INTRODUCTION TO BANKING

FINANCE & FINANCIAL SYSTEM

FINANCE MEANS MONEY FINANCIAL SYSTEM MEANS A SET OF COMPLEX AND CLOSELY INTERMIXED FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL INSTRUMENTS, FINANCIAL SERVICES ETC. FINANCIAL SYSTEM HELPS TO MOBILISE THE FINANCIAL SURPLUSES OF AN ECONOMY AND TRANSFER THEM TO THE AREAS OF FINANCIAL DEFICIT. THERE ARE FOUR PARTS OF THE FINANCIAL SYSTEM

FINANCIAL SYSTEM

FINANCIAL INSTITUITIONS

FINANCIAL MARKETS

FINANCIAL INSTRUMENTS

FINANCIAL SERVICES

FINANCIAL SECTOR

ORGANISED SECTOR LIKE BANKS, FINANCIAL INSTITUITONS

MONEY LENDERS, INDIGENOUS BANKERS

WHAT IS BANK ?
IT IS DERIVED FROM THE WORD BANCUS OR BANQUE IT MEANS A BENCH. THE EARLY BANKER, THE JEWS, TRANSACTED THEIR BUSINESS ON BENCHES. SOME ARE OF THE OPINION THAT THE WORD IS DERVIED FROM THE GERMAN WORD BACK IT MEANS JOINT STOCK FUND.

DEFINITION OF BANK SEC. 5 (B) OF BANKING REGULATION ACT 1949 IT MEANS ACCEPTING FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWABLE BY CHEQUE, DRAFT, ORDER OR OTHERWISE.

DEFINITION OF BANKING COMPANIES

SEC. 5( C) OF BANKING REGULATION ACT, 1949 IT MEANS A COMPANY WHICH TRANSACTS THE BUSINESS OF BANKING IN INDIA. HENCE MANUFACTURING COMPANY ACCPETING DEPOSITS IS NOT BANKING COMPANY.

FUNCTIONS OF BANKS
ACCEPTING DEPOSITS FROM PUBLIC AND OTHERS. LENDING MONEY TO PUBLIC TRANSFERRING MONEY FROM ONE PLACE TO ANOTHER(REMITTANCES) CREDIT CREATION. ACTING AS TRUSTEES. KEEPING VALUABLES IN SAFE CUSTODY. INVESTMENT DECISION AND ANALYSIS. GOVERNMENT BUSINESS OTHER TYPE OF LENDING AND TRANSACTION SUCH AS NON FUND BASED FACILITIES.

MAIN CHARACTERISTICS OF BANKERS

CONDUCT OF CURRENT ACCOUNTS. PAYMENT OF CHEQUES COLLECTION OF CHEQUES FROM THE CUSTOMERS.

HISTORY OF BANKING IN INDIA

STATE BANK OF INDIA
STATE BANK OF INDIA IS A GOVT. OWNED BANK. IT IS THE OLDEST AND LARGEST COMMERCIAL BANK IN INDIA WITH ORIGIN OF JUNE 1806. SBI TOOK OVER COMMERCIAL BANKING FUNCTIONS OF 3 PRESIDENCY BANKS: BANK OF CALCUTTA. BANK OF BOMBAY BANK OF MADRAS.

 SBI IS GOVERNED BY STATE BANK OF INDIA ACT 1955 SBI ACTS AS AN AGENT OF THE RBI.

HISTORY.
RESERVE BANK OF INDIA IT WAS ESTABLISHED IN 1935 & NATIONALISED IN 1949. IT IS GOVERNED BY RBI ACT 1934 BANKING REGULATION ACT 1949 THE ACT IS PASSED FOR THE REGULATION, STRUCTURE AND SUPERVISITION OF BANKS IN INDIA

HISTORY
RBI ACT 1934 AND BANKING REGULATION ACT 1949 ARE THE BASIC FOUNDATION FOR THE REGULATION AND SUPERVISION OF BANKS IN INDIA.

ROLE OF BANKS IN AN ECONOMY

ECONOMIC DEVELOPMENT CAPITAL FORMATION MONETIZATION

CHEAP MONEY POLICY MEDIUM & LONG TERM FINANCE

ROLE OF BANKS

INNOVATIONS

FINANCE TO PRIORITY SECTORS