Banking Flashcards
History of Banking In India
1770 :- Bank of Hindustan was established.
○ 1786 : “General Bank of India” was established.
○ 1809 : Bank of Bengal by East India Company.
○ 1840 : Bank of Bombay by East India Company.
○ 1843 : Bank of Madras by East India Company.
: These three banks were known as the Presidency
Bank.
○ 1865 : Allahabad bank was established.
: Oldest existing Public Sector Bank.
○ 1894 : Punjab National Bank was established.
: It was the first Indian bank to have been started
solely with Indian capital investments.
○ 1935 : RBI was established.
○ 1955 : Imperial Bank was converted as state Bank of
India (SBI)
types of bank in India
Schedule Commercial Bank :- Bank of India, Andhra Bank, Allahabad Bank
Private bank :- ICICI bank, HDFC banks
Public Bank :- SBI, PNB
Foreign Bank :- Deutsche Bank
Regional Rural Bank
what are schedule Commercial Bank
To simplify, the scheduled commercial banks are those banks which carry out the normal business of banking such as accepting deposits, giving out loans and other banking services.
All these banks have been included in the 2nd schedule of RBI Act 1934.
Time to time some banks are included and some are removed. For example, six banks were removed from the 2nd schedule because of
merger with other banks.
They are. namely, Syndicate Bank, Oriental Bank of Commerce, United Bank of India, Andhra Bank, Corporation Bank, and Allahabad Bank
What are Regional Rural bank
The Indian Government set up RRB on 2nd October 1975.
These banks grant credit to the weaker section of rural areas mainly small and marginal farmers, small entrepreneurs, agriculture labourers .
These banks are sponsored by the central
government, state governments and a sponsor
central bank collectively.
Sharing In RRB
Central government holds 50% share
State governments holds 15% share
Sponsor Bank holds 35% share
What is Cooperative societies?
Sub Group of Co-operative societies
It is an autonomous association of people bound together to fulfill common social, cultural and economical needs.
It is said that the system of cooperation is as old as human society.
These groups are sub-divided into two sub-groups
[a] Agricultural societies. :- Mostly found in rural areas.
[b] Non-Agricultural societies :- Mostly found in urban Areas.
:- Societies based on cottage industry are also found in rural areas.
Nationalization of Banks
After independence, all the major banks of India were under private ownership which was a cause of concern as the people belonging to rural areas were still dependent on unauthorized money lenders for financial assistance which led to their exploitation even after independence.
In Order to get rid of the problem of non-availability of credit for poor rural sections from the organized sector, the banks were nationalized under the Banking Regulation Act, 1949.
Also the Reserve Bank of India was nationalized in 1949.
After the formation of the State Bank of India in 1955, several banks were nationalized in the time period 1969-1991.
14 Banks nationalized in 1969
In 1980, another 6 banks were nationalized
When was SBI established and which parities are include in this establishment
How SBI is governed?
Is SBI a nationalized Bank
In 1955, the Government of India and Reserve Bank of India jointly established the State Bank Of India i.e. they both have joint ownership of SBI.
In 2007, Reserve Bank’s share of SBI was transferred to the government of India.
SBI is governed by a board of directors headed by a chairman. The chairman and managing directors of the bank are appointed by the government.
It is evident that the SBI works under the Government of India, but it is also a fact that SBI is not called a nationalized bank.
What is RBI
When was RBI Established
Who Governs RBI
The Reserve Bank of India is the apex bank of India which regulates and controls all the monetary policies of India.
Hence, it is called the “Monetary Authority of India’’.
RBI was established in April, 1935.
The affairs of RBI are governed by a central board of directors, which are fourteen in number, including the governor and four
deputy governors.
Functions of RBI
➔ Monetary Management Authority
➔ Regulation and Supervision of the Banking and Non-Banking Financial Institutions.
➔ Regulation of Foreign Exchange Market, Government Securities Market and Money Market.
➔ Management of Foreign Exchange Reserves.
➔ Current Account and Capital Account Management.
➔ Banker to Central and State governments
➔ Debt Manager of Central and State Governments
➔ Banker to Banks
➔ Issuer of Currency
➔ Oversight of Payment and Settlement Systems
What is Money Supply
Main Elements of the Money Supply
How Money Supply measured measured in INDIA ?
The meaning of money supply is related to the total amount of currency, which is kept by people in various forms in the economy.
● The main elements of the money supply are the currency kept by people and the demand deposits made by commercial banks.
● In India, the demand for money supply is generally measured as M1, M2, M3, M4.
● Among all the concepts of money supply, M1 and M2 is the narrowest and most important measure of money supply.
● M3 and M4 is a broad measure of money supply.
● M1 is the most liquid and M4 is the least liquid.”
Measurement level of Money supply and their Description
M1 :- Currency with the public + Demand deposits with the banking system + Other deposits with the RBI
Highest Liquidity.
M2:- M1+ Post office savings deposits
Intermediate Liquidity
M3 :- M1+ Time Deposit with the Banking
System
Liquidity is Lower than M1 and M2
M4:- M3+ All deposits with the post office
(except National Savings Certificates)
Lowest Liquidity
Type Of Diposit
Saving deposits
reinvestment deposits
fixed deposits
recurring deposits
What Are saving Deposits
A basic account used for daily transactions.
Money deposited in a savings bank account earns interest.
These accounts typically come with withdrawal restrictions but offer easy accessibility.
What is reinvestment Deposits
A type of fixed deposit where the interest earned is reinvested back into the deposit instead of being regularly paid out.
The interest is compounded quarterly and is paid along with the principal amount at the time of maturity
What is Fixed Deposits
A financial instrument provided by banks that offers a higher rate of interest than a regular savings account.
The money is deposited for a fixed period, and
withdrawal before maturity can result in penalties.
