A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly

or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses.

Originated in last decades of 18th century. The first bank where General Bank Of India in 1786 and Bank Of Hindustan in 1790. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. Bank Of Bengal, Bank Of Bombay & Bank Of Madras acts as a presidency bank established under charters from British East India Company. For many years they acted as quasi central bank.

The three banks merged in 1921 to form the Imperial Bank Of India, which, upon India's independence, became the State Bank Of India. During the First World War (1914-1918) & Second World War (1939-1945) & after independence of India were challenging for Indian banking. At least 94 banks in India failed between 1913 and 1918.

Years 1913 1914 1915 1916 1917 1918

Number of banks that failed

12 42 11 13 9 7

Authorized capital (Rs. Lakhs)

274 710 56 231 76 209

Paid-up Capital (Rs. Lakhs)

35 109 5 4 25 1

1. 2.

3.

A committee has made comprehensive proposal in the area of banking system the capital market & their regulation. The committee put emphasis on: Operational flexibility Functional autonomy Greater degree of professionalism

Liberal policy towards banking expansion Abolition of discriminatory policy in promoting banking Phasing out of direct investment Setting up of tribunals to speed up the process of recovery

RBI is the soul authority

4 tier structure of banking system Non-performing assets. Capital adequacy & tightening of provisioning norms. Entry of foreign banks.

Basel Accord I. was established in 1988 and was implemented by 1992. Then the second accord by the name Basel Accord II was established in 1999 with a final directive in 2003 for implementation by 2006 as Basel II Norms. the Reserve Bank of India to implement it from 1 April, 2009.

Basel II Norms are considered as the reformed & refined form of Basel I Accord. The Basel II Norms primarily stress on 3 factors:

Pillar I: Capital Adequacy Requirements Pillar II: Supervisory Review Pillar III: Market Discipline

A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system within its country's borders. A central bank is distinguished from a normal commercial bank because it has a monopoly on creating the currency of that nation, which is usually that nation's legal tender.

The central bank was founded in 1935 to respond to economic troubles after the first world war. The Reserve Bank of India was set up on the recommendations of the Hilton Young Commission. The commission submitted its report in the year 1926, though the bank was not set up for another nine years. It is nationalize in 1949.

Banking & Financial sector analysis

The Bank was constituted for the need of following: To regulate the issue of banknotes. To maintain reserves with a view to securing monetary stability. To operate the credit and currency system of the country to its advantage. The existing regulatory framework under the Banking Regulations Act 1949 can be categorized as follows : Business of Banking Companies Licensing of banking companies Control over Management Acquisition of the Undertakings of banking companies in certain cases Penal Provisions

Before granting any license, RBI may require to be satisfied that the following conditions are fulfilled: That the company is or will be in a position to pay its present or future depositors in full as their claims accrue. That the affairs of the company are not being , or are not likely to be, conducted in a manner detrimental to the interests of its present or future depositors. That the general character of the proposed management of the proposed bank will not be prejudicial to the public interest or the interest of its depositors. That the company has adequate capital structure and earning prospects.

Foreign banks are required to apply to RBI for opening their branches in India. Foreign banks application for opening their maiden branch is considered under the provisions of Sec 22 of the BR Act, 1949. The branch authorization policy for Indian banks has been made applicable to foreign banks subject to the following: Foreign banks are required to bring an assigned capital of US $25 million up front at the time of opening the first branch in India. Foreign banks may submit their branch expansion plan on an annual basis.

In addition to the parameters laid down for Indian banks, the following parameters would also be considered for foreign banks : Foreign banks and its groups track record of compliance and functioning in the global markets would be considered.
Weight

age would be given to even distribution of home countries of foreign banks having presence in India. treatment extended to Indian banks in the home country of the applicant foreign bank would be considered.

The

 Due

consideration would be given to the bilateral and diplomatic relations between India and the home country.

Licenses

issued for off-site ATMs installed by foreign banks are not included in the ceiling of 12.

Established-1 April 1935 Governer- D.subbarao. Headquarter - Maharashtra(Mumbai) Branches-18 Sub-offices-8(including Raipur) Training colleges-2(Reserve Bank Staff College at Chennai and College of Agricultural Banking at Pune) Zonal training center-4(Belapur, Chennai, Kolkata and New Delhi)

Banking & Financial sector analysis

RBI
EXCHANGE
Ministry Of Finance BANK

Ministry Of Road Transport And Highway ROAD CONSTUCTION CONTRACTORE

M.C.I.C.A

Ministry Of Agriculture

Ministry Of Tourism

STEEL

COAL & MINES

OIL & GAS

BANK LABOUR

INDIAN MARKET

Foreign country

BANK

STEEL

COAL & MINES

OIL & GAS

LABOUR

LOCAL MARKET

PRODUCT & Service

INDIA

Foreign country

The Indian financial system currently consists of commercial banks, co-operative banks, financial institutions and non-banking financial companies ( NBFCs). The commercial banks can be divided into categories depending on the ownership pattern, viz. public sector banks, private sector banks, foreign banks.

