Welcome to JAIIB Virtual ClassesPRINCIPLES OF BANKING

INDIAN FINANCIAL SYSTEM

Financial System The financial system in a country refers to the institutional framework existing to enable financial transactions to be carried out in a smooth manner

Any Financial System has three main segments

Financial institutions -banks, mutual funds, insurance companies etc

2) Financial markets -money market, debt market, capital market, forex market, derivative markets

3) Financial products -loans, deposits, bonds, equities , different types of financial derivatives etc

FINANCIAL SERVICESMARKETS & REGULATORS

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Reserve Bank of India - 1Reserve Bank of India was established on 1st April 1935, after the enactment of the Reserve Bank of India Act 1934 (RBI Act).The RBI was initially privately owned but was nationalized in 1949 by the enactment of the Banking Regulation Act.Banking Regulation Act,1949 (BR Act)gave wide powers to RBI as regards to establishment of new banks/mergers and amalgamation of banks,opening of new branches,etcBR Act,1949 gave RBI powers to regulate,supervise and develop the banking system in India

RBIs Major FunctionsSupervisory & Regulatory

Promotional & Developmental

Refinance Activities

RBIs Major FunctionsSupervisory & Regulatory

Promotional & Developmental

Refinance Activities

RBIs Major FunctionsSUPERVISORY & REGULATORY

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RBIs Major FunctionsSupervisory & Regulatory

Promotional & Developmental

Refinance Activities

RBIs Major FunctionsPROMOTIONAL & DEVELOPMENTAL

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RBIs Major FunctionsSupervisory & Regulatory

Promotional & Developmental

Refinance Activities

RBIs Major FunctionsREFINANCE ACTIVITIES

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Securities & Exchange Board of India (SEBI)

SEBI was constituted on April 12/1988, and obtained the statutory powers in March,1992

SEBIs functions:To protect the interests of investorsTo recognize the business in stock exchanges and other security marketsTo supervise and regulate work of intermediaries, such as stock brokers merchant bankers/custodians

depositories/bankers to the issues

Association of Mutual Funds in India (AMFI)AMFI is an association as a non profit organization.AMFI represents mutual funds in India and working for healthy growth of the Mutual Funds.AMFI conduct examinations for MF executives as part of their training activities

Insurance Regulatory & Development Authority (IRDA)The regulator for insurance business in India is IRDA.IRDA was established in 2000

IRDAs functions:To regulate, promote and ensure orderly growth of the insurance business and reinsurance business in IndiaTo protect the interests of policy holders

Banks in India

Banking Regulation Act,1949 (BR Act)-1 - BR Act covers banking companies and cooperative banks, with certain modifications. - BR Act is not applicable to a) primary agricultural credit societies b) land development banksBR Act allows RBI (Sec 22) to issue licence for banks

BANKING -DefinitionSection 5 (b) of Banking Regulation Act 1949 defines banking as acceptance of deposits of money from the public for the purpose of lending or investmentUnder Section 49A of the Act , no person other than a Bank is authorised to accept deposits which can be withdrawn by cheques except SB Schemes run by government or a firm notified by the government.Section 6 (1) gives the list of permissible businessSection 8 gives details of activities that are prohibited

Reserve Bank of India Act,1934(RBI Act)-1RBI Act was enacted to constitute the Reserve Bank of IndiaRBI Act has been amended from time to timeRBI Act deals with the constitution, powers and functions of RBI

Reserve Bank of India Act,1934(RBI Act)-2RBI Act deals with:incorporation, capital management and business of bankscentral banking functionsfinancial supervision of banks and financial institutionsmanagement of forex/reservescontrol functions : bank rate,audit,accountspenalties for violation

Classification of Banks-1

Classification of Banks-2

WHOLESALE BANKINGProvision of services by banks to the like of large corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, institutional customers (such as pension funds and government entities/agencies), and services offered to other banks or other financial institutions.. Wholesale banking is different from retail banking, in that the former focuses more on corporate style entities and high value transactions, while the latter is focused on providing financial services to individual consumers.

PRESENTATION BY- SHANKER IYER THANK YOUEmail-shanker.iyer@bankofindia.co.in