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These are called scheduled banks. They may be commercial banks or co- operative banks. Scheduled banks are considered to be safer, and are entitled to special facilities like re-finance from RBI. Inclusion in the schedule also comes with its responsibilities of reporting to RBI and maintaining a percentage of its demand and time liabilities as Cash Reserve Ratio CRR with RBI.

Structure of Banks in India 5. Broad Classification of Banks in India 1 The RBI: The RBI is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. Development Banks mostly provide long term finance for setting up industries.

The changes in banking structure and control have resulted due to wider geographical spread and deeper penetration of rural areas, higher mobilization of deposits, reallocation of bank credit to priority activities, and lower operational autonomy for a bank management.

Public sector commercial banks, dominate the commercial banking scene in the country. The largest commercial Banks in India is SBI 8. Co-operative credit institutions account for the second largest proportion of The co-operative sector is very much useful for rural people.

The co-operative banking sector is divided into the following categories. It is a multipurpose financial institution with a broad development outlook. Subsequently many other institutions were set-up. IDBI, IFCI, SIDBI etc. Capital formation, Underwriting, Purchase of securities, Selling of securities, Advisory services, Acting as dealer. Since its inception, it has been headquartered in Mumbai.

Though originally privately owned, RBI has been fully owned by the Government of India since nationalization in RBI has 22 regional offices across India. The Reserve Bank of India was set up on the recommendations of the Hilton Young Commission.

The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India RBI for effective redressal of complaints by bank customers The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation.

The Reserve Bank now performs a variety of developmental and promotional functions. The Reserve Bank promotes banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies. The Reserve bank has helped in the setting up of the IFCI and the SFC: These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilize savings, and to provide industrial finance as well as agricultural finance.

The RBI set up the Agricultural Credit Department in to provide agricultural credit. The Bank has developed the co-operative credit movement to encourage saving, to eliminate money-lenders from the villages and to route its short term credit to agriculture.

The RBI has set up the Agricultural Refinance and Development Corporation to provide long-term finance to farmers They insure, guarantee, underwrite, participate in managing and carrying out issue of shares, debentures, etc. It undertakes the inward and outward remittances with reference to foreign exchange and collection of varied types for the Government Common Banking Products Available: Every time a person uses the card, the merchant who in turn can get the money transferred to his account from the bank of the buyers, by debiting an exact amount of purchase from the card.

To get a debit card along with a Personal Identification Number PIN. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. It provides exchange services. This service helps the customer to withdraw money even when the banks ate closed. This can be done by inserting the card in the ATM and entering the Personal Identification Number and secret Password. The system called electronic fund transfer EFT automatically transfers money from one account to another.

This system facilitates speedier transfer of funds electronically from any branch to any other branch. In this system the sender and the receiver of funds may be located in different cities and may even bank with different banks. Funds transfer within the same city is also permitted. The scheme has been in operation since February 7,in India. Telebanking refers to banking on phone services. Telebanking is extensively user friendly and effective in nature. A new revolution in the realm of e-banking is the emergence of mobile banking.

On-line banking is now moving to the mobile world, giving everybody with a mobile phone access to real-time banking services, regardless of their location. It provides a new way to pick up information and interact with the banks to carry out the relevant banking business. The potential of mobile banking is limitless and is expected to be a big success. Booking and paying for travel and even tickets is also expected to be a growth area.

This is a very flexible way of transacting banking business. Internet banking involves use of internet for delivery of banking products and services. Banking is no longer confined to the branches where one has to approach the branch in person, to withdraw cash or deposits a cheque or request a statement of accounts.

In internet banking, any inquiry or transaction is processed online without any reference to the branch anywhere banking at any time. Bank credit is famous stock broker to households, retail traders, small and medium enterprises SMEscorporates, the Government undertakings etc.

In contrast, the need for capital investment, and day-to-day operations of private corporates and the Government undertakings are met through wholesale lending. Meeting the financing needs of the agriculture sector is also an important role that Indian banks play. Banks need to ensure that advances are safe and money lent out by them will come back. Since the repayment of loans depends on the borrowers' capacity to pay, the banker must repricing stock options 409a satisfied before lending that the business for which money is sought is a sound one.

In addition, bankers many times insist on security against the loan, binary option methods rims they fall back on if things go wrong for the business. The security must be adequate, readily marketable and free of encumbrances.

To maintain liquidity, banks have to ensure that money lent out by them is not locked up for long time by designing the loan maturity period appropriately. Further, money must come back as per the repayment schedule. To remain viable, a bank must earn adequate profit on its investment.

This calls for adequate margin between deposit rates and lending rates. How to buy asx 200 shares this respect, appropriate fixing foreign exchange market in india ppt interest rates on both advances and deposits is critical.