The Scheduled Commercial Banks(96) have been listed under the Second Schedule of the Reserve Bank of India Act, 1934.

Non-scheduled bank of India means a banking company as defined in clause(c) of section 5 of the banking regulation act 1949,which is not a scheduled bank.

RESERVE BANK OF INDIA

BANKS

FINANCIAL INSTITUTIONS ALL INDIA FINANCIA L INSTITUTI ONS STATE LEVEL INSTIT UTIONS OTHER INSTITU TIONS

SCHEDULED COMMERCIAL BANKS PUBLIC SECTOR BANKS(27) PRIVATE SECTOR BANKS(2 2) FOREIGN BANKS(3 2) REGION AL RURAL BANKS(8 2)

COOPERATIVE CREDIT INSTITUTIONS

URBAN COOPERA TIVE BANKS(167 4)

RURAL COOPERA TIVE CREDIT INSTITUTI ONS(96751)

The modern Commercial Banks in India cater to the financial needs of different sectors. The main functions of the commercial banks comprise: Transfer of funds. Acceptance of deposits . Offering those deposits as loans for the establishment of industries . Purchase of houses, equipments, capital investment purposes etc. The Indian Government presently hires the commercial banks for various purposes like tax collection and refunds, payment of pensions etc.

PUBLIC SECTOR BANKS

PRIVATE SECTOR BANKS

FOREIGN BANKS

Allahabad Bank Andhra Bank Bank of Baroda Bank of Maharashtra Punjab National Bank Central Bank of India

Axis Bank City Union Bank Dhanlakshmi Bank HDFC Bank ICICI Bank IndusInd Bank

The Royal Bank of Scotland Bank of America Barclays Bank BNP Paribas Citi Bank Deutsche Bank

Corporation Bank
IDBI Bank Indian Overseas Bank

ING Vysya Bank

Karnatka Bank Kotak Mahindra Bank

HSBC Bank
Standard Chartered Bank JP Morgan Chase Bank

State Bank of India

South Indian Bank

State Bank of Mauritius

BANK Rani Laxmibai Urban Co-op Bank

MAIN LOCATION Jhansi

Ahemdabad Mercantile Co-op Bank Ltd Caliper Commercial cCo-op Bank Ltd

Ahemdabad

Kalupur

Madhavpura Mercantile Co-op Bank Ltd

Madhavpur

MERCHANT BANK INVESTMENT BANK

RETAIL BANK

1. STATE BANK OF INDIA.

2. INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA. 3. HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED
Banking & Financial sector analysis

Type- Public NSE:SBIN BSE:500112 LSE:SBID Founded- 1 july 1955 Headquaters - Mumbai , Maharashtra ,India
Product- investment banking, consumer banking, commercial banking Retail banking , assets mgnt., pensions ,mortgages , credit Revenue- 133,851 crore (US$29.71 billion) (2010) Profit- 11,733 crore (US$2.6 billion) (2010) Total assets- US$ 323.0 billion (2010) Total equity-US$ 19 billion (2010)

Employees- 200,229 (2010)

Type - Public (NSE: ICICIBANK, BSE: 532174, NYSE: IBN) Founded - 1955 Headquarters - Mumbai, Maharashtra, India `````````````````````````````````````````````````````````````````````` Key people - K.V. Kamath(Chairman) Chanda Kochhar (MD & CEO) Products - Investment Banking Commercial Banking Retail Banking Private Banking Asset Management Mortgages Credit Cards Operating income - 6,578.64 crore (US$1.43 billion) (2010) Employees - 35,000+ (2009)

Headquarters - Mumbai, India

Key people - C.M. Vasudev Products - Investment Banking Commercial Banking Retail Banking Private Banking Asset Management Mortgages Credit Cards Revenue - 20,266 crore (US$4.5 billion) (2010) Total assets - US$ 53.670 billion (2010) Total equity - 21,158 crore (US$4.7 billion) (2010) Employees - 51,888 (2010)

EFT is a Scheme introduced by Reserve Bank of India (RBI) to help banks offering their customers money transfer service from account to account of any bank branch to any other bank branch in places where EFT services are offered.

Step 1:Remitter fills in the EFT Application form Step 2:Sends the duplicate of the EFT application form to its Service branch for EFT data preparation. Step 3: Preparation of EFT data in NCC(National clearing cell) Step 4:Sorting of city wise all the transaction Step 5: RBI at the destination centre receives the files from the originating canters, consolidates them and sorts them bank-wise. Step 6:Transfer to destination branch & forward credit reports

It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice versa. Electronic Clearing service (ECS) is increasingly being used by various users like Govt. Departments, corporate bodies, etc. for repetitive payments like salary, pension, dividends, interest, etc.

