3/22/2018 SSC Economic Notes: Banking Structure in India

f
-- Regards, Palak Wadhawan
All Exams Ph: +91 9650 052 904 -- Regards, Palak Wadhawan Ph: +91 9650 052
904
SSC CGL ▾ CHSL ▾ ALP ▾ Group D ▾ CPO ▾ Exams ▾ Notes ▾ Noti

Home > SSC > SSC CGL > General Awareness > Article

SSC Economic Notes: Banking Structure in India

89 upvotes 4 comments

After various notes of SSC GK Economic Notes, we are adding the important study
notes based on Banking and its Structures. You can also read earlier SSC Economic
Notes provided by us from the link given below.

SSC GK Economic Notes - Read Here

Banking System and its Structures

Money Market

In this borrowing and lending of funds take place up to 1 years.

It is used for short-term credit.
It includes Reserve Bank of India, Commercial Banks, Cooperative Banks,
Regional Rural Banks, Some NBFC’s etc.

Composition of Money Market

Indian Money market consists of organised sector and unorganised sector.
1. Organised Sector-
It is also divided into two categories-         

https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 1/8
3/22/2018 SSC Economic Notes: Banking Structure in India

All Exams

Railway Group D Online Test Series on Updated Online Pattern - Attempt Now
Available in Hindi & English. Get Detailed Analysis & All India Rank

a. Banking
b. Sub Markets

a. Banking-

In this, we include Commercial Banks, Regional Rural Banks, and Cooperative

Banks.

Commercial Banks-

Regulated under Banking Regulation act 1949.

They can accept deposits, can provide loans and other nancial services to
earn pro t.
Commercial Banks consists of- Public Sector Banks and Private Sector
Banks.

(i) Public Sector Banks-

In these Banks majority of shares (more than 50 %) are held by Government.

Currently, in India, there are 21 Public sector banks after the merger of SBI
with their associate banks and Bhartiya Mahila Bank (BMB).
The Nationalisation of Banks was done by government in two stages-
The rst stage of nationalization took place in July 1969, in which fourteen
Banks were nationalized.
The second stage of nationalization of Banks took place in April 1980, in
https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 2/8
3/22/2018 SSC Economic Notes: Banking Structure in India

which 6 banks were nationalized.

Objectives of Nationalization of Banks-
All Exams

1. Reducing Private Monopolies

2. Social Welfare
3. Expansion of Banking Facilities
4.Focus on Priority Sector Lending

(ii) Private Sector Banks-

In these Banks, majority parts of share are not held by the government.
These banks consist of both Indian Banks as well as foreign banks.
Private banks which were set up before 1990 (liberalisation of the economy)
are categorised as Old Banks.
Private banks which were set up after 1990 (liberalisation of the economy) are
categorised as New Banks.
Local Area Banks- Private Banks which are allowed to operate in the limited
area called local area banks and registered under the companies act, 1956.
The minimum capital required for these are Rs. 5 crores.

(iii) Small Finance Banks- Read here for small nance Banks.
(iv) Payment Banks- Read here for Payment Banks
Regional Rural Banks-

Established under RRB Act, 1976.

Set up by Public Sector Banks.
The objective is to increase credit ow to rural areas.
After Kelkar committee’s recommendations in April 1987, no new RRBs have
been opened.

Cooperative Banks-

Established with the aim of funding agriculture, cottage industries etc.

Deposits and lending Both activities can do.
NABARD (National Bank for Agriculture and Rural development) is the apex
body of the cooperative sector in India.

Composition of Cooperative Banks-

1. Rural Cooperative Credit Institutions

(a) Short Term Structure-

Lend up to one year.

https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 3/8
3/22/2018 SSC Economic Notes: Banking Structure in India

It is divided into three-tiered setup-

All Exams
(i) State Cooperative Bank-

Apex body for cooperative banks in the state.

(ii) Central or District Cooperative Banks-

Operate at the district level.

(iii) Primary Agriculture Credit Societies-

Operate at the village level.

(b) Long-Term Structure-

Lend for more than one year to twenty- ve years.

It is divided into two-tiered setup-
(i) State Cooperative Agriculture and Rural Development Banks and
(ii) Primary Cooperative Agriculture and Rural Developments Banks

2. Urban Cooperative Credit Institutions

Set up in urban and semi-urban areas.

Lend to small businesses and borrowers.

