Download - Banking mp
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BANKING
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BANKING
FIVE DIFFERENT MARKETS 1) MONEY MARKET 2) STOCK MARKET 3) FOREX MARKET 4) COMMODITY MARKET 5) REAL ESTATE MARKET
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BANKINGSYLLABUS
FUNCTIONS OF THE BANK VARIOUS KINDS OF DEPOSITS VARIOUS KINDS OF ADVANCES CRR, SLR, LENDABLE RESOURCES BILL CULTURE/ BILL FINANCE
(CHORE COMMITTEE) TANDON COMMITTEE
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BANKINGSYLLABUS
FINANCIAL SECTOR REFORMS INCOME RECOGNITION ASSET CLASSIFICATION PROVISIONING NORMS CAPITAL ADEQUACY
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BANKINGSYLLABUS
BASEL COMMITTEE NORMS ENTRY OF FOREIGN BANKS /
PRIVATE BANKS, ETC. INTERNATIONAL BANKING FUNCTIONS OF RESERVE BANK OF
INDIA
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BANKING
BANKING IS DIFFERENT FROM MONEY-LENDING BUT THE TWO TERMS CARRY SAME SIGNIFICANCE TO THE LAYMAN.
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BANKING THE WORD “BANK” IS SAID TO BE OF
GERMANIC ORIGIN, COGNATE WITH THE FRENCH WORD “BANQUE” AND ITALIAN WORD “ BANCA”
BOTH THESE WORDS MEAN “BENCH” THE JEWISH MONEY-CHANGERS USED
TO DO THEIR BUSINESS SITTING ON A BENCH IN MARKET.
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BANKING
SIMILARLY THE WORD “BANKRUPT” IS BELIEVED TO HAVE BEEN ORIGINATED FROM FRENCH WORD “BANQUE-ROUTE” AND ITALIAN WORD “BANCA-ROTTA” MEANING “BROKEN BENCH”.
MONEY CHANGER USED TO BREAK HIS BENCH WHEN HE FAILED.
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BANKING
BANKING EXISTED IN INDIA IN ONE FORM OR THE OTHER FROM TIMES IMMEMORIAL.
AMONG EARLIEST BANKS ESTABLISHED WERE, BANK OF BENGAL, BANK OF BOMBAY, BANK OF MADRAS KNOWN AS “PRESIDENCY BANKS”.
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BANKING
ALL THESE BANKS WERE AMALGAMATED TO FORM IMPERIAL BANK OF INDIA WHICH WAS SUBSEQUENTLY CONVERTED INTO STATE BANK OF INDIA.
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BANKING
IN EARLY PHASE INDIGENOUS BANKERS, NIDHIS AND MONEYLENDERS ACTED AS BANKERS.
THEY WORKED ON ESTABLISHED NORMS AND TABOOS OF THE COMMUNITY.
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BANKING
IN THE INITIAL STAGES BANKING COMPANIES WERE REGISTERED UNDER THE COMPANIES ACT.
HOWEVER WITH GROWTH OF JOINT STOCK BANKING IN FIRST QUARTER OF 19TH CENTURY, IT BECAME NECESSARY TO CODIFY RULES AND REGULATIONS.
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BANKING THUS EMERGED THE BANKING
REGULATION ACT IN 1949. BANKING LEGISLATION ACT AIMS AT
PROTECTING INTEREST OF DEPOSITORS ENSURING CONTROL OVER CREDIT STREAMLINING PROCEDURES EVOLVING UNIFORM BANKING PRACTICES DEVELOPING BANKING ON SOUND LINES.
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BANKING
SECTION 5 C OF THIS ACT DEFINES A BANKING COMPANYAS “A COMPANY WHICH CARRIES ON THE BUSINESS OF BANKING.”
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BANKING
SECTION 5 B DEFINES BUSINESS OF BANKING AS “ ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT, DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWABLE BY CHEQUES, DRAFTS OR OTHERWISE.”
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BANKING
MAIN PROVISIONS OF ACT 1) BUILT IN SAFEGUARDS 2) POWERS AND COSEQUENTIAL
FUNCTIONS AND RESPONSIBILITIES OF RBI.
