Banking in India

SBI is the largest commercial bank of India. Bank Sakhi: Women SHG members appointed as banking agents.

First 5 RRBs

• Muradabad (Uttar Pradesh)
• Bhiwani (Haryana)
• Malda (West Bengal)
• Jaipur (Rajasthan)
• Gorakhpur (Uttar Pradesh)

RRBs provide banking/credit for rural communities, small/marginal farmers, agricultural labourers, artisans and other target groups.

Shree Mahila Seva Cooperative Bank: Established 1974, Founder Elaben Bhatt, HQ Ahmedabad.

• State Co-operative Bank
• District / Central Co-operative Bank
• Primary Credit Societies

State Co-operative Banks (SCBs)

Provide loans to Central/District Co-operative Banks.

Central Co-operative Bank

Area of work limited to one district; acts as a bridge between State Co-operative Banks and Co-operative Credit Societies.

Primary Credit Societies

Primary Agricultural Credit Societies (PACS): village-level institutions providing short- and medium-term credit and related services to members, especially farmers.

Urban Co-operative Banks (UCB)

Scope limited to metros, semi-urban, urban centres; provides loans to micro/small/medium industries, small entrepreneurs, retail traders. UCB totals change over time and require a dated RBI count.

Multi-State Co-operative Society: Registered under the Multi-State Co-operative Societies Act, 2002.

Major banks: ICICI Bank, Axis Bank, HDFC Bank, Kotak Mahindra Bank, Yes Bank

SHGs pool savings and obtain bank-linked credit generally in the group's name, supporting members' livelihoods and financial inclusion.

RBI played the role of the central bank for Burma until 1947.

Central Board: Maximum Statutory Strength 21

• 1 Governor
• 4 Deputy Governors
• 2 Central Government officials
• 10 directors appointed by Government
• 4 directors representing local boards

Governors of RBI

• Regulation and control of the banking system (Banking Regulation Act, 1949)
• RBI issues banknotes except the ₹1 note (signed by Finance Secretary); Government of India issues coins and RBI circulates them as its agent
• Regulate the banking and financial system
• Lead the government in institutions like IMF, World Bank
• Working as banker to the government
• Controlling credit
• Act as a bank of banks
• Conservation of foreign exchange reserves
• Regulation of foreign exchange rates
• Conduct of monetary policy
• Developmental work
• Compilation and publication of data

Minimum Reserve System: at least ₹200 crore reserve, with at least ₹115 crore in gold and balance in foreign securities. Clean/clear-note policy maintains clean notes and withdraws unfit notes.

Indian coins are minted in Mumbai, Kolkata, Hyderabad, and Noida.

Monetary Policy is formulated by RBI in consultation with the MPC; works to control money and credit in the economy; target is price stability in the economy.

Monetary Policy Committee (MPC)

• Do not affect overall creditworthiness
• Liberal in some sectors based on credit policy needs
• Purpose: Prevent gambling/hoarding; prevent unreasonable price increases

Instruments Used

• Limit — Regulation of needs
• Regulation of consumer credit
• Rationing of credit
• Direct action
• Use of ethical advice and propaganda (moral suasion)

NDTL = Net Demand and Time Liabilities. Demand Liabilities: Savings account, Current account. Time Liabilities: Fixed deposit, Recurring deposit.

Sectors covered: Agriculture, Education, Housing, Micro and Small Enterprises, Export Credit, Social Infrastructure, Renewable Energy, etc.

Basel is a Swiss city. G10 central-bank Governors formed the Basel Committee at the end of 1974; BIS was established in 1930. Basel norms strengthen regulation, supervision, risk management and capital standards internationally.

Capital Adequacy Ratio (CAR), also known as Capital-to-Risk Weighted Assets Ratio (CRAR): measurement of a bank's available capital as a % of risk-weighted credit exposure.

NPA classification depends on specified criteria; for term loans, interest and/or principal overdue for more than 90 days is the standard trigger.

Categories

• Sub-standard Assets
• Doubtful Assets
• Loss Assets

Wilful Defaulter: Deliberately not repaying a loan despite being capable of doing so.

Indradhanush Yojana (2015): Improve functioning of public sector banks. Components: Appointments, Bank Board Bureau, Capitalisation, De-stressing PSBs, Empowerment, Framework of Accountability, Governance Reforms.

Accept deposits and provide credit with an inclusion focus on small businesses, farmers, micro/small industries and underserved customers, under RBI prudential rules.

Accepts demand deposits up to RBI's prescribed limit and provides payments/remittances and ATM/debit cards; cannot lend or issue credit cards.

Bandhan Financial Services: Established 2001, HQ Kolkata. India Post Payments Bank: Started 1 September 2018.

Companies incorporated under the Companies Act and conducting permitted financial business (lending, investment, leasing and other services); RBI registration generally required under Section 45-IA unless exempt.

NBFCs need not maintain SLR/CRR; do not form part of the payment and settlement system; no insurance facility by DICGC for depositors.

Small-scale collateral-free credit and related financial services for low-income households with limited formal-finance access; not defined by donor dependence.