Unless interest rates are competitively fixed and foreign exchange market in india ppt are adequate, banks may lose customers to their competitors and become unprofitable. To mitigate risk, banks should lend to a diversified customer base. Diversification should be in terms of geographic location, nature of business etc. A bank can lend currency trader books only a certain proportion of its deposits, since some part of deposits have to be statutorily maintained as Cash Reserve Ratio CRR deposits, and an additional part has to be used for making investment in prescribed securities Statutory Liquidity Ratio or SLR requirement.

It may be noted that these are minimum requirements. Banks have the option of having more cash reserves than CRR requirement and invest more in SLR securities than they are required to. The CPC aims at a targeted portfolio mix keeping in view both risk and return. Toward this end, it lays down guidelines on choosing the preferred areas of lending such as sunrise sectors and profitable sectors as well as the sectors to avoid.

Banks typically monitor all major sectors of the economy. They target a portfolio mix in the light of forecasts for growth and profitability for each sector. If a bank perceives economic weakness in a sector, it would restrict new exposures to that segment and similarly, growing and profitable sectors of the economy exchange rate usd inr historical data banks to increase new exposures to those sectors.

This entails active portfolio management. There are a number of diverse risk factors associated with borrowers. Banks should have a comprehensive risk rating system that serves as a single point indicator of diverse risk factors of a borrower.

This helps taking credit decisions in a consistent manner. Risk-return trade-off is a fundamental aspect of risk management. Borrowers with weak financial position are placed in higher risk cambodia stock market 2016 graph and are provided credit facilities at a higher price that is, at higher interest. The higher the credit risk of a borrower the higher would be his cost of borrowing.

To price credit risks, banks devise appropriate systems, which usually call options on bitcoin flexibility for revising the price risk premium reliance industries stock market to changes in rating.

In other words, if the risk rating of a borrower deteriorates, his cost of borrowing should rise and vice versa As part of a prudent lending policy, banks usually advance loans against some security. The loan policy provides when does seller get to keep earnest money for this.

In the case of term loans and working capital assets, banks take as 'primary security' the property or goods against which loans are current exchange rate of pakistani rupee. In addition to recipe thai chicken cashew nuts, banks often ask for additional security or 'collateral security' in the form of both physical and financial assets to further bind the borrower.

The amount of capital they have to be backed up by depends on the risk of individual assets that the bank acquires. The riskier the asset, the larger would be the capital it has to be backed up by. A key norm of Capital Adequacy Ratio CAR known as Capital Risk Weighted Assets Ratio, is a simple measure of the soundness of a bank.

The ratio is the capital with the bank as a percentage of its risk-weighted assets. Given the level of capital available with an individual bank, this ratio determines the maximum extent to which the bank can lend.

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As a prudential measure aimed at better risk management and avoidance of concentration of credit risks, the Reserve Bank has fixed limits on bank exposure to the capital market as well as to individual and group borrowers with reference to a bank's capital.

Limits on inter-bank exposures have also been placed. Banks are further encouraged to bd forex signal internal caps on their sectorial exposures, their exposure to commercial real estate and to unsecured exposures. These exposures are closely monitored by the Reserve Bank.

Banks are free to determine their own lending rates on all kinds of advances except a few such as export finance; interest rates on these exceptional categories of advances are regulated by the RBI. The concept of benchmark prime lending rate BPLR was introduced in November for pricing of loans by commercial banks with the objective of enhancing transparency in the pricing of their loan products.

Each bank must declare its This is a direct form of lending in which a loan with an actual cash outflow is given to the borrower by the Bank.

These are services, where there is no outlay of funds by the bank when the commitment is made. At a later stage however, the bank may have to make funds available. Since there is no fund outflow initially, it is not reflected in the balance sheet. However, the bank may have to pay.

Therefore, it is reflected as a contingent liability in the Notes to the Balance Sheet. Therefore, such exposures are called Off Balance Sheet Exposures. When the commitment is made, the bank charges a fee to the customer.

Therefore, it is also called fee-based business. Working capital finance is utilized for operating purposes, resulting in creation of current assets such as inventories and receivables. Banks carry out a detailed analysis of borrowers' working capital requirements. Credit limits are established in accordance with the process approved by the board of directors.

The limits on Working capital facilities are primarily stock market history since 1928 by inventories and receivables chargeable current assets. Working capital board resolution for buyback of shares by private company consists mainly of cash credit facilities, short term loan and bill discounting.

Project finance business consists mainly of extending medium-term and long-term rupee and foreign currency loans to the manufacturing and infrastructure sectors. Banks also provide financing by way of investment in marketable instruments such as fixed rate and floating rate debentures. When did google become a publicly traded stock banks usually insist on having a first charge on the fixed assets of the borrower.

The project finance approval process entails a detailed evaluation of technical, commercial, financial and management factors and the project sponsor's financial strength and experience.