Classi cation of Banks based on schedule of RBI Act 1934-

All banks (Commercial Banks, RRB, Cooperative Banks) can be classi ed into
scheduled and non-scheduled banks.
1. Scheduled Banks-

Banks those are listed in the second schedule of RBI Act, 1934.
Eligible for obtaining loans from RB on Bank Rate.

2. Non- Scheduled Banks-

Banks those are not listed in the second schedule of RBI Act, 1934.
Generally, not eligible for obtaining loans from RBI.
Keep CRR with itself, not with RBI.

b. Sub Markets-

Sub Market, market to generate resources for investment and to meet the
shortage of money for regular activities.

https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 4/8
3/22/2018 SSC Economic Notes: Banking Structure in India

The government, Financial Institutions and Industries take part in submarket.

All Exams
Composition of Sub Market-
(i) Call Money Market-

Known as Short Notice Market.

Generally used for inter-bank borrowing and lending.
Loans for a range from One to Fourteen Days.
It is also divided into two categories- A. Call market or Overnight Market
(Within one Day) B. Short Notice market (up to fourteen days)

(ii) Bill Market or Discount Market-

(a) Treasury Bills-

Issued by Government treasury.

Used for short-term credit.
Non-interest bearing (Zero Coupon bonds), issued at discount price.

(b) Commercial Bill Market-

Bills other than treasury bills.

Issued by traders and industries.

(iii) Dated Government Securities-

Used for long-term maturity.

(iv) Certi cates of Deposits

Issued by commercial banks and nancial Institution

(v) Commercial Paper-

Issued by corporate, Primary dealers and nancial institutions.

2. Unorganised Sector-
(i) Money Lenders
(ii) Merchant Cum Money Lenders
Gradeup has come up with the complete test series package for upcoming SSC &
Railways Exams for 2018 session with the following test series.

SSC Supreme Test Series Pack 2018 - Unlimited Practice Now

Download Gradeup, the best  ssc cgl app  for Preparation

https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 5/8
3/22/2018 SSC Economic Notes: Banking Structure in India

All the best!

Team gradeup!
All Exams

Railway Group D 2018 Online Test Series

Practice 20 Online Full Length Mock Tests on Updated Online Pattern in
Hindi & English, get All India Rank, Percentile& Live Video
Analysis(Tuesdays & Fridays)

ATTEMPT TEST NOW

89 upvotes 4 comments

Tags : SSC SSC CGL General Awareness

Posted by:

Puneet Bansal
Feb 28 SSC

Stay updated with our latest content by following us on Facebook

Govt Exams - SSC CGL, CHSL

Like Page 195K likes

Related Posts

SSC Economic Notes: Unemployment and its types

Feb 27 | 81 upvotes

SSC Economic Notes: Regulatory Bodies in India

Feb 26 | 121 upvotes

GK Quiz on Economic For SSC Exams

Feb 23 | 16K+ attempts
10 Questions | 30 Minutes

https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 6/8
3/22/2018 SSC Economic Notes: Banking Structure in India

Comments WRITE A COMMENT

All Exams

Arvind Khichar Feb 28

Tnx @Rinkumaan
0 0

Anita Kumari Feb 28

Thanks
0 0

Ranveer Singh Feb 28

Thanks
0 0

Atique Ansari Mar 1

Sukriya
0 0

Write a comment

Our Apps Important Links

Previous Year Question Papers SSC Exams

Online Test Series SSC CGL 2018
NCERT Solutions SSC CHSL 2017-18
SSC MTS 2016-17
SSC CPO 2018
Railway Group D 2018
RRB ALP 2018
RRB NTPC

Quick Links Test Series

SSC CPO Application Form Railway Group D

RRB ALP Syllabus Railway ALP & Tech.
Railway Group D Syllabus SSC CPO Test Series
Railway Group D Question Paper SSC CHSL Test Series
RRB Group D Salary SSC CGL Test Series
Railway Group D Salary Others
https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 7/8
3/22/2018 SSC Economic Notes: Banking Structure in India

UP Constable Syllabus
SSC CHSL Cut Off All Exams

GradeStack Learning Pvt. Ltd.

8 Square Building, 6th Floor,

Plot No. 8, Sector 125,
Noida, India - 201313

support@gradeup.co

ABOUT US CONTACT US MENTORS NEWS FAQ TERMS & CONDITIONS PRIVACY POLICY

SITEMAP

https://gradeup.co/ssc-economic-notes-banking-structure-in-india-i-154a33b0-1c61-11e8-81b0-93ada5be0c86 8/8