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BANKING
BUILT IN SAFEGUARDS RELATE TO 1) ORGANISATION 2) MANAGEMENT 3) OPERATIONSOF A BANKING COMPANY.
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BANKINGORGANISATIONAL SAFEGUARDS
1) PERMITTED BUSINESS 2) HOLDING IMMOVABLE PROPERTY 3) FORMATION OF SUBSIDIARY
COMPANIES 4) USE OF WORD ‘BANK’, ‘BANKING
COMPANY’, ‘BANKER’ AND ‘BANKING’
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BANKINGORGANISATIONAL SAFEGUARDS
5) PAID UP CAPITAL AND RESERVES
6) CHANGE OF NAME
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BANKINGOPERATIONAL SAFEGUARDS
1) MAINTENANCE OF CASH RESERVES AND ASSETS
2) GRANT OF UNSECURED LOANS AND ADVANCES
3) OPENING OF NEW BRANCHES
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BANKINGMANAGERIAL SAFEGUARDS
1) PREPARE ANNUAL ACCOUNTS IN THE FORMS PRESCRIBED UNDER THE ACT
2) THE ACCOUNTS ARE TO BE AUDITED BY A QUALIFIED AUDITOR.
3) PUBLISH AND SEND COPIES TO RBI 4) DISPLAY AT IT’S OFFICES.
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BANKINGFUNCTIONS
1) PRIMARY FUNCTIONS 2) AGENCY FUNCTIONS 3) GENERAL UTILITY FUNCTIONS
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BANKINGPRIMARY FUNCTIONS
ACCEPTANCE OF DEPOSITS LENDING MONEY BORROWING MONEY MAKING INVESTMENTS
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BANKINGAGENCY FUNCTIONS
COLLECTION AND PAYMENT OF CHEQUES
COLLECTION AND PAYMENT OF BILLS
REMITTANCE OF FUNDS COLLECTION OF GOVERNMENT
TAXES
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BANKING AGENCY FUNCTIONS
UNDERTAKING ADMINISTRATION OF ESTATES AS EXECUTORS AND TRUSTEES.
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BANKING GENERAL UTILITY FUNCTIONS
ISSUING OF GUARANTEES ISUING OF LETTERS OF CREDIT DEALING IN FOREIGN EXCHANGE DEALING IN BULLION SAFE DEPOSIT VAULT SAFE CUSTODY OF ARTICLES
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BANKING GENERAL UTILITY FUNCTIONS
MERCHANT BANKING ACQUIRING, HOLDING AND
DEALING WITH PROPERTIES AS SECURITY FOR ADVANCES.
ISSUING AND ENCASHING GIFT CHEQUES
ISSUING CREDIT / DEBIT CARDS
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BANKER-CUSTOMER RELATIONSHIP
1) DEBTOR AND CREDITOR 2) BAILER-BAILEE 3) PRINCIPAL-AGENT 4) TRUSTEE-BENEFICIARY
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BANKER-CUSTOMER RELATIONSHIP
DEBTOR AND CREDITOR – IN CASE OF DEPOSIT ACCOUNT BANKER IS A DEBTOR AND CUSTOMER IS A CREDITOR
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BANKER-CUSTOMER RELATIONSHIP
BAILER-BAILEE – IN CASE A SEALED BOX IS DEPOSITED WITH THE BANK FOR SAFE CUSTODY, THE CUSTOMER IS A BAILER AND THE BANK IS A BAILEE.
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BANKER-CUSTOMER RELATIONSHIP
PRINCIPAL-AGENT – IN CASE OF COLLECTION AND PAYMENT OF CUSTOMER’S CHEQUES / BILLS, THE CUSTOMER IS A PRINCIPAL AND THE BANK IS AN AGENT.
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BANKER-CUSTOMER RELATIONSHIP
TRUSTEE-BENEFICIARY – IF A BANK IS ASKED TO MANAGE THE PROPERTY OF A TRUST, THE BANK IS A TRUSTEE AND THE TRUST IS THE BENEFICIARY.
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DEFINITION OF CUSTOMER
NO STATUTORY DEFINITION IS AVAILABLE. WE HAVE TO DEPEND ON JUDICIAL PRONOUNCEMENTS.
