BANKING SYSTEM

BANKING SYSTEM:-

The modern banking system in India started with the establishment of general bank of India in 1786.

MEANING OF BANKING:-  

Bank is German word which means 'to collect'. The main functions of the banks is collection of funds as deposits. A bank is a financial institution that accepts deposits from the public and creates credit.

Features of Banking:-

There are some important features of banking.

• It deals with money and accepts deposits from public.

• The buying and selling of bullion and specie.

• The receiving of all kind of bonds or valuable  on deposit or for safe custody. 

• The buying and selling of foreign exchange including banks notes.

• The drawing, accepting, buying, selling, collecting and dealing in bills of exchange,promissory notes,debentures, and other instruments and securities whether transferable or negotiable or not. 

• The purchasing and selling of bonds, scripts or other forms of securities on behalf of constituents or others, the negotiating of loans and advances.
• The borrowing, raising or taking up of money.
• The granting and issues of letters of credit, traveler's cheques and circular notes.

TYPES OF BANKS:-

Banks can be divided into two groups. 

1. The scheduled banks.
2. Non-scheduled banks.

SCHEDULED BANKS:- 

A scheduled bank is one which is registered in the second scheduled  of the RESERVE BANK OF INDIA. Scheduled banks are further classified into:-

1. commercial banks.
2. co-operative banks. 

COMMERCIAL BANKS:- 

 Commercial banks are those banks which perform all kinds of banking functions such as accepting deposits, credit creation, and agency functions. some of the commercial banks in India are Andhra bank, Canara bank, Indian bank, Punjab national bank etc.

CO-OPERATIVE BANKS:- 

 Co-operative banks came into existence with enactment of the co-operative of the co-operative credit societies act of 1904 which provided for the formation of co-operative credit societies.

NON-SCHEDULED BANKS:-

Banks which are not included in the Second schedule of the RBI, are known as non- scheduled banks.

Banks can be classified into the following categories.

1. COMMERCIAL BANKS
2. CENTRAL BANK
3. CO-OPERATIVE BANK
4. SAVING BANK
5. EXPORT-IMPORT BANK
6. DEVELOPMENT BANK