Introduction To Banks

M.
COM PART II : SEM 3 TYPES OF BANKING SECTOR IN INDIA

2019-20
INTRODUCTION TO BANKS:-
a) What is Bank in simple words?
A bank is a financial institution which deals with deposits and advances and
other related services. It receives money from those who want to save in the form of
deposits and it lends money to those who need it.
What is the work of bank?
b) Banks work by paying its customers to lend them money. When a person
deposits money into their bank account, the bank can then lend other people
that money. ... To make money for itself, the bank keeps the difference.
Finance is the life blood of trade, commerce and industry. Now-a-days, banking
sector acts as the backbone of modern business. Development of any country mainly
depends upon the banking system.
The term bank is either derived from old Italian word banca or from a French
word banque both mean a Bench or money exchange table. In olden days, European
money lenders or money changers used to display (show) coins of different countries
in big heaps (quantity) on benches or tables for the purpose of lending or exchanging.
 A bank is a financial institution where customers can save or borrow money.

Customer's money may be placed in the bank for safe keeping. Banks may
give loans to customers under an agreement to pay the money back to
the bank at a later time, with interest.
bank's main activity should be to do business of banking which should not be

subsidiary to any other business. bank should always add the word "bank" to its name
to enable people to know that it is a bank and that it is dealing in money. Bank may be
a person, firm or a company. A banking company means a company which is in the
business of banking.
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M.COM PART II : SEM 3 TYPES OF BANKING SECTOR IN INDIA
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bank accepts money from the people in the form of deposits which are usually
repayable on demand or after the expiry of a fixed period. It gives safety to the
deposits of its customers. It also acts as a custodian of funds of its customers.
The bank collects deposits from the public. These deposits can be of different types,
such as :-
1. Saving Deposits
2. Fixed Deposits
3. Current Deposits
4. Recurring Deposits
c) DEFINITION OF A BANK
Oxford Dictionary defines a bank as "an establishment for custody of money, which it
pays out on customer's order."
d) HISTORY OF BANKING
How Banks are created?
Banks and money are

essential to maintaining
economies and they impact the
entire societies and nations. Hence
they are closely regulated and
strict procedures and principles are advised to be followed by the banks by various
authorities and governments. In the United States, banks may be chartered by federal
or state governments and in India government decides the rules for opening any banks
or its branches.
From a business structure perspective, most of the Banks are corporations or

cooperative societies and may be owned by groups of individuals, corporations, or
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some combination of the two. Around the world banks are supervised by governments
to guarantee the safety and stability of the money supply and of the country.
The history of banking began with the first prototype banks which were the merchants
of the world, who made grain loans to farmers and traders who carried goods between
cities. This was around 2000 BC in Assyria, India and Sumeria. Later, in ancient
Greece and during the Roman Empire, lenders based in temples made loans, while
accepting deposits and performing the change of money. Archaeology from this
period in ancient China and India also shows evidence of money lending.
Many histories position the crucial historical development of a banking system to

medieval and Renaissance Italy and particularly the affluent cities
of Florence, Venice and Genoa. The Bardi and Peruzzi Families dominated banking in
14th century Florence, establishing branches in many other parts of Europe. The most
famous Italian bank was the Medici bank, established by Giovanni Medici in
1397.The oldest bank still in existence is Banca Monte dei Paschi di Siena,
headquartered in Siena, Italy, which has been operating continuously since 1472.
Development of banking spread from northern Italy throughout the Holy Roman
Empire, and in the 15th and 16th century to northern Europe. This was followed by a
number of important innovations that took place in Amsterdam during the Dutch
Republic in the 17th century, and in London since the 18th century. During the 20th
century, developments in telecommunications and computing caused major changes
to banks' operations and let banks dramatically increase in size and geographic spread.
The financial crisis of 2007–2008 caused many bank failures, including some of the
world's largest banks, and provoked much debate about bank regulation.
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A financial system is an important tool for a country that wants to develop

economically. The reason is that it helps in the creation of wealth by a way of
investments. That is why there are different types of financial services available to
facilitate the requirement. One of the important ways for a country to control financial
transactions and services is through banks. Banking in India has been a backbone to
so many businesses in the past as well as in the present times. It started in the 18th
century and is still going strong.
In India the banks and banking have been divided in different groups. Each group has
their own benefits and limitations in their operations. They have their own dedicated
target market. Some are concentrated their work in rural sector while others in both
rural as well as urban. Most of them are only catering in cities and major towns.
Different types of banks are central banks, commercial banks, investment banks,
cooperative banks, postal banks.
The banking system plays an important role in promoting economic growth not only
by channeling savings into investments but also by improving allocative efficiency of
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resources. A bank is a financial institution and a financial intermediary that accepts
deposits
and channels those deposits into lending activities, either directly by loaning or
indirectly through capital markets.
A bank may be defined as an institution that accepts deposits, makes loans, pays
checks, and provides financial services. A bank is a financial intermediary for the
safeguarding, transferring, exchanging, or lending of money. A primary role of banks
is connecting those with funds, such as investors and depositors, to those seeking
funds, such as individuals or businesses needing loans. A bank is the connection
between customers that have capital deficits and customers with capital surpluses.
Banks distribute the medium of exchange. Banking is a business. Banks sell their
services to earn money, and they must market and manage those services in a
competitive field. Banks are financial intermediaries that safeguard, transfer,
exchange, and lend money and like other businesses that must earn a profit to survive.
Understanding this fundamental idea helps you to understand how banking systems
work, and helps you understand many modern trends in banking and finance.
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BANKING IS A UNIQUE BUSINESS
The services banks offer to customers have to do almost entirely with handling money
or finances for other people. Banks are critical to our economy. The primary function
of banks is to put their account holders' money to use by lending it out to others who
are in need of the same.
Money is a medium of exchange, an agreed-upon system for measuring the value of

goods and services. Once, and still in some places today, precious stones, animal
products, or other goods of value might be used as a medium of exchange. This
system was used for centuries, before the invention of money. People used to
exchange the goods or services for other goods or services in return. This system is
also known as “Barter System” and an age-old method that was adopted by people to
exchange their services and goods. Roman soldiers were sometimes paid in salt,
because it was critical to life and was a scarce commodity at those times.
Anything with an agreed-upon value might be a medium of exchange. Today, many

forms of money are used. Money is any object or record that is generally accepted as
payment for goods and services and repayment of debts in a given socio-economic
context or country. The main functions of money are distinguished as: a medium of
exchange; a unit of account; a store of value; and, occasionally in the past, a standard
of deferred payment. Any kind of object or secure verifiable record that fulfills these
functions can be considered money. Money simply shows how much something is
worth, whether it is a new gadget that you can purchase or two hours of your labor.
When you have money, a bank can act as your agent for using or protecting that
money.
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EARLIEST BANKING SYSTEMS
It is impossible to say exactly when banking properly began. We do, however, have
evidence that it may have started to properly occur around 8000 BC, although these
were not banking in the way that we see things now. It was more record keeping of
trades that were being made. There may have been specific institutions developed
specifically for banking, but we can’t possibly know for sure. All we have records of
are people making trades and record their trades down in a log.
THE EARLIEST ‘PROPER’ BANKS
The first proper banks would have sprung up in ancient Mesopotamia. We have
evidence that there were temples and palaces throughout Babylonia and other cities
which provided lending activities. Although, a lot of this was not in the form of
financial lending. Instead, banks would lend out seeds and the like. The idea is that
by lending out seeds, farmers would have products that they could work with.
When it came to the harvest, the farmers would pay back their seed loan from the
harvest.
There are also records of credit from around this time. In fact, we have a history of
credit and other banking activities throughout Asian civilization. The Temple of
Artemis, for example, was a deposit for cash and there were records of debts held
here. Mark Anthony plays a major role in these banks. He is said to have stolen
cash from these banks.
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MODERN BANKING IN THE 17TH TO 19TH CENTURIES
Perhaps the biggest changes to the world of banking came in the 17th to 19th
centuries, particularly in London. In fact, the way in which banks work will be
based completely around these banking concepts, i.e. issuing bank debt, allowing
deposits to be made into banks etc.
The first ‘proper’ bank could be said to be the Goldsmiths of London. It is now a
bank, but back then it was more a series of vaults which charged a fee for their
services. People would deposit their precious materials into these vaults, and they
would be able to collect them. Over time, Goldsmiths started to provide loans.
The first bank to offer banknotes was the Bank of England. Bank notes were,
initially, promissory notes. You would deposit cash into the bank and be offered a
note to say that it was there. Over time, the bank started to offer cheques,
overdrafts, and traditional banking services. This was important when the
Industrial Revolution in the United Kingdom was starting to get into ‘full swing’.
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20TH CENTURY
It was in the 20th Century when banks started to pop up in the way we know them
properly. Post-World War II, banks started to lend money to countries as a whole,
and retail banking started to become a proper ‘thing’. In fact, a lot of the
technology that was developed throughout the 20th Century is still in use today,
e.g. the ATM systems and SWIFT payments.
Divine Deposits
Banks have been around since the first currencies were minted — perhaps even before
that, in some form or another. Currency, particularly the use of coins, grew out of
taxation.
In the early days of ancient empires, a tax of one healthy pig per year might be
reasonable, but as empires expanded, this type of payment became less desirable.
Additionally, empires began to need a way to pay for foreign goods and services, with
something that could be exchanged more easily. Coins of varying sizes and metal
served in the place of fragile, impermanent paper bills.
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The First Bank
The Romans, great builders, and administrators in their own right took banking out of
the temples and formalized it within distinct buildings. During this time,
moneylenders still profited, as loan sharks do today, but most legitimate commerce—
and almost all governmental spending—involved the use of an institutional bank.
Julius Caesar, in one of the edicts changing Roman law after his takeover, gives the
first example of allowing bankers to confiscate land in lieu of loan payments. This
was a monumental shift of power in the relationship of creditor and debtor, as landed
noblemen were untouchable through most of history, passing debts off to descendants
until either the creditor's or debtor's lineage died out.
The Roman Empire eventually crumbled, but some of its banking institutions lived on
in the form of the papal bankers that emerged in the Holy Roman Empire, and with
the Knights Templar during the Crusades. Small-time moneylenders that competed
with the church were often denounced for usury.
Merchant Banks
Most of the economic duties that would have been handled by the national banking
system, in addition to regular banking business like loans and corporate finance, fell
into the hands of large merchant banks, because the national banking system was so
sporadic. During this period of unrest that lasted until the 1920s, these merchant
banks parlayed their international connections into both political and financial power.
These banks included Goldman and Sachs, Kuhn, Loeb, and J.P. Morgan and
Company. Originally, they relied heavily on commissions from foreign bond sales
from Europe, with a small backflow of American bonds trading in Europe. This
allowed them to build up their capital.
At that time, a bank was under no legal obligation to disclose its capital
reserve amount, an indication of its ability to survive large, above-average loan losses.
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This mysterious practice meant that a bank's reputation and history mattered more
than anything. While upstart banks came and went, these family-held merchant banks
had long histories of successful transactions. As large industry emerged and created
the need for corporate finance, the amounts of capital required could not be provided
by any one bank, and so initial public offerings (IPOs) and bond offerings to the
public became the only way to raise the needed capital.
The public in the U.S. and foreign investors in Europe knew very little
about investing, due to the fact that disclosure was not legally enforced. For this
reason, these issues were largely ignored, according to the public's perception of
the underwriting banks. Consequently, successful offerings increased a bank's
reputation and put it in a position to ask for more to underwrite an offer. By the late
1800s, many banks demanded a position on the boards of the companies seeking
capital, and if the management proved lacking, they ran the companies themselves.
Financial Sector in India consists of three main segments:
1. Financial institutions -banks, mutual funds, insurance companies
2. Financial markets -money market, debt market, capital market, forex market
3. Financial products -loans, deposits, bonds, equities
f) FINANCIAL REGULATORS IN INDIA
There are mainly three Financial regulators in India:
1. Reserve Bank of India (RBI) - Banking Sector
2. Securities Exchange Board of India (SEBI) - Capital Markets /Mutual Funds
3. Insurance Regulatory and Development Authority (IRDA) - Insurance

