Impact of Changes in the Cash Reserve Ratio and Statutory Liquidity Ratio on the volume of loans and

advances made by commercial Banks:

The data provided below in table 1 indicates the changes in the CRR and SLR during the last few years and that
in table 2 indicates the advances made by the commercial banks.

Table 1:

As on CRR As on SLR

8-12-2006 5.5% 25-10-1997 25%

10-11-2007 7.5% 8-11-2008 24%

30-08-2008 9% 7-11-2009 25%

17-01-2009 5% 19-12-2010 24%

24-04-2010 6% 11-08-2012 23%

10-03-2012 5.5% 31-10-2013 22.5%

22-09-2012 4.75%

31-10-2012 4.25%

9-02-2013 4%

Advances made by commercial banks(Rs in crore)

Table 2

Bank 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

State Bank 4,16,768 5,42,503 6,31,914 7,56,719 8,67,579 10,45,616

of India

Punjab 1,19,502 1,54,703 1,86,600 2,42,107 2,93,775 3,08,725

National
Bank

ICICI Bank 2,25,616 2,18,219 1,81,206 2,16,366 2,53,728 2,90,249

Canara 1,07,238 1,38,219 1,69,335 2,11,268 2,32,490 2,42,177

Bank

Bank of 1,06,701 1,43,251 1,75,251 2,28,676 2,87,377 3,28,186

Baroda
In table 1 and 2, it is evident that a change in the CRR and SLR affects the advances made by the commercial
banks. During the fiscal 2008-09, the reduction in CRR from 9% to 5% and that of SLR from 25% to 24% has
facilitated an increase in lending performance of all the five commercial banks. For instance, the State Bank of
India has been able to advance Rs 5, 42,503 crore from the previous fiscal amount of Rs 4, 16,768. A 30%
increase in its rate of advancing credit to different sectors. Therefore, we can arrive at a conclusion that the
decrease in CRR and SLR for attaining expansionary monetary policy by the Central bank will lead to increase in
the rate of advances made by the commercial banks.

What is also very interesting to observe from the findings presented in the above tables is that, there has been
a decreasing trend in the rate of CRR and SLR in India over the past six years. The affect of this decreasing
trend is that these commercial banks are able to make increased advances in the economy.

Posted by sunil gurung at 22:32 No comments:

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Monday, 16 November 2015

Project Title:
A comparative analysis of lending performance of five commercial banks in the past six years
with reference to the changing CRR and SLR.

Introduction:
In this project, we will be looking at one of the primary functions of commercial banks as that of
advancing of loans to different sectors. Also, we will discuss about the ways in which commercial
banks extend loans and advances to their customers. However, the major objective of this project
report will primarily be looking at the regulations that are imposed by the Central Bank (considered
as the supreme monetary authority) for controlling the credit created by commercial banks through
loans and advances. Therefore, we will also discuss about some of the quantitative credit control
measures adopted by the central bank; the two important instruments which shall be dealt are (i)
Cash Reserve Ratio (CRR) and (ii) Statutory Liquidity Ratio (SLR). So, our endeavor is to present in
this project report the lending performance of five commercial banks in the past six years with
reference to the changing CRR and SLR.

Primary functions of commercial banks:

Modern Commercial banks perform a variety of functions and provide a number of services to their
customers. Traditional functions performed by commercial banks are: acceptance of deposits from
the public and provisions of credit to different sectors of the economy. However, with the growth
of modern banking, the banks have started providing a variety of services to their customers.
Modern banks are regarded as departmental store banks because they provide a wide variety of
services to their customers.

Economics project
Introduction

A commercial bank is a financial institution that is authorized by law to receive money from
businesses and individuals and lend money to them. Commercial banks are open to the public and
serve individuals, institutions, and businesses. A commercial bank is almost certainly the type of
bank you think of when you think about a bank because it is the type of bank that most people
regularly use.

Banks are regulated by federal and state laws depending on how they are organized and the services
they provide. Commercial banks are also monitored through the Federal Reserve System.

BAKI KA BOOK SE LIKHNA HAI

CRR(cash reserve ratio)

The reserve requirement (or cash reserve ratio) is a central bank regulation employed by most, but
not all, of the world's central banks, that sets the minimum fraction of customer deposits and notes
that each commercial bank must hold as reserves (rather than lend out). These required reserves are
normally in the form of deposits made with a central bank, or cash stored physically in the bank
vault (vault cash).

