Structure of Banking Industry

Slides:



Advertisements
Similar presentations
Banks and their products VOŠ – 3. ročník – 2. semestr.
Advertisements

Classification of Banks
Reserve Bank Of India To regulate the issue of bank notes. To maintain reserves with a view to securing monetary stability. To operate the credit & currency.
EXIM Bank, NABARD, RRBs Group 4. Export Import Bank Of India (EXIM Bank of India)
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved Chapter One An Overview of Banks and the Financial-Services Sector.
2-1 CHAPTER 2 AN OVERVIEW OF FINANCIAL INSTITUTIONS.
Types of banks Commercial Banks:
Chap. 1 The Study of Financial Markets Financial Markets – A Definition: –Markets in which funds are transferred between savers (investors) and borrowers.
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill /Irwin Chapter One Introduction.
Accounting For Financial Firms
An Overview of Financial Markets and Institutions
Development Financial Institutions
INDIAN FINANCIAL SYSTEM
INTRODUCTION TO INDIAN FINANCIAL SYSTEM
1 Types of Banks. 2 Central bank Development Bank Investment Bank Cooperative Credit Bank Regional Rural Bank Non Banking Financial Companies Types of.
1 MCF 304: Bank Management Lecture 1.1 Structure of Financial Systems in Malaysia.
CA PRATAP VISHNOI. The money market is a key component of the financial system as it is the fulcrum of monetary operations conducted by the central bank.
An Overview of Banks and Their Services
Classification of banks According to services rendered.
Finance THE BANKING SYSTEM. Finance Lecture outline  The types and functions of banking  Central banking  Commercial and investment.
SUCCESS STORY OF THE POLISH CREDIT UNION MOVEMENT How to reach 1 million Members in 12 years Grzegorz Bierecki, President National Association of Cooperative.
©2007, The McGraw-Hill Companies, All Rights Reserved Chapter One Introduction.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill /Irwin Chapter One Introduction.
3-1 Chapter 3 Central Bank. 3-2 Central Bank Definition:  “An institution which is charged with the responsibility of managing the expansion & contraction.
University of Palestine International Business And Finance Management Accounting For Financial Firms Part (3) Ibrahim Sammour.
Financial Markets and Institutions. Financial Markets Financial markets provide for financial intermediation-- financial savings (Surplus Units) to investment.
Chapter 4 Financial Intermediaries and the Banking System Chapter 4.
Financial Markets & Credit institutions. Practice Variety of teaching methodology Students participation Fair grading Care about st Quizz or viva Feedback.
© 2007 Prentice Hall, Inc. All rights reserved.15–1 Chapter 15 Money and Banking.
ALOMAR_212_31 Chapter 2 The Financial System. ALOMAR_212_32 Intermediaries, instruments, and regulations. Financial markets: bond and stock markets Financial.
FINANCIAL SYSTEM.
 What is a Bank?  What do a Bank?  To create generate capital market  To play effective role in the Economy by supplying capital.  To persuade quench,
Financial System The financial system in a country refers to the institutional framework existing to enable financial transactions to be carried out in.
Finance Business function of planning, obtaining, and managing a company’s funds in order to accomplish its objectives effectively and efficiently. THE.
Central Bank State Bank of Pakistan. Organization of SBP Established in 1 st July, Purpose Regulating monetary & credit system of Pakistan. Organizational.
Banks and Stock Exchange
Financial Markets & Institutions
Lecture 4.
Financial Institutions and Financial Markets
An Overview of the Financial System chapter 2 1. Function of Financial Markets Lenders-Savers (+) Households Firms Government Foreigners Financial Markets.
Financial Markets and Institutions 6th Edition
Investment Analysis Lecture1 Introduction: Financial System, Institutions & Instruments Nadir Khan Mengal 5/4/2010.
Bună Ziua!. Financial Institutions and Markets Professor Lal C. Chugh.
Trade Finance Financial Markets & Role of Banks in Financial Sector.
Finance (Basic) Ludek Benada Department of Finance Office 533
Money Markets Introduction to Money Markets. Agenda In this session, you will learn about: Features of the Money Market Functions of the Money Market.
The Financial System. Introduction Money – Medium of exchange – Allows specialisation in production – Solves the divisibility problem, i.e. where medium.
Markets & Interest Rates. Financial Markets All entities need finance to run business Financial markets - Platform that brings together entities with.
FINANCIAL INSTITUTIONS – OVER VIEW Chapter 1 Dr. BALAMURUGAN MUTHURAMAN.
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Risk Management Lecture1 Introduction: Financial System, Institutions & Instruments Nadir Khan.
Role of Financial Markets and Institutions
1 Financial Sector Development in Myanmar Presented by Mr. Nyo Aye Mr. Win Hteik Assistant Director Board Secretary Ministry of Finance Central Bank of.
An introduction to financial institutions, investments & Management
FINANCIAL MARKETS TYPES
ROLE OF FINANCIAL INSTITUTIONS IN CAPITAL FORMATION
COMMERCIAL BANKS.
MONEY & CREDIT.
Commercial Banking : Structure and Evolution.
ECON 112 INTRODUCTION TO ECONOMICS II
An Overview of Financial Markets and Institutions
Chapter 2 Learning Objectives
Introduction to Capital Market
Money & Banking SESSION 1 BANKING By Dr. Soha El Magawry.
MONEY MARKET.
Lecture 2 Chapter 2 Outline The Financing Decision
MONEY & CREDIT.
Financial Management Kiran.
AN INTRODUCTION TO BANKS AND BANKING
Presentation transcript:

Structure of Banking Industry

Structure of Banks in India

Structure of Banks in India

Central Bank Central bank is responsible for regulating the banking system of a nation. It is essentially a banker to banks as well as banker to the Government. Central bank also is responsible for the monetary and credit policies of the economy. Central bank issues currency notes for the country and oversees the movement of currency value in relation to other country’s currency value.

