Latest In RBI RBI has appointed M Rajeshwar Rao as Executive Director following retirement of G Mahalingam. . RBI has issued new series of notes for 500 rupees & 2000 rupees denomination with improved features & newer sizes on order of Prime Minister Finance Minister has asked RBI to form special cell to monitor fake notes.
Banks in India Commercial Banks: According to the RBI, "Commercial Banks refer to both scheduled and non- scheduled commercial banks which are regulated under Banking Regulation Act, 1949." Commercial banks operate on a for-profit' basis. They primarily engage in the acceptance of deposit and extend loans to the general public, businesses and the government. . Scheduled Banks: By definition, any bank which is listed in the 2nd schedule of the Reserve Bank of India Act, 1934 is considered a scheduled bank. To qualify as a scheduled bank, the paid up capital and collected funds of the bank must not be less than Rs5 lakh
Continued... . Non-Scheduled Banks: Non-scheduled banks by definition are those which are not listed in the 2nd schedule of the RBI act, 1934. Banks with a reserve capital of less than 5 lakh rupees qualify as non-scheduled banks. Unlike scheduled banks, they are not entitled to borrow from the RBI for normal banking purposes, except, in emergency or "abnormal circumstances." Jammu & Kashmir Bank is an example of a non-scheduled commercial bank. e Cooperative Banks: Unlike commercial banks, who are driven by profit, co-operative banks work on a "no profit, no loss" basis. These are regulated by the Reserve Bank of India under the Banking Regulation Act, 1949 and Banking Laws (Application to Co-operative Societies) Act, 1965.
Commercial Banks . A commercial bank is a financial institution which performs the functions of accepting deposits from the general public and giving loans for investment with the aim of earning profit. .In fact, commercial banks, as their name suggests, axe profit seeking institutions, i.e., they do banking business to earn profit. They generally finance trade and commerce with short-termm loans. They charge high rate of interest from the borrowers but pay much less rate of Interest to their depositors with the result that the difference between the two rates of interest becomes the main source of profit of the banks. Most of the Indian joint stock Banks are Commercial Banks such as Punjab National Bank, Allahabad Bank, Canara Bank, Andhra Bank, Bank of Baroda etc.
Core functions and services Accepting money on various types of Deposit accounts Lending money in the form of Cash: by overdraft, instalment loan etc. . Inter- Financial Institutions relationship . Cash management Treasury management Private Equity financing Issuing Bank drafts and Bank cheques . Processing payments via telegraphic transfer, internet banking, or other payment methods
Agency Functions To collect and clear cheques, dividends and interest warrant. . To make payments of rent, insurance premium, etc. To deal in foreign exchange transactions. To purchase and sell securities. . To act as trustee, attorney, correspondent and executor. . To accept tax proceeds and tax returns.
Utility Functions . To provide safety locker facility to customers. To provide money transfer facility . To issue traveller's cheque. . To act as referees . To accept various bills for payment: phone bills, gas bills, water bills, etc To provide merchant banking facility. To provide various cards: credit cards, debit cards, smart cards, etc
Types of Commercial banks Public Sector Banks: Refer to a type of commercial banks that are nationalized by the government of a country. In public sector banks, the major stake is held by the government. In India, public sector banks operate under the guidelines of Reserve Bank of India (RBI), which is the central bank. Some of the Indian public sector banks are State Bank of India (SBI), Corporation Bank, Bank of Baroda, Dena Bank, and Punjab National Bank.
Continued . Private Sector Bank: Refer to a kind of commercial banks in which major part of share capital is held by private businesses and individuals. These banks are registered as companies with limited liabilitv. Some of the Indian private sector banks are Vysya Bank, Industrial Credit and Investment Corporation of India (ICICI) Bank, and Housing Development Finance Corporation (HDFC) Bank.
Continued Foreign Banks: Refer to commercial banks that are headquartered in a foreign country, but operate branches in different countries. Some of the foreign banks operating in India are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank, and Grindlay's Bank. In India, since financial reforms of 1991, there is a rapid increase in the number of foreign banks. Commercial banks mark significant importance in the economic development of a country as well as serving the financial requirements of the general public.
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