2. INDIA All banks which are included in the SecondSchedule to
the Reserve Bank of India Act, 1934 are Scheduled Banks. These
banks comprise Scheduled CommercialBanks and Scheduled Co-operative
Banks. 3. Scheduled Commercial Banks State Bank of India and its
AssociatesNationalized BanksForeign BanksPrivate Sector
Banks,Regional Rural BanksScheduled Co-operative BanksRegional
Rural bankScheduled State Co-operative Banks Scheduled Urban Co
operative Banks 4. Section 42(6) The Reserve Bank Of India Act,
1934 Scheduled Bank The Bank shall, save as hereinafter provided,
bynotification in the Gazette of India,- (a) direct the inclusion
in the Second Schedule of any bank not already so included which
carries on the business banking 3[ in India] and which (i) has a
paid- up capital and reserves of an aggregatevalue of not less than
five lakhs of rupees, and (ii) satisfies the Bank that its affairs
are not being conducted in a manner detrimental to the interest of
its depositors, and (iii) 4[ is a State co- operative bank or a
company] as defined in 5[ section 3 of the Companies Act, 1956 (1
of 1956 ), or an institution notified by the Central Government in
this behalf] or a corporation or a company incorporated by or under
any law in force in any place 6[ outside India]; 5. EVOLUTION OF
BANKING Prior to 1950 Some schedule banks after RBI founded in
1935were PNB, Allahabad Bank, Oudh Commercial bank Total around 58
banks existed 6. Foundation Phase 1948-1967 1949 Banking Regulation
Act Imperial Bank Of India converted into State bankof India
Institutional frame work for long term financing to agri and
industry By 1968 there were 281 banks 71 scheduled and 210 non
scheduled Till 1968 RBI and SBI with associates were under the govt
control 7. Expansion Phase 1968-1984 Socialization of Banking
started in 1968 .Commercial banks were viewed as agents of change
14 banks were nationalized in 1969 6 in 1980 Birth of RRB in 1975
and NABARD in 1982 By 1984 scheduled banks 264 and non scheduled
banks reduced to 268 8. Consolidation Phase( 1985-1990)
Consolidation of exiting banks Focus on credit management , staff
productivity Assest liabilities priced by Rbi High CRR and SLR
Consolidation of losses because of farmer debtrelief schemes 9.
Reformatory Phase NARASIMHAM COMMITTEE REPORT PHASE 1
reportsubmitted 1991 Recommended CRR reduction to 10% and SLR to
25% Interest payment of 3% on cash balances above minimum CRR
balances Interest rate deregulation Minimum of 4% CAR capital
adequacy ratio Income recognition ,assets classification and
provisioning norms Restructure to create 3or 4 large banks gave the
concept of universal banks Entry of Pvt. Banks with level playing
field Abolishment of branch licensing Opening for foreign banks
Supervision of banks rather than regulation Elimination of duality
of control on banking sector 10. ACTION ON RECOMMENDATION CRR
brought down from 15% to 5% in 2004 SLR from 38.5% to 25% Inclusion
in other areas in priority sector lending of 40% Bank to have PLR
Capital adequacy norms of 8% Creation of Assets reconstruction fund
Restructuring new India bank merged with PNB 11. CRR AND SLR
DYNAMICS 12. Pvt banks Banking regulation Amendment Act
1994permited entry of pvt sector banks 30 Allowed entry of foreign
banks currently 33 13. (Narasimham Committee IIBanking Sector
Reforms RECOMMENDATIONS The Committee suggests that pending the
emergence of markets inIndia where market risks can be covered, it
would be desirable that capital adequacy requirements take into
account market risks in addition to the credit risks. In the next
three years, the entire portfolio ofGovernment securities should be
marked to market and this schedule of adjustment should be
announced at the earliest. It would be appropriate that there
should be a 5% weight for market risk for Govt. and approved
securities. 14. CENTRAL BANK RBI CENTRAL BANK OF INDIA UNDER RBI
ACT 1934 FUNCTIONAL SINCE 1935 15. REGULATION OF MONEY AND CREDIT
MONETARY TECHNIQUES CRR AND SLR OMO REPO AND REVERSE REPO THROUGH
LAF 16. REGULATION OF MONEY AND CREDIT CONDITIONS NON- MONETARY
TECHNIQUES DIRECT CREDIT ALLOCATION CREDIT RATIONING REPO AND
REVERSE REPO
