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TYPES OF BANKS
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Types of Banks
Commercial banks/Nationalized banks
Cooperative banks
Land Development Banks
Regional Rural banks
Foreign banks
Private Sector banks
Development banks
NABARD
EXIM Bank
National Housing Bank
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Commercial Banks
Mobilize Deposits from the public which are repayableon demand or at short notice.
They lend to general public , traders and manufacturers.
They provide working capital to the business in the formof overdraft and cash credit.
No. of agency services like; collection of cheque, bills,safe keeping for valuables, issue of letter of credit, etc.
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Investment Bank or Industrial Bank
Provide medium-term and Long-term finance toindustries to meet their Fixed capital requirements.
For existing industries , they lend for expansion and
modernization .
Help to promote new industries by underwriting theissue of securities.
The industrial bank secure funds through share capitaland debentures.
They also receive deposits from the public for long- periods.
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Exchange Banks
Specialized in f inancing the f oreign trade.
Supply Necessary
f oreign e
xchange required for
settlement of transactions in f oreign trade.
Now a days commercial banks themselves undertake
foreign exchange business so, there is no separateforeign exchange bank.
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Savings Banks
Collects savings from poor and middle income peopleof the society.
These banks primarily intended to encourage habits
of thrift and savings among people with smallincomes.
Depositors are allowed to withdraw the amount intimes of needs.
The govt. runs savings bank and they are managed by postal department.
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Co-operative Banks
Formed on the principle of co-operation.
Provide short-term credit to agriculturists,
artisans, small f armers and small scale industries.
Accept all kind of deposits and make loan to themembers at lower rate of interest.
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Land Development Banks
Provide Long-term loans to Agriculturists for purchasing toolsand equipments and cattle and making permanent improvementon land.
Granted against the security of land.
Organized on co-operative basis in India.
The banks raise their resources in the form of shares and byissuing long-term securities.
These banks are presently known as Agriculture and Rural
Development Banks.
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Central Bank
Acts as leader of the money market; supervising, controlling,and regulating the activities of commercial banks and otherf inancial institutions.
Enf orces monetary discipline in the country¶s economy.
Manage the issue and circulation of currency to safeguardfinancial stability in the country.
Functions in close touch with the government and assists in theimplementation of its economic policies.
It serves as banker, agent and advisor to the government.
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Types of BankingCore Banking
A centralized branch computerization model in which
branches are connected to a central host.
It incorporates branch automation modules and online
multiple delivery channels like ATM, Debit card, Tele-
banking, Internet Banking, etc., under one roof.
In core banking there is a central database f or the bank andtransactions done centrally, online.
It offers integrated products and services to customers round
the clock.
Core
Banking
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Retail Banking
Retail banking refers to banking in which banks
undergo transactions directly with consumers, rather
than corporations or other banks. Services offeredinclude: savings and checking accounts, mortgages ,
personal loans, debit cards, credit cards, etc.
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Investment Banking
Financial intermediary that performs a variety of
services Like, underwriting, acting as an intermediary
between an issuer of securities and the investing public,
facilitating mergers and other corporatereorganizations, and also acting as a broker for
institutional clients.
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Electronic Banking
With the introduction of computers in Indian Banks and with
the arrangements of ATMs, the services are provided across the banks.
Customers need not necessarily visit the Bank to do banking
transactions when their banker provides them tele-banking or
remote-banking facility. This type of banking is called electronic
banking .
Anytime Banking
Any where Banking
Home banking (corporate and personal)
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Corporate Banking
Corporate customers are especially big business/industrialhouses.
For getting these types of services from the banks , the
customers requires a computer, a telephone connection and a
modem and could be utilized at the time of performing
banking transactions.
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Personal Banking
By using tele-banking facility, the customer get the connectivityto the branch¶s designated computer.
The software provided in the machine will be interactive with
the customer asking him to dial the code number of the service
required by him and suitably answer him. A customer can have access to his balance, and also can place
order for statement of accounts, cheque books and other selected
services through this tele (phone) banking.
