What is banking?

Bank is an institution which trades in money,

an establishment for the deposits,custody
and issue of money,as also for making loans
and discounts and facilitating the
transmission of remittances from one place to
another.

Types of bank in India

Commercial

Banks
Industrial Banks
Agricultural Banks
Exchange Banks
Central Banks
Indigenous Bankers

Main reforms in banking sector

Government

equity in banks has been

reduced and strong banks have been allowed
to access the capital market raising additional
capital.
Bank now enjoying the operational freedom
in terms of opening of new branches and
bank having good track record of profitability
given flexibility in recruitment.

Main reforms in banking sector

New

private sector banks have been set up

and foreign banks are allowed to expend their
function in India including through
subsideries.
Banks are also allowed to set up off shore
banking units in SEZ.
new instrument have been introduced for
better flexibility and better risk management
like interest rate exchange, cross currency
forward contract.

Main reforms in banking sector

New

areas open like-:

Insurance
Credit card
Infrastructure financing
Gold banking
Investment banking

Main reforms in banking sector

Several

new institution have been set up-:

National securities depositor limited
Central depositors service limited
Credit information bureau India limited
Limits

for overseas investment have been

liberalized.
The overseas investment for corporate have
been raised to hundred percent

Main reforms in banking sector

Universal

banking has been introduced.

Adoption of global standard-:
Prudential norms for capital adequacy, Assets
classification , income recognization, best
accounting system, settlement system are
adopted

Competition enhancing
measures
Freedom

in operation
Disinvestment of public ownership in public
sector bank
Transparent norms for private and foreign bank
Permission for FDI and portfolio investment in
banking

Measures enhancing the role

of market forces
Interest

rate on domestic term has been

deregulated
Reduced pre-emption.
Enhanced transparency and disclosure.

Instutional and legal measure

Strengthening

of credit information and

creditors right.
Passed the recovery of debt act in 1993 to
facilitate and speed up .
Six special tribunals have been set up And
appellate Tribunal has also been set up in
mumbai.
Improved framework for payment and
settlement.

Techenological Related measures

Dedicated

communication as bakbone for

banks.
Introduction of product through
communication network.
Electronic funds transfer .
Centralised banking or core banking .
Structured financial messaging solution.

Measure in Interest rates slab

Prime

landing rate of SBI and other banks of

over Rs 2 lakhs has been reduced .
Rate of interest on bank loans above Rs 2
lakhs has been fully decontrolled .
The interest rates on deposits and on
advance of all co-operative bank have been
deregulated.
Interest rate on domestic term deposits has
been decontrolled .

Supervisory measures
Setting

up an autonomous body for supervision

provision
Introduction of off-site surveillance
Monitoring systematically, important financial
institutions

Thank you