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BusinessEnvironment-II Presented by: (Group-11) Shivam. Shubham B. Karishma. Akshit. Gangam. Class: ( F.Y) B.Com ‘B’Topic: CommercialBankSubmitted To: Tushtima’am
Definitionof Banking… • “Bank is an institute which collects money from those who are saving it out of their income and lend this money out to those who require it.” • Commercial banks are like other financial institutions which are in the business of lending and borrowing of money or credit.
Acceptingdeposits… • Demand or current account deposit. • Fixed deposits or time deposits • Saving bank deposit.
Advancingloans… • By allowing an over draft facility cheques are honoured even if deposits is less facility for businessmen only interest on overdraft amount • Loans by creating a deposits. • Banks give loans to people by charging interest • Bank asks for security • Simply opens an account in name of needy person and issues a cheque book to transact • Loans granted mostly for business
Discountingbillsof exchange… • If a seller sells some goods to a buyer who does not pay in cash. But the seller draws a bill of exchange which is signed by buyer. • There is maturity or payment period, say one month. • Now the seller can give this exchange bill to a bank which will give him cash against it. • Bank charges interest on it till one month.
Agencyservices… • Collection of bills, cheques. • Collection of dividends, interest, premium. • Purchase and sale of shares and debentures. • Payment of insurance premiums. • Acts as trustee when nominated.
Generalservices… • Traveller’s cheques, bank draft • Safe vaults for valuables • Supplying trade information • Economic surveys • Projects report preparation
Accelerating the rate of capital formation. • Provision of Finance and Credit. • Developing Entrepreneurship. • Promoting balanced regional development. • Help to consumers.
1. Accelerating the Rate of Capital Formation: • Commercial banks encourage the habit of thrift and mobilise the savings of people. • These savings are effectively allocated among the ultimate users of funds, i.e., investors for productive investment. • So, savings of people result in capital formation which forms the basis of economic development.
2. Provision of Finance and Credit: • Commercial banks are a very important source of finance and credit for trade and industry. • The activities of commercial banks are not only confined to domestic trade and commerce, but extend to foreign trade also.
3. Developing Entrepreneurship: • Banks promote entrepreneurship by underwriting the shares of new and existing companies and granting assistance in promoting new ventures or financing promotional activities. • Banks finance sick (loss-making) industries for making them viable units.
4. Promoting Balanced Regional Development: • Commercial banks provide credit facilities to rural people by opening branches in the backward areas. • The funds collected in developed regions may be channelised for investments in the under developed regions of the country. • In this way, they bring about more balanced regional development.
5. Help to Consumers: • Commercial banks advance credit for purchase of durable consumer items like Vehicles, T.V., refrigerator etc., which are out of reach for some consumers due to their limited paying capacity. • In this way, banks help in creating demand for such consumer goods.
Structureofcommercial banks… The commercial banks can be broadly classified under two heads:
Scheduled banks: • Scheduled banks refer to those banks which have been included in the Second Scheduled of Reserve Bank of India Act, 1934. • In India, scheduled commercial banks are of three types: • Private sector banks. • Public sector banks. • Foreign sector banks.
PublicSectorBanks… • These banks are owned and controlled by the government. • The main objective of these banks is to provide service to the society, not to make profits. • State Bank of India, Bank of India, Punjab National Bank, Canada Bank and Corporation Bank are some examples of public sector banks.
PrivateSectorBanks… • These banks are owned and controlled by private businessmen. • Their main objective is to earn profits. • ICICI Bank, HDFC Bank, IDBI Bank is some examples of private sector banks.
ForeignBanks… • These banks are owned and controlled by foreign promoters. • Their number has grown rapidly since 1991, when the process of economic liberalization had started in India. • Bank of America, American Express Bank, Standard Chartered Bank are examples of foreign banks.
Non-scheduled banks: • Non-scheduled banks refer to those banks which are not included in the Second Schedule of Reserve Bank of India Act,1934.
