8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 1/15

BANKS - INTRODUCTION

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 2/15

Origin of banks

Italian ‘banca’, ‘banc’, or ‘banque’which means a bench.

German ‘back’ which means a jointstock fund. Italianised into ‘banco’

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 3/15

Origin of Modern Banks

Merchants of 17th century ket !old at "owerof #ondon

In 1$%& 'in! (harles I sei)ed such !old

*eole be!an !old with Goldsmiths Goldsmith’s receit later become bank notes

+currency Goldsmith accetin! orders from deositors

to ay money - cheques Goldsmith be!an lendin! !old - not alldeositros withdraw - Modern bankin!functions

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 4/15

Banking in India

Inde!enous bankin! is a!eold

Modern bankin! efforts of n!lish

/!ency 0ouses 177& - ank of 0indoostan

+/le2ander 3 (o

174% - en!al ank

174$ - General ank of India

/ll these banks failed

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 5/15

Banking in India contd

Go5t set u three banks14&6 ank of en!al

16%& ank of ombay14% ank of Madras

"hese were *residency anks withnote issue ower

14 - 168& emer!ence of othercommercial banks

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 6/15

Banking in India contd

1681 - *residency banks amal!amatedinto Imerial ank of India

Imerial ank - banker to Go5t.

9unction took o5er by :I in 16;

Imerial ank took o5er by <I in 16;$

=ationalisation of banks in 16$6 and

1641 >e ha5e ublic sector banks, ri5ate

sector banks and forei!n banks

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 7/15

Classification of Banks

(ommercial banks In5estment banks (ooerati5e banks #and mort!a!e banks 2chan!e banks ?ff@shore banks <a5in!s banks *ri5ate banks (entral banks

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 8/15

Move towards Universal Banking

Mi2ed ankin!(ombinin! deosit takin! and

in5estment bankin!

Ani5ersal ankin!/ suermarket for financial ser5ices

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 9/15

Trend in India

"raditionally, Indian bankin! was fordeosit takin!

Mo5e towards Ani5ersal ankin! onthe recommendations of=arasimham (ommittee II on9inance sector reforms and 'han

>orkin! Grou on 0armonisin! the:ole and ?erations of Be5eloment9inancial Institutions and anks

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 10/15

Bank Sste!s

ranch ankin!

Anit anki!

Grou ankin! (hain ankin!

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 11/15

Branc" Banking

/ sin!le bank ha5in! manybranches o5er a 5ast area

?ri!inated in n!land and followedin most other countries

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 12/15

 Advantages of Branc" Banking

conomies ofscale.

conomy in

reser5es. asy transfer of

funds. Bi5ersion of risks. Aniformity of

interest rates. ?timal use of

funds.

Bi5ersification ofortfolio.

fficient

mana!ement. :esilience etter customer

care

ffecti5ere!ulation

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 13/15

De!erits of Branc" Banking

Inefficientmana!ement.

0i!h cost of

oerations :ed taism.

Anremunerati5ebranches

Monooly ower Anjust

cometition

(onta!ion effect

#ocal needsne!lected

Imersonalbankin!

Imbalanced branch!rowth

=e!lect of smalllaces

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 14/15

Unit Banking

anks are monoliths with one officeor few branches sread o5er a smallarea of oeration

*oular in A</

Merits and Bemerits oosite tothat of ranch ankin!

8/9/2019 Banks - Introduction

http://slidepdf.com/reader/full/banks-introduction 15/15

Banking Str#ct#re in India

Scheduled and Non-scheduled Banks Scheduled banks

State Bank Group

Nationalised banks Other nationalised bank (IDBI) Old private sector banks New private sector banks Foreign banks

egional ural Banks !oopertive bnks "ocal #rea Banks