Companies
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BANKING DEVELOPMENT AND NATIONALIZATION OF BANKS IN

INDIA
Banking development in India has been, by and large, a state-induced activity. The
Reserve Bank of India was nationalized in 1949 followed by the nationalization
of Imperial Bank of India (now the State Bank of India - SBI) in 1955. In 1969, 14
major commercial banks were nationalized and the exercise was repeated when 6
more commercial banks were nationalized in 1980. Thus, prior to economic reforms
initiated in early 1990s, banking business in India was a near-monopoly of
the Government of India.
The underlying philosophy of this approach was to encourage growth, via availability
of adequate credit at reasonable/concessional rates of interest, in areas where
commercial considerations did not allow for disbursal of credit.
Nationalization of commercial banks was a mixed blessing. After nationalization

there was a shift of emphasis from industry to agriculture. The country witnessed
rapid expansion in bank branches, even in rural areas. However, bank nationalization
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created its own problems like excessive bureaucratization, red-tapism and disruptive
tactics of trade
The following banks were nationalised in 1969:
 Allahabad Bank
 Bank of Baroda
 Bank of India
 Bank of Maharashtra
 Central Bank of India
 Canara Bank
 Dena Bank
 Indian Bank
 Indian Overseas Bank
 Punjab National Bank

 Syndicate Bank
 UCO Bank
 Union Bank
 United Bank of India
A second round of nationalisations of six more commercial banks followed in 1980.

The stated reason for the nationalisation was to give the government more control of
credit delivery. With the second round of nationalisations, the Government of India
controlled around 91% of the banking business of India.
The following banks were nationalised in 1980:
 Punjab and Sind Bank

 Vijaya Bank
 Oriental Bank of India
 Corporate Bank
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 Andhra Bank
 New Bank of India
Later on, in the year 1993, the government merged New Bank of India with Punjab
National Bank.[24] It was the only merger between nationalised banks and resulted in
the redction of the number of nationalised banks from 20 to 19. Until the 1990s, the
nationalised banks grew at a pace of around 4%, closer to the average growth rate of
the Indian economy.
g) FUNCTION OF BANKS
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(I) Primary Function:
1. Accepting Deposits:
It is the most important function of commercial banks. They accept deposits in several
forms according to requirements of different sections of the society. The main kinds
of deposits are:
(i) Current Account Deposits or Demand Deposits:
These deposits refer to those deposits which are repayable by the banks on demand:
a. Such deposits are generally maintained by businessmen with the intention of

making transactions with such deposits.
b. They can be drawn upon by a cheque without any restriction.
c. Banks do not pay any interest on these accounts. Rather, banks impose service
charges for running these accounts.
(ii) Fixed Deposits or Time Deposits:
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Fixed deposits refer to those deposits, in which the amount is deposited with the bank
for a fixed period of time.
a. Such deposits do not enjoy cheque-able facility.

b. These deposits carry a high rate of interest.
Basis Demand Deposits Fixed Deposits
Cheque They are chequeable deposits. They are non-chequeable

facility deposits.
Interest They do not carry any They carry interest which

payments interest. varies directly with the period
of time.
Number of The depositor can make any Depositor generally makes

transactions number of transactions for only two transactions:
deposit or with drawl of
(i) Deposit of Money in the
money.
beginning;
(ii) Withdrawal of money on

maturity.
(iii) Saving Deposits:
These deposits combine features of both current account deposits and fixed deposits:
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a. The depositors are given cheque facility to withdraw money from their
account. But, some restrictions are imposed on number and amount of
withdrawals, in order to discourage frequent use of saving deposits.
b. They carry a rate of interest which is less than interest rate on fixed
deposits. It must be noted that Current Account deposits and saving
deposits are chequable deposits, whereas, fixed deposit is a non-chequable
deposit.
2. Advancing of Loans:
The deposits received by banks are not allowed to remain idle. So, after keeping
certain cash reserves, the balance is given to needy borrowers and interest is charged
from them, which is the main source of income for these banks.
Different types of loans and advances made by Commercial banks are:
(i) Cash Credit: Cash credit refers to a loan given to the borrower against his current
assets like shares, stocks, bonds, etc. A credit limit is sanctioned and the amount is
credited in his account. The borrower may withdraw any amount within his credit
limit and interest is charged on the amount actually withdrawn.
(ii) Demand Loans: Demand loans refer to those loans which can be recalled on
demand by the bank at any time. The entire sum of demand loan is credited to the
account and interest is payable on the entire sum.
(iii) Short-term Loans: They are given as personal loans against some collateral
security. The money is credited to the account of borrower and the borrower can
withdraw money from his account and interest is payable on the entire sum of loan
granted.
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(II) Secondary Functions:
1. Overdraft Facility:
It refers to a facility in which a customer is allowed to overdraw his current account

up to an agreed limit. This facility is generally given to respectable and reliable
customers for a short period. Customers have to pay interest to the bank on the
amount overdrawn by them.
2. Discounting Bills of Exchange:
It refers to a facility in which holder of a bill of exchange can get the bill discounted
with bank before the maturity. After deducting the commission, bank pays the balance
to the holder. On maturity, bank gets its payment from the party which had accepted
the bill.
3. Agency Functions:
Commercial banks also perform certain agency functions for their customers. For
these services, banks charge some commission from their clients. Some of the agency
functions are:
i. Transfer of Funds:
Banks provide the facility of economical and easy remittance of funds from
place-to-place with the help of instruments like demand drafts, mail transfers,
etc.
ii. Collection and Payment of Various Items:

Commercial banks collect cheques, bills,’ interest, dividends, subscriptions,
rents and other periodical receipts on behalf of their customers and also make
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payments of taxes, insurance premium, etc. on standing instructions of their
clients.
iii. Purchase and Sale of Foreign Exchange:
Some commercial banks are authorized by the central bank to deal in foreign
exchange. They buy and sell foreign exchange on behalf of their customers
and help in promoting international trade
.
iv. Purchase and Sale of Securities:
Commercial banks buy and sell stocks and shares of private companies as well
as government securities on behalf of their customers.
v. Income Tax Consultancy:

They also give advice to their customers on matters relating to income tax and
even prepare their income tax returns.
vi. Trustee and Executor:

Commercial banks preserve the wills of their customers as trustees and
execute them after their death as executors.
vii. Letters of Reference:

