BANKING SYSTEM IN INDIA- BASIC STRUCTURE

                                                               BANKING INDUSTRY IN INDIA

             A well-organized and banking system is a pre-requisite for economic growth. A particular industry is become well-organized when it is regulated by some autonomous body which is controlled by govt. Here in India all the banks are operated under the control of central bank which is known as RESERVE BANK OF INDIA (RBI).

       

  In India total banking industry is divided into four categories:

1.       Commercial bank.

2.       Regional rural bank

3.       Co-operative banks

4.       Development bank.

COMMERCIAL BANK:

                                           Commercial banks handle banking needs for large and small businesses including retail customers. Basically it provides following types of functions:-

1.       Acceptance of deposits.

2.       Granting of Advance.

3.       Remittances.

4.       Collection.

5.       Issuance of letter of credit & guarantees.

6.       Credit cards.

7.       Merchant banking business & many more.

TYPES OF COMMERCIAL BANK :

                                                              Commercial bank can be divided in two categories based on their ownership:-

1.       Public sector bank.

2.       Private sector bank.

Public sector bank is consisted of State Bank of India and its subsidiaries and nineteen nationalized banks.

Private sector bank is in private hands. They are three types:

1.       Indian Schedule Commercial Bank other than public sector bank.(The term Scheduled commercial banks refers to commercial bank which are included in the Second Schedule to the Reserve Bank of India Act. 1934).

2.       Non-Schedule banks.

3.       Foreign banks.

REGIONAL RURAL BANK:

                                                  As name suggest “this type of bank have been established with a view to developing the rural economy. It have been established for the purpose of development of agriculture, trade, commerce, Industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural labourers  and small ntrepreneurs”(Preamble to the Regional Rural Banks Act 1976).

CO-OPERATIVE BANKS :

                                                 This type of bank provides facilities to the farming and allied sector. Basically this type of bank divided into :

1.       Central co-operative banks.

2.       State co-operative banks

3.       Primary co-operative banks.

4.       Land development banks.

DEVELOPMENT BANKS:

                                                This type of banks is started with the objective of providing only long-term finance for development purposes.

LEGAL FRAMEWORK OF BANKING INDUSTRY:-

                                                                                        Total operation of banking industry is regulated by                          various Acts. Which are enumerated below:

1.       Banking Regulation Act 1949

2.       State Bank of India Act 1955

3.       Companies ACT 2013.

4.       State Bank Of India (Subsidiary Banks ) Act 1959

5.       Banking Companies (Acquisition and Transfer of Undertakings ) Act 1970

6.       Regional Rural Bank Act 1976.

7.        Banking Companies (Acquisition and Transfer of Undertakings ) Act 1980

8.       Information Technology Act 2000

9.       Prevention of Money Laundering Act 2002

10.   Securitization and Reconstruction of financial Assets and Enforcement of security Interest Act 2002

11.   Credit Information Companies Regulation Act 2005

12.   Payment and Settlement System Act 2007