COMMERCIAL BANKING

AN OVERVIEW
 COMMERCIAL BANKING
AN OVERVIEW

• INDIAN BANKING SYSTEM

• COMMERCIAL BANKING IN INDIA
• FUNCTIONS OF COMMERCIAL BANK
• CHALLENGES AND TRENDS IN BANKING
• UNIVERSAL BANKING
• BANKING IN THE NEW MILLENIUM
 Banking
• According to Sec. 5 of the Banking Regulation Act,
1949, a banking company means the accepting, for
the purpose of lending or investment, of deposits of
money from the public, repayable on demand or
otherwise and withdrawn by Cheque, Draft, Order,
or otherwise.

Licensing of Banking Companies:

• According to Sec. 22, no company shall carry on
banking business in India unless it holds a license
issued by the Reserve Bank of India.
 INDIAN BANKING SYSTEM
PUBLIC SECTOR BANKS (12)
PRIVATE SECTOR BANKS (22)
Small Finance Banks (11)
FOREIGN BANKS (46)
Payments Banks (2)
REGIONAL RURAL BANKS (43)
COOPERATIVE BANKS (350)
DEVELOPMENT BANKS (8)
Reserve Bank of India - Database (rbi.org.in)
FUNCTIONS OF COMMERCIAL BANKS
Primary Services
TRANSACTION SERVICES
Accepting deposits (CA, SA, FD, RD)
Granting Loans(CC, OD, bills of exchange, Business
home/auto/personal/education loans
INTERMEDIATION
Remittances
Cheque
DD
PAYMENT AND SETTLEMENT SYSTEM
REAL TIME GROSS SETTLEMENT SYSTEM
IMPS
FUNCTIONS OF COMMERCIAL
BANKS
Secondary Function
PORTFOLIO MNGMT SERVICES
ADVISORY SERVICES
CUSTODIAL SERIVES
Bank Guarantee
Third party product sale
Insurance
MF
 CHALLENGES AND TRENDS IN
BANKING

TECNOLOGICAL REVOLUTION
SERVICE PROLIFERATION
DISINTERMEDIATION
SECURITISATION
DEREGULATION
CONSOLIDATION
GEOGRAPHICAL EXPANSION
INCREASING RISKS OF MANAGEMENT
RISING COST OF FUNDING
TRENDS IN BANKING
• Branch Banking
• ATM Banking
• Net Banking
• Mobile Banking
 Retail Banking
Retail Banking includes a comprehensive range of financial
products to individual/Retailers.
– Small Amount
– Large Staff
– High Default Risk
 Corporate Banking

• Corporate Banking supplies capital and services to

Corporate customers for business venture and construction
activities on a long term basis to build genuine and lasting
relationship. Most of the services are customized to the
individual needs which range from core banking services to
account management services of client's need.
Causes of preference for Corporate Loan

Low Credit Risk

High Return
Less Staff to monitor
 UNIVERSAL BANKING
FINANCIAL SUPER HOUSES
MULTIPLICITY OF PRODUCTS AND SERVICES
CROSS FUNCTIONAL, CROSS SELLING
CROSS BORDER, CROSS CULTURAL
UNIVERSAL BANKING MODELS
CREATED THROUGH M&A ROUTE
CREATED THROUGH HOLDING CO., ROUTE
 CRM IN BANKING
WHY CRM
Customer retention
Identification of Potential customers
Dynamic nature of information
Client knowledge (KYC)
Information and communication technology
Growth of personalised services
Growth of E- COMMERCE
Thanks..