They give information about the economic position of their customers to
traders and provide the similar information about other traders to their
customers.
4. General Utility Functions:
Commercial banks render some general utility services like:
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1. Locker Facility:
Commercial banks provide facility of safety vaults or lockers to keep valuable
articles of customers in safe custody.
2. Traveler’s Cheques:
Commercial banks issue traveler’s cheques to their customers to avoid risk of
taking cash during their journey.
3. Letter of Credit:
They also issue letters of credit to their customers to certify their
creditworthiness.
4. Underwriting Securities:
Commercial banks also undertake the task of underwriting securities. As
public has full faith in the creditworthiness of banks, public do not hesitate in
buying the securities underwritten by banks.
5. Collection of Statistics:
Banks collect and publish statistics relating to trade, commerce and industry.
Hence, they advise customers on financial matters. Commercial banks receive
deposits from the public and use these deposits to give loans. However, loans
offered are many times more than the deposits received by banks. This
function of banks is known as ‘Money Creation’
h) ADVANTAGES OF BANKS
1. SAFETY OF PUBLIC WEALTH
Before the introduction of the modernized banking system, people used to save their
money in hard cash. They stored this cash in lockers, underground, with the grains,
etc. There were so many instances when the money got stolen, eaten by the rats or
simply rot through the years. However, the modern banking system completely
eliminated the need to store hard cash. It actually helps save a huge proportion of
public wealth that used to get spoiled in storage.
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2. AVAILABILITY OF CHEAP LOANS
Before modern banks were established, people would borrow money from local
money lenders, landlords, merchants or other wealthy individuals. These loans were
given at exorbitant interest rates that most people couldn’t afford to pay, in the
process the borrower would always remain in debt. It was a vicious cycle. Modern
banks started providing cheaper loans to the underprivileged section of the society,
breaking the whole expensive loans system.
3. PROPELLANT OF ECONOMY
Banks create money with a system called credit creation. With the help of credit
creation, banks can lend a lot more money than the deposits that it holds. When banks
lend this money to agriculture, industries, small businesses, and service providers,
they are actually helping the economy grow exponentially. This, in turn, creates
employment and spending power. Overall this one function of the bank is so powerful
that the entire economy of any country relies on it.
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4. ECONOMIES OF LARGE SCALE
An extremely important benefit of any bank is its deep and wide reach through the
branch banking system and the benefits of large scale operations. The wider the bank
can reach the better services it can provide. Now a day’s banks provide services of net
banking, card payments, ATM’s, etc. at even the most far-fetched and backward
areas. Due to these large scale operations, the services have become extremely cheap,
or sometimes even free.
5.DEVELOPMENT IN RURAL AREAS
Banks aid rural development in more than one way. Firstly, the government makes it
mandatory for the banks to lend to specialized sectors such as agriculture, rural
infrastructure, etc. This leads to the development of modern infrastructure and
methods in rural areas, thereby bringing in growth. Secondly, with the banks opening
their branches in the backward areas, the rural population has benefits of modern bank
facilities such as check-in accounts, ATM’s, locker facility, etc. Furthermore, when a
new bank branch opens in a village, it needs facilities such as 24-hour electricity
supply, internet connection, new staff etc. This creates employment and the villagers
can also benefit from facilities of electricity and internet.
5. GLOBAL REACH
Many banks operate at the multinational level, this has helped people and businesses
in a way that was not possible before the establishment of modern banks.
Multinational banks aids in remittance of cash, exchanging one currency for another;
aids in export by transferring documents and payments; lend money to government,
institutions and other world organizations. The reach of the banks is unlimited and it
has helped in making the world a global village.
Though there are many benefits of the modern banks, it comes with its fair share of
flaws. Let’s discuss the disadvantages of banks to understand it better.
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i) DISADVANTAGES OF BANKS
1. CHANCES OF BANK GOING BANKRUPT
The world economy goes through turbulent times every few years. Events such as
great depression of 1929, World War I & II, dot com bubble of 2000, or great
recession of 2008, etc. expose banks to unnatural risks. During delicate periods, if
all the people decide to withdraw their money from the bank, all at once, the bank
will become bankrupt. Due to the function of credit creation, banks never have
enough money to pay all its customers at the same time. People, without a doubt,
will lose their money if the bank goes bankrupt.
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2. RISK OF FRAUD AND ROBBERIES
The rise in internet banking has given rise in cybercrime as well. Now more
people are exposed to the risk of credit card thefts, stolen passwords, net banking
frauds, etc. There have been robberies where robbers have stolen millions of
dollars through the internet, without entering the bank premises physically. With
the rise in internet banking, there will be a more innovative way for conmen and
robbers to cheat people. This leaves the public vulnerable. This also increases the
expenses that banks have to incur to safeguard their systems, which are eventually
charged from the customers.
3. RISK OF PUBLIC DEBT
This is not the risk of the bank per se, but this is the risk that people take on
themselves while dealing with a bank. Say a person is in the habit of maxing out
his credit card every month and repays the bare minimum then he will spiral into
debt very fast. The habit of borrowing more than a person can afford to repay is
actually a personal bad habit, however, the easy lending policies of banks add fuel
to the fire. This can be damaging to people’s personal finances. It even affects
businesses that take term loans and working capital loans from the banks and
cannot repay it. Comparatively fewer businesses are affected by debt epidemic,
but it still exists.
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STRUCTU
RE OF BANKS IN INDIA
 The Reserve Bank of India:
Reserve Bank of India was established as the central bank of the country on April
1,1935, though the idea existed since 1836. As the Central bank of the country, the
Reserve Bank is the banker to the banks also. The Reserve Bank regulates the entire
banking system of the country.
It regulates the issue of bank notes and the keeping of reserves with a view to secure
monetary stability in India and generally to operate the currency and credit system of
the country to its advantage. It has also been given the power to pursue on
appropriate credit policy. It has control over the cash reserves of the commercial
banks. The Reserve Bank has also been given the power to issue license to the
banking companies in the country.
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The Reserve Bank is required to remove structural instability of the banking system
and to provide leadership to the money market. The Reserve Bank was nationalised
with the passing of an act in 1948. The entire share capital of the bank was acquired
by the Central Government w.e.f. Jan 1,1949 and the Reserve Bank started
functioning as a state-owned and state-controlled institution.
 Scheduled & Non Scheduled Banks:
Scheduled Banks in India refer to those banks which have been included in the Second
Schedule of Reserve Bank of India Act, 1934. Banks not under this Schedule are
called Non-Scheduled Banks. In other words, Banks with a reserve capital of less than
5 lakh rupees qualify as non-scheduled banks. Unlike scheduled banks, they are not
entitled to borrow from the RBI for normal banking purposes, except, in emergency or
“abnormal circumstances.”
Coastal Local Area Bank Ltd (Vijayawada, AP), Capital Local Area Bank Ltd
(Phagwara, Punjab), Krishna Bhima Samruddhi Local Area Bank Ltd
(Mahbubnagar, Telangana), Subhadra Local Area Bank Ltd (Kolhapur,
Maharashtra) are the only Non-Scheduled Banks in India.
Scheduled Banks are further internally classified into Commercial Banks and Co-
operative Banks.
1. Commercial Banks:
A commercial bank is a type of financial institution that provides services such
as accepting deposits, making business loans, and offering basic investment
products to the general public and to companies.
2. Co-operative Banks:
A bank that holds deposits makes loans and provides other financial services
to cooperatives and member-owned organizations.
Commercial Banks Co-Operative Banks
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Registration Commercial Banks are Co-operative Banks are
required to be registered under required to be registered under
Banking Regulation Act, 1949. the Co-operative Societies Act,
of the concerned state.
Function To accept deposits from public To accept deposits from the

for the purpose of lending to members and the public for the
industry and commerce. purpose of providing loans to
farmers and small businessmen
with a motto of service.
Capital/Funds Huge funds are available for Limited funds are available for
Commercial Banks. Co-operative Banks.
Area of They are spread across the Their scope is limited and
Operation country & some banks have restricted to state level.
foreign presence.
Nationalization There are about 21 None of the Co-operative

Nationalized Public sector Banks are Nationalized.
banks.
Merchant Almost all the Commercial Co-operative Banks do not

Banking Service Banks provide Merchant provide Merchant Banking
Banking Services. Services.
Mutual Fund At present Canara Bank, Bank Co-operative Banks do not

of India, State Bank of India, operate mutual funds.
do operate mutual funds.
Main Motive They Operate on Commercial The basis of their operations is

principles in order to earn service to its members and the
profits. society.
Interest % They provide less interest Co-operative Banks provide

compared to Co-operative interest more than commercial
Banks. banks.
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 A merchant bank is historically a bank dealing in commercial loans and
investment. In modern British usage it is the same as an investment bank.
 A mutual fund is a professionally-managed investment scheme, usually run by
an asset management company that brings together a group of people and
invests their money in stocks, bonds and other securities.
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 PUBLIC SECTOR BANKS:
Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is
held by a government. The shares of these banks are listed on stock exchanges. There
are a total of 21 PSBs in India and State Bank of India group.
 In 1969, the Indira Gandhi-headed government nationalized 14 major

commercial banks (Allahabad Bank, Bank of Baroda, Bank of India, Bank of
Maharashtra, Canara Bank, Central Bank of India, Dena Bank, Indian Bank,
Indian Overseas Bank, Punjab & Sind Bank, Punjab National Bank, Syndicate
Bank, UCO Bank, United Bank of India).
 In 1980, a further 6 banks were nationalized (Andhra Bank, Corporation
Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sindh Bank,
Vijaya Bank).
 IDBI Bank is an Indian government-owned financial service company,
formerly known as Industrial Development Bank of India, headquartered in
Mumbai, India. It was established in 1964 and Nationalized in the year 2005.
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1. Central Bank (Reserve Bank of India or RBI) –
The central bank is the apex bank in banking structure of any country. The Central
Bank controls the flow of currency in the economy. It regulates the other banks in the
country. It also works as a banker to the government. The central bank plays a very
important role in the economy of the country. It helps stimulate growth and control
inflation in the country. It does so by controlling the flow of money in the economy.
When other banks are in a problem, they approach the Central Bank for assistance.
Hence it is also called as a banker's bank.
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2. Commercial banks-
Commercial banks are the banks which do the banking business with the aim of
earning profits. These banks play the most important role in modern economic
organisation. Their business mainly consists of receiving deposits, giving loans and
financing the trade of a country. They provide short-term credit, i.e., lend money for
short periods. This is their special feature.
The scheduled commercial banks are those banks which are included in the second
schedule of RBI Act 1934 and which carry out the normal business of banking such as
accepting deposits, giving out loans and other banking services. The major difference
between Scheduled Commercial Banks and Scheduled Cooperative Banks is their
holding pattern, since cooperatives are registered under the Cooperative Societies
Act as cooperative credit institutions.
Scheduled Commercial Banks can be further divided into four groups:
a) Public Sector Banks:

i. SBI & Associates
ii. Nationalized Banks
iii. Other Public Sector Banks
b) Private Banks
c) Foreign Banks
d) Regional Rural Banks
A. Scheduled Commercial Banks (Public Sector)
At present, there are 27 Public Sector Banks in India including SBI (plus its 5
associates) and 19 nationalized banks. Further, there are two banks which have been
categorized by RBI as “Other Public Sector Banks”. IDBI and Bhartiya Mahila Bank
come under this category.
i. SBI & Associates
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State Bank of India with its around 17,000 branches and around 200 foreign offices,
is India’s largest banking and financial services company by assets. With over 2 lakh
employees, SBI is banker to millions of Indians. This bank got birth in the British Era.
Its first parents were three presidency banks viz. Bank of Calcutta (later Bank of
Bengal), Bank of Bombay and the Bank of Madras. In 1921, these there presidency
banks were merged in one entity called “Imperial Bank of India”. The Imperial Bank
of India was nationalized in 1955 and was renamed a State Bank of India. Thus, State
bank of India is the oldest Bank of India. In 1959, there were eight associates of SBI.
The current five associate associate banks of SBI are:
 State Bank of Bikaner & Jaipur
 State Bank of Hyderabad
 State Bank of Mysore
 State Bank of Patiala
 State Bank of Travancore
Apart from the above, the SBI also has seven non-banking subsidiaries viz. SBI
Capital Markets Ltd, SBI Funds Management Pvt Ltd, SBI Factors & Commercial
Services Pvt Ltd, SBI Cards & Payments Services Pvt. Ltd. (SBICPSL), SBI DFHI
Ltd, SBI Life Insurance Company Limited and SBI General Insurance.
ii. Nationalized Banks: There are 19 nationalized banks in India as follows:
 Allahabad Bank
 Andhra Bank
 Bank of Baroda
 Bank of India
 Bank of Maharashtra
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 Canara Bank
 Central Bank of India
 Corporation Bank
 Dena Bank
 Indian Bank
 Indian Overseas Bank
 Oriental Bank of Commerce
 Punjab & Sind Bank
 Punjab National Bank
 Syndicate Bank
 UCO Bank
 Union Bank of India
 United Bank of India
 Vijaya Bank
iii. Other Public Sector Banks
Further, there are two scheduled commercial banks in India, which have been
classified as “other Public Sector Banks”. These are:
 IDBI
 Bhartiya Mahila Bank.
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Scheduled Commercial Banks (Private Banks)
In private sector banks, most of the capital is in private hands. There are two types of
private sector banks in India viz. Old Private Sector Banks and New Private Sector
Banks.
i. Old Private Banks: There are 13 old private sector banks as follows:
 Catholic Syrian Bank
 City Union Bank
 Dhanlaxmi Bank
 Federal Bank
 ING Vysya Bank
 Jammu and Kashmir Bank
 Karnataka Bank
 Karur Vysya Bank
 Lakshmi Vilas Bank
 Nainital Bank
 Ratnakar Bank
 South Indian Bank
 Tamilnad Mercantile Bank
Out of the above banks, the Nainital Bank is a subsidiary of the Bank of Baroda,
which has 98.57% stake in it. Some other old generation private sector banks in India
have merged with other banks. For example, Lord Krishna Bank merged with
Centurion Bank of Punjab in 2007; Sangli Bank merged with ICICI Bank in 2006;
Centurion Bank of Punjab merged with HDFC in 2008.
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ii. New Private Sector Banks
The new private sector banks were incorporated as per the revised guidelines issued
by the RBI regarding the entry of private sector banks in 1993. At present, there are
seven new private sector banks as follows:
 Axis Bank
 Development Credit Bank (DCB Bank Ltd)
 HDFC Bank
 ICICI Bank
 IndusInd Bank
 Kotak Mahindra Bank
 Yes Bank
Apart from the above, there are two banks which are yet to commence operation.
These have obtained ‘in-principle’ licenses from RBI. They are
 IDFC
 Bandhan Bank of Bandhan Financial Services
B. Foreign Banks
As of December 2014, there are 43 foreign banks from 26 countries operating as

