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Group members


Roll no.

Anand bhatt


Alka makwana


Chandni parikh


Ishita shah


Parth vora


Introduction to Banking


Meaning and Definition

Evolution of Banking
Functions of Bank
Different Types of Bank

Meaning and Definition

A bank is an institution which deals in money
and credit. Thus bank is an intermediary which
handles other peoples money both for their
advantage and to its own profit.
Dr. L.Hart, says that the bankers as one who in
the ordinary course of business honours cheque
drawn upon him by person from and for whom
he receives money on current accounts.

Evolution Of Banking
The development of banking is
evolutionary in nature.
The word bank is derived from the
French bancus or banque which means
a bench.
Thus, the origin of the word bank can be
traced as follows:

Functions of banks
Dealing in money: The banks deals in money.
They accept deposits from the public. There are
different types of deposits such as saving, current,
fixed, recurring, etc. banks advance money as
loans to the needy people.
Agency: banks act as an agents of the customer.
They provide variety of agency services, besides
the basic function of accepting deposits and lending
money. Fund transfer, credit cards, telebanking,
cheque clearing, bills collection are some of the
services provided by the banks as an agent.

Credit creation: creation of credit is an

unique features of banking. Every deposits
can create credit. Additional money cab be
created for the purpose of lending. There
is a limit for such credit.
Commercial nature: all the banking
function are carried out with the aim of
making profit. They pay interest on
deposits and these deposits are advanced
to the needy persons at a higher rate of

Different banks

Commercial bank

Co-operative Banks

Development bank


Short term



Long term





Reserve bank of India

The reserve bank of India was originally

constituted as a shareholders bank in 1935
under the reserve bank of India Act, 1934.
The bank was nationalised on 1st January, 1949.
The bank is vested with large powers of
supervision, control, direction and inspection of
scheduled and non-scheduled banks.

Role and function of RBI

Note Issuing Authority
Government Banker
Bankers Bank
Exchange Management And Control
Supervising Authority
Credit Control
Development And Promotion
Export Finance

Commercial bank
Commercial banks are the oldest and fastest
growing banks in India.
Commercial banks include scheduled, nonscheduled, Indian, foreign , public sector,
private sector and regional rural banks
The commercial banks have undergone a
major transformation with the introduction of
new economic policy of Liberalization ,
Privatization and Globalization

Function of commercial bank

Accepting deposits
Giving loans
Creation of credit
Bill discounting
Remitting funds
Miscellaneous funds
Agency function

Classification of commercial
Scheduled banks
A bank in order to be designated as a
scheduled bank, should have a paid up capital
and reserves as prescribed by the Act. As per
section 42 (6) of the Reserve Bank has
prescribed a minimum capital of Rs.100 crores.
The scheduled banks are required to maintain
with the Reserve bank a deposit in the form of
Cash Reserve Ratio, based on its demand and
time liabilities, at a prescribed rate.

Non-Scheduled Banks
The commercial banks which are not included
in the second schedule of the Reserve Bank
of India Act, 1934 are called as Nonscheduled Banks.
They are not entitled to facilities like
refinance, and rediscounting of bills from the
Reserve bank. They do not get the privileges
that are available to the scheduled banks.

Co-operative banks
The co-operative banking started in India in 1904,
when official efforts were initiated to create new type
of institution based on the principles of co-operation.
Co-operative banks are managed by the board of
directors on the principles of co-operation, self-help
and mutual help. They function as per rule of one
member- one vote.
They also get financial help from Reserve Bank Of

Function of co-operative banks

The short term structure of co-operative banks like
primary agriculture credit societies accept the
deposit and provide timely adequate short term
and medium term loans to member on reasonable
rate of interest, terms conditions.
To undertake educative, advisory and welfare
functions for the benefit of farmers.
To promote the economic interests of members.
To provide a safe place for investing the reserves
of primary societies.

Regional rural banks (RRBs)

Regional rural banks were set up under an
of parliament in 1976, with the objective of
developing rural economy through
promotion of agriculture, trade, commerce,
industry and extending credit, particularly
to the small entrepreneurs.

Objectives of RRBs
To provide credit facilitates to the farmers,
agricultural labourers and others those
engaged in rural activities.
To develop agriculture, commerce, trade,
industry and other productive activities in the
rural areas.
To encourage rural entrepreneurship.
To increase employment opportunities in the
rural areas.

Development banks
Development banking was conceived as
an instrument for achievement of national
economic objectives.
Government intervention to promote
economic growth.
High protection to domestic industry.
Promotion of fixed capital assets through
different subsidies.

Function of development banks

Development banks play an important role
in the promotion and development of the
small scale sector. SIDBI provides direct
finance to SSI units. It also refinances
banks and financial institutions that provide
seed capital equipment finance, etc.
Govt. of India started the National Housing
Bank (NHB) in 1988. It promises and
develops housing and financial institutions.

NABARD started in 1982 to provide

refinance to banks which provide credit to
the agriculture sector and also for rural
development activities and also helps to
conduct agricultural research.
Govt. of India started EXIM Bank in 1982
t provide medium and long-term finance to
exporters and importers from India. It
provides overseas buyers credit to buy
Indian capital goods.

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