Introduction to Banking

Medium of exchange, Unit of measurement and Storehouse for wealth Accounting Unit Money

Evolution of coins led to the need for storage Wealthy used temples, which became financial centers Emergence of merchants and concept of charging interest, for commoners Roman Banks Merchant Banks of Italy- grain traders Development of Central Banks World Bank & development of Payment Technology Deregulation & Globalization beginning 1980s Evolution of Banking

Evolution of Banking in India

Some of the early banks were formed during Swadeshi movement stimulated formation of many more banks during There were bank failures during 1913 to 1923 warranting regulation of banks Formation of RBI Banking up to 1900

Objective To bring about economic development by spread of banking and financing needy productive sectors (Priority sector) Increase the branch network in rural areas for further development Era of Nationalisation

14 banks nationalized in 1960 and another 6 in 1980

Policy initiative to allow foreign capital to move into the country through economic reforms Banks were strengthened by capitalisation Competition in banking allowed Change in bank licensing policy to enable entry of new banks Introduction of technology Banking Sector Reforms

Entry of new banks and increased competition Enhanced use of technology Development of new products and services Consumerism fueled by banking sector Spread of alternate channels of banking Financial inclusion Banking post Reforms

Increased reach Access to rural economy Increased collection of savings Availability of debt for more productive activities Balanced growth across sectors Benefits of Expansion of Banking

Financial Intermediation Role of Banks

Backbone of Payment Systems Role of Banks

Provider of Financial Services Role of Banks

Difference between interest earned and interest paid on deposits Net Interest Margin Interest Paid Interest Earned Consumer LoansBusiness LoansHome LoansCredit CardsCurrent AccountsSavings AccountsFixed Deposits

Banking Structure in India RBI (Central Bank) Scheduled Banks Commercial Banks Public Sector Banks SBI & associates Other Nationa l Banks Private Sector Banks OldNew Foreign Banks Regional Rural Banks Cooperative Banks Urban cooperative Banks State cooperative Banks Unscheduled Banks

Public Sector Banks

Private Sector Banks Old New

Foreign Banks

Commercial Banking Corporate Banking Rural & Agricultural Banking International Banking Retail Banking

Reserve Bank of India

Role of RBI

RBI and Commercial Banks Priority Sector Lending Lender of the last Resort CRR & SLR Credit Control Regulation Currency Chest

Need for a New Bank Model Need of the hour is a new Bank Model Be able to compete successfully in a market where socio- economic and technological factors have brought a major change in how banks operate

Guided by the philosophy of continuous change Logic of Alternate channels Benefits of ‘Multi-channel’ integration and Cross-selling Innovation in Banking

Various Electronic Channels Physical as well as electronic channels such as: Branches Internet banking Mobile banking Phone banking ATM POS

Role of Technology in Banks- 4 Es Technology has changed the face of banking Everything- Access an extensive range of products Everytime- Access 365 days, 24 hours a day Everywhere- Access from anywhere Everyway- Access services through various easy ways

Alternate Channels- Advantages for Customers ConvenienceUbiquitySpeedEffectivenessEfficiency

Alternate Channels- Advantages for Banks Better Control Cost Reduction Paperwork Reduction Efficiency Effectiveness

Emerging Trends Bank Types- Global

E-banking - Future

Summary Technology is indispensible for Banking Banks strengthen their distribution activities through alternate channels to fulfil customer requirements A winning model includes more diversity of integrated channels

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