Financial Institutions of India

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FINANCIAL INSTITUTIONS :

FINANCIAL INSTITUTIONS BY - NEHA SINGHAL

FINANCIAL INSTITUTIONS :

FINANCIAL INSTITUTIONS The Indian financial system can broadly classified into thefollowing groups:- Organized sector; & Unorganized sector. The organized financial systemcomprises the: banking system, the co-operative system, development banking system, moneymarkets, financial companies/institutions. The unorganized financial system comprises ifmoneylenders, indigenous bankers, lending pawnbrokers, landlords, traders, etc. investmentcompanies, chit fund, etc. the central bank or govt. does not regulate these in a systematicmanner.

HISTORY :

HISTORY The journey of Indian Banking System can be segregated into three distinct phases.They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks. Nationalizationof Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian

Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

APEX BANKING INSTITUTES :

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APEX BANKING INSTITUTES Established in 1935; Monopoly on issue of banknotes; The

governments banker & the bankers bank (lender of last resort); Manages countrys foreignexchange & gold reserves; Regulation & supervision of banking industries; Manages inflation ina the country; etc. Established on 9th July 1988 under the National Housing Bank Act,1987;Issue directions to housing finance institutions to ensure their growth on sound lines; Make loans& advances and render any other form of financial assistance to scheduled banks and housingfinance institutions; etc. Various HFCs are as follows:- SRG Housing Finance Ltd.raj(Udaipur); GE Money Housing Finance-delhi; Haware's Housing Development FinanceCorporation Ltd.maharashtra; Inara Housing Finance Limited.-gujrat; etc. RBI-RESERVEBANK OF INDIA NHB-NATIONAL HOUSING BANK

COMMERCIAL BANKS :

COMMERCIAL BANKS A commercial bank is a type of financial intermediary; Issuing bank

drafts and bank cheques; lending money by overdraft, installment loan, or other means;safekeeping of documents and other items in safe deposit boxes; merchant banking; It providesLoan options that include secured loans, unsecured loans, and mortgage loans; etc.

PUBLIC SECTOR BANKS :

PUBLIC SECTOR BANKS After independence the largest commercial bank-Imperial bank ofIndia was nationalized & the first public sector commercial bank-SBI was set up in 1955; Toprovide strong base to SBI, 7 princely banks were Nationalized as its subsidiaries; They are asfollows:- SB of Bikaner & Jaipur; SB of Indore; SB of Patiyala; SB of Travancore; SB ofMysore; SB of Saurashtra; & SB of Hyderabad. The successful working of SBI was realized thatbanks can work in a better way when they are in Public Sector to provide credit facilities to rural

areas; Consequently, 14 major commercial banks with their deposits of RS. 50 crore or morewere Nationalized on 19th july,1969; The success motivated to nationalize 6 more largecommercial banks having total deposit of Rs. 200 crore or more in 1980; The 19 nationalizedbanks are as follows:- Allahabad Bank Andhra Bank SBI & SEVEN SUBSIDIARIES 19NATIONALIZED BANKS Bank of Baroda Bank of India Bank of Maharashtra Canara BankCentral Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank OrientalBank of Commerce Punjab & Sind Bank PNB Syndicate Bank UCO Bank Union Bank of IndiaUnited Bank of India Vijaya Bank

PRIVATE SECTOR BANKS :

PRIVATE SECTOR BANKS Scheduled Banks in India constitute those banks which have beenincluded in the Second Schedule of Reserve Bank of India(RBI) Act, 1934; Currently, India has

96 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government ofIndia holding a stake), 31 private banks (these do not have government stake; they may bepublicly listed and traded on stock exchanges) and 38 foreign banks. They have a combinednetwork of over 53,000 branches and 17,000 ATMs; "Non-scheduled bank in India" means a

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banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10

of 1949), which is not a scheduled bank. SCHEDULED & NON-SCHEDULED BANKS OFINDIAN

SCHEDULED BANKS IN INDIA :

SCHEDULED BANKS IN INDIA State Bank of India State Bank of Bikaner and Jaipur

State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank ofSaurashtra State Bank of Travancore Andhra Bank Allahabad Bank Bank of Baroda Bankof India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank; Eetc.