branches in India and 46 banks from 22 countries operating as representative offices
in India. Most of the foreign banks in India are niche players. RBI policy towards
presence of foreign banks in India is based upon two cardinal principles viz.
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reciprocity and single mode of presence. more details about regulation of Foreign
Banks by RBI.
C. Regional Rural Banks
Rural Banks were started in 1970s due to the fact that even after nationalization,
there were cultural issues which made it difficult for commercial banks, even under
government ownership, to lend to farmers. Each RRB is owned by three entities with
their respective shares as follows:
i. Central Government → 50%
ii. State government → 15%
iii. Sponsor Bank → 35% T
iv. 3. Development Banks-
v.
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Development banks are those financial institutions which provide term finance,
promote entrepreneurship, enhance organizational effectiveness and upgrade know-
how and do-how. In this article, we discuss the developments banks of India and their
part in shaping the Indian economy.
The notable financial development of the post-independence India has been a huge
growth of development banks in our country. These banks, which are specialized
financial institutions, give the loan or financial help to private business and also
promote economic development. During the US, War Finance (1918) and
Reconstruction Finance Corporation (1932), funded railroads, airlines and exports in
addition to the war effort. Development banks have played a significant role in the
fast growth of Japan post-war. Now development banks formed the main piece of
growth strategy in Indian economy also.
There are a few industrial banks in India. But in some other countries, notably
Germany and Japan, these banks perform the function of advancing loans to industrial
undertakings. Industries require capital for a long period for buying machinery and
equipment. Industrial banks provide this type of Mock capital. Industrial banks have a
large capital of their own. They also receive deposits for longer periods. They are thus
in a position to advance long-term loans.
In India, the Central Government set up an Industrial Finance Corporation of India

(IFC1) in 1948. Its activities have since then been greatly enlarged. Further the States
have also set up State Financial Corporations. The Central Government has also
established the Industrial Credit and Investment Corporation of India (ICICI) and the
National Industrial Development Corporation for the financing and promotion of
industrial enterprises. In 1964 the Industrial Development Bank of India (1DBI) was
established as the apex or top term-lending institution. These new institutions fill
important gaps in our system of industrial finance.
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4. Agricultural or Co-operative Banks-
Structure of Cooperative Banking:
There are different types of cooperative credit institutions working in India. These
institutions can be classified into two broad categories- agricultural and non-
agricultural. Agricultural credit institutions dominate the entire cooperative credit
structure.
I. Agricultural credit institutions
Agricultural credit institutions are further divided into (a) short-term

agricultural credit institutions and (b) long-term agricultural credit institutions.
A. Short-Term Rural Cooperative Credit Structure:
In rural India, there exists a 3-tier short-term rural cooperative structure. Tier-I
includes state cooperative banks (SCBs) at the state level; Tier-II includes central
cooperative banks (CCBs) at the district level; and Tier- III includes primary
agricultural credit societies (PACSs).
1. State Cooperative Banks (SCBs):
State cooperative banks are the apex institutions in the three-tier cooperative credit
structure, operating at the state level. Every state has a state cooperative bank. State
cooperative banks occupy a unique position in the cooperative credit
structure because of their three important functions:
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(a) They provide a link through which the Reserve Bank of India provides credit to
the cooperatives and thus participates in the rural finance,
(b) They function as balancing centers for the central cooperative banks by making
available the surplus funds of some central cooperative banks. The central cooperative
banks are not permitted to borrow or lend among themselves,
(c) They finance, control and supervise the central cooperative banks, and, through
them, the primary credit societies.
The number of state cooperative banks rose from 15 in 1950-51 to 21 in 1960-61 and
to 28 in 1991-92. The loans advanced by these banks increased from Rs. 42 crore in
1950-51 to Rs. 260 crore in 1960-61, and further to Rs. 7685 crore in 1991-92.
2. Central Cooperative Banks (CCBs):
Central cooperative banks are in the middle of the three-tier cooperative credit
structure. Central cooperative banks are of two types:
(a) There can be cooperative banking unions whose membership is open only to
cooperative societies. Such cooperative banking unions exist in Haryana, Punjab,
Rajasthan, Orissa and Kerala.
(b) There can be mixed central cooperative banks whose membership is open to both
individuals and cooperative societies. The central cooperative banks in the remaining
states are of this type. The main function of the central cooperative banks is to provide
loans to the primary cooperative societies. However, some loans are also given to
individuals and others.
For the rehabilitation of the weak Central cooperative banks, the Central Sector Plan
Scheme has been formulated under which semi financial help is given to write off the
bad debts, losses and irrecoverable overdues against small and marginal farmers.
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3. Primary Agricultural Credit Societies (PACSs):
Primary agricultural credit society forms the base in the three-tier cooperative credit
structure. It is a village-level institution which directly deals with the rural people. It
encourages savings among the agriculturists, accepts deposits from them, gives loans
to the needy borrowers and collects repayments.
It serves as the last link between the ultimate borrowers, i.e., the rural people, on the
one hand, and the higher agencies, i.e., Central cooperative bank, state cooperative
bank, and the Reserve Bank of India, on the other hand.
In 1999-2000 there were 88 thousand primary agricultural societies covering more

than 96 per cent rural areas. The membership of these societies was 8.68 crore.
During the past few decades, the Reserve Bank in collaboration with State
governments, has been taking various measures to reorganise the viable primary credit
societies and to amalgamate non-viable societies with large-sized multipurpose
societies.
This work of reorganisation of primary societies into strong and viable units has been
completed in almost all the states except Gujrat, Maharashtra, and Jammu and
Kashmir. It is because of reorganisation that the number of primary societies which
increased from 105 thousand in 1950-51 to 212 thousand in 1960- 61, declined to 92
thousand in 1999-2000.
B. Long-term agricultural credit is provided by the land development banks.
Progress of Cooperative Credit:
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As a result of effective steps taken by the government and the Reserve Bank of India,
the cooperative banking system in India made tremendous progress after
independence. The cooperative credit which was only 3.1 per cent of the total rural
credit in 1951-52, rose to 15.5% in 1961-62 and to 22.7 per cent in 1970-71.
The total amount of short-term credit granted by the cooperatives increased from Rs.
23 crore in 1951 -52 to Rs. 203 crore in 1961-62 and further to Rs. 1425 crore in
1979-80. Thus, during the period of about two decades (i.e., 1960-61 to 1979- 80), the
short-term and medium-term loans increased by more than seven times.
Table 1 shows that cooperative credit increased significantly from Rs. 3874 crore in
1985-86 to Rs. 10479 crore in 1995-96, and further to Rs. 24296 crore in 2002-03.
Short-term cooperative credit increased from Rs. 2787 crore in 1985-86 to Rs. 8331
crore in 1995-96 and to Rs. 20247 crore in 2002-03. Medium-term and long-term
cooperative loans increased from Rs. 1087 crore in 1985-86 to Rs. 2148 crore in
1995-96 and to Rs. 4049 crore in 2002-03.
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Table-2 shows that during 10th Five Year Plan (2002-03 to 2006-07), agricultural
credit from cooperative banks increased from Rs. 23716 crore (34%) to Rs. 33174
crore (22%). In 2009-10, it was Rs. 32925 crore (20%).
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5. SPECIALIZED BANKS
In India, there are some specialized banks, which cater to the requirements and
provide overall support for setting up business in specific areas of activity. They
engage themselves in some specific area or activity and thus, are called specialized
banks.
There are three important types of specialized banks with different functions:
a. Export Import Bank of India (EXIM Bank)

