Functioning of Commercial Banks in India

Presented By:

Gaurav Sharma Shiksha Goyal Shweta Mehta

Introduction Commercial banking is the most important part of modern banking set up.
The function of commercial banks are confined not

only to advancing loans to the public and accepting their deposits, their contribution in accelerating the rate of economic development in under-developed and developing countries.

 Upto, 1969, the operation and functioning of

commercial banks in India was confined only to medium and large sized towns and economically rich people. Agriculture, small scale and cottage industries and rural areas were generally neglected by these banks. With the nationalisation of commercial banks in 1969, now these priority sectors have started getting attention, with the result they get more credit and more branches of these banks are being opened in rural areas also.

Controlling Authority

These banks work as per the parameter set by the regulating

body. They are also bound to keep a certain amount in the Reserve Bank. This is known as CRR Cash Reserve Ratio.
The lending capacity of the commercial banks in India are also

related to this Cash Reserve Ratio because whenever it is raised by the Reserve Bank of India, the loan providing capacity of commercial banks decreases. On the other hand, the Reserve Bank of India also decides on the amount of asset that the commercial banks in India can keep in their direct possession.

 Again, the Reserve Bank of India determines the interest rates

that the commercial banks can impose on the loan products. At the same time, these rates are also related to the interest rates that the commercial banks offer for the deposits.

Indian banking system

RESERVE BANK OF INDIA

COMMERCIAL BANK

COOPERATIVE BANK

PUBLIC SECTOR BANKS

PRIVATE SECTOR BANKS

STATE COOPERATIVE BANKS

Commercial banking system

PUBLIC SECTOR BANKS SCHEDULED BANKS NONSCHEDULED BANKS PRIVATE SECTOR BANKS FOREIGN BANKS

COMMERCIAL BANKS

List of commercial banks Public sector bank

State Bank of India Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank

Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank IDBI Bank

Indian private banks

Axis Bank Bank of Rajasthan Bharat Overseas Bank City Union Bank Development Credit Bank Federal Bank HDFC Bank ICICI Bank

 IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Limited Kotak Mahindra Bank Lakshmi Vilas Bank Nainital Bank Ratnakar Bank SBI Commercial and International

Bank South Indian Bank YES Bank

Foreign banks in India

ABN-AMRO Bank Abu Dhabi Commercial Bank Ltd. American Express Bank Ltd Citibank DBS Bank Ltd Deutsche Bank HSBC Ltd Standard Chartered Bank

Main function of commercial banks

Acceptance of deposits

Fixed deposit account Saving bank account Current account

Advancing of loan

Cash credit Call loans Over draft Bills discounting

SECONDARY FUNCTIONS

Agency function Collecting receipts Making payments Buy and sell securities Trustee and executor

General utility function Issuing letters of credit, travelers cheques Underwriting share and debentures Safe custody of valuables Providing ATM and credit card facilities Providing credit information