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hole Sale Banking
Banking services between merchant banks and other
f inancial institutions. In other words, business to
business banking (B2B).
Other Banking are:
- Mobile Banking
- Internet Banking, etc.
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Present Era
The last decade experienced a complete reform in the Banking
sector.
With the advancement of technology, banking sector has become more EASY, FAST , ACCURATE and also TIME
SAVING.
ATMs, Mobile Banking, Net Banking are the tools to
facilitate the customers of the bank.
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SOME
BANKING
CONCEPTS
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NPA
KYC
Basel ±I & II Bancassurance
Money Laundering
Banking Sector Reforms
Derivatives Merchant Banking
Repo Rate and Reverse
Repo Rate
CRR & SLR Risk Management
Venture Capital
Recovery management
Overdraft
Government Securities
SEBI
Lease Financing FDI (Foreign Direct Investment)
FII (Foreign Institutional
Investment)
Credit Rating Agencies Commercial Paper
Certificate of Deposit
Equity
Bonds
Mutual funds
Close ended and O pen ended
schemes
Cash Credit
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Cont«.
Bill of exchange
Discounting of bills
Promissory note
Mortgage
Interest warrant
Dividend warrant
Clearing house Underwriting
Hire-purchase finance
Bill of lading
Material alteration
Budla Transactions or
carry over Factoring services
Commercial paper
Certificate of Deposits
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WHAT IS BANKING ?
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Def inition of a Bank
Under English law, a Bank is defined as a person whocarries on the business of banking , which is specifiedas;
Conducting current accounts for his customers
Paying cheques drawn on the bank, and
Collecting cheques for the customers.
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In India
Section 5 (b) of Banking Regulation Act 1949
³ Accepting for the purpose of lending and investment,
of deposits of money from the public, repayable on
demand, order or otherwise and withdrawal by
cheque, draf t order or otherwise´.
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Primary or Traditional Functions
The major f unctions of banks are:
1. Acceptance of Deposits
2. Lending of money3. Creation of credit, and
4. Transferring of money and other related activities
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Ancillary Services
Safe custody of Valuables
Safe deposit Vault
Purchase and sale of securities
Collection of interest on securities/debentures and
dividend on shares, etc
Remittance of Funds ± Bank drafts, Mail Transfers,
Telegraphic Transfers Agent and Trustee
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Cont«.
Personal tax assistance
Investment facilities ± Underwriting, banker to new
issues, Guidance to Investment, etc.
Credit Transfers
Travelers' Cheques and Gift Cheques,etc.
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K inds of business that cannot be done
Section 8 of the Banking Act, prohibits a bank f rom
carrying on trading activities which are not incidental
to banking business.
For example, it can buy or sell securities for the
purpose of realizing them, can deal with stocks, shares,
bullion, etc., and can act as Trustees, Executor,
Administrator, etc.
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R OLE PLAYED BY BANKS
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Economic Development
Mobilization of Savings
Balanced Regional Development
Extension of credit
Creation of money
Facilitate Commerce and Trade
Role of Banks
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Banks contribute to the operation and growth of the
economy through various roles, including that of
intermediary and provider of payment settlement
facilities. Promote confidence and stability in the system.
Transfer of funds with minimal risk to the parties.
Efficient allocation of resources in an economythrough lending to businesses and individuals.
Cont..
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Banking facilities to unbanked areas
Deployment of credit to neglected sections of the
society (priority sectors)
Bank finance to small-scale industries
Small business finance (self-employed)
Financing of agriculture
Assistance to women
Welfare of minorities
Assistance to students
«««««««««««« And many more
Social Responsibility of Commercial Banks
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Changing Prof ile of Indian Banking
Organizational Changes Change from wholesale character to retail character
Purpose orientation in Lending
Credit Planning
Reduction of regional imbalances Development of banking habits
Increase in volume of credit
Increase in advances to priority sector and weaker sections
Housing finance
leasing
Innovations
Venture capital financing
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QUESTIONS
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