Structure of Indian Banking System

Transcription

1 Structure of Indian Banking System

2 Banking - Definition Section 5 of BR Act defines Banking as Accepting deposit from public For the purpose of lending and investment Repayable on demand or otherwise Withdrawable by cheque/draft or otherwise Also secondary or non-banking functions like Agency services, utility services and product distribution are also done by banks

3 Nationalization Nationalization - Process of taking over a private company or industry by a state or national government. Ordinance ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969') issued by Government of India led by Prime Minister Mrs. Indira Gandhi. 14 largest commercial banks Nationalized with effect from the midnight of 19 July 1969.

4 Reasons Nationalised banks held 85% of total deposits of the country Ownership concentrated in private hands only profit oriented Enabled better coordination between Central bank and commercial banks

5 Structure of Banks in India

6 Banks Categorization State Bank Group comprising SBI and 5 associates (previously7) There are 21 nationalized banks Low cost banking is provided by RRBs, and are set up with States Partnership SBI and Nationalized banks account for 82% of branches and around 77% of deposits are controlled by them They cater to Government developmental programs to Rural Weaker section loans and Small borrowers

7 Latest developments Higher degree of professionalism in private sector banks. IDFC and Bandhan 2 latest private sector banks. Development banks include IFCI, IIBI, SIDBI. Foreign banks include Citibank, HSBC, BOBK etc.

8 NBFC s like Muthoot Finance, IIFL, Sundaram Finance, Shriram Finance also offer variety of services, personal loan, gold loan, auto loans etc. Residuary Non Banking Companies like Peerless Group, Sahara Group also collectively collect deposits and operate through their several branch offices Chit fund companies like Saradha Chit funds, Peerless Chit funds,shiram Chit funds also operate in a large scale

9 Credit Co opertive Societies operate on Small Savings Deposits Regularly guided by RBI and local State Government regulations. India Posts too operate on small savings deposits Micro finance institutions provide assistance to low income groups through NGOs, SHGs for economic development

10 BCSBI BCSBI stands for Banking Code and Standards Board of India Formed under the recommendations of Committee on Procedures and Performance Audit of Public Services headed by Mr. S.S. Tarapore (former Dy governor of RBI).

11 BCSBI The main objectives of BCSBI are To plan evolve, prepare, develop, promote and publish comprehensive Codes and Standards for Banks for providing fair treatment to their customers. To function as an independent and autonomous body to monitor and to ensure that the Codes and Standards adopted by the banks are adhered to in letter and spirit while delivering service to their customers.

12 BCSBI BCSBI in collaboration with the IBA evolved two codes Code of Banks Commitment to Customers and The Code of Banks Commitment to Micro and Small Enterprise. Objectives Promoting good banking practices Setting minimum standards Increasing transparency Achieving higher operating standards Promoting a cordial banker-customer relationship to foster confidence of common man in the banking system

13 BCSBI Implementation of the Codes through Obtaining from member banks an Annual Statement of Compliance (ASC) Visiting branches to find out the status of ground-level implementation of Codes Studying complaints received from customers and orders / awards issued by Banking Ombudsmen / Appellate Authority to find out whether there is any system-wide deficiency Organizing an annual Conference with Principal Code Compliance Officers of the Member banks to discuss implementation issues.

14 BCSBI BCSBI also Undertakes campaigns and initiatives to spread awareness of the Codes amongst customers and banks Provides faculty support to training establishments of banks Participates in on-location workshops held by / for member banks to increase coverage

15 BCSBI Associates with customer awareness programs conducted by Banking Ombudsmen Provides credit counselling services in Mumbai Publishes quarterly newsletter entitled Customer Matters, containing matters of interest to customers.

16 International Banking With globalization, consolidation, deregulation, diversification, banking globally has become more complex. Various commercial banks have opened branches in India and extend all types of facilities Investment banking viz Securitization, mergers, acquisitions, investments in securities and trading are the main investment portfolios today.

17 International Banking Also Private placements, money market operations, Project finance, bonds underwriting and financial advisory work are also taken up by Indian and foreign banks. In India, investments in technologies by financial services organizations are increasing, and new initiatives emerging. However, in the long run, it is evident that technology investments in transaction and process automation will cease to be a differentiator.