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Commercial banks
A financial institution that accepts deposits, provides checking account services, makes a variety of loans, and provides fundamental financial products to individuals and small businesses is referred to as a commercial bank. Commercial banks also offer basic financial products such as certificates of deposit (CDs) and savings accounts. The majority of customers conduct their financial transactions at commercial banks. Commercial banks generate revenue by acting as lenders and collecting interest payments from borrowers of various types of loans, including mortgages, auto loans, business loans, and personal loans.
The Operation of Commercial Banks
The general public, including individual consumers as well as small and medium-sized businesses, can access the fundamental banking services and products offered by commercial banks. These services consist of checking and savings accounts, loans and mortgages, fundamental investment services like CDs, and additional services like safe deposit boxes. Service charges and other fees are the primary sources of revenue for banks. Account fees (monthly maintenance charges, minimum balance fees, overdraft fees, and non-sufficient funds (NSF) charges), safe deposit box fees, and late fees are some examples of these types of fees. These fees vary depending on the products that are being purchased. In addition to interest payments, the majority of loan products also require payment of fees.
Mutual fund history
Unit Trust of India was established in 1963, marking the beginning of the mutual fund industry in India. This establishment came about as a result of a joint effort by the Government of India and the Reserve Bank of India. It’s possible to roughly split the development of mutual funds in India’s history into four distinct phases.
The Beginning Years, 1964–1987
An Act of Parliament passed in 1963 led to the establishment of the Unit Trust of India (UTI). The Reserve Bank of India was the organisation that initiated its establishment, and it continued to exercise regulatory and administrative authority over its operations. In 1978, the link between UTI and the RBI was severed, and in its place, the Industrial Development Bank of India (IDBI) was given the responsibility of exercising regulatory and administrative control. Unit Scheme 1964 was the initial investment opportunity offered by UTI. At the end of 1988, the total value of assets managed by UTI was approximately Rs. 6,700 crores.
Second Phase: Between 1987 and 1993 (Entry of Public Sector Funds)
In 1987, non-UTI, public sector mutual funds that were set up by public sector banks, the Life Insurance Corporation of India (LIC), and the General Insurance Corporation of India were allowed to begin operations (GIC). The SBI Mutual Fund was the first non-UTI Mutual Fund to be established in June of 1987. This was followed by the establishment of the Canbank Mutual Fund in December of 1987, the Punjab National Bank Mutual Fund in August of 1989, the Indian Bank Mutual Fund in November of 1989, the Bank of India in June of 1990, and the Bank of Baroda Mutual Fund in June of 1990. (Oct 92). The mutual fund that was run by LIC was established in June 1989, while the mutual fund that was run by GIC was established in December 1990.
The Third Phase lasted from 1993 to 2003. (Entry of Private Sector Funds)
A new era in the history of the Indian mutual fund industry began in 1993 with the introduction of funds from the private sector. This provided Indian investors with a greater variety of fund families from which to choose. In addition, 1993 was the year that the first Mutual Fund Regulations were enacted. These regulations required that all mutual funds, with the exception of UTI, be registered and governed in accordance with their provisions. In July of 1993, the Kothari Pioneer mutual fund became the first private sector fund to be registered as a mutual fund with the Securities and Exchange Commission (SEC).
Since February of 2003, the fourth phase has been in effect.
UTI was split into two distinct organisations in February of 2003, shortly after the Unit Trust of India Act of 1963 was declared unconstitutional and repealed. One of these is called the Specified Undertaking of the Unit Trust of India, and it had Rs. 29,835 crores worth of assets under management as of the end of January 2003. These assets represented, in a broad sense, the assets of the US 64 scheme, assured return, and a few other schemes. The Specified Undertaking of Unit Trust of India, which operates under the supervision of an administrator and in accordance with the guidelines established by the Government of India, is exempt from the regulations that apply to mutual funds.
Permit commercial banks
- According to the announcement that was made in paragraph 35 of the Fourth Bi-monthly Monetary Policy Statement, 2015-16 that was announced on September 29, 2015, it has been decided to permit the scheduled commercial banks to take short positions in the “When Issued” (WI) market for both new and reissued securities. This decision was made in light of the fact that it has been decided to allow the scheduled commercial banks to take short positions. It was also decided to allow other eligible entities such as mutual funds, insurance companies, pension funds, housing finance companies, NBFCs, and UCBs to take long positions in the ‘WI’ market. These entities include pension funds, mutual funds, insurance companies, and housing finance companies.
- In addition, the sum of all net short positions held by all entities will be added together to determine the aggregate net short positions in a new security, and this sum will be monitored on NDS-OM. The cap will be set at 90 percent of the amount that was notified.
- If an entity holding a net short position is unable to deliver securities after the auction on the settlement date, the transaction will be settled in accordance with the default settlement mechanism of CCIL. This will occur in the event that the entity is unable to deliver securities after the auction.
Conclusion
A financial institution that accepts deposits, provides checking account services, makes a variety of loans, and provides fundamental financial products to individuals and small businesses is referred to as a commercial bank. Commercial banks also offer basic financial products such as certificates of deposit (CDs) and savings accounts. Unit Trust of India was established in 1963, marking the beginning of the mutual fund industry in India. This establishment came about as a result of a joint effort by the Government of India and the Reserve Bank of India.According to the announcement that was made in paragraph 35 of the Fourth Bi-monthly Monetary Policy Statement, 2015-16 that was announced on September 29, 2015, it has been decided to permit the scheduled commercial banks to take short positions in the “When Issued” (WI) market for both new and reissued securities.
