Banking 2: Banking Sector in India Video Lecture | General Knowledge (GK) for LIC AAO Exam (English) - Banking Exams

and everyone among could Saudi from hit
bullseye dot-com and in this video
lecture I will be talking to you about
the banking sector in India first of all
let us see the story of evolution of
banking sector in India in 1960 the
State Bank of India was given the
control of eight state associated banks
under the State Bank of India act of
1959 so pious like State Bank of
Hyderabad State Bank of Travancore
etcetera came under the direct control
of State Bank of India in 1960 later on
another major event was the
nationalization of banks of 1969
so 1969 14 banks which were earlier
privately owned were bought by the
Government of India this is because that
these bands were earlier owned by large
businessman and now the government to
control of them to further their social
welfare agenda later on in 1986 more
private banks were nationalized or what
by the Government of India in the later
phases we have seen greater amount of
liberalisation and privatization of
banks in India in 1993 then new bike
lies bike licences were given and new
banks came into being like ICICI HDFC
IDBI etc data on to in 2001
Kotick back and yes Bank were given
universal banking licenses to perform
all the functions that are performed by
banks and more recently after a gap of
13 years two more companies got banking
licenses that is idfc add abundant
finance further we've also seen the
coming in of foreign sector banks in the
country now recently we have increased
the FDI limits or foreign direct
investment limits up to seventeen
seventy four percent in the barking
history industry with some amount of
restrictions from the Government of
India and the Reserve Bank of India as
well another new development
that is in the past couple of years only
we have seen the oncoming of
differentiated banking licenses in the
form of small banks and payment banks
now it was seen that the conditions that
were applied for banks for licenses of
universal banks they were very harsh so
not enough large number of companies
were able to set up shop in the back end
banking industry in the country hence
the need was felt that a different type
of bank should be introduced with lesser
qualifications and as such small banks
and payment banks came into being now
let us understand what these banks are
all about first let us talk about
smaller banks so small banks can accept
current account and saving account casa
FD that is fixed deposits and recurring
deposit accounts right they can give out
depositors money as nodes to other
customers but the important thing is
that have they have a very small area of
operation right so every small Bank will
be operating in a limited area but
within that area they can perform all
the functions of a huge bank like SBI
hdf CI CI its ICICI etcetera the small
banks will be targeting customers which
are MSME micro small medium enterprise
businessmen unorganized workers small
and marginal farmers and their focus
will remain on getting more and more
deposits as well as disbursing greater
loans the basic idea being that it
functions as a universal bank or a
normal bank but within a limited area
next we talk about payment paths so they
can only do accept current accountants
saving account deposits and not empties
and RDS payment banks cannot give loads
but they can invest depositors money in
government approved securities only
right their target customers are poor
migrants unorganized workers wanted to
send remittances
so as far as payment banks are concerned
they'll be utilizing the mobile banking
platforms internet banking etc to ensure
that people who are living outside of
their homes are able to send back money
to their places using this using the
electronic or mobile platform so their
focus will remain on payment remittances
only including cross-border remittances
right so payment banks can operate
throughout the country but have a
limited operations and their focus
remains only on remittances or sending
of money from one place to the other
so now if we look at certain important
laws which govern the banking industry
in the country now you do not have to go
into greater details of these laws and
you have to only cover the broad or
major areas that these laws are talking
about first one is banking regulations
Act of 1949 so as the name suggests it
regulates all banking companies or firms
in the country it is applicable to
cooperative banks as well but only since
1965 it gives RBA the power to give
licenses licenses to banks have
regulations over the shareholdings and
voting rights of shareholders of these
funds this is a very important act as it
gives RBI the power to give more
licenses to the new banks next is the
RBI Act of 1934 so RBI again this is a
very important term act as RBI was
established under this particular act
it contains the definition of scheduled
banks in shed rule 2 of this act the
section 18 deals with emergency loans to
banks and the other important sections
are section 21 22 and 24 section 24 is
very important for objective type of
questions it states the maximum
denomination or note in India can have
this rupees then house next one is
negotiable instruments Act of 1881 so
defines the important negotiable
instruments like promissory notes Bills
of exchange and buy checks and also
gives various types of checks so
different kind of checks can be local
checks outstation checks or add par
checks
further we have bearer cheques cross
checks open checks etc so these are
certain checks that you have to know the
meanings of and understand the meanings
of for your papers point of view so in
the subsequent slide we talk about the
structure of the banking sector in the
country and so these are the different
types of banks that we have in India
first let us talk about the central bank
the central bank of india is of course
there is a Bank of India
it was established on April the 1st 1935
under RBI Act 1934 so these facts are
again important for any competitive
examination with objective type
questions so these are the various main
