F Y B.

COM (HONS) SEM -II

CORPORATE BANKING AND

INSURANCE

INDIAN BANKING SYSTEM (IBS)

CH :1 INDIAN BANKING SYSTEM

 OUTLINE OF THE CHAPTER
• INTRODUCATION/OBJECTIVE OF THE
CHAPTER
• QUESTIONS FROM THE CHAPTER
• QUIZ /CASE STUDY
• DISCUSSION OF THE SURPRISE
QUESTION/ANSWER
• OVERVIEW OF THE CHAPTER
INTRODUCTION OF THE CHAPTER
• The banking system in India works according
to the guidelines issued by the RBI. The
banking system is the lifeline of Morden
economy.
• The banks play an important role in
mobilization of deposits and disbursement of
credit to various sectors of the economy.
Indian banking system is one of the largest
banking system in the word.
 QUESTIONS FROM THE CHAPTER
1. EXPLAIN/DISCUSS THE STRUCTURE OF
INDIAN BANKING SYSTEM IN DETAIL.
2. COMMERCIAL BANKS AND ITS FUNCTIONS
3. REGIONAL RURAL BANKS AND ITS FUNCTIONS
4. COOPERATIVE BANKS AND ITS STRUCTURE
5. DISTINCTION BETWEEN COMMERCIAL BANKS
AND COOPERATIVE BANKS
6. CHARACTERISTICS OF A GOOD BANKING
SYSTEM.
 EXPLAIN/DISCUSS THE STRUCTURE OF
INDIAN BANKING SYSTEM IN DETAIL.
• MEANING :
Indian banking system is a perfect system in
which one regulator(RBI) providing rules and
regulation to manage different types of bank.
so as to provide banking facility to each and
every individual and industries.
 STRUCTURE OF INDIAN BANKING SYSTEM

Refer this link for more study: https://en.wikipedia.org/wiki/List_of_banks_in_India