b. Small Industries Development Bank of India
c. National Bank for Agricultural and Rural Development
A. Export Import Bank of India (EXIM Bank)
The Export-Import (EXIM) Bank of India is the principal financial institution in India
for coordinating the working of institutions engaged in financing export and import
trade. It is a statutory corporation wholly owned by the Government of India. It was
established on January 1, 1982 for the purpose of financing, facilitating and
promoting foreign trade of India. This specialized bank grants loans to exporters and
importers and also provides information about the international market. It also gives
guidance about the opportunities for export or import, the risks involved in it and the
competition to be faced, etc.
B. Small Industries Development Bank of India
This specialized bank grant loan to those who want to establish a small-scale business
unit or industry. Small Industries Development Bank of India (SIDBI) was established
in October 1989 and commenced its operation from April 1990 with its Head Office
at Lucknow as a development bank, exclusively for the small scale industries. It is a
central government undertaking. The prime aim of SIDBI is to promote and develop
small industries by providing them the valuable factor of production finance. Many
institutions and commercial banks supply finance, both long-term and short-term, to
small entrepreneurs. SIDBI coordinates the work of all of them.
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C. National Bank for Agricultural and Rural Development
It was established on 12 July 1982 by a special act by the parliament. This specialized
bank is a central or apex institution for financing agricultural and rural sectors. It can
provide credit, both short-term and long-term, through regional rural banks. It
provides financial assistance, especially, to co-operative credit, in the field of
agriculture, small-scale industries, cottage and village industries handicrafts and allied
economic activities in rural areas
6. REGIONAL RURAL BANKS
The main aim of Regional Rural Banks (RRBs) is to provide banking services in rural
areas. These banks were established mainly to support the weaker and lesser fortunate
section of the society like marginal farmers, laborers, small enterprises etc. they
mainly operate at regional levels at different states and may have branches in urban
areas as well. Their main features are:
1. Supporting rural and semi-urban region financially
2. Pension distribution and Wage disbursement of MGNREGA workers
3. Added banking facilities like locker, cards-debit, and credit
7. EXCHANGE BANKS:
These banks are mainly concerned with the financing of foreign trade. The main
function of such banks is to provide a facility for transfer of money from one country
to another. Exchange banks finance mostly the foreign trade of a country. Their main
function is to discount, accept and collect foreign bills of exchange. They also buy
and sell foreign currencies and help businessmen to convert their money into any
foreign money they need. Their share in the internal trade of a country is usually
small. In addition, they carry on ordinary banking business too. If an exporter in
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Bangalore requires finance to move goods from Bangalore to Bombay port and from
there to New York, he may enter into agreement with an exchange bank for financing
the movement of his goods. Example, Bank of America
8. INDIGENOUS BANKERS
These are private lenders who charge a very high rate of interest on loans given by
them. They are private money lenders and are not covered by any act. Such bankers
do not follow any rules or documentation like established commercial banks.
According to the Indian Central Banking Enquiry Committee, an indigenous banker
/ bank has been defined as an individual or private firm which receives deposits,
deals in hundies or engages itself in lending money". They have been operating in
different parts of the country with varying names. For example, in Chennai city they
are called as "Chettys", in Northern India they are called as "Shahukars", "Khatries"
and "Mahajans"; in Mumbai city they are known as "Marwaris" and "Seths". Some
of these indigenous bankers deal in banking business; and some indigenous bankers
combine their banking business with trade. In addition, they also directly or
indirectly participate in speculative activities. The primary source of their capital is
their own capital or/and that of their family members' or relatives'. These bankers
were not regulated. Further, the Reserve Bank of India does not control them. The
latest and detailed statistics about their activities are not available to access their
role in the banking industry.
9. SAVINGS BANK
The main aim of the Savings Bank is to cultivate a habit of saving among people.
These banks perform the useful service of collecting small savings. Commercial
banks too run “savings departments” to mobilise the savings of men of small means.
The idea is to encourage thrift and discourage hoarding. Post Office Saving Banks in
India are doing this useful work. For example, Post Office savings bank.
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10. INVESTMENT BANKS
These are financial institutions that provide financial and advisory assistance to their
customers. Their clients can be individuals, businesses, or government
organizations. They assist their customers to raise funds when required. These banks
act as the underwriters for their customers when they want to raise capital by issuing
securities. In some cases, they also help their customers to issue securities.
When there is a merger or an acquisition, they provide their customers with the
necessary support like marketing, foreign trading, foreign exchange, sale of equities,
fixed income instruments etc. Apart from raising capital, these banks render
valuable financial advise to their customers and various kinds of businesses. Some
examples of these banks include, Bank of America, Barclays Capital, Citi Bank,
Deutsche Bank etc.
11. SMALL FINANCE BANKS:
These banks cater to a niche segment in the society and help with financial inclusion
of sections which are not taken care of by other leading banks. They look after micro
industries, unorganized sector, small farmers etc. RBI and FEMA are the governing
bodies of these banks. These are:
1. Au Small Finance Bank

2. Capital Small Finance Bank
3. Fincare Small Finance Bank
4. Equitas Small Finance Bank
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5. Esaf Small Finance Bank
6. Suryoday Small Finance Bank
7. Ujjivan Small Finance Bank
8. Utkarsh Small Finance Bank
9. Northeast Small Finance Bank
10. JANA SMALL FINANCE BANK
12. PAYMENTS BANK
Payments banks is a new model of banks conceptualised by the Reserve Bank of

India (RBI). These banks can accept a restricted deposit, which is currently limited
to ₹100,000 per customer and may be increased further. These banks cannot issue
loans and credit cards. Both current account and savings accounts can be operated by
such banks. Payments banks can issue services like ATM cards, debit cards, net-
banking and mobile-banking.
Out of the 41 applicants, the list of RBI approved for provisional payments bank
licenses are:
1. Aditya Birla Nuvo Limited

2. Airtel M Commerce Services Limited
3. Cholamandalam Distribution Services Limited
4. India Department of Posts
5. Fino PayTech Limited
6. National Securities Depository Limited
7. Reliance Industries Limited
8. Shri Dilip Shantilal Shanghvi
9. Paytm Payments Bank Limited
10. Tech Mahindra Limited
11. Vodafone m-pesa Limited
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The following is the list of active payments banks:
1. Airtel Payments Bank

2. India Post Payments Bank
3. Fino Payments Bank
4. Jio Payments Bank
5. Paytm Payments Bank
6. NSDL Payments Bank
Bharti Airtel launched India's first live payments bank named Airtel payment bank in
March 2017. Paytm payment bank, India Post payment bank ,Fino Payment bank and
Aditya Birla Payment Bank have also launched services. Cholamandalam Distribution
Services, Sun Pharmaceuticals and Tech Mahindra have surrendered their licenses.
Aditya Birla have discontinued their services from 26 July 2019.
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2) RESEARCH AND MATHODOLOGY:-
Objectives of study:-
The Purpose of study is to explore the basix dimensions of service quality offered by
Indian banking and its impacts on Individual customers by using the gap between the
customer expectations and perceptions regarding the service offered by banking
industry,
To understand the perception of the employees of public, private and foreign banks
and find out challenges face by them to deliver expected services.
To evaluate the performance of public , private and foreign bank on the basis of
quality of service.
To make the suggestion for improvement of quality of service in public , private and
foreign bank.
Research Design:-
Secondary data was collected from various websites and books.
Limitations of Study:-
Lack of money,
Lack of time,
Lack of data,
Leak of data of Various.
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Sources of Data:-
https://www.gktoday.in/gk/scheduled-commercial-banks-of-india/
http://www.economicsdiscussion.net/india/development-banks/examples-of-
development-banks-in-india/31373
http://www.yourarticlelibrary.com/banking/development-banks-in-india-explained-
with-diagram/40836
https://indiasahayi.com/development-banks-of-india/
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REVIEW OF LITERATURE:-
ADAM SMITH AND MODERN BANKING
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Banking was already well established in the British Empire when Adam Smith came
along in 1776 with his "invisible hand" theory. Empowered by his views of a self-
regulated economy, moneylenders and bankers managed to limit the state's
involvement in the banking sector and the economy as a whole. This free
market capitalism and competitive banking found fertile ground in the New World,
where the United States of America was getting ready to emerge.
In the beginning, Smith's ideas did not benefit the American banking industry. The
average life for an American bank was five years, after which most bank notes from
the defaulted banks became worthless. These state-chartered banks could, after all,
only issue bank notes against gold and silver coins they had in reserve.
A bank robbery meant a lot more then than it does now, in our age of deposit
insurance and the Federal Deposit Insurance Corporation (FDIC). Compounding these
risks was the cyclical cash crunch in America.
Alexander Hamilton, the secretary of the Treasury, established a national bank that
would accept member bank notes at par, thus floating banks through difficult times.
This national bank, after a few stops, starts, cancellations and resurrections, created a
uniform national currency and set up a system by which national banks backed their
notes by purchasing Treasury securities, thus creating a liquid market. Through the
imposition of taxes on the relatively lawless state banks, the national banks pushed
out the competition.
The damage had been done already, however, as average Americans had already
grown to distrust banks and bankers in general. This feeling would lead the state of
Texas to actually outlaw bankers—a law that stood until 1904.
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PROFILE OF COMPANY:-
 HDFC Bank Profile

HDFC Bank was incorporated in August 1994. As of September 30, 2019, the Bank
had a nationwide distribution network 5,314 branches and 13,514 ATM's in 2,768
cities/towns.
The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of RBI's liberalisation of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC
Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995.
 Businesses
HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional / branch banking on the
retail side. The bank has three key business segments:
 Wholesale Banking
The Bank’s target market is primarily large, blue-chip manufacturing
companies in the Indian corporate sector and to a lesser extent, small & mid-
sized corporates and agri-based businesses. For these customers, the Bank
provides a wide range of commercial and transactional banking services,
including working capital finance, trade services, transactional services, cash
management, etc. The bank is also a leading provider of structured solutions,
which combine cash management services with vendor and distributor finance
for facilitating superior supply chain management for its corporate customers.
Based on its superior product delivery / service levels and strong customer
orientation, the Bank has made significant inroads into the banking consortia
of a number of leading Indian corporates including multinationals, companies
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from the domestic business houses and prime public sector companies. It is
recognised as a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock exchange
members and banks.
 Treasury
Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities,
and Equities. With the liberalisation of the financial markets in India,
corporates need more sophisticated risk management information, advice and
product structures. These and fine pricing on various treasury products are
provided through the bank’s Treasury team. To comply with statutory reserve
requirements, the bank is required to hold 25% of its deposits in government
securities. The Treasury business is responsible for managing the returns and
market risk on this investment portfolio.
 Capital Structure
As on 30-June-2019, the authorized share capital of the Bank is Rs. 650 crore. The
paid-up share capital of the Bank as on the said date is Rs. 546,56,24,542 /- which is
comprising of 273,28,12,271 equity shares of the face value of Rs 2/- each. The
HDFC Group holds 21.31% of the Bank's equity and about 18.81% of the equity is
held by the ADS / GDR Depositories (in respect of the bank's American Depository
Shares (ADS) and Global Depository Receipts (GDR) Issues). 31.37% of the equity is
held by Foreign Institutional Investors (FIIs) and the Bank has 6,53,843 shareholders.
The shares are listed on the BSE Limited and The National Stock Exchange of India
Limited. The Bank's American Depository Shares (ADS) are listed on the New York
Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository
Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No
US40415F2002.
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 Amalgamation of Times Bank & CBoP with HDFC Bank
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank
was formally approved by Reserve Bank of India to complete the statutory and
regulatory approval process. As per the scheme of amalgamation, shareholders of
CBoP received 1 share of HDFC Bank for every 29 shares of CBoP.
The amalgamation added significant value to HDFC Bank in terms of increased

branch network, geographic reach, and customer base, and a bigger pool of skilled
manpower.
In a milestone transaction in the Indian banking industry, Times Bank Limited

