BANKING INSTITUTIONS-History about banking in India General Bank of India-1786 Bank of Hindustan- 1790 State bank of India-1806 During

ring 1800-1900 Allahabad bank, Oudh Commercial Bank, Punjab National Bank, The period between 1906 and 1911- Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

During the First World War (19141918) through the end of the Second World War (19391945)- many banks failed

Post-Independence India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation. greater involvement of the state in

different segments of the economy including banking and finance. The major steps to regulate banking included: The Reserve Bank of India, India's central banking authority, was established in April 1934, but was nationalized on January 1, 1949 under the terms of the Reserve Bank of India In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India". The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the SBI, and no two banks could have common directors.

 Despite the provisions, control and regulations of Reserve Bank of India, banks in India except the State Bank of India , continued to be owned and operated by private persons. It was considered that banks were controlled by business houses and thus failed in catering to the credit needs of poor sections such as cottage industry, village industry, farmers, craft men, etc Thus, the government decided to nationalize 14 major commercial banks and SBI subsidiaries bank on 19th July, 1969. All commercial banks with a deposit base over Rs.50 crores were nationalized Central Bank of India, Bank of Maharashtra, Dena Bank, Punjab National Bank, Syndicate Bank, Canara Bank, Indian Bank, Indian Overseas Bank, Bank of Baroda, Union Bank, Allahabad Bank, United Bank of India, UCO Bank, Bank of India The second nationalisation came in April 1980 the Government of India controlled around 91% of the banking business of India

Private sector banks in India All those banks where greater parts of stake or equity are held by the private shareholders and not by government are called as the private sector banks The bank shall be registered as a public limited company under the Companies Act, 1956. It will be licensed under the Banking Regulation Act, 1949 . Bank of Rajasthan, Catholic Syrian Bank, City Union Bank1904 Regional Rural Bank The Government of India set up Regional Rural Banks (RRBs) on October 2, 1975. Initially, five RRBs were set up on October 2, 1975 which were sponsored by Syndicate Bank, State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of India. Capital share being 50% by the central government, 15% by the state government and 35% by the scheduled bank.

 Co-operative Banks in India are registered under the Co-operative Societies Act. The co-operative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965. Cooperative banks in India finance rural areas under: Farming Cattle Milk Personal finance Cooperative banks in India finance urban areas under: Self-employment Industries Small scale units Home finance Consumer finance Personal finance

 Non-Banking Financial Institutions Non-banking Financial Institutions carry out financing activities but their resources are not directly obtained from the savers as debt. Instead, these Institutions mobilise the public savings for rendering other financial services including investment. All such Institutions are financial intermediaries and when they lend, they are known as Non-Banking Financial Intermediaries (NBFIs) or Investment Institutions. It is engaged in the business of loans, insurance, chit funds etc They also provide products/services that includes margin funding, leasing and hire purchase, corporate loans, IPO funding, small loans, venture capital etc An NBFC must be registered with the Reserve Bank of India (RBI), a company incorporated under the Companies Act, 1956 and have specific authorization to accept deposits from the public. Two types of NBFCs- organized and unorganized

FINANCIAL MARKETS: A)MONEY MARKET 1)CALL MONEY MARKET: Call Money Markets

The call money market is an integral part of the Indian Money Market, where the day-to-day surplus funds (mostly of banks) are traded. The loans are of short-term duration varying from 1 to 14 days. The money that is lent for one day in this market is known as "Call Money", and if it exceeds one day (but less than 15 days) it is referred to as "Notice Money".

 Banks borrow in this money market for the following purpose: To fill the gaps or temporary mismatches in funds To meet the CRR & SLR mandatory requirements as stipulated by the Central bank To meet sudden demand for funds arising out of large outflows.

Thus call money usually serves the role of equilibrating the short-term liquidity position of banks

 Call Money Market Participants : 1.Those who can both borrow as well as lend in the market - RBI Banks, Bank of America, Bank of Baroda, Canara Bank, Corporation Bank

2.Those who can only lend Financial institutions-LIC, UTI, GIC, IDBI, NABARD, ICICI and mutual funds etc.

2) COMMERCIAL BILL MARKET 3) TREASURY BILLS 4)CERTIFICATE OF DEPOSITS

 5) Commercial Paper (CP)?: Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. It was introduced in India in 1990. Why it was introduced? It was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations. Who can issue CP? Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP.

B) CAPITAL MARKET: Long maturity period of financial assets. More than a year. 1) Primary market: The primary market deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock issue. 3 ways of issue: public issue, right issue , private placement

2)SECONDARY MARKET: is a market for sale of securities 3) DERIVATIVE MARKET: The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets.

FINANCIAL INSTRUMENTS:
A)TERM- Short, medium and long term B)TYPE- primary securities, secondary securities, innovative instruments