There are two types of ECSCREDIT CLEARING

Large number of credit one debit E.g. dividend, salary, pension, etc. DEBIT CLEARING Large number of debit one credit ECS Debit is useful for payment of telephone / electricity / water bills, tax collections, loan installment repayments. MICR-MAGNATIC INK CHARACTER RECOGNITION

The acronym 'RTGS' stands for Real Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ` 2 lakh. There is no upper ceiling for RTGS transactions.

All the bank branches in India are not RTGS enabled. As on 23 February, 2011 there are more than 74,000 RTGS enabled bank branches

a) Inward transactions Free, no charge to be taken b) Outward transactions ` 2 lakh to - 5 lakh - not exceeding 25Rs per transaction. Above 5 lakh not exceeding 50Rs per transaction. TIMING-9.00 hours to 16.30 hours on week days & 9.00 hours to 13.30 hours on Saturdays for settlement

National Electronic Funds Transfer (NEFT) is a nation-wide system that facilitates individuals, firms and corporate to electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country. For being part of the NEFT funds transfer network, a bank branch has to be NEFT-enabled. As at end-January 2011, 74,680 branches / offices of 101 banks in the country (out of around 82,400 bank branches) are NEFT-enabled.

What is IFSC? Indian financial system code It is a 11digit alpha-numeric code in whichFirst 4 alpha characters- represents the bank Fifth number - zero Last six characters - represents the branch

Step 1: Fill an application form providing details of the beneficiary. Step-2 : The originating bank branch prepares a message and sends the message to its pooling centre.

Step-3 : The pooling centre forwards the message to the NEFT Clearing Centre.
Step-4 : The Clearing Centre sorts the funds transfer transactions destination bank-wise and prepares accounting entries banks through their pooling centre. Step-5 : The destination banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary accounts.

Well developed financial infrastruct ure Large workforce in the banking sector ADVANTAGE Rising demand for banking services

IN
INDIA Good mix of public & private sector bank Welldefined regulatory framewor k

Innovatio ns in service delivery

Market share by assets(2002-03)

Market share by assets(2009-10)

7%

17%

76%

Public banks Private banks Foreign banks

7% 19%

74%

Public banks Private banks Foreign banks

Credit demand from corporate organizations has helped maintain credit growth in recent years.

60% 50% 40% 30% 20% 10% 0% 2004-05 -10% Growth in housing finance Growth in retail credit(excl. housing finance) 2005-06 2006-07 2007-08 2008-09 2009-10

Growth in savings deposit is expected to increase with an increase in the amount per account & a steady increase in the number of saving accounts as banks reach out to new markets.

35% 30% 25% 20% 15%

10%
5% 0% 2204-05 2005-06 2206-07 2007-08 2008-09 2009-10 Demand deposit Saving bank deposit Term deposit

A non-banking financial company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934

The NBFCs that are registered with RBI are: (i) Equipment leasing company; (ii) Hire-purchase company; (iii) Loan company; (iv) Investment company.

With effect from December 6, 2006 the above NBFCs registered with RBI have been reclassified as : (i) Asset Finance Company (AFC) (ii) Investment Company (IC) (iii) Loan Company (LC)

Requirements for registration with RBI:

A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 2 crore from April 21, 1999). Some of the important regulations relating to acceptance of deposits by NBFCs are as under: i) The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand. ii) NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 11 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests.

iii) NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.

iv) NBFCs (except certain AFCs) should have minimum investment grade credit rating.
v) The deposits with NBFCs are not insured. vi) The repayment of deposits by NBFCs is not guaranteed by RBI.

vii) There are certain mandatory disclosures about the company in the Application Form issued by the company soliciting deposits.

Brokerage firms are the business entities that deal with the stock trading. India, with an increasing capital market & a growing no. of investors, has a no. of brokerage firms . In Indian retail brokerage industry, the brokerage firms primarily work as agents for buying & selling of securities like shares, stocks & other financial instruments & earn commission for each of the transactions. There are plenty of brokerage firms in India.

The total trading volume of the Indian brokerage companies stood at US$ 1239.1 billion in the year 2004, which increased to US$ 1492.1 billion in 2005. It is further expected to reach US$ 6535.7 billion by the year 2015.

SEBI

BSE &NSE
TARWALA BROKER

NBFC FUND MANAGER

COMPANY

SHARE HOLDER

1.

Manappuram Finance

2.

Muthoot Finance

3.

Indiabulls Financial Services

1.

Kotak Securities Ltd

2.

Karvy Stock Broking Ltd

3.

Indiabulls Securities