The required reserve ratio is sometimes used as a tool in monetary policy, influencing the country's
borrowing and interest rates by changing the amount of funds available for banks to make loans
with.[1] Western central banks rarely alter the reserve requirements because it would cause
immediate liquidity problems for banks with low excess reserves; they generally prefer to use open
market operations (buying and selling government-issued bonds) to implement their monetary
policy. The People's Bank of China uses changes in reserve requirements as an inflation-fighting tool,
and raised the reserve requirement ten times in 2007 and eleven times since the beginning of 2010.

An institution that holds reserves in excess of the required amount is said to hold excess reserves.
Statutory liquidity ratio (SLR)

Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the
commercial banks in India require to maintain in the form of gold, government approved securities
before providing credit to the customers. Statutory Liquidity Ratio is determined by Reserve Bank of
India maintained by banks in order to control the expansion of bank credit.

The SLR is determined by a percentage of total demand and time liabilities. Time Liabilities refer to
the liabilities which the commercial banks are liable to pay to the customers after a certain period
mutually agreed upon, and demand liabilities are such deposits of the customers which are payable
on demand. An example of time liability is a six month fixed deposit which is not payable on demand
but only after six months. An example of demand liability is a deposit maintained in saving account
or current account that is payable on demand through a withdrawal form such as a cheque.

The SLR is commonly used to control inflation and fuel growth, by increasing or decreasing it
respectively. This counter acts by decreasing or increasing the money supply in the system
respectively. Indian banks’ holdings of government securities are now close to the statutory
minimum that banks are required to hold to comply with existing regulation. When measured in
rupees, such holdings decreased for the first time in a little less than 40 years (since the
nationalisation of banks in 1969) in 2005–06.currently it is 21.00 percent.

State bank of india (SBI)

State Bank of India (SBI) is an Indian multinational, public sector banking and financial services
company. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. As
of 2014-15, it had assets of INR 20,480 billion (USD 310 billion) and more than 14,000 branches,
including 191 foreign offices spread across 36 countries, making it the largest banking and financial
services company in India by assets.[4][5][6] The company is ranked 232nd on the Fortune Global
500 list of the world's biggest corporations as of 2016.[7]

State Bank of India is one of the Big Four banks of India, along with ICICI Bank, Bank of Baroda and
Punjab National Bank.[8]

The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding, in
1806, of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank
of Madras merged into the other two "presidency banks" in British India, Bank of Calcutta and Bank
of Bombay, to form the Imperial Bank of India, which in turn became the State Bank of India in
1956.[9] Government of India owned the Imperial Bank of India in 1955, with Reserve Bank of India
(India's Central Bank) taking a 60% stake, and renamed it the State Bank of India. In 2008, the
government took over the stake held by the Reserve Bank of India.

State Bank of India is a banking behemoth and has 20% market share in deposits and loans among
Indian commercial banks.[10]

Last six years loan advances of sbi

Book se likhna hai

Punjab national bank (PNB)

Punjab National Bank is an Indian multinational banking and financial services company. It is a state-
owned corporation based in New Delhi, India. Founded in 1894, the bank has over 6,968
branches and over 9,656 ATMs across 764 cities. It serves over 80 million customers.[3]

Punjab National Bank is one of the Big Four banks of India, along with Bank of Baroda, ICICI Bank and
State Bank of India.[6] It has a banking subsidiary in the UK (PNB International Bank, with
seven branches in the UK), as well as branches in Hong Kong, Kowloon, Dubai and Kabul. It
has representative offices in Almaty (Kazakhstan), Dubai (United Arab Emirates), Shanghai
(China), Oslo (Norway) and Sydney (Australia). In Bhutan it owns 51% of Druk PNB Bank,
which has five branches. PNB owns 20% of Everest Bank Limited, which has 50 branches in
Nepal. Lastly, PNB owns 84% of JSC (SB) PNB Bank in Kazakhstan, which has four branches.

Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act, with its office
in Anarkali Bazaar, Lahore. The founding board was drawn from different parts of India
professing different faiths and a varied back-ground with, however, the common objective
of providing country with a truly national bank which would further the economic interest of
the country.[1] PNB's founders included several leaders of the Swadeshi movement such as
Dyal Singh Majithia and Lala Harkishan Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.
Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass.[7][8] Lala Lajpat Rai
was actively associated with the management of the Bank in its early years. The board first
met on 23 May 1894.[1] The bank opened for business on 12 April 1895 in Lahore.
PNB has the distinction of being the first Indian bank to have been started solely with Indian capital
that has survived to the present. (The first entirely Indian bank, Oudh Commercial Bank, was
established in 1881 in Faizabad, but failed in 1958.)