Reserve Bank of India The Reserve Bank of India Act, 1934 established Reserve Bank as the Central bank of India. Regulator and Supervisory authority of the monetary policy of India. Supervises the financial system of the Indian economy. Issues Indian currency note (Rupee) Ensures stability and management of interest rate in the economy and exchange rates in an international setting. Regulates and supervises the payment and settlement systems in the economy.

Role of Reserve Bank of India Developing financial institutions and markets. Promoting banking activities. Ensuring safety of depositors’ funds in the banking system. Provide the supply of currency and credit for the economy. Manage Government debt. Encourage financial inclusion in the society. Encourage developmental functions in the economy.

Structure of Reserve Bank of India

Commercial Banks Banks that accept deposits and provide loans and advances. Three types of commercial banks. Public sector banks. Private sector banks. Foreign banks.

Structure of Public Sector Banks

Primary Functions of Commercial Banks Accepting deposits Surplus income and savings are mobilized as short-term and long-term deposits for specified interest rates. Providing loans and advances Fund needs of the society (individuals and business establishments) are met through the loans and advances at specified interest rates. Loans are long term fund assistance. Advances are short term fund assistance such as cash credit, overdraft, discounting of bills.

Secondary Functions of Commercial Banks Safe custody of valuables. Providing foreign exchange. Transfer of money. Providing guarantee and letters of credit. Providing business support services such as providing business information, credit reports etc.

Investment Banks Corporate financial advisory and investment service providers. Assist financial markets and provide capital intermediation services. Provide consultancy, market research and broking services to assist high net worth individuals and other entities in their investment goals. Develop ventures through project finance to support fund needs and export finance to meet international trade ventures.

Functions of Investment Banks Services for individuals Maintain financial accounts Provide loans, lease and mortgages Pension management Investment management Private banking E-banking

Functions of Investment Banks Services for business firms and institutions Corporate advisory services Investment management of institutional investors Asset management services Industry analysis and research Information provision Merger and amalgamation activities Valuation services

Development Banks and Specialized Banks Specialized development financial institutions. Providers of long-term funds to economic sectors experiencing shortage of funds. Substantiate and bridge market gaps in developing economies.

Illustrative Development Banks Industrial Development Bank of India (IDBI) Industrial Finance Corporation of India (IFCI). National Bank for Agriculture and Rural Development (NABARD) Export Import Bank of India (EXIM Bank) National Housing Bank (NHB) Small Industries Development Bank of India (SIDBI) Infrastructure Development Finance Company (IDFC) Industrial Investment Bank of India (IIBI) State Finance Corporations (SFCs)

Co-operative Banks Established for the purpose of providing funds for non- agricultural purposes. These banks were formed by local communities, local geographical groups or work groups. Based on the principles of cooperation that implies mutual help, open membership and participative decisions.

Types of Co-operative Banks State Co-operative Banks. Apex body of co-operative banks in a state. Central / District Co-operative Banks. Established at the district level and report to the State Co-operative Banks. Primary Co-operative Banks. Located in urban or semi-urban areas catering to the business needs of the locality. Located in rural areas to meet the funding needs of the community / work group / area.

Structure of Co-operative Banks

Non Banking Finance Companies Non Banking Financial Companies offer a wide range of services such as hire purchase finance, lease finance and investment services. They provide financial intermediation and have expanded their products profile. The Reserve Bank of India working group on Financial Companies introduced registration of such companies with net owned funds (NOF) of Rupees 5 million or above.

Types of NBFCs NBFCs accepting deposits NBFCs not accepting deposits but rendering financial intermediation services NBFCs that are investment companies (90% or more of their total assets are in the form of investment in securities of their group / holding / subsidiary companies)

Mutual Funds Mutual funds are capital market intermediaries. Mutual funds are established as trust entities. Mobilize money in the form of units and invest them in portfolios to meet risk-return expectations of investors. Mutual fund returns are shared among unit holders.

Structure of Mutual Fund

Microfinance Institutions Small scale financial service providers. Financial services are provided to low-income households and enterprises. Microfinance is provided by alternate sector such as Non Government Organizations (NGOs), Self Help Groups (SHGs).

Microfinance Business Models Joint Liability Group. The group who are co-guarantors for other members of the group. Linkage with Banks. SHGs coordinate with bank in microfinance activities.

Risk Management Measurement and management of banking risks in a regulated environment Credit risk Liquidity risk Market risk Operational risk System risk

Risk Management Structure

Risk Management in Banks Technology driven Model driven Capital adequacy to absorb risk Dynamic strategies Integration of risk management process Risk based bank audit and supervision Supportive legal environment

Risk Management Practices Board of Directors Banking Business Risk Management Practices Lending decision Deposit mobilization Asset mobilization Credit management Investment decision Loan policy Interest rate policy Planning asset management Internal rating systems Setting risk tolerance level