WORD CUSTOMER DERIVES FROM ‘CUSTOM’ MEANING HABIT OF RESORTING TO SAME PLACE OR PERSON TO DO BUSINESS.
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DEFINITION OF CUSTOMER
ONE WHO MAINTAINS SOME SORT OF DEPOSIT ACCOUNT
STATE OF ACCOUNT IS IMMATERIAL
BY FREQUENTLY PURCHASING DRAFTS OR CASHING CHEQUES ONE DOES NOT BECOME A CUSTOMER
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DEFINITION OF CUSTOMER
A CUSTOMER OF ONE BRANCH IS NOT A CUSTOMER OF ANOTHER BRANCH OF THE SAME BANK.
BANKER- CUSTOMER RELATIONSHIP EXISTS BETWEEN TWO BANKS, IF ONE HAS AN ACCOUNT WITH THE OTHER
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CONTRACTUAL RELATIONSHIP
THE BANKER IS ENTITLED TO USE MONEY WITHOUT BEING CALLED UPON TO ACCOUNT FOR SUCH USE.
LIABILITY TO RETURN THE AMOUNT THE BANKER CAN NOT CLOSE
CUSTOMER’S ACCOUNT WITHOUT GIVING HIM NOTICE.
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CONTRACTUAL RELATIONSHIP
BANKER IS OBLIGED TO KEEP TRANSACTIONS OF CUTOMER SECRET, EXCEPT UNDER SPECIAL CIRCUMSTANCES
BANKER ENJOYS A RIGHT OF LIEN. IT IS A LIMITED PLDEGE EXCEPT IN CASE OF ARTICLES RECEIVED FOR SAFE CUSTODY
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CONTRACTUAL RELATIONSHIP
BANKER’S RIGHT OF SET OFF BANKER HAS A RIGHT FOR
APPROPRIATION OF ACCOUNTS BANKER IS ENTITLED TO INTEREST
ON LOANS AND COMMISSION FOR OTHER SERVICES.
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CONTRACTUAL RELATIONSHIP
TERMINATION OF RELATIONSHIP i) VOLUNTARY ii) BY PROCESS OF LAW1) DEATH OF CUSTOMER2) BANKRUPTCY3) INSANITY OF CUSTOMER4) GARNISHEE ORDER
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EXERCISETRUE OR FALSE
1) THE BANKER IS A PRIVILEDGED DEBTOR IN AS MUCH AS HE NEED NOT REPAY HIS DEPOSITORS UNLESS A DEMAND IS MADE ON HIM.
2) BANKER IS AN AGENT WHEN HE ARRANGES SALE OF SHARES ON BEHALF OF HIS CUSTOMER
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EXERCISETRUE OR FALSE
3) THE BALANCE IN THE ACCOUNT OF THE WIFE CAN BE DISCLOSED TO THE HUSBAND, BUT NOT VICE VERSA
4) BANKER CAN EXERCISE RIGHT OF SET OFF WITHOUT NOTICE TO THE CUSTOMER
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EXERCISETRUE OR FALSE
5) RIGHT OF SET OFF CAN BE EXERCISED IN RESPECT OF BILLS DISCOUNTED BUT NOT YET DUE.
6) IF BANKER FINDS THE ACCOUNT OF THE CUSTOMER UNDESIRABLE OR UNREMUNERABLE, HE CAN CLOSE THE ACCOUNT AND REMIT THE BALANCE BY A CHEQUE.
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EXERCISETRUE OR FALSE
7) THE BANK HAS GRANTED OVERDRAFT FACILITY; THE ACCOUNT IS IN CREDIT BALANCE. THE BANKER IS A CREDITOR OF THE CUSTOMER
8) THE BANKER IS A BAILEE WHEN HE PAYS SUBSCRIPTION ON BEHALF OF CUSTOMER
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BANKING REGULATION ACT
GOVERNMENT OF INDIA PASSED A COMPREHENSIVE BANKING REGULATION ACT IN 1949 FOR SAFEGUARDING THE BUSINESS OF BANKING COMPANIES.