ING Vysya Bank Ltd Axis Bank Ltd Indusind Bank Ltd ICICI Bank Ltd South IndianBank HDFC Bank Ltd Centurion Bank Ltd Bank of Punjab Ltd IDBI Bank Ltd Jammu &

Kashmir Bank Ltd. PUBLIC SECTOR PRIVATE SECTOR FOREIGN BANKS AmericanExpress Bank Ltd. ANZ Gridlays Bank Plc. Bank of America NT & SA Bank of Tokyo Ltd.

Banquc Nationale de Paris Barclays Bank Plc Citi Bank N.C. Deutsche Bank A.G. Hongkong and Shanghai Banking Corporation Standard Chartered Bank. The ChaseManhattan Bank Ltd. Dresdner Bank AG.

PRIVATE SECTOR BANKS :

PRIVATE SECTOR BANKS Foreign Banks are not new phenomena in Indian bank in system.Standard Charted Bank started its operation in 1858 and Citi Bank opened its branch in India in1902; Similarly Hong Kong and Shanghai Banking Corporation is functioning in India since1953; Foreign banks in India have brought the latest technology and new banking practices. Thishelped the domestic banks to improve their performance and provide better customer service.Due to their fast and efficient working style and better customer service foreign banks in India

captured a large customer base; Present there are 29 foreign banks are operating in India andsome of the important foreign banks in India are: ABN-AMRO Bank Abu Dhabi CommercialBank Bank of Ceylon BNP Paribas Bank Citi Bank China Trust Commercial Bank DeutscheBank JPMorgan Chase Bank Standard Chartered Bank Scotia Bank Taib Bank Foreign exchangebanks throughout the world participate and play a big role in forex; Apart from normal banks,central banks also participate in the foreign exchange market to regulate currencies in protectionof their economy. Central banks or and national banks serve a dominant role in controllinginflation, interest rates and money supply; Following are the foreign exchange banks in india:-Dena Bank Deutsche Bank The Development Bank of Singapore Ltd. HDFC Bank Ltd. ABNAMRO Bank N.V. Abu Dhabi Commercial Bank Ltd. Allahabad Bank American ExpressBank Ltd. Federal Bank Ltd.; etc. FORIGN BANKS FOREIGN EXCHANGE BANKSCOMMERCIAL BANKS

COMMERCIAL BANKS :

COMMERCIAL BANKS Lack of well trained & efficient employees; Inadequate capital &deposits; Neglecting rural areas; Low profitability; Political & administrative interference; etc.

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Recruitment of well educated & efficient employees; Effective bank management; Increase in

capital & other resources; Branch expansion in rural areas; Increasing profitability; Leastpolitical & administrative interference; Effective internal Audit, inspection & management;Review & updated banking laws; etc. PROBLEMS REMEDIAL MEASURES

SPECIALIZED FINANCIAL INSTITUTES :

SPECIALIZED FINANCIAL INSTITUTES

Slide 15:

Export-Import Bank of India is the premier export finance institution of the country, set up in1982 under the Export-Import Bank of India Act 1981; Government of India launched theinstitution with a mandate, not just to enhance exports from India, but to integrate the countrysforeign trade and investment with the overall economic growth. IDFC is Indias leading financialinstitution at the forefront of developing infrastructure through its presence across financing,advisory, investment banking, development and asset management functions related to thesector. EXIM BANK IDFCINFRASTRUCTURE DEVELOPMENT FINANCE COMPANYLTD.