(another new private sector bank promoted by Bennett, Coleman & Co. / Times
Group) was merged with HDFC Bank Ltd., effective February 26, 2000. This was the
first merger of two private banks in the New Generation Private Sector Banks. As per
the scheme of amalgamation approved by the shareholders of both banks and the
Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank
for every 5.75 shares of Times Bank.
 Distribution Network
HDFC Bank is headquartered in Mumbai. As of September 30, 2019, the Bank's

distribution network was at 5,314 branches across 2,768 cities. All branches are
linked online on a real-time basis. Customers across India are also serviced through
multiple delivery channels such as Phone Banking, Net Banking, Mobile Banking,
and SMS based banking. The Bank's expansion plans take into account the need to
have a presence in all major industrial and commercial centers, where its corporate
customers are located, as well as the need to build a strong retail customer base for
both deposits and loan products. Being a clearing / settlement bank to various leading
stock exchanges, the Bank has branches in centres where the NSE / BSE have a strong
and active member base. The Bank also has a network of 13,514 ATMs across India.
HDFC Bank's ATM network can be accessed by all domestic and international Visa /
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MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit /
Charge cardholders.
 Management
HDFC Bank's Board of Directors comprises eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC Ltd. are also on the Board.
Various businesses and functions in the Bank are headed by senior executives with
work experience in India and abroad. They report to the Managing Director. The
Bank is focussed on recruiting and retaining the best talent in the industry as it
believes that its people are a competitive strength.
 Technology
HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. All the bank’s branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class bank.
In terms of core banking software, the Corporate Banking business is supported by
Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions
Ltd. The systems are open, scaleable and web-enabled.
The Bank has prioritised its engagement in technology and the internet as one of its
key goals and has already made significant progress in web-enabling its core
businesses. In each of its businesses, the Bank has succeeded in leveraging its market
position, expertise and technology to create a competitive advantage and build market
share.
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 Awards and Accolades :
HDFC Bank began operations in 1995 with a simple mission: to be a "World-
class Indian Bank". We realized that only a single-minded focus on product
quality and service excellence would help us get there. Today, we are proud to
say that we are well on our way towards that goal.
Over the years, the Bank has received recognition and awards from several leading
organizations and publications, both domestic and international.
 HDFC BANK Interest Rate on Saving Deposit :-
Current interest rate offered on funds in a Savings Account is 4.00%

per annum. Interest will be credited to a customer's savings account on a half yearly
basis. For any updates on the interest rates offered, kindly contact one of HDFC
Bank's branches.
 HDFC BANK Interest Rate on Fixed Deposit:
HDFC bank offers 7.25% Interest rate on Fixed Deposit.
Axis Bank
Axis Bank is the third largest private sector bank in India. The Bank offers the
entire spectrum of financial services to customer segments covering Large and Mid-
Corporates, MSME, Agriculture and Retail Businesses. ... Axis Bank is one of the
first new generation private sector banks to have begun operations in 1994.
The Bank has a large footprint of 4,050 domestic branches (including extension
counters) with 11,801 ATMs & 4,917 cash recyclers spread across the country as on
31st March, 2019. The overseas operations of the Bank are spread over nine
international offices with branches at Singapore, Hong Kong, Dubai (at the DIFC),
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Colombo and Shanghai; representative offices at Dhaka, Dubai, Abu Dhabi and an
overseas subsidiary at London, UK. The international offices focus on corporate
lending, trade finance, syndication, investment banking and liability businesses.
Axis Bank is one of the first new generation private sector banks to have begun
operations in 1994. The Bank was promoted in 1993, jointly by Specified
Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India), Life
Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC),
National Insurance Company Ltd., The New India Assurance Company Ltd., The
Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The
share holding of Unit Trust of India was subsequently transferred to SUUTI, an entity
established in 2003.
With a balance sheet size of Rs. 8,00,997 crores as on 31st March 2019, Axis Bank
has achieved consistent growth and with a 5 year CAGR (2013-14 to 2018-19) of
16% in Total Assets, 14% in Total Deposits, 17% in Total Advances
Business:-
The Retail Banking segment continues to be a key driver of the Bank’s overall growth
strategy. It encompasses a wide array of products and services across deposits, loans,
investments and payment solutions which are delivered through multiple channels to
the Bank’s customers. The Bank has over the years developed long-term relationships
with its customers by being their preferred financial solutions partner on account of its
excellent customer delivery through insights and superior services. The Bank has also
succeeded in making banking simple for masses by smart use of technology. The
Bank has always focused on meeting the financial needs of its customers by providing
high quality products and services through regular customer engagement in
convenient manner.
During the year, the Bank continued to focus on increasing its retail deposits base,
particularly demand deposits. Savings Bank deposits crossed Rs. One lac crores and
have grown at a Compounded Annual Growth Rate (CAGR) of 21% over the last five
years. As on 31 March, 2016, the Bank had over 172 lac savings account customers,
registering a growth of 15%. As on 31 March, 2016, the retail term deposits grew
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14.42% and stood at Rs. 121,955 crores, constituting 64.69% of the total term
deposits compared to 59.86% last year. The Retail Assets portfolio has grown at a
Compounded Annual Growth Rate (CAGR) of 31% over the last five years. The Bank
continued to increase its share of retail loans to total advances which stood at 41%
compared to 29% in March 2012. Including SME loans that qualify as regulatory
retail, the share of retail loans to total loans would be 46%. The retail loans portfolio
continues to be focused on secured products, predominantly mortgages. Secured loan
products accounted for 86% of retail loans, of which Home loans accounted for 45%,
retail agricultural loans accounted for 17%, auto loans 9%, loans against property 8%,
personal loans and credit cards were 11%, while non-schematic loans comprising loan
against deposits and other securities accounted for 10%.
Corporate banking:-
The corporate banking space in India is recovering from its own set of challenges.
The issues at hand on the corporate side range from excess capacities in many sectors
to increase in leverage on corporate balance sheets. Resolving the asset quality issues
remain a top priority for the Government and the Regulator to get back to a
sustainable economic growth path. Asset quality recovery is linked to how the
economy turns around and it will happen gradually but the silver lining stems from
the fact that, while the high debt is concentrated in only a few sectors, the balance
sheets of the other segments and sectors remain relatively robust. However, despite
these challenges the private sector banks have continued to gain market share by
delivering above industry growth rates. This trend is likely to continue in the near
future; however the preference is for a much healthier and well capitalized banking
sector for overall swifter revival in the country’s economic growth.
Certain policy initiatives taken by the Government during the year has resulted in a
minor uptick in the execution of the existing projects which were stalled due to
various policy and regulatory constraints. Reserve Bank of India also introduced
certain guidelines more popularly known as 5/25 which enables long term financing
of projects by Banks. However, the results of these initiatives are yet to materialize
fully and the demand and delivery of credit is yet to witness a healthy uptrend.
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Now, focusing on the Bank’s strategies, the corporate client relationship model
introduced in earlier years has been further entrenched. The Bank continued its focus
on transactional business comprising of trade finance, cash management, remittances
etc. and has further strengthened its processes and controls apart from investing in
technology platforms to enable seamless transaction experience on digital channels
introduced by the Bank for its corporate clients. This has enabled an increase in the
Bank’s wallet share in a wide range of banking products with its corporate customers.
The Bank’s corporate advances portfolio grew by 22% during the fiscal year 2016.
The growth has been on account of cost efficient financing provided to highly rated
corporates, with strong group financials, that are new relationship additions to the
Bank’s franchise. Given that the focus remains on highly rated corporates,
approximately 79% of new sanctions in the corporate book are to companies rated ‘A’
and above. Presently, 63% of outstanding corporate loans are to companies rated ‘A’
and above. Also, the Bank’s strategy of sectoral approach to credit continued where
the focus was on identifying sector-specific opportunities and risks. Industry, group
and company specific exposure limits have been defined by the Bank and continuous
monitoring is undertaken with a view to identify risk and take proactive decisions to
mitigate them. Portfolio diversification is also ensured through the sectoral credit
approach.
The Bank has disclosed a watch list of `22,628 crores which is assessed to be the key
pool of potential future stress in the corporate lending book over the next two years.
Iron and Steel and Power sectors comprise 47% of this list. The Bank would maintain
adequate provision coverage levels and also build up its contingent provision buffers.
The Bank has been cautious in its lending practices, especially in the last three years
by focussing on higher rated corporates. However, due to the significant price and
demand correction witnessed globally in the metal and minerals sector, the outlook
for the sector remains cautious. A major proportion of the Bank’s these exposures
relate to large integrated players with stronger balance sheets that are better equipped
to meet the challenges currently witnessed by the sector. More recently price volatility
across commodities appears to have stabilized and suggests mild recovery prospects.
The bank has maintained its leadership position in the loan syndication market and
syndicated an aggregate amount of `22,613 crores (previous year `15,930 crores) by
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way of rupee loans and USD 1.93 billion (previous year USD 1.55 billion) of foreign
currency loan during the year 2015-16.
Source: Annual Report 2015-2016
INTERNATIONAL BANKING:-
The International Banking strategy of the Bank continues to revolve around

