Commercial Banking in India At the time of Independence, India had a fairly well-developed banking system with more than 645 Banks having more than 4800 branch offices. These banks although developed could not conform to the social needs of society. These banks generally catered to the needs of industries and that too, big ones. (Other
Functions of Commercial Banks As shown in the figure, the functions of commercial banks can be broadly classified into three parts: Primary Functions of Commercial Banks The primary functions of commercial banks are also known as the ‘acid test’ functions of commercial banks. The following are the primary functions of a commercial bank: Accepting Deposits
Other things being the same, rates of interest also differ according to the term to maturity of the debt. The resulting is called the term structure of interest rates and the curve showing the relationship between yield and term to maturity is called the yield curve. Low short-term interest rates and high long-term rates indicate
What is Asset Liability Management? Asset Liability Management is the ongoing process of formulating, implementing, monitoring, and revising strategies related to assets and liabilities to achieve financial objectives, for a given set of risk tolerances and constraints. Asset Liability Management (ALM) is a part of the overall risk management system in the banks. It is
What is Risk in Banks? The word “Risk” has been derived from the Latin word Rescum. Risk is the potentiality that both the expected and unexpected events may have an adverse impact on the bank‘s capital or earnings. Risk arises due to uncertainty or unpredictability of the future due to changes in internal and external
What is WTO? After the Second World War, many countries planned down to be together to work on ways and means to promote international trade. The result was the signing of (the GATT) General Agreement on Tariffs and Trade by 23 countries in 1947. India was one of the founding members of GATT. GATT was
What is EXIM Policy? In India, economic reforms took place in 1991 with the introduction of the LPG (Liberalization, Privatization, and Globalization) Policy. In order to liberalize imports and boost exports, the Government of India for the first time introduced the Indian EXIM Policy on April I, 1992. In order to bring stability and continuity,
What is International Trade? External trade is also called International Trade. It implies buying and selling of goods or services between two or more countries. For instance, If Mr. A who is a trader from Delhi, sells his goods to Mr. B another trader from China then this is an example of foreign trade or
In India, there was an acute shortage of capital and people lacked initiative and enterprise. Means of transport were undeveloped and as such Industry was in bad condition. Thus there is a need for an institution that removes all the above deficiencies and this led to the emergence of Banks. “A bank is an Institution,
What is Monetary Policy? Monetary policy refers to the use of instruments under the control of the central bank to regulate the availability, cost, and use of money and credit. The goal: achieving specific economic objectives, such as low and stable inflation and promoting growth. The monetary policy of a nation involves the overall set