BANKING SYSTEM OF INDIA AND TYPES OF BANKS

banking system of India

Banking in India ?

A Bank is a financial institution where an individual can deposit money, Banks provide a system for easily transferring money from one person or business to another,

The first bank of limited liability managed by Indian was the Awadh commercial bank founded in 1881, Punjab National Bank was established in 1894, Swadeshi movement which begin in 1906.inaugurated the formation of a number of commercial banks. banking crisis during 1913 to 1917and failure of 588 banks in various states during the decade ended 1949 underlined the need of for regulating and controlling commercial banks,

The banking companies act was passed in February 1949 which was subsequently amended to read as banking regulation act 1949 this act provided the legal framework for regulating of the banking system by RBI

TYPES OF BANK

*CENTRAL BANK

*COMMERCIAL BANK

*INDUSTRIAL BANK

*AGRICULTURAL BANK

*FOREIGN EXCHANGE BANK

*INDIGENOUS BANK

Reserve bank ba india

CENTRAL BANK OF INDIA(RBI)

A Central Bank, reserve Bank, our monetary authority is the entity responsible for the monetary policy of a country or of a group of member states.its primary responsibility is to maintain the stability of the national currency and money supply,but more active duties include controlling subsidies loan interest rate and acting as a lender of Last resort to the banking sector during times of financial crisis.

It also called the bankers Bank and no other bank than the central bank can issue currency notes except one rupees note.

COMMERCIAL BANKS

the commercial bank performs all kinds of banking functions such as accepting deposits advancing loan, credit creation and agency functions. they generate advanced short term loan to their customer, in some cases they may give medium term loans also, it is divided into three types

*Public sector bank

*Private sector bank

*Foreign bank

Industrial Bank

The industrial Bank Perform three main functions,

First, acceptance of long term deposits, since the industrial Bank give long term loan,they cannot accept short term deposits from the public.

Secondly , meeting the credit requirements of companies- first the industries require to purchase land and building and plant machinery. Secondly the industry required short term loans to buy raw material and to make payments of wages to workers,

Thirdly ,it does some other function the industrial banks tender advised to being industrial form regarding the sale and purchase of share and debenture.

Agricultural Bank

As the commercial and the industrial bank are not in a position to meet the credit requirement of agriculture .there arises the need for setting up special type of banks to finance agriculture. first the farmer require short term loan to buy seed, fertiliser,plough and other inputs secondly the farmer require long term loans to purchase land to effect permanent improvements on the land to buy equipment and to provide for irrigation works.

Foreign exchange bank

Foreign exchange Bank

Their main function is to make international payments through the purchase and sale up exchange bills,As is well known the exporters of a country prepare to receive the payment for their exports in their own currency , hence there arise the problem of converting the currency of one country into the currency of another.The Foreign exchange Bank try to solve this problem this Bank specialise in financing foreign trade.

Indigenous Bank

According to the Indian enquiry committee, indigenous bankers is a person or a farm which accept deposits transaction business in hundred and advanced loans,

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