IFCI VENTURE CAPITAL FUNDS :

IFCI VENTURE CAPITAL FUNDS IFCI Venture Capital Funds Ltd was set up by IFCI Ltd in1975 as Risk Capital Foundation with a view to widen the entrepreneurial base by providing startup capital for setting up Green Field projects The venture capital fund makes money by owning

equity in the companies it invests in, which usually have a novel technology or business model inhigh technology industries, such as biotechnology, IT, Software

Slide 17:

Since its inception IFCI Venture has provided the start-up capital and venture funding to over400 entrepreneurs. Venture Capital provides long-term, committed share capital, to helpunquoted companies grow and succeed. Difference between VC and private equity: Privateequity refers to equity or quasi-equity investments in high-growth companies and includesbuyouts, mezzanine financing, privatization and public as well as private deals.

Slide 18:

The private equity asset class includes venture capital, buyouts, and mezzanine investmentactivity. venture capital focuses on investing in private, young, fast growing companies, privateequity players largely provide mezzanine or bridge funding What kind of businesses are

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attractive to venture capitalists: Venture capitalists prefer to invest in "entrepreneurial

businesses". This does not necessarily mean small or new businesses.

ICICI VENTURE LTD. :

ICICI VENTURE LTD. It formerly known as Technology Development & InformationCompany of India Limited (TDICI), was founded in 1988 as a joint venture with the Unit Trustof India. Subsequently, it became a fully owned subsidiary of ICICI. It is a technology venturefinance company, set up to sanction project finance for new technology ventures. The industrialunits assisted by it are in the fields of computer, chemicals/polymers, drugs, diagnostics andvaccines, biotechnology, environmental engineering, etc.

TOURISM FINANCE CORPORATION OF INDIA LTD. :

TOURISM FINANCE CORPORATION OF INDIA LTD. All-India Financial/InvestmentInstitutions and Nationalised Banks promoted a Public Limited Company under the name of"Tourism Finance Corporation of India Ltd TFCI became operational with effect from 1stFebruary, 1989 on receipt of Certificate of the Commencement of Business from the Registrar ofCompanies

Slide 21:

TFCI provides financial assistance to enterprises for setting up and/or development of tourism-related projects, facilities and services. TFCI has also provided high-quality research andconsultancy services to the tourism industry in general and to the investors in tourism industry in

particular TFCI's range of activities in the Consultancy Division covers tourism-related studies,surveys and project-related services TFCI is truly 'Helping Tourism Grow' by taking proactivesteps in providing financial assistance for the growing industry and thereby improving its ownmargin, profitability and other important financial parameters

REGIONAL RURAL BANKS :

REGIONAL RURAL BANKS The committee chaired by Shri Narsimha Rao recommended thesetting up of RRBs in July, 1975 & 5 RRBs were set up on 2nd Oct. 1975 in Bhiwani (Haryana),Muradabad and Gorakhpur (U.P.), Jaipur (Raj.), and Malda (West Bengal). They provide credit& credit facilities especially to the small & marginal farmers, agricultural laborers, artisans andsmall entrepreneurs in rural areas. They provide banking facilities to the backward & tribal areasof the country where banking facility have not reached so far.

CO-OPERATIVE BANKS :

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CO-OPERATIVE BANKS Co-operative banks is a mutual society formed, composed and

governed by working people themselves by encouraging regular saving and granting small loanseasy term of interest and repayment.

NABARD :

NABARD The National Bank for Agriculture And Rural Development (NABARD) is an apexdevelopment bank for promotion of agriculture , small scale industries, cottage industries,handicrafts, and agricultural credit, other allied activities in rural areas. NABARD wasestablished on 12-07-1982 (NABARD Act ,1981 )

Slide 26:

There are three main functions: CREDIT functions DEVELOPMENT functionsREGULATORY functions

SHORT-TERM AND MEDIUM-TERM CO-OPERATIVES :

SHORT-TERM AND MEDIUM-TERM CO-OPERATIVES State Co-operative Banks CentralCo-operative Banks Primary Co-operative Credit Societies

PRIMARY CO-OPERATIVE CREDIT SOCIETIES :

PRIMARY CO-OPERATIVE CREDIT SOCIETIES PACS IS A FORMAL BODY CREATED

BY ITS MEMBERS TO MEET THEIR EMERGING CREDIT NEEDS. MEMBERSHIP OFPACS: Minimum 100 Members required for Registration of NEW PACS. OBJECTIVE OFPACS: To assess the credit needs of members. Recover loan in instalments or in lump-sum.Promote economic empowerment of members. To arrange Inputs like Seeds, Fertilizers,Pesticides, Insecticides and Equipments etc. for members.