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BANKINGCLASSIFICATION OF BANKS
CLASSIFICATION OF BANKS CAN BE DONE IN MANY WAYS.
BASED ON FUNCTIONING COMMERCIAL BANKS CO-OPERATIVE BANKS DEVELOPMENT BANKS RESERVE BANK OF INDIA
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BANKINGCLASSIFICATION OF BANKS
COMMERCIAL BANKS SCHEDULED BANKS NON-SCHEDULED BANKS
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BANKINGCLASSIFICATION OF BANKS
SCHEDULED BANKS ONE WHICH IS REGISTERED IN THE
SCHEDULE OF RBI. COME UNDER PURVIEW OF VARIOUS
CREDIT CONTROL MEASURES OF RBI. REQUIRED TO MAINTAIN CERTAIN
MINIMUM BALANCE WITH RBI. ENTITLED TO BORROW FROM RBI.
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BANKINGCLASSIFICATION OF BANKS
SCHEDULED BANKS INDIAN SCHEDULED BANKS FOREIGN SCHEDULED BANKS
SCHEDULED BANKS PUBLIC SECTOR COMMERCIAL BANKS PRIVATE SECTOR COMMERCIAL BANKS
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BANKINGCLASSIFICATION OF BANKS
PUBLIC SECTOR COMMERCIAL BANKS STATE BANK OF INDIA AND ITS
SUBSIDIARIES; 20 NATIONALISED BANKS;
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BANKINGCLASSIFICATION OF BANKS
PRIVATE SECTOR COMMERCIAL BANKS OTHER INDIAN SCHEDULED BANKS
THAT DO NOT FALL IN THE ABOVE GROUP
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BANKINGCLASSIFICATION OF BANKS
NON-SCHEDULED BANKS THOSE WHICH ARE NOT INCLUDED IN
SCHEDULE OF RBI THEY ARE NOT ENTITLED TO
BORROWINGS AND REDISCOUTING FACILITIES FROM RBI
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BANKINGCLASSIFICATION OF BANKS
BASED ON OWNERSHIP NATIONALISED BANKS PRIVATE BANKS FOREIGN BANKS CO-OPERATIVE BANKS
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BANKINGEVOLUTION & GROWTH DISTINCT PHASES IN BANKING SYSTEM
PRIOR TO 1948 - EVOLUTIONARY PHASE 1949-1968 - FOUNDATION PHASE 1969- 1984 - EXPANSION PHASE 1985- 1990 - CONSOLIDATION PHASE SINCE 1990 - REFORMATORY PHASE
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BANKINGEVOLUTION & GROWTH EVOLUTION PHASE
REGULATIONS WERE BEING INTRODUCED ROLE CONFINED TO ATTEND TO CREDIT
NEEDS OF SELECTED AND LIMITED SEGMENTS OF ECONOMY
OPERATIONS WERE INFLUENCED BY COMMERCIAL PRINCIPLE AND NOT BY DEVELOPMENT FACTOR.
FAILURE OF BANKS WAS COMMON.
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BANKINGEVOLUTION & GROWTH FOUNDATION PHASE
EMPHASIS ON LAYING FOUNDATION FOR SOUND BANKING SYSTEM
AS A CONSEQUENCE BANKING REGULATION ACT WAS PASSED
TRANSFORMATION OF IMPERIAL BANK OF INDIA INTO STATE BANK OF INDIA
STRONG STRESS ON CLASS BANKING BASED ON SECURITY THAN ON PURPOSE
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BANKINGEVOLUTION & GROWTH
EXPANSION PHASE NATIONALISATION BANKS
14 IN 1969 6 IN 1980
EXPANSION AT PATHBREAKING PACE APPRX 50000 BRANCHES WERE SET UP INEFFICIENCY AND LACK OF CONTROL QUALITY BECAME A CASUALTY
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BANKINGEVOLUTION & GROWTH
DIRECTED LENDING INTEGRATED RURAL DEVELOPMENT
PROGRAMME VARIOUS SCHEMES ANNOUNCED BY
GOVT. BIRTH OF REGIONAL RURAL BANKS IN
1975 AND NABARD IN 1982 TRANSFORMATION FROM CLASS
BANKING TO MASS BANKING.
