Banking financial institutions of India

20 most important definitions:

1. Banking-
Sec 5(1)(c ) of Indian Banking regulation Act 1949 defines-The term banking company as any company which
transacts the business of banking in India.

2. Deposit mobilization-
The main business for bank is accepting deposits and granting loans. The more the loan banks disburse the
more profit they make. Also banks do not have a lot of their own their own money to give as loan. They
depend on customer deposits to generate funds for granting for granting loans to other customers.

3. Creation of credit-
Multiple-expansion of deposits is called credit creation and the ability of the banks to expand the deposits
makes them unique and distinguish them from other non-bank financial institutions. Demand deposits are an
important constituent of money supply and the expansion of demand deposits means expansion of money
supply.

4. Commercial banks-
A commercial bank is a type of bank that provides services such as accepting deposits, making business
loans, and offering basic investment products.
Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and
loans from corporations or large businesses, as opposed to individual members of the public.

5. Industrial banks or investment banks-
An investment bank is a financial institution that assists individuals, corporations, and governments in
raising capital by underwriting or acting as the client's agent in the issuance of securities (or both). An
investment bank may also assist companies involved in mergers and acquisitions and provide ancillary
services such as market making, trading of derivatives and equity securities, and FICC services (fixed
income instruments, currencies, and commodities).

6. Agricultural banks-
The agricultural bank is the bank set up by the government to solve financial problems of small holder
farmers with the responsibility of providing credit to farmers.





7. Export banks-
These banks are mainly concerned with financing foreign trade.
Following are the various functions of Exchange Banks:-
Remitting money from one country to another country,
Discounting of foreign bills,
Buying and Selling Gold and Silver, and
Helping Import and Export Trade.


8. Savings banks-
Saving banks are established to create saving habit among the people. These banks are helpful for
salaried people and low income groups. The deposits collected from customers are invested in bonds,
securities, etc. At present most of the commercial banks carry the functions of savings banks. Postal
department also performs the functions of saving bank.


9. Central banks-
A national bank that provides financial and banking services for its country's government and
commercial banking system, as well as implementing the government's monetary policy and issuing
currency.


10. Mass banking-
Mass banking means making of the banking facilities available to maximum number of people i.e the mass of the
people, it is also called as inclusive banking in recent times.


11. Current accounts-
An account with a bank or building society from which money may be withdrawn without notice, typically an active
account catering for frequent deposits and withdrawals by cheque.


12. Savings bank account-
A deposit account held at a bank or other financial institution that provides principal security and a
modest interest rate. Depending on the specific type of savings account, the account holder may not be
able to write checks from the account (without incurring extra fees or expenses) and the account is likely
to have a limited number of free transfers/transactions.


13. Fixed deposit accounts-
The term Fixed Deposit Account refers to a type of savings account or certificate of deposit where deposits
are made for a specified period of time and that pay out a fixed rate of interest.



14. Recurring deposit account-
Recurring deposit account is generally opened for a purpose to be served at a future date. Generally
opened to finance pre-planned future purposes like, wedding expenses of daughter, purchase of costly
items like land, luxury car, refrigerator or air conditioner, etc.


15. Scheduled commercial banks-
Scheduled banks are those banks which have been included in the second schedule of the Reserve bank of
India act of 1934. The banks included in this schedule list should fulfill two conditions.
1. The paid capital and collected funds of bank should not be less than Rs.5 lac.
2. Any activity of the bank will not adversely affect the interests of depositors


16. Non-scheduled banks-
A non-scheduled bank is a bank which does not come under RBI act 1949.


17. Monetary policy-
Monetary policy is the process by which the monetary authority of a country controls the supply of
money, often targeting a rate of interest for the purpose of promoting economic growth and stability.


18. Nationalized banks-
Nationalized Bank refers to Government Undertaking or Managing Bank. As SBI & PNB are Government
Banks its a Nationalized Bank.


19. Regional Rural banks-
Regional Rural Banks are the banking organizations being operated in different states of India. They have
been created to serve the rural areas with banking and financial services. However, RRB's may have
branches set up for urban operations and their area of operation may include urban areas too.


20. Cooperative banks-
A cooperative bank is a financial entity whose members are owners and customers at the same time.
These banks are created by people from the same community who share a common interest. The banks
have democratic member control and member economic participation.