Mr. B.J. VedMr. B.J. Ved

Banking is defined in Sec.5(b) of Banking Regulations Act (BRA) 1949 as

“Accepting for the purpose of lending or investment deposits of money

from public repayable on demand or otherwise & withdrawable by

cheque, draft, order or otherwise.

Banking Company (defined in Sec.5(c ) of BRA 1949) means any

company which transacts the business of banking in India.

Banker (defined in Sec.3 of N.I. Act 1881) includes any person acting as

a banker and any post office saving bank.

Deposits:- Repayable on demand:- Savings Bank Deposits , Current

Deposits. (CASA) , Flexi Deposit. Cheque book provided.

Repayable otherwise than on demand:- Recurring Deposits,

Fixed Deposit, Reinvestment Plan, Regular Income cum Recurring

Deposit (RIRD) etc. 2

Lending:-

(A) Fund Based Lending:-

1) Loans – Demand (Repayable within 35 months) & Term Loans

2) Overdraft Facility

3) Cash Credit Facility against pledge or hypothecation of goods,

against hypothecation of book-debts or against assignment of supply

Bills (Bills drawn for goods and services supplied to Govt. or Semi-

Govt. departments

4) Bills Purchased / Discounted.

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(B) Non Fund Based Facilities:-

1) Letters of Credit (L/Cs)

2) Guarantees

3) Co-acceptance Limits

Investments:-

SLR Investments (Presently 24% of Demand & Time Liabilities)

Investments in approved Govt. & Semi-Govt. Securities classified as

i. Held to Maturity (HTM)

ii. Held For Trading (HFT)

iii. Available For Sale (AFS)

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Banking Business:- (Sec.6 of BRA 1949):- Activities in addition to Banking

Business

1.Primary Functions:-

a) Agency Functions:-

i. Collection of Cheques & Bills

ii.Sale and purchase of securities. ( Bank-Agent, Customer – Principal)

b) Remittance of Funds:-

Through Demand Draft (DD), Mail Transfer (MT), Telegraphic Transfer (TT),

Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT)

c) Trustees & Executors

d) Execution of Standing orders / Instructions,

e) Representative & Correspondent.

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2. General Utility Functions:-

a) Locker Facility (Bank Lesser – Customer Lessee)

b) Safe custody of Articles ( Bank – Bailee , Customer – Bailor )

c) Issue of Travellers Cheques

d) Foreign Exchange Business

e) Merchant Banking Business

f) L/C Related Business

3. Developmental Functions:-

a) Financial Inclusion

b) Loans to weaker sections

c) Assistance to capital market.

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Present status of India

A. 26 Public Sector Banks – 19 Nationalised Banks (1969 / 1980), IDBI

Bank Ltd; State bank of India & 5 Subsidiaries of SBI namely S.B. of

Hyderabad, S.B. of Travancore, S.B. of Bikaner & Jaipur, S.B. of

Mysore & S.B. of Patiala.( Two subsidiaries of S.B. I. namely S.B. of

Saurashtra & S.B. of Indore have been merged with State Bank of

India.)

B. -15-Old Private Sector banks

C. -7-New Private Sector Banks

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D. -31-Foreign banks

E. -86-Regional Rural Banks

F. -31-State Co-op Banks

G. -371- District Central Co-op Banks

H. -1721- Urban Co-op Banks

I. -4-Local Area Banks

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