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BANKINGEVOLUTION & GROWTH
CONSOLIDATION PHASE EXTENSION OF EARLIER PHASE IMPROVING HOUSEKEEPING,
CUSTOMER SERVICE, CREDIT MANAGEMENT, STAFF PRODUCTIVITY AND PROFITABILITY.
BANKS ENDED UP IN CONSOLIDATING LOSSES RATHER THAN THE GAINS.
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BANKINGEVOLUTION & GROWTH
REFORMATORY PHASE UNPRECEDENTED ECONOMIC CRISIS
ENGULFED THE ECONOMY INDIA ALMOST DEFAULTED ON ITS
INTERNATIONAL COMMITMENTS INTERNATIONAL CREDIT RATING
DOWNGRADED BREAKDOWN OF FISCAL DISCIPLINE
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BANKINGEVOLUTION & GROWTH
REFORMATORY PHASE (CONTD) HENCE TO REDRESS THE
IMBALANCES VARIOUS MACRO ECONOMIC STRUCTURAL REFORMATORY MEASURES WERE UNDERTAKEN BY GOVERNMENT IN THE FIELD OF TAX SYSTEM, INDUSTRIAL POLICY, FINANCIAL SECTOR AND FOREIGN TRADE.
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BANKING
IN VIEW OF THIS BANK TRANSACTIONS ARE BROADLY CLASSIFIED IN FOLLOWING 3 WAYS 1) CASH TRANSACTIONS 2) TRANSFER TRANSACTIONS 3) CLEARING TRANSACTIONS
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BANKING
MOST VULNERABLE AND RISKY AREA THEFT FORGED NOTES SOILED NOTES SHORT RECEIPT EXCESS PAYMENT
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BANKING
CASH TRANSACTIONS ARE BALANCED ON DAILY BASIS AS UNDER: CLOSING CASH = OPENING CASH +
CASH RECEIPTS DURING THE DAY – CASH PAYMENTS MADE DURING THE DAY
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BANKING
TO PREVENT FRAUDS, THE PARCTICE OF MAINTAINING A SCROLL OF ALL CASH RECEIPTS IS FOLLOWED BY THE BANK.
AN OFFICIAL (NOT ATTACHED TO CASH DEPARTMENT) WILL KEEP A RECORD OF ALL CASH RECEIPTS
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BANKING
AT THE END OF THE DAY THIS WILL BE TALLIED WITH CASH DEPARTMENT
THIS ENSURES THAT ALL THE CASH TENDERED BY THE CUSTOMERS IS ACCOUNTED FOR.
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BANKING AS AN ABUNDANT PRECAUTION (FOR
HIGH VALUE TRANSACTIONS), SAME TRANSACTION IS PASSED THROUGH SECOND OFFICIAL.
ARMED GUARDS ARE PLACED BURGLAR ALARMS ARE PLACED.
THE BUTTONS ARE KEPT IN STRATEGIC PLACES IN BRANCH PREMISES.
DIRECTLY CONNECTED TO NEAREST POLICE STATION
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BANKING CASH RECEIVED FROM
CUSTOMERS IS IDLE MONEY FOR THE BANK.
AFTER KEEPING SUFFICIENT CASH FOR DAY TO DAY OPERATIONS, THE BRANCHES DEPOSIT THE EXCESS CASH WITH THE NEAREST CURRECY CHEST
THERE BY THEY EARN INTEREST.
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BANKING IF THE AMOUNT OR FUNDS ARE
TRANSFERRED FROM ONE ACCOUNT TO ANOTHER ACCOUNT IN THE SAME BRANCH OR ANOTHER BRANCH OF THE SAME BANK.
TRANSFER SCROLL IS MAINTAINED DEBIT TRANSFER AND CREDIT
TRANSFER MUST TALLY.
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BANKING
WHEN A CUSTOMER DEPOSITS A CHEQUE IN HIS ACCOUNT WHICH IS DRAWN ON ANOTHER BANK, THEN IT NEEDS TO BE CLEARED BEFORE CREDITING THE AMOUNT TO THE ACCOUNT OF THE CUSTOMER.
INWARD CLEARING AND OUTWARD CLEARING