Professional Documents
Culture Documents
Objectives
Show the evolution of our banking system.
Discuss the modern Indian banking system and its
structure.
Working function of bank.
Contents
Introduction.
Banking structure.
Rationale for nationalization of banks.
Reforms of banking sector.
Interest rate slabs.
Norms.
New private and local area banks.
Recovery of debts.
Introduction
A bank is a financial institution whose primary activity is
to act as a payment agent for customers and to borrow and
lend agent for customers.
An institution where one can place and borrow money and
take care of financial affairs.
Foreign Banks
Foreign banks have their registered and head offices
in a foreign country but operate their branches or
fully owned subsidiaries in India.
There are 43 foreign banks in India with a network
of 334 branches, mostly in cities.
Some foreign banks
HSBC,DBS, Abu Dhabi Commercial Bank
etc.
Co operative Bnaks
Ist Phase :
14 Leading Banks were Nationalized on 18 July , 1969.
IInd Phase :
6 more Banks were Nationalized 1980.
Recommendation of Narshimam
Committee -II 1998
Rationalization of bank branches and staff was emphasized.
Licensing policy for new private banks can be continued.
In private banks the limit for FDI has been increased from 49% to
74%.
New areas for bank financing have been opened up.
To bring down net NPAs below 5 percent by 2000 and to 3 percent
by 2002.
Policy
Reserve
Lending/Deposits
Bank
Repo
Reverse
Marginal
Cash
Statutory
Base
Saving
Deposit
Rates
Ratios
Rate
Reserve
Rate
Rate
Repo
Standing
Liquidity
Rate
Ratio
RateFacility
Ratio Rate
PRUDENTIAL NORMS
Prudential means with wisdom. Prudential norms
are guidelines laid down by the central bank which
all banks are required to follow. Introduced in the
year 1992-93 these norms usually are amount of
cash reserves, overnight call rates, various ratios,
etc.
C.R.A.R =
Tier I Capital + Tier II capital * 100 >
8(BASEL) , 9 (R.B.I)
risk weighted assets
=>Tier I capital- Paid-up capital + Statutory reserves + Other
disclosed free reserves + Capital reserves ( Equity investment
in subsidiaries + Intangible assets + losses )
=>Tier II capital- Undisclosed reserves, Revaluation reserves,
Investment fluctuation reserve, Subordinate debt (long term
unsecured loans) , Hybrid
debt capital
instruments (Risk
sayweighted
Bonds) .
Particulars
Weightage
Risk weighted assets :
(fixed by R.B.I)
value of assets
Cash
How
risk
weight
assets
0 % 10 * 0%
= 0
0%
= 0
10
Govt. Securities
15
Mortgage loans
20
is Other loans
55
calculated
TOTAL
15 * 0%
50% 20 * 50% = 10
100% 55* 100% = 55
TOTAL
65
LAB in India .
RECOVERY OF DEBTS
There are various methods that are being used by Banks to recover
debts :
1) Debt restructuring The banks changes the repayment or interest
payment schedule or may waive interest if necessary. Corporate
Debt Restructuring (CDR) is the institution in place.
2) Recovery Agents They make phone calls or self visits to
recover the bad debt under the directions of the R.B.I
3) Debt recovery tribunals (DRTs) established under the Recovery
of Debts due to Banks and Financial Institutions Act, 1993 for
recovery of debts with Loan amount above Rs. 10 lakhs
4) One Time Settlement (OTS) schemes and Lok Adalats useful
for small loan defaulters such as small and marginal farmers.
Queries