भारतीय अर्थव्यवर्ा TOPICS 1. Introduction 2. Economic planning in india 3. Money and banking 4. Budget and taxation 5. National income 6. Inflation 7. International organization 8. Capital market 9. Poverty and unemployment 10.Miscellaneous Money and Banking Money Store of Exchange Measure Value Banking Deposit Loan Payment History of Banking in India Bank of Hindustan The first bank of India From 1770-1832 The General Bank of India From 1786-1791 Oudh Commercial Bank It was the first commercial bank in India having limited liability and an entirely Indian board of directors From 1881-1958 State Bank of India Presidency banks I.Bank of Bengal - 1806 II.Bank of Bombay - 1840 III.Bank of Madras - 1843 Imperial Bank Of India The Presidency banks were amalgamated on 27 January 1921, and renamed as Imperial Bank Of India. On 1 July 1955, the Imperial Bank of India was nationalized and renamed as SBI. Associate Banks Of SBI SBI acquired the control of seven banks of former Indian princely states in 1960- I. State Bank of Bikaner and Jaipur (SBBJ), II. State Bank of Hyderabad (SBH), III. State Bank of Indore (SBN), IV. State Bank of Mysore (SBM), V. State Bank of Patiala (SBP), VI. State Bank of Saurashtra (SBS) and VII. State Bank of Travancore (SBT) In 2008,SBS(State Bank of Saurashtra) and in 2009 SBN(State Bank of Indore) were merged in SBI. From 1st April,2017 five associate banks -State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore); and the Bharatiya Mahila Bank were merged into SBI. State Bank of India (SBI) is the largest commercial bank in terms of assets, deposits, branches, customers and employees Nationalisation Of Banks In India First - • The Government of India issued the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969 and nationalized the 14 largest commercial banks with effect from the midnight of 19 July 1969 • Allahabad Bank (Now Indian Bank) • Indian Overseas Bank • Bank of Baroda • Punjab National Bank • Bank of India • Syndicate Bank (Now Canara Bank) • Bank of Maharashtra • UCO Bank • Central Bank of India • Union Bank of India • Canara Bank • United Bank of India( Now Punjab National Bank) • Dena Bank (Now Bank of Baroda) • Indian Bank Second • On 15th April 1980, six more private sector commercial banks were nationalized. • Punjab and Sind Bank • Vijaya Bank (Now Bank of Baroda) • Oriental Bank of India (Now Punjab National Bank) • Corporation Bank ( Now Union Bank of India) • Andhra Bank (Now Union Bank of India) • New Bank Of India -1993, the government merged New Bank Of India with Punjab National Bank. On 30th August,2019 ,government declared this mega merger of Public Sector Bank. After the merger, there will be 12 PSBs – Six merged banks - SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank Six independent banks - Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India, Central Bank of India. It was applicable from 1st April,2020. On 1st April,2019 Vijaya Bank and Dena Bank were merged with Bank Of Baroda. Scheduled Commercial Banks ‘Scheduled Commercial Banks’ are banks included in second schedule of the RBI Act,1934. Public Sector Banks-12 . Regional Rural Banks- 56 . Private Sector Banks- 22 . Small Finance Banks (SFBs)-10 . Scheduled Payments Banks and -11 License(6 Working) . Foreign Banks- 46 RBI The Reserve Bank of India as Central Bank of India was set up on the basis of the recommendations of the Hilton Young Commission(4th Aaug,1926). The Reserve Bank of India was established on 1st ,April, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. Though originally privately owned, since nationalisation on 1st ,January,1949, RBI is fully owned by the Government of India. Bank Of England-1694 Sveriges Riksbank-1668 Central Board • The Reserve Bank's affairs are governed by a central board of directors. • The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. It include following members- Governor, RBI Deputy Governor,RBI Ten Directors appointed by GOI. Two Government officials Directors from four Local Boards of RBI RBI has 27 regional offices, most of them in state capitals and 04 Sub-offices. Governor of the Reserve Bank of India- • Sir Osborne Smith was the 1st RBI Governor(1935-1937) • Sir James Taylor was the 2nd RBI Governor(1935-1943) • Sir Chintaman Dwarkanath Deshmukh was 3rd and first Indian Governor of RBI(1943-1949) • Sir B.Rama Rau was the 4th and longest serving Governor of RBI(1949-57) • L.K. Jha was the 8th Governor (1967-70) • I.G. Patel was the 14th Governor(1977-82) • Manmohan Singh was the 15th Governor(1982-85) • Shaktikant Das is the current 25th Governor of RBI (12/12/2019 till today) Deputy Governor According to RBI,Act,1934 RBI should have four Deputy Governor Two Deputy Governor – From