analysis (DEA) has used to identify banks that are on the output frontier given the various inputs at their disposal. The present study is confined only to the Constant-Return-to-Scale (CRS) assumption of decision making units (DMUs). Variable returns to scale (VRS) assumption for estimating the efficiency was not attempted. It was found from the results that national banks, new private Banks and foreign banks have high efficiency over a period time than remaining banks. (Amit Kumar Dwivedi D. Kumara Charyulu W.P. No. 2011-03-01 March 2011)
They do this using Data Envelopment Analysis and bank-specific data from 1997 to 2004. They recognize the controversy on the role of deposits as input or output by deriving efficiency scores
under alternative specifications. Their idea results show that the relative efficiency of banks by ownership does not critically depend upon whether deposits are treated as an input (intermediation approach) or output (production approach). In general, they find foreign banks to be the most efficient follotheyd by new private banks. While the efficiency scores of all banks have increased over the reform period, the nationalized banks have registered the strongest gains. This reflects the infusion of new capital and the increase in competition that these banks have experienced in recent years. Thus, the liberalization and deregulation of banks have raised efficiency scores over time of all banks in India regardless of their ownership. These gains in efficiency have also improved bank profitability. Still, the remaining RBI mandate of priority sector lending continues to hurt both the efficiency and profitability of state-owned and nationalized banks. The practice of hiring more officers in relation to non-officers among Foreign and new private banks also appear to have contributed to their enhanced profitability. This reflects perhaps the computer and credit-assessment skills that officer Employees bring to the table. (Kusum W. Ketkar & Suhas L. Ketkar)
OBJECTIVES OF RESEARCH
To explore the role and relevance of banking in economic growth of a nation. To assess the progress and trends of banking growth in India during last five financial years (2006 2011).
To conduct a SWOT analysis of banking industry in current economic spectrum in Indian context.
REFERENCES
Critical analysis of Non Performance Assets in Indian banks (Anis Ali Vol.3 no. 2, 2011:249-254). Performance and Profitability of Indian Banks in the Post Liberalization Period The Indian Banking Sector On the Road to Progress (G. H. Deolalkar) (Amit Kumar Dwivedi D. Kumara Charyulu W.P. No. 2011-03-01 March 2011) Ownership Effects On Bank Performance: A Panel Study Of Indian Banks (Biikrram De11 in 2003) Governance of the banking system (Sayuri Shirai1)