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Overview of the Indian Banking Sector

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Overview of the Indian Banking Sector

Page 1 of 12
FINA0501

OVERVIEW OF THE INDIAN BANKING SECTOR

Chan Yuen On Alice | 2010070314

Contents
1 2 3 Introduction History Mundell’s Holy Trinity 3.1 3.2 3.3 4 5 Floating Exchange Rate Free Capital Flow Limited Independence of Monetary Policy 3 3 4 4 4 4 4 5 5 5 6

Distinctive Characteristics Financial Structure 5.1 Central bank — Reserve Bank of India (RBI) 5.1.1 Background 5.1.2 Function and Roles 5.2 Commercial Banks 5.2.1 5.2.2 5.2.3 5.3 Public Sector Banks Private Banks Foreign Banks

6 6 6 7 7 7 7 7 8 8 8 9 9 9 9 9 10 10 10 10 10 10 11 12 2

Co-operative Banks 5.3.1 Short-term Credit Co-operatives 5.3.1.1 Primary Agricultural Credit Societies (PACS) 5.3.1.2 Central Co-operative Banks (CCBs) 5.3.1.3 State Co-operative Banks (SCBs) 5.3.2 Long-term Credit Co-operatives

5.4 5.5 5.6

Regional Rural Banks (RRBs) Development Banks Financial institutions 5.6.1 All-India Financial Institutions (AIFIs) 5.6.1.1 Development Finance Institutions (DFI) 5.6.1.2 Specialized Banks 5.6.2 State Financial Corporations (SFCs) 5.6.3 State Industrial Development Corporations (SIDCs)

6

Regulatory Bodies 6.1 6.2 6.3 Reserve Bank of India (RBI) Indian Banks’ Association (IBA) Ministry of Finance (MoF)

7 8 9

Conclusion References Appendix

1 Introduction
According to the International Monetary Fund, as of 2011, the Indian economy is the ninth-largest economy by market exchange rates. Behind the mysteriously rapid growth of this newly industrialized country, few know that its banking system, tracing back to the last decades of the 18 century, started off to be unprosperous, though later enhanced. This paper provides an overview of the banking sector in India, including its various categories of financial institutions and their respective functions. th

2 History
The earliest banks in the banking history were The General Bank of India, started in 1786, and the Bank of Hindustan, started in 1790 (IBO), both of which no longer exist today. The oldest bank...