2. Banking

Banks are financial institutions that accept deposits and make loans. Included under the term banks are firms such as commercial banks, savings and loan associations, mutual savings banks, and credit unions. Banks are the financial intermediaries that the average person interacts with most frequently. A person who needs a loan to buy a house or a car usually obtains it from a local bank. Most people keep a large proportion of their financial wealth in banks in the form of savings accounts, or other types of bank deposits. Because banks are the largest financial intermediaries in our economy, they need to be understood well. The following three functions are essential in making a financial institution a bank:

♤ Accept deposits - Banks accept deposits from the public at large which are repayable on demand and withdrawable by cheque or otherwise

♤ Lending - Banks uses these deposits for lending to others and undertaking investment in securities.

♤ Creation of money – It is the unique characteristic of commercial banks. Their debts circulate as money in the economy. Banks have the power to destroy and create money through lending activities. Money created by bank is known as deposit money or bank money.

None of these alone are sufficient to make a financial institution a bank. However, the RBI has in recent times given license for two new types of banks- Payment Banks and Small Finance Banks - as differentiated banks.

2.1. Indian Banking System 2.1.1. Regional Rural Banks (RRBs)2.1.2. Cooperative Banks 2.1.2.1. Types of Cooperative Banks 2.1.2.2. Urban Cooperative Banks Challenges faced by UCBs R Gandhi committee on urban cooperative banks Should large UCBs be converted into commercial banks?2.1.2.3. Rural Cooperative Banks 2.1.3. Commercial Banks 2.1.3.1. Public Sector Banks 2.1.3.2. Private Sector Banks 2.1.3.3. Small Finance banks 2.1.3.4. Payment Banks 2.1.3.5. Wholesale and Long-Term Finance Bank 2.1.3.6. Problems of Commercial Banks in India 2.2. Indian Banks Abroad 2.3. Another way of classification of banks 2.4. Banks v/s Non- Banking Financial Companies (NBFCs)2.4.1. What is NBFC?2.4.2. Regulators of NBFC Nidhi company 2.4.3. Increasing Influence and Regulatory Problems of NBFCs 2.4.4. Usha Thorat Committee 2.4.5. Steps Taken by RBI Regarding NBFCs 2.5. Banking Reforms in India 2.5.1. Narasimham Committee I (1991) ♤ Reduction in CRR and SLR.2.5.2. Narasimham Committee II Implementation of Recommendations 2.6. Issue of Non-Performing Assets (NPAs)2.6.1. What are Non-Performing Assets (NPA’s)2.6.2. Categories of NPAs 2.6.3. How to Reduce NPAs Before giving loans After declaring asset as an NPA 2.6.4. Recent Initiatives 2.6.4.3. Other Measures For securitisation companies For banks ♤ Banking regulation ordinance 2017 -2.6.6. Steps Advised by Finance Standing Committee of the Parliament 2.7. Some Important Terms White Label ATMs:Bhartiya Mahila Bank: