Indian Banking System Introduction
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Transcript of Indian Banking System Introduction
Introduction to Banking INDIAN BANKING SYSTEM
PUBLIC SECTOR BANKS = SBG + PSBs + IDBI Bank
PRIVATE SECTOR BANKS IN INDIA (Old + New)Cooperative Banks; Regional Rural Banks
(RRBs)INDIAN BANKS OPERATIONS ABROADLocal Area Banks (LABs) – 4 are functional now!PRE-REFORMS DEVELOPMENTCREDIT GUARANTEE FUND TRUST FOR SMALL
INDUSTRIES
04/07/23 BANKING 2009 1
BANKING DEFINED… DERIVED FROM FRENCH WORD “BANQUE”
MEANING A BENCHALSO, FROM GERMAN WORD “BACK” MEANING
A JOINT STOCK FUNDHISTORY………….. BANK OF ENGLAND – 1694 ADBANK OF HINDUSTAN, INDIA – 1770LARGE SCALE CLOSURES DURING 1929-32THREE PRESIDENCY BANKS – BANK OF BENGAL
(1809), BANK OF BOMBAY (1840) AND BANK OF MADRAS (1843) IN CALCUTTA, BOMBAY AND MADRAS…. ALL 3 MERGED AS IMPERIAL BANK OF INDIA IN 1919 – LATER BECAME STATE BANK OF INDIA IN 1955
04/07/23 BANKING 2009 2
DEVELOPMENTS…MANY MORE BANKS ALSO OPENED…………CRISIS BETWEEN 1913-1917 – 588 BANKS
FAILEDBANKING COMPANIES (INSPECTION
ORDINANCE) ISSUED IN JANUARY 1946; BANKING COMPANIES (RESTRICTION OF BRANCHES) ACT PASSED IN FEBRUARY 1946
THE BANKING COMPANIES ACT PASSED IN FEB 1946
AMENDED AS BANKING REGULATION ACT, 1949
04/07/23 BANKING 2009 3
DEVELOPMENTS…2RBI ACT, 1934 WAS PASSED (1ST APRIL, 1935)FIRST CENTRAL BANK OF THE COUNTRYTOOK OVER FUNCTIONS FROM IMPERIAL
BANKRBI NATIONALISED ON 01.01.1949IMPERIAL BANK OF INDIA PARTIALLY
NATIONALISED AS STATE BANK OF INDIA IN 1955
IN 1959, SEVEN SUBSIDIARIES ADDED TO STATE BANK GROUP – BIKANER & JAIPUR, HYDERABAD, INDORE, MYSORE, PATIALA, SAURASHTRA AND TRAVANCORE……………….
04/07/23 BANKING 2009 4
DEVELOPMENTS…319TH JULY, 1969 – GOI TOOK OVER CONTROL OF 14
PRIVATE BANKS WITH DEPOSITS OVER Rs 50 CRs15TH APRIL, 1980 – SIX MORE BANKS WITH DTL
EXCEEDING Rs 200 CRORES NATIONALISEDIN 1993, NEW BANK OF INDIA WAS MERGED WITH
PUNJAB NATIONAL BANK…………(BOTH ARE PSBs)NOW, WE HAVE SBI + SIX SUBSIDIARIES AS
SBGROUP (AFTER MERGER OF SB SAURASHTRA WITH SBI), 19 PUBLIC SECTOR BANKS, AND IDBI BANK LTD (AFTER REVERSE MERGER WITH IDBI)
04/07/23 BANKING 2009 5
PRIVATE BANKS IN INDIARBI (1934) NATIONALISED IN 1948……………… IMPERIAL BANK OF INDIA (1919) WAS CONVERTED TO STATE
BANK OF INDIA IN 195514 PRIVATE BANKS NATIONALISED IN 1969AGAIN, 6 MORE NATIONALISED IN 1980BANK OF RAJASTHAN, DHANALAKSHMI, FEDERAL, SOUTH
INDIAN, CATHOLIC SYRIAN, J&K, KARNATAKA, KARUR VYSYA……(Old Private Banks)
ECONOMIC AND BANKING SECTOR REFORMS IN 1991-93 – NEW GENERATION BANKS IN 1994 – CAPITAL OF Rs 100 / Rs 300 CRORES
HDFC – FIRST TO SET UP A NEW PVT BANK…FOLLOWED…BANK OF PUNJAB, CENTURION BANK,
GLOBAL TRUST BANK, ICICI BANK, IDBI BANK, INDUSIND BANK, TIMES BANK, UTI BANK (NOW AXIS)
LATER, KOTAK MAHINDRA BANK AND YES BANK….11 NEW PRIVATE BANKS STARTED BUT TODAY… 6 ONLY!
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INDIAN BANKS’ ABROADOCT 20, 2005 : 14 INDIAN BANKS OPERATING
ABROAD9 PUBLIC SECTOR (BOB, SBI, BOI, PNB, IB, UCO,
CANARA, SYNDCIATE BANK) AND 5 PRIVATE SECTOR BANKS (ICICI BANK, INDUSIND, BANK OF PUNJAB, HDFC BANK and Bharat Overseas Bank)
SPREAD ACROSS 42 COUNTRIES WITH 101 BRANCHES
INCLUDE 6 OFFSHORE UNITS, 6 JOINT VENTURES, 17 SUBSIDIARIES, 30 REPRESENTATIVE OFFICES
PL SEE RBI WEBSITE FOR LATEST POSITION…….
