INTRODUCTION TO BANKING

GROUP MEMBER

AAKANKSHA BHANDARI- 9106

DHANASHRHREE BADLE- 9168
NILESH JADHAV-

SUBMITTED TO- AMINA MAM

 INTRODUCTION

• Development of Banking is evolutionary in

nature.
• Bank performs a multitude of functions and
services.
• In brief, “Banking is what bank does”.
• The Oxford Dictionary defines a bank as “an
establishment for the custody of money which it
pays out on a customer’s order”.
EVOLUTION
Origin of word “bank”

Banck – German

Banco – Italian

Bacus/ Banque

Bank- English
 BANKING COMPANY

• The Banking Regulation Act, 1949 defines a

banking company as a company which transacts
the business in India [ section 5(c)]
 BANKING

• Section 5(1)(b) defines banking as accepting for

the purpose of lending or investment of deposits
of money from the public, repayable on demand
or otherwise and withdraw able by cheque, draft,
order or otherwise.
• Section 49A of the Act prohibits any institution
other than a banking company to accept deposit
money from public withdraw able by cheque.
 CONT’D OF BANKING

• The essence of banking business is the function

of accepting deposits from public with the facility
of withdrawal of money by cheque.
• In other words the above mentioned functions
cannot be performed without the approval of
Reserve Bank.
 ORIGIN OF BANKING

• The origin of modern banks is traced to three

important sources. They are,
i. the goldsmiths
ii. the moneylenders and
iii. the merchant bankers.
 BEGINNING AS PUBLIC ENTERPRISE
YEAR NAME OF BANK

1157 BANK OF VENICE

1401 BANK OF BARCELONA

1407 BANK OF GENOA

1609 BANK OF AMSTERDAM

 DEVELOPMENT OF BANKING

• The East India Company had laid the

foundations for modern banking in the first-half
of the 19th century with the establishment of
the following three banks:

NAME OF BANKS YEAR

BANK OF BENGAL 1809

BANK OF BOMBAY 1840

BANK OF MADRAS 1843

 CON’T OF DEVELOPMENT OF BANKING

• The above banks are known as “Presidency

Banks” and functions as a independent units.
• During the last part of 19th century and early
phase of 20th century, the ‘Swadeshi Movement’
induced the establishment of a number of banks
with Indian Management.
• Example are shown in table form as follows:
 CON’T OF DEVELOPMENT OF BANKING

NAME OF BANKS YEAR

PUNJAB NATIONAL BANK LTD. 1895

THE BANK OF INDIA LTD. 1906

THE CANARA BANK LTD. 1906

THE INDIAN BANK LTD. 1907

THE BANK OF BARODA LTD. 1908

THE CENTRAL BANK OF INDIA LTD. 1911 AND MANY MORE

 SUBSIDIARIES OF STATE BANK OF INDIA

• In 1959, the ‘State Bank of India’ (subsidiary

banks) Act was passed by which the public sector
was further extended.
THE STATE BANK OF BIKANER
THE STATE BANK OF JAIPUR
THE STATE BANK OF INDORE
THE STATE BANK OF MYSORE
THE STATE BANK OF PATIALA
THE STATE BANK OF HYDERABAD
THE STATE BANK OF SAURASHTRA
THE STATE BANK OF TRAVANCORE
 NUMBER OF BANK BRANCHES

YEAR END BRANCHES

1998 66408

1999 67157

2000 67868

2001 67937

2002 68195
 MEANING

• A bank is an institution which deals in money and

credit
• Thus, bank is an intermediary which handles
other people ‘s money both for their advantage
and to its own profit.
 DEFINITION

• According to section 5(1)(c) of Banking

Regulation Act, 1949 defines banking company
as, “any company which transacts the business of
banking in India.
• Crowther defines bank as, “one that collects
money from those who have it to spare or who
are saving it out of their income and lends the
money so collected to those who require it”.
• Prof. Sayers says that, “Banks are not merely
purveyors of money but also in an important
sense, manufacturers of money”.
 FEATURES OF BANKING

• Basic characteristics of banking

• Dealing in money
• Deposits must be withdrawable
• Dealing with credit
• Commercial in nature
• Nature of agent
 CLASSIFICATION OF BANKS

• Central Banks
• Commercial Banks
• Industrial or Development Banks
• Exchange Banks ( Authorized dealers in foreign exchange)
• Co-operative Banks
• Land Mortgage Banks
• Indigenous Banks
• Savings Banks
• Supranational Bank
• International Banks
 BANKING SYSTEM

• Unit Banking
• Branch Banking
• Correspondent Banking
• Chain Banking
• Group Banking
• Pure Banking
• Mixed Banking
• Relationship Banking
 CONT’D BANKING SYSTEM

• Narrow Banking
• Universal Banking
• Regional Banking
• Retail Banking
• Wholesale Banking
• Private Banking
ECONOMIC DEVELOPMENT THROUGH
BANKING SYSTEM

IndustrialEmployment
Development

Income

Consumption Banking
System

Savings

Production

Investments
 BANKS AND ECONOMIC DEVELOPMENT

IMPORTANCE
• Capital Formation
• Creation of money
• Strengthen the link between organised and
unorganised sector
• Provision of long-term loans
• Helping agriculture and small scale industries
• Entrepreneurial development
• Cheque system - Medium of exchange
 CONT’D OF BANKING AND ECONOMIC
DEVELOPMENT
• Regulation of the flow of national savings
• Comprehensive infrastructural facilities
• Maintaining Balance of Trade
• Mitigating the effects of trade cycle
• Sectoral Priorities
• Catalyst in social change
• Effective implementation of monetary policy
THANK YOU