PNB has had the privilege of maintaining accounts of national leaders such as Mahatma Gandhi,
Jawahar Lal Nehru, Lal Bahadur Shastri, Indira Gandhi, as well as the account of the famous
Jalianwala Bagh Committee.[

LOAN ADVANCES OF PNB BOOK SE LIKHNA HAI

ICICI bank
ICICI Bank (Industrial Credit and Investment Corporation of India) is
an Indian multinational banking and financial services company headquartered
in Mumbai, Maharashtra, India, with its registered office in Vadodara. In 2014, it was the second
largest bank in India in terms of assets and third in term of market capitalisation. It offers a wide
range of banking products and financial services for corporate and retail customers through a
variety of delivery channels and specialised subsidiaries in the areas of investment
banking, life, non-life insurance, venture capital and asset management. The bank has a network
of 4,450 branches[4] and 13,995 ATMs[5] in India, and has a presence in 19 countries including
India.[6]

ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Bank of
Baroda and Punjab National Bank.[7] The bank has subsidiaries in the United Kingdom and
Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Oman,
Dubai International Finance Centre, China[8] and South Africa; [9] and representative offices in
United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has
also established branches in Belgium and Germany.[10]
Loan advances book se likhna hai

Canara bank
Canara Bank is an Indian state-owned bank headquartered in Bangalore, Karnataka. It was
established at Mangalore in 1906, making it one of the oldest banks in the country. The
government nationalized the bank in 1969. As of November 2015, the bank had a network of
5784 branches and more than 9153 ATMs spread across India. The bank also has offices
abroad in London, Hong Kong, Moscow, Shanghai, Doha, Bahrain,South africa, Dubai, and New
York.

Ammembal Subba Rao Pai, a philanthropist, established the Canara Hindu Permanent
Fund in Mangalore, India, on 1 July 1906.[2] The bank changed its name to Canara Bank Limited
in 1910 when it incorporated.
Canara Bank's first acquisition took place in 1961 when it acquired Bank of Kerala. Bank of
Kerala had been founded in September 1944 and at the time of its acquisition on 20 May 1961
had three branches. The second bank that Canara Bank acquired was Seasia Midland
Bank (Alleppey), which had been established on 26 July 1930 and had seven branches at the
time of its takeover.[3][4]

In 1958, the Reserve Bank of India had ordered Canara Bank to acquire G. Raghumathmul
Bank, in Hyderabad. This bank had been established in 1870, and had converted to a limited
company in 1925. At the time of the acquisition G. Raghumathmul Bank had five branches.[5] The
merger took effect in 1961.[4] Later in 1961, Canara Bank acquired Trivandrum Permanent
Bank. Trivandrum Permanent Bank had been founded on 7 February 1899 and had 14 branches
at the time of the merger.[4]

Next, Canara Bank acquired four banks in 1963: the Sree Poornathrayeesa Vilasam
Bank, Thrippunithura, Arnad Bank, Tiruchirapalli, Cochin Commercial Bank, Cochin,
and Pandyan Bank, Madurai. Sree Poornathrayeesa Vilasam Bank had been established on 21
February 1923 and at the time of its acquisition it had 14 branches. Arnad Bank had been
established on 23 December 1942 and at the time of its acquisition had only one branch. Cochin
Commercial Bank had been established on 3 January 1936, and at the time of its acquisition had
13 branches.[4]
Loan advances book se likhna hai

Bank of baroda
Bank of Baroda is an Indian state-owned banking and financial services company
headquartered in Vadodara (earlier known as Baroda) in Gujarat, India.It is the second largest
bank in India, next to State Bank Of India. Its headquarters is in Vadodara, it has a corporate
office in the Bandra Kurla Complex in Mumbai. Bank of Baroda is one of the Big Four banks of
India, along with ICICI Bank, State Bank of India and Punjab National Bank.[4]

Based on 2014 data, it is ranked 801 on Forbes Global 2000 list.[5][6] BoB has total assets in
excess of ₹ 3.58 trillion, a network of 5326 branches in India and abroad, and over 8000 ATMs.[7]

The bank was founded by the Maharaja of Baroda, Maharaja Sayajirao Gaekwad III on 20 July
1908 in the Princely State of Baroda, in Gujarat.[8] The bank, along with 13 other major
commercial banks of India, was nationalised on 19 July 1969, by the Government of India and
has been designated as a profit-making public sector undertaking (PSU).

In 2015, Bank of Baroda officials recently stumbled upon illegal transfers of a whopping Rs 6,172
crores in foreign exchange, made to Hong Kong through newly opened accounts in the bank's
Ashok Vihar branch.[9]
Loan advances book se likhna hai