CENTRAL CO-OPERATIVE BANKS (365) :

CENTRAL CO-OPERATIVE BANKS (365) CCB is a Federation of PACS and otherCooperative Societies functioning in the District. CCB is an intermediatory institution between aPACS and State Cooperative Bank. CCB is a Rural Development Institution for District. CCB isone of the implementing agency of State/Central Government. Membership- Fee and Fixed

Deposit of Rs.500/-to become a Nominal Member.

FUNCTIONS OF A CCB :

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FUNCTIONS OF A CCB To fulfill All types of Credit needs of PACS, such as S.T., M.T. and

L.T Commercial Banking Functions: Accepting Deposits from Public and Granting various typesof loans including overdraft facility. Collection of Cheques, Bills, Advancing loans toIndividuals & other Cooperative Societies.

STATE CO-OPERATIVE BANKS :

STATE CO-OPERATIVE BANKS The state cooperative banks finance & control the centralcooperative banks in the state; It is a link between NABARD for which it borrows * the centralco-operative banks & the village primary agricultural credit societies; There are 29 state-cooperative banks in India; etc.

LAND DEVELOPMENT BANKS OF INDIA :

LAND DEVELOPMENT BANKS OF INDIA The special banks providing Long Term Loansare called Land Development Banks (LDA). The history of LDBs is quite old. The first LDBwas started at Jhang in Punjab in 1920. But the real impetus to these banks was received afterpassing the Land Mortgage Banks Act in 1930s (LDBs were originally called Land MortgageBanks).

Objective :

1. promote the development of agriculture and 2. increase the agricultural production. The3.CLDBs provide long-term finance to PLDBs affiliated to them or finance directly through theirbranches. Objective

Bank have two-tier structure :

Bank have two-tier structure

Slide 35:

Primary Land Development Banks (PLDB) These are at district level with branches at talukalevel These banks were originally organized to cover one or a few taluks in the district. Atpresent they are eligible to cover one development block.

Slide 36:

State Land Development Bank. All primary Land Development Banks are federated into CentralLand Development Bank at the State Level. In some States, there is Unitary structure wherein,

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there is only one State Land Development Bank at the state level operating through its branches

and sub-branches at district and below levels.

INVESTMENT BANKS :

INVESTMENT BANKS

LIFE INSURANCE CORPORATION OF INDIA(LIC) :

LIFE INSURANCE CORPORATION OF INDIA(LIC) It was founded in 1956 with the mergerof more than 200 insurance companies and provident societies LIC is the largest state-owned lifeinsurance company in India, and also the country's largest investor

Slide 39:

It has assets estimated of US$ 211.34 billion LIC deals in three products:- Life insurance Mutualfunds Pension

Zindagi ke saath bhi,zindagi ke baad bhi :

Zindagi ke saath bhi,zindagi ke baad bhi

UNIT TRUST OF INDIA (UTI) :

UNIT TRUST OF INDIA (UTI) It is known as axis bank It is a financial services firm that hadbegun operations in 1994 As on the year ended 31 March 2009 the Bank had a total income ofUS$ 3.12 billion and a net profit of US$ 411.54 million

Slide 43:

On 24 February 2010, Axis Bank announced the launch of 'AXIS CALL & PAY on atom', aunique mobile payments solution using Axis Bank debit cards. Axis Bank is the first bank in thecountry to provide a secure debit card-based payment service over IVR

General Insurance Corporation of India (GIC) :

General Insurance Corporation of India (GIC) It was formed in pursuance of the GeneralInsurance Business (Nationalization) Act, 1972(GIBNA ), for the purpose of superintending,

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controlling and carrying on the business of general insurance or non-life insurance; Initially, GIC

had four subsidiary branches, namely, National Insurance Company Ltd , The New IndiaAssurance Company Ltd , The Oriental Insurance Company Ltd and United India InsuranceCompany Ltd . But these branches were delinked from GIC in 2000 to form an associationknown as 'GIPSA' (General Insurance Public Sector Association).

