B ANKING Commercial banks are an important institution of the economy for providing institutional credit to its customers. A banking company in India is the one which transacts the business of banking which means accepting, for the purpose of lending and investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheques, draft, order or otherwise. In simple terms, a bank accepts money on deposits, repayable on demand and also earns a margin of profit by lending money. A bank stimulates economic activity in the market by dealing in money.
It mobilises the savings of people and makes funds available to business financing their capital and revenue expenditure. It also deals in financial instruments and provides financial services for a price i.e., interest, discount, commission, etc. Banks can be classified into the following: . Commercial banks .
Cooperative banks . Specialised banks . Central bank (i) Commercial Banks: Commercial banks are institutions dealing in money. These are governed by Indian Banking Regulation Act and according to it banking means accepting deposits of money from the public for the purpose of lending or investment.
There are two types of commercial banks, public sector and private sector banks. Public sectors banks are those in which the government has a major stake and they usually need to emphasise on social objectives than on profitability. Private sector banks are owned, managed and controlled by private promoters and they are free . .
Type of Banks The focus of banking is varied, the needs diverse and methods different. Thus, we need distinctive kinds of banks to cater to the above-mentioned complexities. to operate as per market forces. There are nationalised public sector banks like SBI, PNB, IOB etc., and other private sector banks represented by HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Jammu and Kashmir Bank.
Banking and Social Objectives In the recent past there has been a concerted effort by the policy makers in reorienting banking towards achieving social objectives. There has been a major shift in the banking policy of the country: from to (i)