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    Banking Systems in India: S.P.Mohanty Assistant General Manager Reserve Bank of India Bhubaneswar

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    Sanjay Parida
    This document provides an overview of the banking system in India. It discusses the evolution of banks from early indigenous bankers in India to the modern system. Key events include the establishment of the Reserve Bank of India in 1935 and the nationalization of major banks in 1969 and 1980. The structure of the current banking system is outlined, including public sector banks, private banks, cooperative banks, and regional rural banks. Important acts related to banking regulation are also mentioned such as the Banking Regulation Act of 1949. Core banking concepts like the balance sheet, banker-customer relationships, and negotiable instruments are briefly covered.

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    Banking Systems in India: S.P.Mohanty Assistant General Manager Reserve Bank of India Bhubaneswar

    Uploaded by

    Sanjay Parida
    51 views22 pages
    This document provides an overview of the banking system in India. It discusses the evolution of banks from early indigenous bankers in India to the modern system. Key events include the establishment of the Reserve Bank of India in 1935 and the nationalization of major banks in 1969 and 1980. The structure of the current banking system is outlined, including public sector banks, private banks, cooperative banks, and regional rural banks. Important acts related to banking regulation are also mentioned such as the Banking Regulation Act of 1949. Core banking concepts like the balance sheet, banker-customer relationships, and negotiable instruments are briefly covered.

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    Banking Systems in India[1]

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    This document provides an overview of the banking system in India. It discusses the evolution of banks from early indigenous bankers in India to the modern system. Key events include the establishment of the Reserve Bank of India in 1935 and the nationalization of major banks in 1969 and 1980. The structure of the current banking system is outlined, including public sector banks, private banks, cooperative banks, and regional rural banks. Important acts related to banking regulation are also mentioned such as the Banking Regulation Act of 1949. Core banking concepts like the balance sheet, banker-customer relationships, and negotiable instruments are briefly covered.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    51 views22 pages

    Banking Systems in India: S.P.Mohanty Assistant General Manager Reserve Bank of India Bhubaneswar

    Uploaded by

    Sanjay Parida
    This document provides an overview of the banking system in India. It discusses the evolution of banks from early indigenous bankers in India to the modern system. Key events include the establishment of the Reserve Bank of India in 1935 and the nationalization of major banks in 1969 and 1980. The structure of the current banking system is outlined, including public sector banks, private banks, cooperative banks, and regional rural banks. Important acts related to banking regulation are also mentioned such as the Banking Regulation Act of 1949. Core banking concepts like the balance sheet, banker-customer relationships, and negotiable instruments are briefly covered.

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    BANKING SYSTEMS IN

    INDIA

    S.P.Mohanty
    Assistant General Manager
    Reserve Bank of India
    Bhubaneswar
    Evolution of Banks in India

    Financial system refers to: The system of


    borrowing and lending of funds or the demand
    for and the supply of funds of all individuals,
    institutions, companies and of the Government.
    Classification:
     Industrial Finance
     Agricultural Finance
     Development Finance
     Government Finance
    New finances
     Finance to services sector
     Housing finance
     Consumer finance
     Other retail finances
    History of banking
    Existed in India few centuries before Chriest-Lending
    moneys to traders/ placed funds with kings for
    financing wars-unsecured loans without any charge
    creation.
    Manu’s Sanhita-Rules & rates regarding deposits and
    advances were laid down
    12th century-Hundis & Bills of exchange came into
    use
    Mogul Era-Indigenous bankers lent money and
    financed for domestic and international trade. Money
    (metallic money) changing across the boarder
    Indigenous bankers could not develop to any
    considerable extent the system of obtaining deposits
    of money from the public and lending there from.
    History of banking contd…
    The Indian financial system & Banking system-
    contribution of British Government
    1770-Bank of Hindustan by one British Agency
    1809-Bank of Bengal-Govt. charter & Govt.
    share holding.
    1840-Bank of Bombay
    1843-Bank of Madras
    These three banks were known as Presidency
    banks & also given power to issue bank notes
    1862-Note issuing power were withdrawn
    History of banking contd…

    Mushrooming of banks there after


    1913-1938- series of bank crises-locking of bank
    funds in industries, financing speculative deals, not
    adhering to principles of sound banking
    1934-35-Reserve Bank of India Act- 1934 enacted.
    RBI started functioning since April 1, 1935
    1949-Nationalisation of RBI, Banking Regulations
    Act- 1949
    1955- SBI-nationalisation
    1959-Nationalisation of Associate banks
    1965-BR Act provisions applicable to Co-op banks
    1967-Govt. introduced “Social control” in banking
    industry
    History of banking contd…