DEVELOPMENT INSTITUTIONS :

DEVELOPMENT INSTITUTIONS

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI) :

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI) Started in 1964 Provide finance fordifferent activities Act as principal financial institution

INDUSTRIAL CREDIT & INVESTMENT CORPORATION OF INDIA

(ICICI) :

INDUSTRIAL CREDIT & INVESTMENT CORPORATION OF INDIA (ICICI) Started in1955 By world bank ,government of India and private industry Assist in creation ,expansion andmodernization of industrial enterprises Promoting private capital in industrial enterprisesPromoting industrial investment

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI) :

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI) Started in 1948 Provide longterm loan to large industry Principal activities 1 project financing 2 financial services

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI) :

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI) Started in 1990Subsidiary of IDBI provide loan to small industries

INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI) :

INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI) Started in 1971 Given the name IIBI in1997 Give finance to sick industrial units

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STATE FINANCE CORPORATIONS (SFCs) :

STATE FINANCE CORPORATIONS (SFCs) It is state level institution Provide loan to smalland medium industries Help in starting new business There are 18 SFC

STATE INDUSTRIAL DEVELOPMENT CORPORATIONS (SIDC) :

STATE INDUSTRIAL DEVELOPMENT CORPORATIONS (SIDC) Started in 1960 State levelinstitution Give loan to small industries Help in other promotional activities

OTHER FINANCIAL INSTITUTIONS :

OTHER FINANCIAL INSTITUTIONS

Slide 54:

It was established in the year 1957 by the Government of India to strengthen the exportpromotion drive by covering the risk of exporting on credit. Provides a range of credit riskinsurance covers to exporters against loss in export of goods and services. Offers guarantees tobanks and financial institutions to enable exporters to obtain better facilities from them. ProvidesOverseas Investment Insurance to Indian companies investing in joint ventures abroad in theform of equity or loan. Insurance bank deposit is intended to give a measure of protection todepositors, particularly the smaller depositors, from the risk of loss of their savings arising frombank failures. Establishment of DIC came in the wake of certain bank failures in fifties & earlysixties and consequent efforts to restore the confidence of the depositing public in the banking

system by safeguarding their interests. ECGC DICGC

PRESENT SCENARIO OF THE BANKS IN INDIA :

PRESENT SCENARIO OF THE BANKS IN INDIA Banks are extremely useful andindispensable in the modern community. The banks create the purchasing power in the form ofbank notes, cheques bills, drafts etc, transfers funds bring borrows and lenders together,encourage the habit of saving among people. The banks have played substantial role in thegrowth of Indian economy. At present in India there are 20 nationalized banks, State bank ofIndia and its seven Associate banks, 21 old private sector banks and 8 new private sector banks.Besides them there are more than 30 foreign banks either operating themselves or having theirbranches in India.

FUTURE IS BRIGHT :

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FUTURE IS BRIGHT The Information Technology (IT) is becoming an important component of

the banking sector. The customers have become more demanding and they need value addedservices from the banks. The foreign banks have raised the expectations of the customers causingthe bank to invest strongly on IT. The Indian banks have started to meet the expectations of thepeople by opening both onsite and offsite ATMs. Banks have also started telebanking,anytime/anywhere banking, mobile banking and Internet banking to give the facilities to thecustomers.

CONCLUSION :

CONCLUSION Banking Sector in India is likely to undergo a major change. This change will bein the form of mergers and acquisitions and takeovers. The State Bank of India may merge all itsassociate banks with itself to make a one bank. The banks based in South India may look for abank in North India to have presence in North. Similarly banks in North may look for banks in

South to increase its area of operations. Consolidation will be the key to the banking sector infuture.

THANK YOU :

THANK YOU

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