leveraging its relations with corporates in India and Non-resident Indians, while
providing banking solutions at overseas centres. The Bank, through its international
operations, leverages the skills and strengths built in its domestic operations. It also
widens the horizon of the product offerings covering a varied spectrum of corporate
and retail banking solutions across client segments in various geographies. The Bank
has established its presence at strategic international financial hubs in seven countries.
The global landscape of the Bank consists of five branches at Singapore, Hong Kong,
Dubai International Financial Centre (DIFC) – UAE, Colombo (Sri Lanka) and
Shanghai (China); three representative offices at Dubai, Abu Dhabi (both in UAE)
and Dhaka (Bangladesh); and an overseas banking subsidiary in the United Kingdom.
The representative office at Dhaka was inaugurated during the current financial year.
The Bank continues to offer corporate banking, trade finance, treasury and risk
management solutions through the branches at Singapore, Hong Kong, DIFC,
Shanghai and Colombo, and also retail liability products from its branches at Hong
Kong and Colombo. Further, the Bank’s Gulf Co-operation Council (GCC) initiatives
in the form of representative offices in Dubai and Abu Dhabi, and alliances with
banks and exchange houses in the Middle East provide support for leveraging the
business opportunities emanating from the large NRI diaspora present in these
countries. Through the Representative Office at Dhaka, the Bank aims to promote its
trade finance business arising between Bangladesh and India & other Asian financial
markets where Bank has presence. Secondary market risk participations, pertaining to
Bangladeshi banks, being presently done by the foreign branches of the Bank, will
also be captured at the primary level itself enabling the Bank to move up the value
chain and enhance its risk return.
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 TRANSACTION BANKING:-
A new business unit ‘Transaction Banking’ was formed in April 2015 to focus on the
flow businesses within Corporate Banking, i.e. current accounts, collection &
payments solutions, forex, trade services and capital market solutions. This
restructuring was done to enable the Bank to offer a seamless experience to its
customers, for all their requirements through a dedicated relationship manager
supported by a customer service team. The key financial deliverables of the business
are current account float balances and fee income.
Current account balances grew from `56,108 crores as on 31 March, 2015 to `63,652
crores as on 31 March, 2016, a year on year growth of 13%. Daily average balances in
current accounts grew 16%, from `34,634 crores in fiscal 2015 to `40,140 crores in
fiscal 2016. The trade scenario for the economy remained depressed with decline in
both imports and exports for several months in a row.
The key themes that the business has been focusing on are deepening share of wallet
for existing clients, offer digital solutions to customers and enhance customer service.
The relationship managers and branches are continuously equipped with analytical
tools and learning interventions to help cross-sell the large suite of transaction
banking products to customers. The Bank also launched mobile apps for the entire
gamut of transaction banking requirements, including payments, forex rate bookings
and trade finance transactions. A comprehensive capability enhancement programme
was undertaken to enable the Bank to enhance the footprint of B Category branches
(branches authorized to handle forex business) from 214 at the beginning of the year
to 475 as at the end of the year. The Bank has also taken various steps to strengthen
internal controls and adhere to emerging regulatory requirements.
Source: Annual Report 2015-2016
 TREASURY:-
The Bank’s Treasury business comprises Asset Liability Management (ALM),

Correspondent banking activitiy, Foreign exchange and derivatives trading, bullion
business, Investments in SLR and Non-SLR securities, and arranger ship business.
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The ALM group manages the regulatory requirements of CRR, SLR and Liquidity
Coverage Ratio (LCR). The group also manages the liquidity, interest rate and
currency risks in the Bank’s portfolio, under the guidance of the Asset Liability
Committee (ALCO) of the Bank. ALM is responsible for overall liquidity
management of the domestic book and longer term liquidity management of the
overseas branches across geographies.
The Global Financial Institutions Division (GFID) within Treasury focuses on

developing and maintaining business relationships with Financial Institutions (FIs)
across the globe and holds the primary responsibility for developing various business
opportunities emanating from such relationship. The Group facilitates institutional
fund raising and cross-border trade finance business with specific focus on inbound
trade and payments flows into India. GFID forges long term strategic ties with
identified Banks/ FIs in areas ranging from corporate referrals, payments, trade
finance to lending solutions. The Bank has taken steps to enhance the overall FI
Proposition including Vostro and ACU Accounts, and Client Experience through
initiatives like transaction automation, dedicated operations support and customer
service support.
 INFORMATION TECHNOLOGY:-
The IT team of the Bank in partnership with its trusted and experienced vendors has
been instrumental in making the innovations and aspirations of high quality digital
products and services from the various businesses and other operations teams a
reality. The sheer quality and quantity of awards received by the Bank in this space
substantiates the consistent improvement in performance. The Bank has launched
some unique products and processes this year like LIME, 24X7 instant Personal Loan,
new tablet based Loan Origination System, various branch automation projects,
FxConnect Mobile for its corporate customers.
Harnessing the technology wave in Banking, Axis Bank has undertaken various
technology driven business initiatives that reinforce the Bank’s commitment to
making banking simple and hassle-free for its customers. The Bank has focused on
providing customers a seamless digital payment and banking experience. LIME’s
digital platform has been at the forefront of the digital innovation initiatives from
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Axis Bank. The inception phase of LIME focuses on easy peer-to-peer payments,
seamless shopping and payments experience, end-to-end digital banking platform and
simple personal finance management tools with tailored insights. LIME has helped
the bank to capture a huge customer base outside its existing customer base.
A new tablet based Loan Origination system has been developed to digitize the entire
lending process of MicroFinance business. The application includes different modules
for on-boarding of villages by conducting village surveys, on-boarding of applicants,
conducting group trainings and tests, and complete the disbursement. The tablet
application is integrated with the bank's underwriting hub for real time
approvals/rejections based on bureau checks and underwriting rules. Tablet and
desktop based new workflow has been designed as a part of the mobility initiatives for
Rural Lending.
 LENDING TO SMALL AND MEDIUM ENTERPRISES:-
Axis Bank plays an important role in supporting the Small and Medium Enterprise
(SME) businesses across the nation. The SME business of the Bank comprises of
three business groups: Medium Enterprises (MEG), Small Enterprises (SEG) and
Supply Chain Finance (SCF) which as on 31 March, 2016 comprised 40%, 46% and
14% of total SME advances respectively. The Bank extends working capital, term
loan, trade finance and project finance facilities to SMEs for their various financing
needs. The wide range of fast-track and customized products available in the Bank’s
product suite ensure that customers get adequate finance best suited for their
businesses. During FY16, various products and process changes were implemented.
“SME Dealer Power” launched during FY16 offers comprehensive financing facility
to the dealers of various companies in the country for efficient management of
working capital and other business requirements. Another newly launched product
“Exim Power” offers financing facilities to SMEs engaged in export/import activities
and showcase Bank’s commitment towards “Make in India” initiative. The Bank has
also adopted an industrial cluster based financing as an important strategy towards
ensuring manufacturing credit flow in SME sector. As part of this initiative, important
clusters have been identified across various sectors and awareness has been created
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within the Bank’s teams to focus more on these identified clusters in the coming
years.
The Bank continues to support SMEs not only through innovative financial products
but also by extending non-financial services to grow their business. Last year, the
bank had initiated a road show series titled “Evolve” for capacity building of SMEs
which attracted lot of appreciation from the participants. This year also, “Evolve” was
conducted on a bigger platform covering more number of cities and thus educating
larger audience in the SME segment. This capacity building initiative is also a unique
step towards further facilitating and contributing to the ‘Make in India’ initiative.
 AXIS BANK INTEREST ON SAVING BANK DEPOSIT:-
Current interest rate offered on funds in a Savings Account is 3.50% per annum, if
the balance in the account is less than Rs. 50 lakh. For balance of Rs. 50 lakh to less
than Rs 100 crore then the rate of interest provided is 4.00% p.a.; for balance of Rs.
100 crore and above 6.00% p.a.
Axis Bank Savings Account Balance Rate of Interest*

Less than Rs. 50 lakh 3.50% p.a.
Rs 50 lakh to less than Rs. 100 crore 4.00% p.a.
Rs 100 crore and above 6.00% p.a.
 AXIS BANK INTEREST ON FIXED DEPOSIT:-
Axis Bank Fixed Deposit Rates

Tenure FD Rates Senior Citizen FD Rates
7 days to 14 days 3.50% 3.50%
15 days to 29 days 4.25% 4.25%
30 days to 45 days 5.00% 5.00%
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46 days to 60 days 5.50% 5.50%
61 days to 3 months 5.50% 5.50%
90 days to 119 days 5.50% 5.50%
4 months to 5 months 5.50% 5.50%
5 months to 6 months 5.50% 5.50%
6 months to 8 months 29 days 5.85% 6.10%
11 months 25 days to 11 months 29 days 6.50% 6.75%
18 months to 2 years 6.65% 7.30%
30 months to 3 years 6.70% 7.20%
1 year to 1 year 24 days 6.40% 7.05%
1 year 25 days to 12 months 29 days 6.50% 7.15%
2 years to 30 months 6.70% 7.35%
3 years to 4 years 364 days 6.70% 7.20%
5 years to 10 years 6.70% 7.20%
The above rates are applicable for deposits of below Rs.
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DATA ANALYSIS:-
The following are the 5 years profit and loss a/c and Balance sheet of AXIS and
HDFC bank.
BALANCE SHEET AS AT 31 MARCH, 2015
Particulars As at 31-03-
2015
(` in Thousands)
CAPITAL AND LIABILITIES
Capital 4,741,044
Reserves & Surplus 442,024,106
Deposits 3,224,419,369
Borrowings 797,582,689
Other Liabilities and Provisions 150,556,734
TOTAL 4,619,323,942
ASSETS
Cash and Balances with Reserve Bank of India 198,188,397
Balances with Banks and Money at Call and Short 162,801,921

Notice
Investments 1,323,428,317
Advances 2,810,830,297
Fixed Assets 25,143,105
Other Assets 98,931,905
TOTAL 4,619,323,942
Contingent Liabilities 5,911,749,072
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Bills for Collection 490,086,861
Significant Accounting Policies and Notes to

Accounts
Schedules referred to above form an integral part of

the Balance Sheet
Banlance sheet as at 31 March, 2016
Particulars As at 31-03-2016
Capital and Liabilities
Capital 4,765,664
Deposits 3,579,675,603
Total 5,254,676,181
Assets
Cash and Balances with Reserve Bank 223,611,495
of India
Balances with Banks and Money at 109,642,909
Call and Short Notice
Advances 3,387,737,229
Total 5,254,676,181
Significant Accounting Policies and
Notes to Accounts
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Schedules referred to above form an integral part of the Balance Sheet
Banlance sheet as at 31 March, 2017

Capital 4,790,072
Deposits 4,143,787,878
Borrowings 1,050,308,694
Total 6,014,676,703
Assets
Cash and Balances with Reserve Bank of 308,579,390
India
Balances with Banks and Money at Call 193,982,441
and Short Notice
Advances 3,730,693,495
Total 6,014,676,703
Significant Accounting Policies and Notes
to Accounts
Schedules referred to above form an integral part of the
Balance Sheet
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BALANCE SHEET RATIOS :-
1) Financial Leverage Equity Multipliyer= Total Capital or Assets

Net worth
4,619,323,942
A) 31st March, 2015 = =10.33949032
446,765,150
B) 31st March, 2016 = 5,254,676,181 =9.883730543
531649073
C)31st March, 2017 = 6,014,676,703 =10.78623124

