2. Definition
A bank is a financial Institution and a financial intermediary that
accepts deposits and channels those deposits into lending activities,
either directly or through capital markets. A bank connects customers
that have capital deficits to customers with capital surpluses.
A banker or bank is a financial institution whose primary activity is to
act as a payment agent for customers and to borrow and lend money
Banking is one of the key drivers of the economy. Why?
It provides the liquidity needed for families and businesses to invest for
the future. Bank loans and credit means families don't have to save up
before going to college or buying a house, and companies can start
hiring immediately to build for future demand and expansion.
Here's how banking works. Banks provides a safe place to save excess
cash, known as deposits. Instead of sitting uselessly under the
mattress, banks can turn every one of those Rupee into Wealth. Banks
primarily make money by charging higher interest rates on their loans
than they pay for deposits.
3. Origin of the word
The word bank was borrowed in Middle English from Middle
French banque, from Old Italian banca, from Old High
German banc, bank "bench, counter".
Benches were used as desks or exchange counters during
the Renaissance by Florentine bankers, who used to make their
transactions atop desks covered by green tablecloths.
One of the oldest items found showing money-changing activity is a silver
Greek drachm coin from ancient Hellenic colony Trapezus on the Black
Sea, modern Trabzon, c. 350–325 BC, presented in the British Museum in
London. The coin shows a banker's table (trapeza) laden with coins, a pun
on the name of the city.
In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means
both a table and a bank.
Another possible origin of the word is from the Sanskrit words ( )
'byaya' (expense) and 'onka' (calculation) = byaya-onka. This word
still survives in Bangla, which is one of Sanskrit's child languages.
4. Indian Banking Scenario
Banks in India can be categorized into Scheduled and Non-scheduled Banks
Scheduled Banks
Non-Schedule Banks
Banks in India can also be categorized as:
1. Public Sector Banks
2. Private Sector Banks
3. Foreign Banks
4. Regional Rural Banks (RRBs)
5. RBI: The Regulator
The Reserve Bank of India was created
with the central task of maintaining
monetary stability in India. The
Government on December 20, 1934
issued a notification and on January 14,
1935, the RBI came into existence,
though it was formally inaugurated only
on April 1, 1935.
Main functions of RBI are
Regulate the issue of banknotes2.
Maintain reserves with a view to
securing monetary stability and3.
To operate the credit and currency
system of the country to its advantage
6. Regulatory Framework in India
REGULATOR ROLE
RESERVE BANK OF INDIA (RBI) Banker to every Bank
AMFI Regulates Mutual Fund Transactions
INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY(IRDA) Regulates Insurance Transactions
FEMA Regulates Foreign Exchange Transactions
Regulates through Banking Practices
WORLD BANK implementation worldwide to strengthen
the International Banking
Regulates through setting of norms for
BASEL NORMS Risk Management in advances.
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) Regulates the Stock Market transactions
Regulates Forward trading and treasury
FORWARD MARKETS COMMISSION (INDIA) (FMC) transactions
7. Banking Functions and Units
Banking Functions Target Audience Porducts
Saving A/c,Salary A/c,FDR,RD,Fund Transfers
Retail Banking Average Individual etc.
Non fund based advances,LC,BG,Packing
Commercial Banking SMLE Credit,Derivatives
Current Account,Overdraft Facilities,Cash Credit
Business Banking SME Loans
Agriculturist and allied small Farm Equipment and Machinery Loans,Kisan
Priority Banking traders Credit Card and Loans for Crop Aggregators
No Frill Accounts for Poor, Loans and Advances
Low Income segment, BPL, through Micro Finance companies and
Landless Laborers and distribution machinery for Government Schemes
Inclusive Banking Government Institutions E.g. SGSSY,SRY etc.
Corporate Banking Large Enterprises Loan Sydication,Advances etc
Financial Institution Other Banking Institutions,Co-
Banking op,Urban and RRB's Treasury Services, Call Money and FDR's
8. World Banking Scenario: Focus Areas
Returning Shareholders value
Foster Financial Inclusion
Contribute to GDP growth
Effectively manager intermediation cost
Effectively allocate capital and maintain stability
9. Best Banks in the World
Rank Assets Capital
Current Previous Bank US$m US$m
1 1 Deutsche Bank AG , Frankfurt am Main , Germany 2,804,332 3,084.10
2 2 BNP Paribas SA , Paris , France 2,546,693 33,274.59
Industrial & Commercial Bank of China Limited , Beijing ,
3 3 China 2,458,597 55,454.17
4 4 Barclays Bank PLC , London , UK 2,426,889 22,499.22
5 5 JAPAN POST BANK Co Ltd , Tokyo , Japan 2,320,244 41,980.52
6 6 Crédit Agricole SA , Montrouge , France 2,233,521 9,711.03
7 7 The Royal Bank of Scotland plc , Edinburgh , UK 2,224,124 10,259.24
8 8 China Construction Bank Corporation , Beijing , China 1,951,046 39,715.81
9 9 Bank of China Limited , Beijing , China 1,879,280 44,344.24
10 10 Agricultural Bank of China Limited , Beijing , China 1,855,056 51,595.55
11 11 The Bank of Tokyo-Mitsubishi UFJ Ltd , Tokyo , Japan 1,840,587 20,533.97
JPMorgan Chase Bank National Association , New York
12 12 , USA 1,811,678 1,785.00
13 13 Banco Santander SA , Boadilla del Monte , Spain 1,621,778 5,772.97
14 14 Sumitomo Mitsui Banking Corporation , Tokyo , Japan 1,591,849 21,242.10
15 15 Lloyds TSB Bank plc , London , UK 1,534,253 2,443.34
16 16 Société Générale , Paris La Défense , France 1,530,870 1,256.97
17 17 UBS AG , Zürich , Switzerland 1,511,838 408.01
18 19 BPCE , Paris , France 1,475,178 20,750.29
19 18 Bank of America NA , Charlotte , USA 1,451,969 3,020.04
20 20 Citibank NA , New York , USA 1,288,592 751
21 21 HSBC Bank plc , London , UK 1,285,269 1,237.19
22 22 ING Bank NV , Amsterdam , Netherlands 1,245,516 680.32
Banking Institutions with Foot Prints in India are marked Bold
10. Indian Banking Wish List
Indian Banking has a big potential while quoting "Top Ten
Indian Banks are way behind the Biggest asset Bank in
China"
At a time when bankers across the world are being termed
as 'London Whale', hedge-fund sharks and various other
deadly creatures, Indian financial system remains
intact despite its "boring banking" tag.
