Daily Classes anking & Financial Awareness Banking Exams Kapil Kathpal
* Credit & Risk Analyst (S.O. Post) in a Public Sector Bank. * 7 years Banking experience. Selected as SBI PO and also cracked IBPS PO * Appeared in UPSC Civil Services Mains (2017) Academics: Chartered Financial Analyst (C.F.A.) Masters in Commerce (Accounting & Business Statistics). Diploma in Treasury, Investment & Risk Management. JAIIB & CAIIB Follow me on Unacademy: https://unacademy.com/user/Zinni "RATE REVIEW & RECOMMEND" VERIFIED
Daily Classes anking & Financial Awareness RRB,LAB & Foreign Banks Kapil Kathpal
Regional Rural Banks Regional Rural Banks are local level banks operating in different States of India. They have been created with a view to serve primarily the rural areas of India with basic banking and financial services. However, RRBs may have branches set up for urban operations and their area of operation may include urban areas too. The area of operation of RRBs is limited to the area as notified by Government of India covering one or more districts in the State. RRBs perform various functions in following heads: Providing banking facilities to rural and semi-urban areas. Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc. Providing Para-Banking facilities like locker facilities, debit and credit cards.
History of RRBs The Government set up Narasimham Working Group in 1975. On the basis of this committee's recommendations, a Regional Rural Banks Ordinance was promulgated in September 1975, which was replaced by the Regional Rural Banks Act 1976.The development process of RRBs started on 2 October 1975 with the forming of the first RRB, the Prathama Bank with authorised capital of Rs. 5 crore at its starting. Also on 2 October 1975 five regional rural banks were set up with a total authorised capital of Rs. 100 crore ($10 Million which later augmented to 500 crore ($50 million) The RRBs owned by three entities with their respective shares as follows: Central Government-) 50% State government .> 15% sponsor bank-> 35% E,I > Regional Rural Banks were conceived as low cost institutions having a rural ethos, local feel and pro poor focus. Every bank was to be sponsored by a "Public Sector Bank".
Some more facts Currently, RRB's are going through a process of amalgamation and consolidation. 25 RRBs have been amalgamated in January 2013 into 10 RRBs On 31 March 2016, there were 56 RRBs (post merger) covering 525 districts with a network of 14,494 branches. All RRBs were originally conceived as low cost institutions having a rural ethos, local feel and pro poor focus. However, within a very short time, most banks were making losses. This may be again amalgamated in near future At present there are 56 RRBs in India.
Foreign Banks Those banks having their Headquarters in other nations and have established branches in India Kapil Kathpal
Foreign Banks As of January 2018, there are 43 foreign banks from 26 countries operating as branches in India and 46 banks from 22 countries operating as representative offices in India. Most of the foreign banks having business focused on trade finance, external commercial borrowings, wholesale lending, investment banking and treasury services. Some other policy guidelines of RBI towards foreign banks are as follows: V They should have to meet minimum capital requirement of Rs. 5 billion They should need to maintain minimum CRAR at 10% Priority sector targets for foreign banks in India is 40%. V Further, the foreign banks have to follow other norms as set by Reserve Bank of India.
Local Area Banks Local Area Banks were set up as per a Government of India Scheme announced in August 1996. The intention of the government was to set up new private local banks with jurisdiction over two or three contiguous districts. The objective of establishing the local area banks was to enable to mobilization of the rural savings by local institutions and make them available for investments in local areas. Thus, the overall idea was to bridge the gaps in the credit availability in the rural and semi-urban areas. Each local Area bank is registered as a public limited company under the Companies Act 1956. However, they are licensed under the Banking Regulation Act, 1949. Local Area Banks have jurisdiction over a maximum of three contiguous districts. The minimum start-up capital of a LAB was fixed at Rs.5 crore The Local Area banks are subject to prudential norms, accounting policies and other policies as stipulated by the RBI. Such a bank has to maintain capital adequacy at 9% of risk weighted assets.
Local Area Banks As on January 2018; There are only three Local Area Banks (LAB) in India, which exist in the form of Non-scheduled banks. They are as follows: 1) Coastal Local Area Bank Ltd This bank was established on 27th December 1999. Its area of operation includes three contiguous districts viz. Krishna, Guntur and West Godavari. Its head office is located at Vijayawada in Andhra Pradesh 2) Krishna Bhima Samruddhi Local Area Bank Ltd This bank was established on 28th February 2001 with an area of operation comprising three contiguous districts of Mahbubnagar in Andhra Pradesh and Raichur and Gulbarga in the state of Karnataka with its head office at Mahbubnagar(Andhra Pradesh) 3) Subhadra Local Area Bank Ltd., Kolhapur This is smallest Local Area Bank with only 8 branches. Its head office is in Kolhapur.
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