    July 19, 1969-Nationalisation of 14 major


    banks
    1975-formation of RRBs
    1980-Nationalisation of six more banks
    1991-92-Banking reforms as part of
    financial reforms in India
    1994-New private banks were allowed to
    set up
    1998-second banking sector reforms
    Banking

    Definition:Section 5(b) of BR Act 1949


    defines banking as “accepting for the
    purpose of lending or investment,
    deposits of money from the public,
    repayable on demand or otherwise,
    and withdrawable by cheque, draft,
    order or otherwise.
    Banking structure in India

    Reserve Bank of India

    Commercial
    RRBs Co-op Banks
    Banks

    Private Sector
    Public Sector Banks UCBs SCBs
    Banks

    SBI Group Indian CCB

    SBI Old PCS

    Associate Banks New

    Nationalised Banks Foreign

    IDBI Ltd.
    Different Acts relating to Banking

    Reserve Bank of India Act-1934


    Banking Regulations Act-1949
    Negotiable Instruments Act-1881
    State Bank of India Act-1955
    State Bank of India (Subsidiary banks) Act-
    1959
    Banking Companies {Acquisition &
    Transfer of Undertakings} Act, 1970
    Banking Companies {Acquisition &
    Transfer of Undertakings} Act, 1980
    Regional Rural Banks Act, 1975
    BALANCE SHEET OF A COMMERCIAL BANK
    Capital and Liabilities Assets
    1.Capital 1. Cash
    2.Reserve Fund & Other Accounts 2. Balances with Other Banks

    3.Deposits & Other Accounts 3. Money at Call & Short Notice

    4.Borrowings 4.Investments

    5.Bills Payable 5.Advances

    6.Profit & Loss 6.Premises-depreciation

    7.Furniture & Fixtures-Depreciation

    8.Other Assets

    9.Non-banking assets acquired in


    satisfaction of claims
    10. Profit & Loss
    Banker-customer relationshp
    Debtor-Creditor
    Creditor-Debtor
    Banker as a trustee-(safe keeping or
    deposit certain money for specific
    purpose)
    Bailee-Bailor relationship (safe custody)
    Agent-Principal relationship (remittance,
    collection of cheques, bills etc.)
    Lessor-Lessee (safe deposit locker)
    Rights of a banker

    Banker’s lien-Its an implied pledge,


    where a banker acquires the right to
    sell the goods which came to his
    possession in the ordinary course of
    banking business as a banker, in
    case the debt is not paid.
     General lien
     Particular or special lien.
    Banker’s general lien not applicable
    to…..

    1. Safe custody of articles


    2. Items held in lockers
    3. Documents/money deposited for
    specific purpose
    4. Securities/valuables left negligently
    5. Immature debts
    6. Stolen goods
    Right of set off
    It is the right to combine the two or more
    accounts of the same person in the same
    capacity.
    Important considerations
     The same name & the same right
     Proprietor & individual account can be
    combined.
     Debts due but not future contingent debts
     Debt must be certain/ absolute before
    exercising the right to set-off.
     No agreement to the contrary
     Banker’s discretion
    Negotiable instruments-characters

    Easily transferable
    Can be transferred by mere delivery,
    if it is a bearer instrument; by
    endorsement & delivery if it is an
    order one.
    Transferee does not get better title
    than that of transferor.
    What is negotiation

    Where a bill of exchange, promisory


    note or cheque is transferred to any
    person as to constitute that person
    the holder thereof, the instrument is
    said to be negotiated.
    It is transfer by endorsement and
    delivery if payable to order or by
    delivery if payable to bearer.
    Characterstics of a cheque

    Negotiability
    Payability
    Tripartite
    Unconditionality
    Monetary nature
    Certainty-amount & payee
    Can be payable either to order or to
    bearer
    Crossing of cheques

    General Crossing-Payment through


    another bank- through banking
    channel
    Special crossing-Payment through a
    specific bank
    Not negotiable crossing
    Account payee crossing
    When & Who can cross a cheque?

    Uncrossed cheque-can be crossed generally or


    specially
    Crossed generally- can be crossed specially
    When crossed generally / specially-the holder may
    add the words “not negotiable”.
    Crossed specially to a banker, he (the banker) can
    again cross it specially to another banker, his
    agent for collection.
    The drawer has the right to cancel the crossing by
    writing the words “crossing cancelled pay cash”
    QUESTIONS??
    Thank You

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