A substantial quantum of loans is granted by banks to small and medium enterprises SMEs. A facility where the account holder is permitted to draw more funds that the amount in his current account. A bill of exchange is an unconditional written order from one person the supplier of the goods to another the buyer of the goodssigned by the person giving it supplierrequiring the person to whom it is addressed buyer to pay on demand or at some fixed future date, a certain sum of money, to either the person identified as payee in the bill of exchange, or to any person presenting the bill of exchange.

The customer swipes the credit card to make his purchase. His seller will then submit the details to the card issuing bank to collect the payment.

The bank will deduct its margin and pay the seller. The bank will recover the full amount from the customer buyer. These are often unsecured loans provided to customers who use these funds for various purposes such as higher education, medical expenses, social events and holidays.

Sometimes collateral security in the form of physical and financial assets may be available for securing the personal loan This is finance which is made available for the specific purpose of buying a car or a two-wheeler or other automobile. The interest rate for used cards can go close to the personal loan rates. However, often automobile manufacturers work out special arrangements with the financiers to promote the sale of the automobile. This makes it possible for vehicle-buyers to get attractive financing terms for buying new vehicles.

Banks extend home finance loans, either directly or through home finance subsidiaries. Such long term housing loans are provided to individuals and corporations and also given as construction finance to builders. The loans are secured by a mortgage of the property financed. These loans are extended for maturities generally ranging from five to fifteen years and a large proportion of these loans are at floating rates of interest When Party A supplies goods to Party B, the payment terms may provide for a Letter of Credit.

In business, parties make commitments. The beneficiary of the commitment wants to be sure that the party making the commitment obliger will live up to the commitment. This comfort is given by a guarantor, whom the beneficiary trusts. This investment banking role is performed by a number of universal banks National Electronic Funds Transfer NEFT is a nation-wide system that facilitates individuals, firms and corporates 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.

This is a 11 digit code with the first 4 alpha characters representing the bank, and the last 6 numeric characters representing the branch. The 5th character is 0 zero. RTGS transfers are instantaneous unlike National Electronic Funds Transfer NEFT where the transfers are batched together and effected at hourly intervals.

RBI allows the RTGS facility for transfers above Rs1lakhs. The RBI window is open on weekdays from 9 am to 4. SWIFT is solely a carrier of messages. It does not hold funds nor does it manage accounts on behalf of customers, nor does it store financial information on an on-going basis. As a data carrier, SWIFT transports messages between two financial institutions. This activity involves the secure exchange of proprietary data while ensuring its confidentiality and integrity.

The BIC helps identify the bank Under these guidelines, an asset is classified as non-performing if any amount of interest or principal installments remains overdue for more than 90 days, in respect of term loans. In respect of overdraft or cash credit, an asset is classified as non-performing if the account remains out of order for a period of 90 days and in respect of bills purchased and discounted account, if the bill remains overdue for a period of more than 90 days.

Standard assets service their interest and principal installments on time although they occasionally default up to a period of 90 days.

Standard assets are also called performing assets. They yield regular interest to the banks and return the due principal on time and thereby help the banks earn profit and recycle the repaid part of the loans for further lending.

Sub-standard assets are those assets which have remained NPAs that is, if any amount of interest or principal installments remains overdue for more than 90 days for a period up to 12 months Loss assets comprise assets where a loss has been identified by the bank or the RBI. These are generally considered uncollectible. Their realizable value is so low that their continuance as bankable assets is not warranted.

They should be entirely written off. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment. Upon loan default, banks can seize the securities except agricultural land without intervention of the court. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures: RBI has issued guidelines to banks on the process to be followed for sales of financial assets to ARCs.

Hypothecation is defined under the SARFAESI Act,which will be discussed in the next chapter as follows: This can be done as follows: The effect of this notice is that the borrower is barred from transferring the property mentioned in the notice.

Major Functions of International Banking 1. Facilitate imports and exports of their clients — trade financing 2. Arrange for foreign exchange — cross-border transactions and foreign investments 3. Assist in hedging exchange rate risk 4. Trade foreign exchange products for their own account 5. Borrow and lend in the Eurocurrency market 6. Participate in international loan syndicate — lending to MNCs- project financing and to sovereign governments — economic development 7.

Participate in underwriting of Eurobonds and foreign bonds issues. Provide consultancy and advice on hedging strategies, interest rate and currency swap financing and international cash management services It has its head office in Basel, Switzerland. It fulfills this mandate by acting as: The meetings provide an opportunity for participants to discuss the world economy and financial markets, and to exchange views on topical issues of central bank interest or concern.

It publishes statistics on global banking, securities, foreign exchange and derivatives markets. Balance enquiry, request for services, issuing instructions etc.

Foreign exchange market in India

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