RBI One belong to Public Sector Bank One Economist Currently following three Deputy Governors are - Bibhu Prasad Kanungo Mahesh Kumar Jain Michael Debabrata Patra Functions Of RBI 1. Bank Of Issue- • All notes except ₹1 and coins are issued by RBI • One rupee notes and coins are issued by Ministry Of Finance • Except one rupee notes, all notes have signature of RBI Governor. • One rupee notes have signature of Finance Secretary Of India. • It destroys currency and coins not fit for circulation. Minimum Reserve System (MRS) • For the issue of currencies, the RBI follows Minimum Reserve System at present. The Minimum Reserve System (MRS) is followed from 1956 onwards. Minimum Reserve of Rs 200 Crore Gold- Foreign Rs.115 Currency- Crore Rs.85 Crore 2.Banker to the Government • It performs merchant banking function for the central and the state governments. • It also acts as their banker. 3.Banker to banks • It maintains banking accounts of all scheduled banks. 4.Manager of Foreign Exchange • RBI Manages the Foreign Exchange Management Act, 1999. • It regulate foreign exchange flow and rate in India. 5.Controller of credit • It control lending and deposit creating capacity of the banks • These controls result in control of money supply. Monetary Policy • Section 45ZB of the amended RBI Act, 1934 provides for an empowered six-member Monetary Policy Committee (MPC) to be constituted by the Central Government. • The MPC determines the policy interest rate required to achieve the inflation target. • The first meeting of the MPC was held on October 3 and 4, 2016 in the run up to the Fourth Bi-monthly Monetary Policy Statement, 2016-17. MPC Monetary Policy Framework Agreement • The Government of India and Reserve Bank of India signed a Monetary Policy Framework Agreement on February 20, 2015 Objective- • Maintaining inflation at 4%(+/-2) Maximim-6% Minimum-2% • Validity of the existing target will come to an end on March 31, 2021 • RBI use Consumer Price Index(CPI) for inflation targeting. • CPI is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers. Monetary Policy Objective A.Inflation/Price Rise POLICY RATES MONEY SUPPLY WILL BE HIGH INCREASED B.Deflation/Price Reduction POLICY RATES MONEY SUPPLY WILL BE LOW DECREASED Instruments of Monetary Policy Bank Rate • It is the rate at which RBI provide long term loan to commercial banks. Repo Rate(Repurchase Option Rate) • It is the rate at which RBI provide short time loan to commercial banks with Government Securities as collateral. Reverse Repo Rate • It is the rate at which commercial banks deposit their surplus money with RBI. CRR(Cash Reserve Ratio)- • The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify. Statutory Liquidity Ratio (SLR): • The share of NDTL that a bank is required to maintain with itself. It can include- Cash Gold Government Securities Marginal Standing Facility • This facility was started by RBI from 9TH May,2011. • In this facility commercial banks can take one day loan from RBI at MSF rate with Government Securities as Collateral. Minimum Loan – ₹1 crore or its multiple Maximum Loan – 2% of NDTL(NET Demand Time Liability) • In normal condition MSF rate is equal to Bank Rate. Payment Banks • They are created in India on the recommendations of Nachiket Mor Committee report(January 7th, 2014) Features- • The minimum paid-up capital for payments bank is Rs 100 crore. • Acceptance of demand deposits, initially restricted to holding a maximum balance of Rs 100,000 per individual customer. • Issuance of ATM/debit cards. • They cannot issue credit cards. • They are not allowed to give loans. • Payments and remittance services through various channels On 19 August 2015, the Reserve Bank of India gave “in- principle” licences to eleven entities to launch payment banks in India 1. Aditya Birla Nuvo Limited 2. Airtel M Commerce Services Limited 3. Cholamandalam Distribution Services Limited 4. Fino PayTech Limited 5. Reliance Industries Limited 6. Sun Pharma (Shri Dilip Shantilal Shanghvi) 7. Paytm Payments Bank Limited 8. Tech Mahindra Limited 9. Vodafone m-pesa Limited 10. India Department of Posts 11. National Securities Depository Limited India’s first Payments Bank was launched in January 2017 Founded 1 September 2018; Headquarters New Delhi Small Finance Banks • They are created on the recommendations of Usha Thorat Committee report. Features- • The minimum paid-up capital for payments bank is Rs 100 crore. • Accept both demand and time deposits • Small finance banks can give loans • They can provide both debit and credit card • Small finance banks to give 75% of their total credit to priority sector • These banks are also allowed to distribute third-party mutual funds, insurance and pension products.