Banking Management - IPM Term V

Banking refers to the practice of accepting deposits from the public and then using those funds for lending or investing purposes.

The Banking Regulation Act of 1949 defines banking as accepting deposits for lending or investment, repayable on demand or otherwise, and withdrawable by cheque, draft, order, or otherwise.

The primary function of banks is to act as intermediaries, channeling people's savings into productive loans and investments.

Any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers can be considered a bank.

Financial markets are platforms where buyers and sellers trade financial instruments such as stocks, bonds, and currencies.

Financial intermediaries operate within the financial system, facilitating transactions between savers and borrowers. They typically accept deposits from savers and then lend those funds to borrowers.

A money market is a segment of the financial market dealing with short-term debt instruments. These instruments mature within a year and involve the exchange of cash for a short duration.

A capital market deals with longer-term debt and equity securities such as bonds and stocks. These securities are used for funding long-term investments and projects.

A type of bank that combines the functions of commercial banking, such as deposit taking and lending, with investment banking activities, such as underwriting securities and providing financial advisory services.

A type of bank that primarily focuses on traditional banking activities, such as deposit taking, lending, and providing other financial services to individuals and businesses.

A type of bank that focuses on providing financial services to businesses and institutions, including underwriting securities, mergers and acquisitions, and investment advisory.

Banks that emphasize providing investment banking services, like Barclays and Deutsche Bank.

Banks that focus on traditional commercial banking activities, like Bank of America, Citi Group, and HSBC.

The Indian banking system is unique because it has a variety of specialized financial institutions catering to specific segments of the economy.

These financial institutions, like credit cooperatives, were created to meet the specific needs of small farmers in rural areas.

The Indian banking system is characterized by a diverse landscape of financial institutions designed to serve various segments of the economy.

Regional Rural Banks (RRBs) were created to address financial needs in rural areas. They combine features of credit cooperatives and commercial banks, aiming to provide affordable credit to backward sections in rural communities.

Local Area Banks (LABs) were established to improve credit access and strengthen the financial structure in rural and semi-urban areas. They bridge the gap in credit availability by providing financial services in these less-developed regions.

The Indian banking system consists of three main categories: commercial banks, non-banking financial institutions (NBFIs), and cooperative credit institutions. These different types of institutions play vital roles in the financial landscape of India.

Public Sector Banks (PSBs) are majority-owned by the Indian government, either at the national or state level. These banks play a crucial role in social welfare and economic development.

PSBs are listed on stock exchanges, meaning their shares are traded publicly. Their primary objective is to contribute to the overall well-being of the Indian population.

Private Sector Banks in India operate independently of government control. Majority ownership is held by private shareholders. Examples include HDFC Bank, ICICI Bank, and Axis Bank.

The Board of Directors in PSBs comprises various members, including full-time directors, government nominees, RBI nominees, and elected representatives of employees. They oversee the bank's management and operations.

Banks designed to serve small businesses, farmers, and the unorganized sector, offering basic banking services like deposits and lending. They aim to promote financial inclusion and reach those underserved by traditional banks.

The Reserve Bank of India (RBI) authorizes these banks to operate, focusing on providing financial services to under-served segments of the economy.

Financial inclusion aims to ensure everyone has access to and uses financial services. SFBs play a key role in promoting this by reaching out to underserved segments like small businesses and farmers.

A type of bank that focuses solely on accepting deposits and facilitating payments. It does not provide lending services, instead investing deposits in safe instruments like government securities.

These banks are regulated by the Reserve Bank of India (RBI), which granted licenses for Payments Banks to promote accessibility and convenience in financial transactions.

Unlike traditional banks, Payments Banks focus on facilitating payments and secure deposit management for customers. They do not engage in lending activities.

SFB and Payments Banks cater to specific market segments, enabling financial inclusion and offering tailored services.

These specialized banks are integral to a country's financial ecosystem, promoting financial inclusion and providing niche financial services that cater to underserved markets.

Financial institutions that provide a wide range of financial services to complement banks.

A type of NBFI that provides financial services on a national level, like EXIM Bank, NABARD, NHB, and SIDBI.

A type of NBFI that focuses on lending funds for specific purposes, often for long durations.

A type of NBFI that provides funding to other financial institutions, playing a vital role in financial stability.

An example of a refinancing institution which supports rural development and agriculture.

An example of a refinancing institution that promotes small-scale industries in the country.

A key player in promoting home loans and housing finance in the country.

A type of NBFI that specializes in investments, like LIC and GIC, offering products related to insurance and financial markets.

Financial institutions owned and controlled by their members, primarily providing loans to members at lower interest rates.

They are crucial for financial inclusion in rural India, providing access to credit for low-income groups.

Primary Dealers (PDs) act as intermediaries between the government and the market, buying and selling government securities.

The Banking Regulation Act of 1949 defines 'banking' as accepting deposits from the public for lending or investment. These deposits can be withdrawn by cheque, draft, or order.

While playing a vital role, cooperative institutions face challenges such as limited size compared to commercial banks and multiple regulatory oversight.

Co-operative banks are especially relevant in semi-urban and urban areas, serving middle- and low-income customers who might not have access to commercial banks.

The main purpose of cooperative credit is to promote social and economic improvement for its members through self-help and cooperation. They also aim to raise funds for business and grant loans to those with lower incomes.

The co-operative sector was established as the first formal credit channel in rural India, contributing to 'financial inclusion'.