functions that the Reserve Bank is
performing first of all it is the
monetary authority of the country that
means it controls the money supply in
the country through its monetary policy
as far as monetary policy is concerned I
have covered this in a previous lecture
secondly it is the regulator and
supervisor of the financial system of
the country so it makes rules Prudential
norms etc for the entire financial
sector as well as the banking sector of
India RBI as a manager manager of
foreign currency is the custodian of
Forex reserve or foreign exchange
reserve of the country so India
maintains a Forex reserve which contains
foreign currency life dollars yen euro
pounds etcetera further gold SDR etc are
also included in this particular four
accessor so RBI is the custodian of
India's Forex reserve further as a
manager of foreign exchange
Alvia is also empowered to manage
foreign exchange under this law that is
foreign exchange Management Act
1999 so this act gives certain limits of
the amount of foreign exchange or
dollars that you can take out of India
so RBI is also the sole authority as far
as this act is concerned next is RBI is
the issuer of currency so RBI prints all
the currency notes of the country the
coins of course are minted by not
different a Reserve Bank of India but
the Ministry of Finance also another
important thing is that the newly or
recently introduced rupee one note is
printed by Ministry of Finance and not
RBI so coins and the rupee one note is
printed by the Ministry of Finance the
rest or currency notes are printed by
the Reserve Bank of India furthermore
RBI also performs certain developmental
rules and it introduces various schemes
like local area schemes of my local area
scheme of 1999 etc next RBI is the
lender of last resort for other banks so
when other banks need money and they
have exhausted all of the sources of
getting credit the RBI is the place that
they go to for asking more money
lastly RBI also acts as the banker to
the government so RBI maintains the
Consolidated Fund of India right so this
is the biggest fund where in all income
tax or central taxes are deposited or
other earnings of the of the Government
of India
is deposited this particular account is
taken care of by the gum by the Reserve
Bank of India similarly to the
consolidated front of India we have the
consolidate Consolidated Fund of various
states
so this consolidated fund is also taken
care of by the Reserve Bank of India
next we take a look at commercial banks
so these are profit-seeking institutions
which accept deposits from general
public and advance money to individuals
in the form of loan credit etc their
main source of income is the
differential between the grades that
they charge to borrowers and the pay to
Depaz
or in other words the interest spread so
as we all know their operations are
regulated by the Reserve Bank of India
so there are different types of
commercial banks in India first is the
scheduled backs and the non scheduled
backs scheduled banks are those nuns
Woods who are registered with the
Reserve Bank of India and their names
appear in the second schedule of the RBI
Act of 1934 right
conversely non scheduled banks are not
registered with RBI as such however
there are as of now there are no non
scheduled banks in the country next
within scheduled banks we have different
categories of banks like foreign owned
backs private sector banks and public
sector banks next what we have is our
breeze that is Regional Rural Banks
these are owned by the government and
mainly operate in anti local levels or
for the development of rural areas in
the country
so next category of banks is cooperative
banks these are different from
commercial banks that we discussed
earlier so these are banks which are
registered under cooperative societies
law of the state government in which it
is found
so every state has a different law with
respect to cooperative societies so this
type of man that is co-operative bank is
registered with the state government as
a cooperative society it serves the need
of the rural sector in general and
agricultural sector in particular so
main focus of cooperative banks is the
rural sector including the agricultural
sector and it provides short term and
mediator credit to agriculture another
important aspect of cooperative banks a
charges lower interest rates as compared
to commercial banks so cooperative banks
have a developmental rule greater
development control as compared to
commercial banks so it has three basic
categories state cooperative banks
cooperative banks as well as at the very
local level primary agricultural credit
societies next category of banks within
the country is that of Development
Bank's now these are banks which are not
there for a commercial purpose or they
are not in the market for earning a
profit but to develop certain specific
sectors of the economy
so first broad category is industrial
development permits so as far as lots of
large scale industries is concerned they
are banks like IIT BIA
IFC I for small-scale industries we have
the SIDBI so as far as development of
export and import business is concerned
in the country we have the export-import
bank or the Exim Bank later further
moving on to agriculture Development
Bank's we have at the All India level
Nevada at the state level we have
various state level Development Bank's
and local level and branches etc of PLD
bees and sld bees and the country where
as far as these banks are concerned for
the purpose of your paper it is very
important that you learn a few facts
about these important paths so first you
will learn the year of their
establishment their headquarters and
their main functions performed by banks
like Navarre say to be etc so during the
course of this video presentation
firstly we saw the major events of the
back evolution of banking sector in the
country
secondly we saw the important laws or
legislations related to or regulating
the banking industry in India and lastly
we saw the broad structure in which the
banking industry in the country is
divided taking a look at the different
types of banks in the country thank you
very much