INDIAN BANKING SYSTEM AND ITS EMERGING TRENDS

SUBMITTED BY-

Saurav Prashar

ROLL NO- 140423301

SUBMITTED TO-

Dr. Dheeraj Joshi

ESTABLISHMENT OF BANKS IN

INDIA

• .

June 2, 1806: The Bank of Calcutta

April 15, 1840: Bank of Bombay

July 1, 1843: Bank of Madras

1861: Paper Currency Act passed.

January 27, 1921

1955

• TAKEN OVER BY SBI

FUNCTIONS OF BANKING

FUNCTIONS OF BANKSAccepting deposits

Giving loans

Overdraft

Discounting of Bills of Exchange

Investment of Funds

Agency Functions

Miscellaneous

Functions

INVENTIONS AND FACILITIES FOR EASING OF BANKING IN

THIS MODERN ERA

AUTOMATIC TELLER MACHINE

(ATM)

CRADIT CARDS

DEBIT CARDS

CHEQUE CARDS

CHARGE CARDS

SMART CARDS

LATEST TRENDS IN BANKING

UNIVERSAL BANKING

ELECTRONIC BANKING

GLOBALISATION OF BANKING• Globalization has emerged as a prime mover in the

Indian banking system.

• This has come about as a result of the policy of liberalization and opening up of banking and other sectors pursued after 1991 in India.

• Foreign banks that wish to set up their offices/branches in India have been granted licenses by RBI on liberal and on reciprocal basis.

• Similarly, Indian banks are also opening their offices/branches abroad, particularly in countries whose banks have opened offices in India

SATELLITE BANKING• Satellite banking is an upcoming technological

innovation in the Indian banking industry.

• It is expected to help in solving the problem of weak terrestrial communication links in many parts of the country.

• The use of satellites for establishing connectivity between branches will help banks to reach rural and hilly areas in a better way, and offer better facilities, particularly in relation to electronic funds transfers.

TECHNOLOGICAL DEVELOPMENT

• With the advancement of technology and the

birth of competition, banks are in the race of

becoming the best in the country.

• The advancement in the technology has helped

the banks to reduce the workload.

• There are so many activities, which are taken

over by machines. Employees are no more

loaded with paper work.

PHONE BANKING

• Pick up the phone to access a host of Bank

services, day or night.

• Phone and mobile banking are a fairly recent

phenomenon for the Indian banking industry.

• Phone banking channels function through an

Interactive Voice Response System (IVRS) or

tele-banking executives of the banks.

Online banking

• Online banking (or Internet banking) is a term

used for performing transactions, payments etc.

over the Internet through a bank, credit union or

building society's secure website.

• This allows customers to do their banking

outside of bank hours and from anywhere

where Internet access is available.

Features of online banking

• Online banking usually offers such features as:

• Bank statements.

• Electronic bill payment

• Funds transfer.

• Loan applications and transactions, such as

repayments

• Account aggregation

REAL TIME GROSS SETTLEMENT

• RTGS is a large value funds transfer system .

• Transfer of money takes place from one bank to

another on a “real time” and on “gross basis”.

• Money can be transferred only to those

branches in which RTGS is enable

Benefits of RTGS

• full value of individual

• Real time immediate value transfer

Features

• 1. No bundling up of transactions,

• 2. No netting

• 3. No deferral of final settlement

Funds

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BANCASSURANCE

Bancassurance

• Bancassurance is the term used to describe the

sale of insurance products in a bank.

• The word is a combination of "banque or bank"

and "assurance" signifying that both banking and

insurance is provided by the same corporate entity.

• Banks gives you peace of mind with

Bancassurance.

• One receive coverage and save money at the

same time. You can choose the right option which

benefits you the most.

Core banking solutions(CBS)

• Core banking (stand for "centralized online

real-time exchange") is a banking services

provided by a group of networked bank

branches

• Here customers may access their bank

account and perform basic transactions from

any of the member branch offices.

• Larger businesses are managed via

the Corporate banking division of the institution.

Electronic fund transfer (EFT)

• Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands.

• It is used for both credit transfers, such as payroll payments, and for debit transfers, such as mortgage payments.

• The growing popularity of EFT for online bill payment is paving the way for a paperless universe where checks, stamps, envelopes, and paper bills are obsolete.

Benefits of EFT

• reduced administrative costs

• increased efficiency

• simplified bookkeeping

• greater security

Electronic clearing system

• ECS is an electronic mode of funds transfer from one bank account to another.

• It can be used by institutions for making payments such as distribution of dividend interest, salary, pension, among others.

• It can also be used to pay bills and other charges such as telephone, electricity, water.

• For making equated monthly installments payments on loans as well as SIP investments. ECS can be used for both credit and debit purposes.

Electronic data interchange (EDI)

It facilitates computer to-computer exchange

of electronic documents (such as purchase

orders, advance shipment notices and without

human intervention or human readable (paper

or electronic documents)..

International banking

• Indian banks have extended their activities beyond

the national boundaries.

• The extension may take place in the form of

borrowings as well as lending and it may take place

through official or private or commercial channel.

• In the process of internationalization, the domestic

financial institutions participate in foreign financial

markets and the foreign institutions participate in

domestic market to a significant extent.

International lending

• Syndicated loans

• Large loans that enable borrowers to obtain large amounts of funds and lenders can diversify their credit risk. Lead bank can earn fee income for management services.

• Letters of credit

• Import letters of credit are issued by a bank in favor of a firm in most cases. An export letter of credit is issued by a foreign bank to a firm in the U.S.

Letters of credit

• The letter of credit is a document from a bank

that says it will pay the exporter when the

conditions in the letter are met.

• In effect, the bank’s credit is substituted for the

importer.

• The issuing bank pays the seller through the

advising (paying) bank.

• The importer pays the issuing bank a fee for its

services.

Foreign exchange markets

• Interbank market of money center banks and

major foreign banks.

• Foreign exchange brokers facilitate currency

trading.

• Credit risk associated with the counterparty

(bank or broker) failing to meet its obligations.

CRMs and any branch banking• Customer relationship management (CRM) is a

system for managing a company’s interactions with current and future customers.

• It often involves using technology to organize, automate and synchronize sales, marketing, customer service and technical.

• Any branch banking

• All the branches are inter-connected and are capable of providing online, real-time transactions to its customers.

• Customers can Deposit/Withdraw freely without any tariff charge i.e. free ABBS facility.

Risk management

• The financial sector in various economies like that of India are undergoing a monumental change factoring into account world events such as the ongoing Banking Crisis across the globe.

• Risk management in Indian banks is a relatively newer practice, but has already shown to increase efficiency in governing of these banks as such procedures tend to increase the corporate governance of a financial institution

POINT OF SALE TERMINAL

• A type of electronic-transaction terminal.

• Point-of-sale terminals typically include a computer, a cash register and other equipment or software used to sell goods or services.

• They also transmit sales data to be posted to customer accounts.

• It is an electronic payment system involving electronic fund transfers based on the use of payment cards, such as debit or credit, at payment terminals located at point of sale.

Thank you

• A presentation by-

Saurav prashar