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LOCAL AREA BANKSLAUNCHED BY RBI ON 24.08.1996 (PC as Fin
Min)TO DEVELOP BACKWARD AND LESS
DEVELOPED DISTRICTS IN THE COUNTRYMINIMUM CAPITAL OF Rs 500 LAKHSINDIVIDUALS, TRUSTS, SOCIETIES AND
CORPORATES AS PROMOTERS…TO OBTAIN ‘IN PRINCIPLE’ APPROVAL FROM
RBITO APPROACH REGISTRAR OF COMPANIES…TO COVER THREE CONTIGUOUS DISTRICTS
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LOCAL AREA BANKS …21. COASTAL AREA LAB LTD., VIJAYAWADA, AP2. CAPITAL LAB LTD., PHAGWARA, NAVSARI, GUJARAT3. KRISHNA BHIMA SAMRUDDHI LAB LTD.,
MAHABOOBNAGAR, AP4. SUBHADRA LAB LTD., KOLHAPUR, MAHARASHTRA
5. SOUTH GUJARAT LAB SUFFERED LOSSES AND WAS MERGED WITH BANK OF BARODA ON JUNE 25, 2004
RBI REVIEWED POLICY AND DECIDED TO STOP LABs
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PRE-REFORMS …1. LEAD BANK SHEME, DECEMBER 19692. COOPERATIVE BANKS – URBAN AND RURAL3. REGIONAL RURAL BANKS, OCT 02, 1975 (196 -
now 96)4. SOME IMPORTANT FINANCIAL
INSTITUTIONS1. NABARD2. EXIM BANK3. NHB4. HUDCO5. HDFC6. IDBI 7.IFCI 8.IIBI 9.ICICI 10.SIDBI 11.IDFC 12.PFC
13.LIC 14.UTI 15.DICGC 16.CGTSME 17.ECGC ………04/07/23 BANKING 2009 10
Indian Financial System (Source: RBI)
Indian Financial System
MoF,GOI, New DelhiRBI/SIDBI/NABARD
SEBI / NHB /IRDA / PFRDA
Development Finance Institutions
IFCI, IDBI, ICICI,IIBI, IDFC
EXIM Bank, IL&FS,
Banks – SB Group,Public / RRBs /
Private-Old & New/Foreign / LAB / Coop
NBFCs, Chit Funds,Nidhi Cos, Postal /
Nat’l Small Savings /Ins Cos/HFCs/CRAs/
Credit Card Cos
Financial Services : IFS 1204/07/23
Indian Financial SystemCommercial Banks
27 Public Sector (7 SB Group, 19 Nationalised & IDBI Bank)23 Private Sector (17 Old and 6 New) 2,800 plus Co-operative Banks !96 RRBs, 4 Local Area Banks !!29 Foreign Banks
More than 70,000 bank branchesAverage popln served per branch : 15,000 !!!Over 35,000 ATMs – on-site, off-site & Bio-Metric
04/07/23Financial Services : IFS 13
Indian Financial System (2)
Development Finance InstitutionsLIC, GIC & its 4 SubsidiariesUTI, DICGC, ECGC, EXIM Bank, ICICI, IFCI, IDBI, IIBI, NABARD, SIDBI, NHB, SHCIL, NSDL, CDSL, IIFCL
SFCs, SIDCs, ITCOs, AFC, etcSTCI, DFHI, IDFC, IL & FS, etc
04/07/23Financial Services : IFS 14
Indian Financial System (3)Government Sector
National Savings Organisation (NSCs, NSS, IVPs, KVPs, PPF etc)
Post Office Savings, RD Accounts
Employees Provident Fund Orgn., etc.
04/07/23Financial Services : IFS 15
Indian Financial System (4)Non Banking Financial Companies
Nidhi CompaniesChit Fund CompaniesInvestment CompaniesHire Purchase CompaniesLease Finance CompaniesHousing Finance CompaniesStock Exchanges,., Broking CosCredit Rating Agencies, RNBCs.,etc.,etc.Mutual Funds, CIBIL, ARCs, Insurance Cos
04/07/23Financial Services : IFS 16
State Bank GroupSTATE BANK OF INDIA – 1955Seven Subsidiaries in 1957
STATE BANK OF HYDERABADSTATE BANK OF MYSORESTATE BANK OF BIKANER & JAIPURSTATE BANK OF TRAVANCORESTATE BANK OF INDORESTATE BANK OF PATIALASTATE BANK OF SAURASHTRA* (since merged
with SBI)
04/07/23Financial Services : IFS 17
Com Bkg 2008 ALM 2008 18
Reserve Bank of India
Scheduled Banks
Commercial banks Co-operatives
RRBs (96)Foreign Banks (29)
Local Area Banks 4Public Sector Banks
(27)
StateCO-operatives
(16)Urban Co-operatives
(52)
Private Sector Banks(23)
New (6)Old (17)
IDBI BankState Bank of India& Associates (7)
Nationalised & PSBs (19)
BALANCE SHEET OF A BANK
Com Bkg 2008 ALM 2008 19
Economic FactorsBanks
Economic Policies
Liabilities Assets
Capital Cash and Balances at RBIReserves and SurplusDepositsBorrowings InvestmentsOther Liabilities and Provisions AdvancesContingent Liabilities Fixed Assets
Other Assets
Balance with banks and money at call and short notice
Balance Sheet of a Bank
YearDeposits
(Rs.in Crores)
Credit(Rs.in Crores)
Total Business(Rs.in Crores)
Credit/DepositRatio(%)
1950-51 882 547 1,429 62
1960-61 1736 1336 3,072 77
1970-71 5,906 4,684 10,590 79
1980-81 37,988 25,371 63,359 66
1990-91 1,92,541 1,16,301 3,08,842 60
2000-01 9,62,618 5,11,434 14,74,052 53
2006-07 25,94,259 19,23,192 45,17,451 74
Com Bkg 2008 ALM 2008 20
EVOLUTION OF BANKING SINCE 1950
RBI Data as on June 26, 2009
ALM 2008 21Com Bkg 2008
Bank Credit (% to GDP)