3. INDIA
All banks which are included in the Second
Schedule to the Reserve Bank of India Act,
1934 are Scheduled Banks.
These banks comprise Scheduled Commercial
Banks and Scheduled Co-operative Banks.
4. Scheduled
Commercial
Banks
State Bank of
India and its
Associates
Nationalized
Banks
Foreign
Banks
Private
Sector
Banks,
Regional
Rural Banks
Scheduled
Co-operative
Banks
Regional
Rural
bank
Scheduled State
Co-operative
Banks
Scheduled Urban Co
operative Banks
5. Section 42(6) The Reserve Bank Of India Act,
1934 Scheduled Bank
The Bank shall, save as hereinafter provided, by
notification in the Gazette of India,- (a) direct the inclusion in the Second Schedule of any
bank not already so included which carries on the
business banking 3[ in India] and which–
(i) has a paid- up capital and reserves of an aggregate
value of not less than five lakhs of rupees, and
(ii) satisfies the Bank that its affairs are not being
conducted in a manner detrimental to the interest of its
depositors, and
(iii) 4[ is a State co- operative bank or a company] as
defined in 5[ section 3 of the Companies Act, 1956 (1 of
1956 ), or an institution notified by the Central
Government in this behalf] or a corporation or a
company incorporated by or under any law in force in
any place 6[ outside India];
6. EVOLUTION OF BANKING
Prior to 1950
Some schedule banks after RBI founded in 1935
were PNB, Allahabad Bank, Oudh Commercial
bank
Total around 58 banks existed
7. Foundation Phase 1948-1967
1949 Banking Regulation Act
Imperial Bank Of India converted into State bank
of India
Institutional frame work for long term financing to
agri and industry
By 1968 there were 281 banks 71 scheduled and
210 non scheduled
Till 1968 RBI and SBI with associates were under
the govt control
8. Expansion Phase 1968-1984
Socialization of Banking started in 1968
.Commercial banks were viewed as agents of
change
14 banks were nationalized in 1969 6 in 1980
Birth of RRB in 1975 and NABARD in 1982
By 1984 scheduled banks 264 and non scheduled
banks reduced to 268
9. Consolidation Phase( 1985-1990)
Consolidation of exiting banks
Focus on credit management , staff productivity
Assest liabilities priced by Rbi
High CRR and SLR
Consolidation of losses because of farmer debt
relief schemes
10. Reformatory Phase
NARASIMHAM COMMITTEE REPORT PHASE 1 – report
submitted – 1991
Recommended CRR reduction to 10% and SLR to 25%
Interest payment of 3% on cash balances above minimum
CRR balances
Interest rate deregulation
Minimum of 4% CAR capital adequacy ratio
Income recognition ,assets classification and provisioning
norms
Restructure to create 3or 4 large banks – gave the concept
of universal banks
Entry of Pvt. Banks with level playing field
Abolishment of branch licensing
Opening for foreign banks
Supervision of banks rather than regulation
Elimination of duality of control on banking sector
11. ACTION ON
RECOMMENDATION
CRR brought down from 15% to 5% in 2004
SLR from 38.5% to 25%
Inclusion in other areas in priority sector lending
of 40%
Bank to have PLR
Capital adequacy norms of 8%
Creation of Assets reconstruction fund
Restructuring new India bank merged with PNB
13. Pvt banks
Banking regulation Amendment Act 1994
permited entry of pvt sector banks 30
Allowed entry of foreign banks currently 33
14. (Narasimham Committee IIBanking Sector Reforms
RECOMMENDATIONS
The Committee suggests that pending the emergence of markets in
India where market risks can be covered, it would be desirable that
capital adequacy requirements take into account market risks in
addition to the credit risks.
In the next three years, the entire portfolio of
Government securities should be marked to market
and this schedule of adjustment should be announced
at the earliest. It would be appropriate that there
should be a 5% weight for market risk for Govt. and
approved securities.
15. CENTRAL BANK RBI
CENTRAL BANK OF INDIA
UNDER RBI ACT 1934
FUNCTIONAL SINCE 1935
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42. REGULATION OF MONEY AND
CREDIT
MONETARY TECHNIQUES
CRR AND SLR
OMO
REPO AND REVERSE REPO THROUGH LAF
43. REGULATION OF MONEY AND
CREDIT CONDITIONS
NON- MONETARY TECHNIQUES
DIRECT CREDIT ALLOCATION
CREDIT RATIONING
REPO AND REVERSE REPO