•FUNCTIONS OF COMMERCIAL BANKS:
BANKING HISTORY OF INDIA
 REGIONAL RURAL BANK:
• As per the name RRBs created for some special regional areas of India to help and served their financial
need for development and growth.
• In simple word RRBs are the part of government banks but they need licence from RBI.
• The idea of establishment RRBs was mooted in the twenty point economic programme in July, 1975. The
government of India has appointed NARSIMHAM COMMITTEE in 1975. The committee has submitted its
report on 30th July, 1975.
• On the basis of this report an ordinance was passed by the government of India on 26 th September, 1975
to establish RRBs on the birthday of mahatma Gandhi on October 2, 1975 to later on regional rural bank
act, 1976 was passed. The establishment of RRBs is a landmark in the history of Indian banking.
• In other words, the institution of rural bank is intended to be locally based, rurally oriented and
commercially organised.
• The establishment of RRBs has created a new era in the credit structure of our economy.
• The RRBs thus come to form the third component of multiagency credit system for agriculture and rural
development, the other two components being the co-operative credit societies and commercial bank.
 FUNCTIONS OF RRBs:
• They grant loans and advances to the weaker sections of the community
especially to small and marginal farmers, agricultural labours, artisans and small
entrepreneurs who are engaged in agriculture, trade, commerce, industry and
other productive activities.
• To grant loans and advance to co-operative societies including marketing
societies including marketing societies , agricultural processing units, co-
operating farming societies, primary agricultural credit societies or farmers
service societies for agricultural purpose.
• To mobilise saving through accepting deposits.
• To take the banking service to the doorsteps of the rural masses especially in
unbanked area.
• They also provide other banking functions like remittance of fund, locker etc.
• To create institutional flows of credit from urban to rural areas through
refinance.
• To generate employment opportunities for rural peoples.
• To provide cheap credit and it time.
 CO-OPERATIVE BANK:
• Definition : "co-operative bank is a mutual society
formed composed and governed by working people
themselves by encouraging regular saving and
granting small loan on easy terms of interest and
repayment.”
• In other words, "co-operative banks are those banks
which are created by people for the people it is mainly
created to serve rural financing need and to support
micro(Small) finance.”
• For example: A person need of 2000 R.s loan .
STRUCTURE OF CO-OPERATIVE
BANK:
 AN EXAMPLE OF COOPRATIVE
BANK
• The Gujarat State Cooperative Bank is a
Scheduled Bank (Registered under the Gujarat
Cooperative Societies Act 1961) having
requisite Banking License with Head Office
located in Ahmedabad. As an Apex bank it
serves the credit and financial needs of nearly
28 Lakhs farmers of 8535 PACS through the 18
District Central Cooperative Banks (DCCBs).
• The cooperative sector in the country has been active since the past 115 years in the country and has
been playing distinct and significant role in the process of socio-economic development of the country
and also for the upliftment of the farmers and poor people of the country.  Therefore, cooperatives have
been accepted as the best agency for agricultural credit with their organizational potential to reach
millions of farmers and thereby establish the grass-root contacts. Cooperatives institutions are one of
the major economic force in developed countries and a powerful business model in developing
countries like India.
• A three tier short term cooperative credit structure (STCCS)  consisting of Apex Bank at State-level,
Central Cooperative Banks at the district-level (DCCBs) and Primary Agricultural Credit Societies (PACSs)
at village level are  in vogue to meet the short-term and medium-term credit requirements of
agriculture and rural economy.
• GSC Bank is not only an Apex Bank for the State of Gujarat, but a premier Co-operative Bank and has
initiated many fold steps for strengthening Cooperative Credit Structure & Cooperative Banking Sector
in the entire country.
• The decision of the Central Government by offering the banking industry in Liberalization, Privatization
and Globalization adoption has given rise to new challenges. Further, this decision of the Government
has opened new challenges and privatization of the bank industry. As a result all the Cooperative Banks,
have to find ways and means for improving the quality of their products and services by implementing
the computerization as well as the technology in their banks.  GSC Bank realizes the importance of
Technology in banking and considering the requirement of huge cost for building the entire system, it
has set up a Technology Umbrella under which District Coop. Banks and smaller cooperative banks are
made sub-members of the Bank so that these small banks can also offer latest technological services to
their customers.  With support from NABARD we have implemented new technologies to be up to date
& be in compliance with all the latest requirements of cyber security & fraud prevention.
•DIFFERENCE BETWEEN COMMERCIAL BANK AND CO-OPERATIVE BANK

POINTS COMMERCIAL BANK CO-OPERATIVE BANK

Type of Commercial banks are Co-operative banks are co-operative

organisation joint stock company. societies.

Rules applicable Commercial bank follows Co-operative bank follows RBI act,
RBI ACT, banking regulation banking regulation act and co-
act , companies act,1956. operative societies act,
Ownership Commercial banks own by Co-operative banks owned by the
the shareholders. member, shareholder, Nat exciding
100 people.
Area of working Commercial banks focus on Co-operative banks focus on mainly
all areas of india includes in rural area.
urban, rural, and remote
area .
Types of customer In commercial banks the customer In co-operative banks farmer, small artists,
includes businessman, individual, and retail traders glossary shops all this
solarised person and any other can types of customer are the focus area of the
open commercial banks account. co-operative banks.

Organizational Commercial banks have large share Co-operative follows customised

structure capital follows co-operative structure organization structure (branch manager,
in include (Board of director, chief assistant manager etc.)
executive office managing director)

Types of business Commercial bank offers almost all Co-operative bank offers basic banking
offering types of Morden banking facilities it facilities and yet to offer Morden banking
includes deposits to credit card to service.
credit card to RTGS and SWIFT.

Types of bank Commercial bank categories into Co-operative banks follows simple one type
public sector bank, private sector structure, it includes district co-operative
bank, foreign sector bank, regional banks, village co-operative banks, starts
rural bank. central co-operative banks.
CHARACTERISTICS OF PERFECT / GOOD BANKING SYSTEM:
• Summary /Review of the unit
• Surprise questions for all
• One to one discussion (short answers)
• Way to the next unit

Thank You