557625418
2) Return on Assets = Net Profit

Total Assets
A) 31st March, 2015 73,578,223 = = 0.015928353

4,619,323,942
B) 31st March, 2016 = 82,236,628 = 0.01565018

5,254,676,181
36,792,792
C) 31st March, 2017 = = 0.006117169
6,014,676,703
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HDFC BANK
BALANCE SHEET AS AT 31ST MARCH 2015
Capital 5012991
Reserves & Surplus 626527660
Minority Interest 1616274
Deposits 4502836477
Borrowings 594782505
Other Liabilities and Provisions 3401891270
Total 6070965177
Assets
Cash and balances with Reserve Bank of India
Balances with banks and money at call and short 275222870

notice
90,041,344
Investment
1,642,726,09
Advances
3,834,079,720
Fixed assets
32,249,444
Other assets
196,645,706
Total 6070965177
6070965177
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BALANCESHEET AS AT 31ST MARCH 2016
Capital 5,056,373
Deposits 5,464,241,920
Total 7,088,455,651
Assets 300,583,087
Cash and balances with Reserve Bank of India 88,605,293
Investment 1,638,857,691
advances 4,645,939,589
Fixed assets 33,431,573
Other assets 381,038,418
Total 7,088,455,651
BALANCESHEET AS AT 31ST MARCH 2017
Capital 5,125,091
Deposits 6,436,396,563
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Total 8,638,401,917
Assets
Cash and balances with Reserve Bank of India 489520951
Investment 2,144,633,366
advances 5,545,682,021
Fixed assets 36,267,379
Other assets 422,298,200
Total 8,638,401,917
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BALANCE SHEET RATIOS :-
1) Financial Leverage Equity Multipliyer = Total Capital or Assets

Net worth
A) 31st March, 2015 = 6,070,965,177 = 9.61294442

631,540,651
7,088,455,651
B) 31st March, 2016 726,777,647 = = 9.753265913
C) 31st March, 2017 8,638,401,917 = = 9.655907596

894,623,507
2) Return on Assets = Net Profit

Total Assets
A) 258,963,586 31st March, 2015 = =
0.042656082 6,070,965,177
B) 31st March, 2016 = 309,240,075 = 0.043625874

7,088,455,651
C) 31st March, 2017 = 380,773,303 = 0.044079137

8,638,401,917
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Financial Leverage Equity Multipliyer= Total Capital or Assets

Net worth
Financial 2015 2016 2017

Leverage Equity
multiplyer
Axis 10.33949032 9.883730543 10.78623124
HDFC 9.61294442 9.753265913 9.655907596
It is calculated by dividing the company's total assets by the total shareholder equity.
The equity multiplier is also used to indicate the level of debt financing that a firm
has used to acquire assets and maintain operations. ... The company may also be
unable to obtain further financing to expand its market reach.
Return on Assets = Net Profit

Total Assets
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Return on 2015 2016 2017
Assets
Axis 0.015928353 0.01565018 0.006117169
HDFC 0.042656082 0.043625874 0.044079137
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PROFIT AND LOSS A/C FOR 3 YEARS OF AXIS AND HDFC BANK
Profit And Loss A/C For The Year Ended 31st March 2015
I INCOME
Interest earned 354,785,977
Other income 83,650,458
TOTAL 438,436,435
II EXPENDITURE
Interest expended 212,544,595
Operating expenses 92,037,456
Provisions and contingencies 60,276,161
TOTAL 364,858,212
III NET PROFIT FOR THE YEAR (I - II) 73,578,223
IV AMOUNT AVAILABLE FOR APPROPRIATION 208,592,684
V APPROPRIATIONS :
Transfer to Statutory Reserve 18,394,555
Transfer to Investment Reserve 254,885
Transfer to Capital Reserve 631,421
Transfer to/(from) Reserve Fund (12,664)
Proposed dividend (includes tax on dividend) 13,089,573
Balance in Profit & Loss Account carried forward 176,234,914
TOTAL 208,592,684
VI EARNINGS PER EQUITY SHARE
(Face value `2/- per share) (Rupees)

Basic 31.18
Diluted 30.85
I Income
Total 503,595,008
II Expenditure
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Total 421,358,380
III Net Profit For The Year (I - II) 82,236,628
Balance in Profit & Loss Account brought forward from 176,234,914
previous year
IV Amount Available For Appropriation 258,471,542
V Appropriations:
Transfer to/(from) Investment Reserve (418.074)
Transfer to Capital Reserve 620.406
Transfer to/(from) Reserve Fund 17.409
Proposed dividend (includes tax on 28.085
dividend)
Total 258,471,542
VI Earnings Per Equity Share
Basic 34.59
Diluted 34.40
I Income
Total 562,334,686
II Expenditure
Total 525,541,894
III Net Profit For The Year (I - II) 36,792,792
Balance In Profit & Loss Account Brought Forward From 237,664,559
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Previous Year
IV Amount Available For Appropriation 274,457,351
V Appropriations:
Transfer to/(from) Investment Reserve (871.671)
Transfer to Capital Reserve 7,555,740
Transfer to/(from) Reserve Fund 17.522
Dividend paid (includes tax on 14,074,287
dividend)
Total 274,457,351
VI Earnings Per Equity Share
Basic 15.40
Diluted 15.34
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CONCLUSION
Banking systems have been with us for as long as people have been using money.
Banks and other financial institutions provide security for individuals, businesses and
governments, alike. Let's recap what has been learned with this tutorial:
In general, what banks do is pretty easy to figure out. For the average person banks
accept deposits, make loans, provide a safe place for money and valuables, and act as
payment agents between merchants and banks.
Banks are quite important to the economy and are involved in such economic
activities as issuing money, settling payments, credit intermediation, maturity
transformation and money creation in the form of fractional reserve banking.
To make money, banks use deposits and whole sale deposits, share equity and fees
and interest from debt, loans and consumer lending, such as credit cards and bank
fees.
In addition to fees and loans, banks are also involved in various other types of lending
and operations including, buy/hold securities, non-interest income, insurance and
leasing and payment treasury services.
History has proven banks to be vulnerable to many risks, however, including credit,
liquidity, market, operating, interesting rate and legal risks. Many global crises have
been the result of such vulnerabilities and this has led to the strict regulation of state
and national banks.
However, other financial institutions exist that are not restricted by such regulations.
Such institutions include: savings and loans, credit unions, investment and merchant
banks, shadow banks, Islamic banks and industrial banks.
80
2019-20
BIBLIOGRAPHY
https://www.gktoday.in/gk/scheduled-commercial-banks-of-india/
http://www.economicsdiscussion.net/india/development-banks/examples-of-
development-banks-in-india/31373
http://www.yourarticlelibrary.com/banking/development-banks-in-india-explained-
with-diagram/40836
https://indiasahayi.com/development-banks-of-india/
http://www.economicsdiscussion.net/india/cooperative-banking/cooperative-banking-
in-india-history-structure-importance-and-weaknesses/31365
https://dailytools.in/BankingKnowledge/SpecializedBanks
https://en.wikipedia.org/wiki/Regional_Rural_Bank
http://www.mygkbook.in/types-of-banks
https://brainly.in/question/12277565
https://www.piggy.co.in/blog/tag/types-of-banks/
https://www.quora.com/What-types-of-banks-are-there-in-India-with-examples
https://www.paisabazaar.com/banking/
https://cracku.in/blog/banking-structure-in-india-pdf/
https://shodhganga.inflibnet.ac.in/bitstream/10603/21949/10/10_chapter_3.pdf
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M.

COM PART II : SEM 3 TYPES OF BANKING SECTOR IN INDIA

a) What is Bank in simple words?

What is the work of bank?

 A bank is a financial institution where customers can save or borrow money.

bank's main activity should be to do business of banking which should not be

How Banks are created?

Banks and money are

From a business structure perspective, most of the Banks are corporations or

Many histories position the crucial historical development of a banking system to

A financial system is an important tool for a country that wants to develop

BANKING IS A UNIQUE BUSINESS

Money is a medium of exchange, an agreed-upon system for measuring the value of

Anything with an agreed-upon value might be a medium of exchange. Today, many

EARLIEST BANKING SYSTEMS

THE EARLIEST ‘PROPER’ BANKS

MODERN BANKING IN THE 17TH TO 19TH CENTURIES

The First Bank

Financial Sector in India consists of three main segments:

1. Financial institutions -banks, mutual funds, insurance companies

3. Financial products -loans, deposits, bonds, equities

f) FINANCIAL REGULATORS IN INDIA

There are mainly three Financial regulators in India:

1. Reserve Bank of India (RBI) - Banking Sector

2. Securities Exchange Board of India (SEBI) - Capital Markets /Mutual Funds

3. Insurance Regulatory and Development Authority (IRDA) - Insurance

BANKING DEVELOPMENT AND NATIONALIZATION OF BANKS IN

Nationalization of commercial banks was a mixed blessing. After nationalization

The following banks were nationalised in 1969:

 Punjab National Bank

A second round of nationalisations of six more commercial banks followed in 1980.

The following banks were nationalised in 1980:

 Punjab and Sind Bank

(I) Primary Function:

(i) Current Account Deposits or Demand Deposits:

a. Such deposits are generally maintained by businessmen with the intention of

(ii) Fixed Deposits or Time Deposits:

a. Such deposits do not enjoy cheque-able facility.

Basis Demand Deposits Fixed Deposits

Cheque They are chequeable deposits. They are non-chequeable

Interest They do not carry any They carry interest which

Number of The depositor can make any Depositor generally makes

(ii) Withdrawal of money on

(iii) Saving Deposits:

Different types of loans and advances made by Commercial banks are:

(II) Secondary Functions:

It refers to a facility in which a customer is allowed to overdraw his current account

2. Discounting Bills of Exchange:

ii. Collection and Payment of Various Items:

iii. Purchase and Sale of Foreign Exchange:

v. Income Tax Consultancy:

vi. Trustee and Executor:

vii. Letters of Reference:

4. General Utility Functions:

Commercial banks render some general utility services like:

1. SAFETY OF PUBLIC WEALTH

2. AVAILABILITY OF CHEAP LOANS

4. ECONOMIES OF LARGE SCALE

5.DEVELOPMENT IN RURAL AREAS

1. CHANCES OF BANK GOING BANKRUPT

3. RISK OF PUBLIC DEBT

 The Reserve Bank of India: