Hello Friends…Here we are all trying to clear the bank exams and people will laugh at us we don’t have the basic knowledge about banking and mainly about the Indian banking system and its structure.When your are preparing for the bank exams then you should know the basic information about the banks and the produre. Many aspirants will be trying to by-heart each and every definition and will try to load them into their minds till it gets full. But what about the very basics of banking, like when did the banks get nationalized, why did they get nationalized and what is RBI?? All these questions are equally important as the definitions do. Coming to the exam that you are going to write,in that questions will be asked in MCQ type and if you have a little knowledge about the concept, you can easily answer the questions based on the options be careful the options will also be tricky to confuse too.
But, when you are being interviewed, what will be your situation? There You will not be given any options to choose one from it; you will be asked orally about the banking procedure in India and you need to answer them framing the answer. This will be possible only when you are well aware about the system. Hence, you need to start from the basics of the topic, which ever or whatever you want to know. If you are reading or studing about RBI, then read from the committee which was responsible for the introduction of RBI, its first governor, minimum paid-up capital. That is, try to cover all the basic things about the RBI. This makes sure that you don’t miss or leave to answer any question you get on the topic.
Banking Abbreviations and Full Forms for IBPS RRB SBI
Here are providing you with some of the most basics of the banking system which covers: the apex bank, types of banks which come under it, their functioning and some more important points which are to be covered from the examination point of view and interview point of view. Banks are classified into several types for the academic discussion. Commercial Banks, Agricultural Banks, Industrial Banks, Cooperative Banks, Indigenous Bankers, Foreign Banks/ Exchange Banks, and Central Bank are Types of Banks in India.
- Reserve Bank of India
- Scheduled Commercial Banks
- Agriculture Banks
- Industrial Banks
- Cooperative Banks
- Foreign Banks
- Indigenous Banks
- Central Bank
Reserve Bank of India:
RBI is the Central Bank of India, which acts as a banker to the government. It is also called as “Bankers bank”, because all banks will have accounts with RBI. It provides funds to all banks hence it is called as BANKERS BANK. RBI was established by an act of Parliament in 1934. It has four zonal offices at Mumbai, Kolkata, Chennai and Delhi and 19 regional offices
Current Governor: Dr. Raghuram Rajan
Deputy Governors: H R Khan, Dr Urjit Patel, R Gandhi and S S Mundra
Head office: Mumbai
Functions: Issues currency notes, Acts as bankers bank, Maintain foreign exchange reserves, Maintains CRR and SLR
Its affairs are regulated by 21-member central board of directors: Governor (Dr. Raghuram Rajan), 4 deputy Governors, 2 Finance Ministry representatives, 10 Government-nominates directors,4 directors to represent local boards
Policy Rates, Reserve Ratios, Lending and Deposit Rates as of July 15, 2014
Bank Rate: 9:00%
Repo Rate: 8:00%
Reverse Repo Rate: 7:00%
Cash Reserve Ratio (CRR): 4%
Statutory Liquidity Ratio (CRR): 22.00%
Base Rate: 10.00%-10.25%
Savings Deposit Rate: 4%
Term Deposit Rate: 8.00%-9.5%
Currency notes other than one rupee notes are issued by RBI. The initial share capital for RBI was Rs. 5 Crores
Scheduled Commercial Banks:
Commercial Banks are also being known as Deposit Banks. Commercial Banks are Joint stock companies. These Commercial banks established under Special Acts at public or private sector banks as pet the act. Depending upon their region these banks can be categorized as Domestic Banks or Foreign Banks. The main functions of these banks are taking deposits, lending money through overdrafts, loans, discount of bills.
- Nationalized Banks
- Private Sector Banks
- Regional Rural Banks
- Urban Cooperative Banks
- State Cooperative Banks
Nationalized Banks:
Nationalized banks are the banks which are owned and run by government of India. There are total of 20 nationalized banks. In 1969, 14 banks, in 1980, 6 banks were nationalized. Nationalized banks are Allahabad bank, Andhra bank, Bank of Baroda, Bank of India, Bhartiya Mahila bank, Canara bank, Central Bank of India, Corporation bank, Dena bank, IDBI bank, Indian bank, Indian Overseas bank, Oriental Bank of Commerce, Punjab National bank, Punjab & Sind bank, Syndicate bank, UCO bank, Union bank of India, United bank of India, Vijaya bank.
Private Sector Banks:
Private Banks are the banks which are owned and run by individuals. Private banks are split into two groups by financial regulators in India they are
Old Private sector banks: The banks which were not nationalized at the time of bank nationalization that took place during 1969 and 1980 are known as old private sector banks.
New Private Sector Banks: Banks which came in operation after 1991, with the introduction of economic and financial sectors reforms are called “new private-sector banks”
These banks were formed as per RBI guidelines 1993. These banks should have a minimum net worth of Rs.200 Crores. The promoters holding should be a minimum of 25% of the paid-up capital. Within 3 years of the starting of the operations, the bank should offer shares to public and their net worth must increased to 300 Crores. New private-sector banks in India are Axis Bank, Bank of Punjab, Centurian Bank, Development Credit Bank, SBI Bank, ICICI Bank, IndusInd Bank, Kotak Mahindra Bank, Yes Bank, Times Bank (Merged with HDFC Bank Ltd.), Global Trust Bank (Merged with Oriental Bank of Commerce), Balaji Corporation Bank Limited.
Foreign Banks: are those that are based in a foreign country but have several branches in India. Some examples of these banks include; HSBC, Standard Chartered Bank etc.
Regional Rural Banks: were brought into operation with the objective of providing credit to the rural and agricultural regions and were brought into effect in 1975 by RRB Act. These banks are restricted to operate only in the areas specified by government of India. These banks are owned by State Government and a sponsor bank. This sponsorship was to be done by a nationalized bank and a State Cooperative bank. Prathama Bank is one such example, which is located in Moradabad in U.P.
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Agricultural Banks:
Agricultural credit needs are different from those of industry and trade. Industrial and commercial banks normally do not deal with agricultural finance. The agriculturists require:
(a) short-term credit to buy seeds, fertilizers and other inputs, and
(b) long-term credit to purchase land, to make permanent improvements on land, to purchase agricultural machinery and equipment, etc. In India, agricultural finance is generally provided by co-operative institutions. Agricultural co-operatives provide short-term loans and Land Development Banks provide the long-term credit to the agriculturists.
Industrial Banks:
Industrial banks, also known as investment banks, mainly meet the medium-term and long-term financial needs of the industries. Such long-term needs cannot be met by the commercial banks, which generally deal with short-term lending.
The main functions of the industrial banks are:
(a) They accept long-term deposits.
(b) They grant long-term loans to the industrialists to enable them to purchase land, construct factory building, purchase heavy machinery, etc.
(c) They help selling or even underwrite the debentures and shares of industrial firms,
(d) They can also provide information regarding the general economic position of the economy.
Cooperative banks:
These banks are controlled, owned, managed and operated by cooperative societies and came into existence under the Cooperative Societies Act in 1912. these banks are located in the urban as well in the rural areas. Although these banks have the same functions as the commercial banks, they provide finance to farmers, salaried people, small scale industries, etc. and their rates of interest of interest are lower as compared to other banks.
There are three types of cooperative banks in India:
- Primary credit societies
- Central cooperative banks
- State cooperative banks
Foreign Banks:
Foreign banks are registered and have their headquarters in a foreign country but operate their branches in India.
Central Bank:
Central bank is the apex institution, which controls, regulates and supervises the monetary and credit system of the country. Important functions of the central bank are:
(a) It has the monopoly of note issue;
(b) It acts as the banker, agent and financial adviser to the state;
(c) It is the custodian of member banks reserves;
(d) It is the custodian of nation’s reserves of international currency;
(e) It serves as the lender of the last resort;
(f) It functions as the bank of central clearance, settlement and transfer; and
(g) It acts as the controller of credit. Besides these functions, India’s central bank.
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