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BANKING AMENDMENT ACT
2012
Submitted to: Submitted by:
Mr Rajpreet Chatwal Ishadeep Kaur
Irvanpreet Kaur
Jaspreet singh
Harmandeep
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WHATISBANKING
A bank is a financial institution and a financial
intermediary that accepts deposits and channels
those deposits into lending activities
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WHYAMENDMENTS?
Increased operational efficiency, profitability and
productivity
Superior customer services
Better cross-selling ability Improved management/accountability
Risk management
Minimal transaction cost
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BANKING REGULATION ACT, 1949
The Banking Regulation Act, 1949 came into force on
March 16, 1949. It contained various aspects related to
Banking Companies in India. This is regulatory act Its
purpose is to Provide safety in the interest of depositors
Prevent misuse of powers by managers of banks
Act does not supersede but supplement to Companies
Act, 1956Initially named Banking Companies Act, 1949
but from March 1, 1966, the name of the Act was
changed to Banking Regulation Act, 1949.
http://www.lawnotes.in/Companies_Act,_1956http://www.lawnotes.in/Companies_Act,_1956http://www.lawnotes.in/Companies_Act,_1956http://www.lawnotes.in/Companies_Act,_19567/30/2019 banking amendment act 2012
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SALIENT FEATURESOF BANKING
REGULATION ACT, 1949
Restrictions on banks to grant loan to person
interested in management of the bank
Every bank to maintain a percentage of its demand
and time liabilities by way of cash, gold,
unencumbered securities 25%-40% as on last
Friday of 2nd preceding fortnight
Every bank has to publish its balance sheet as on
March 31st
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CONTD
Balance sheet is to be got audited from qualified
auditors
Banks not to pay any commission, brokerage,
discount etc. more than 2.5% of paid up value of
one share
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INDIANBANKINGNOW
Narrow banking
Relationship banking
Hi-tech banking
E Age-banking Mobile banking
Network banking
Online banking
Universal banking
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E BANKINGDEVELOPMENTS
ALPMs and back office computerization
Need to improve customer service
Advent of pc in 1980s
Competition and reforms
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Introduction of computerization
Clearing houses
ATMs
Electronic fund transfer
Bank-net
SWIFT (society for worldwide interbank finicial telecom) Electronic mail
Credit cards
Tele banking
Online banking
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WHY TECHNOLOGYINBANKS?
To transform financial services industry in the
networked world
Banks to be customer centric
Provide services across a range of channels To be futuristic
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BENEFITSTOCUSTOMERS
More convenience and flexi timings
Better awareness of products and services
Up-to-date information on accounts
Low cost of accessing accounts
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BANKING AMENDMENT ACT (BILL) 2012
Statement given by P. Chidambaram
Strengthen financial sector Establishing large size bank
Increasing voting right of investors
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SALIENT (AMENDMENT FEATURESOF BANKING
LAWS) BILL 2012
Increase shareholders voting rights.
More corporate houses to run banks
Can remove entire Board of a Bank
Prior approval of RBI necessary if a person wants
to purchase more than 5% shares of a bank.
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CONTD
RBI can conduct special audits of cooperative banks.
Bank will have to pay penalty interest rate, if it doesnt
maintain CRR on daily basis.
Cooperative societies cannot carryout banking activitieswithout license from RBI.
A DepositorEducation and Awareness Fund to receive
money from deposit accounts not operated for more
than 10 years.
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LATEST RATES
Bank Rate 8.75
CRR 4
SLR 23
Repo Rate 7.75 Reverse Repo Rate 6.75
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NEWBANKINGLICENCES
By passing the Banking Amendment Bill 2012 that RBI
would issue only a handful of licenses and given that there
are a large number of hopefuls, the competition for new
banking licenses would be very intense.
The contenders for bank license are list below
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RBIGUIDELINES
TO GETA BANKING LICENSE
A minimum capital of Rs. 500 crore, 49% cap on foreign
shareholding.
listing within two years of receiving the banking license
Mandatory 25% branches into rural areas Groups that have significant (10 per cent or more)
income or assets or both from real estate construction
and broking activities in the last three years shall not be
eligible to promote banks.
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CONTD
The bank shall be required to maintain a minimum capitaladequacy ratio of 12 per cent for a minimum period of
three years after the commencement of its operations.
Private groups with diversified Indian ownership, sound
credentials and integrity that have a successful track
record for at least 10 years.
Ref=http://www.moneymantra.co.in/detailsPage.php?id=2730&title=Special%20Story&wrt=MM%20Bure
au
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THECONTENDERSFORBANKLICENSEARELIST
BELOW
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SHRIRAM GROUP
Strengths: Shriram Group's whole business model
mainly caters to financially secluded bottom of the
pyramid consumer segment. It has over 1,200 branches
in rural areas through its companies.
Weakness: Shriram Group comprises multiple entities of
which, only two are listed (STFC & SCUF), hence the
structure is complicated and it could be difficult to club all
the business in non-operating holding company (NOHC)
as per RBI requirement.
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L&T FINANCE
Strengths: L&T Finance is professionally managed group
with diversified holdings and no promoters. Its holding
structure is closely aligned with the current RBI's proposal
of non-operating holding company structure.
Weakness: It has a very small branch network (around 110
branches) compared to other contenders who have a
network of over 500 branches. Less than one-third of its
book is rural-focused, and hence does not score very high
on financial inclusion.
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BAJAJ FINSERV
Strengths: Bajaj Finserv has a well-diversified range of
financial services. At the group level, it has an existing
customer base of 15 million+ and presence in over1,000+ locations through its subsidiaries.
Weakness: Bajaj has been focusing on the affluent
customers segment, and scores low on financial
inclusion. It has has almost 25% of its book focused
toward financing purchase of products of other group
companies.
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TATA CAPITAL
Strengths: Tata Capital is a household name and is
the most trusted brand in the country. The group
through its various companies has presence in several
industries with consumer base of over 150 million.
Weakness: Tata Capital is a 100% subsidiary of Tata
Sons. It has multiple entities in the financial services
business, which makes the NOHC structure
complicated.
Ref= http://www.moneycontrol.com/news/business/6-contenders-for-bank-license-
strengthsweaknesses_793669-5606.html
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