Unit I- Banking Regulation Act, 1949.
“Banking is the business of accepting for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise and
withdraw-able by cheque, draft, and order or otherwise.” Indian Banking Regulation Act, 1949.
Essentials of a Banking System:
One of the essentials of a sound banking system is to have a higher degree of liquidity. The bank holds a small proportion of its assets in cash. Therefore,
its other assets must possess the criterion of liquidity so that they may be turned into such easily. A commercial bank is under an obligation to pay its
depositors cash on demand. This is only possible if the bank possesses such securities which can be easily liquidated. Central banks have made it obligatory
on the commercial banks to keep a certain proportion of their assets in cash to ensure liquidity.
Another essential of a sound banking system is that it must be safe. Since the bank keeps the deposits of the people, it must ensure the safety of their
money. So it should make safe loans and investments and avoid unnecessary risks. If the debtors of the banks do not repay the loans in time and it loses
on its investments, the bank shall become insolvent. As a result, its depositors lose money and suffer hardships. Thus the bank must ensure the safety
of its deposits.
A sound banking system must be stable. It should operate rationally. There should neither be undue contraction nor expansion of credit. If the bank restricts
the creation of credit when trade and industry need it the most, it will harm the interests of the business community. On the other hand, if it expands
credit when the economic conditions do not permit, it will lead to boom and inflation. So the banking system should follow a stable lending policy. The
central bank of the country can help in achieving stability in the banking operations of the commercial banks by a judicious credit control policy.
But the stability of banking operations should not be interpreted as rigidity. Rather, the banking system should have sufficient elasticity in its lending
operations. It should be in a position to expand and contract the supply of loanable funds with ease in accordance with the directives of the central bank
of the country.
A sound banking system should be able to earn sufficient profits. Profits are essential for it to be viable. It has to pay the corporation tax like any
other company, pay interest to its depositors, dividend to shareholders, salaries to the staff and meet other expenses. So unless the bank earns, it cannot
operate soundly. For this purpose, it must adopted judicious loan and investment policies.
- Reserve Management:
Sound banking system must follow the principle of efficient reserve management. A bank keeps some amount of money in reserve for meeting the demand of
its customers in case of emergency. Though the money kept in reserve is idle money, yet the bank cannot afford the risk of keeping a small amount in reserve.
There are, however, some statutory limits laid down by the central bank in maintaining minimum reserves with itself and with the bank. But how much reserve
money should a bank maintain is governed by its own wisdom, experience and the size of the bank. The bank should manage its reserve policy effectively
and efficiently without keeping too much or too little cash. It has to balance between profitability and safety.
A sound banking system must be spread throughout the country. It should not be concentrated only in big towns and cities but in rural areas and backward
regions. It is only by widespread expansion of the banking system that the deposits can be mobilized and credit facilities can be made available to trade,
industry, agriculture, etc. This is especially the case in a developing country where the banking system must provide these facilities through its expansion
in all areas. This is essential for capital formation and economic growth.
Structure of Banking:
Image result for structure of banking
Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935 accordance with the provisions of the Reserve Bank of India
Act, 1934. It holds the apex position in the banking structure. RBI performs various developmental and promotional functions.
It has given wide powers to supervise and control the banking structure. It occupies the pivotal position in the monetary and banking structure of the
Scheduled and Non-Scheduled Banks:
The scheduled banks are those which are enshrined in the second schedule of the RBI Act, 1934. These banks have a paid-up capital and reserves of an aggregate
value of not less than Rs. 5 lakhs, they have to satisfy the RBI that their affairs are carried out in the interest of their depositors.
All commercial banks (Indian and foreign), regional rural banks, and state cooperative banks are scheduled banks. Non- scheduled banks are those which
are not included in the second schedule of the RBI Act, 1934. At present these are only three such banks in the country.
Commercial bank is an institution that accepts deposit, makes business loans and offer related services to various like accepting deposits and lending
loans and advances to general customers and business man.
These institutions run to make profit. They cater to the financial requirements of industries and various sectors like agriculture, rural development,
etc. it is a profit making institution owned by government or private of both.
Public sector banks:
Public sector banks are those where majority of the stake in the bank is held by government. Where as in private sector bank, majority is held by shareholders
of the bank.
Private Sector Banks:
The “private-sector banks” are banks where greater parts of stake or equity are held by the private shareholders and not by government.
A foreign bank with the obligation of following the regulations of both its home and its host countries. Loan limits for these banks are based on the capital
of the parent bank, thus allowing foreign banks to provide more loans than other subsidiary banks.
Foreign banks are those banks, which have their head offices abroad. CITI bank, HSBC, Standard Chartered etc. are the examples of foreign bank in India.
Currently India has 36 foreign banks.
Regional Rural Bank (RRB):
The government of India set up Regional Rural Banks (RRBs) on October 2, 1975. The banks provide credit to the weaker sections of the rural areas, particularly
the small and marginal farmers, agricultural labourers, and small entrepreneurs.
Other special features of these banks are:
(i) their area of operation is limited to a specified region, comprising one or more districts in any state; (ii) their lending rates cannot be higher
than the prevailing lending rates of cooperative credit societies in any particular state; (iii) the paid-up capital of each rural bank is Rs. 25 lakh,
50 percent of which has been contributed by the Central Government, 15 percent by State
Government and 35 percent by sponsoring public sector commercial banks which are also responsible for actual setting up of the RRBs.
Co-operative bank was set up by passing a co-operative act in 1904. They are organised and managed on the principal of co-operation and mutual help. The
main objective of co-operative bank is to provide rural credit.
Banking Regulation Act 1949:
list of 2 items
Banking Regulation Act, 1949
is a legislation in
that regulates all banking
firms in India.
- The act was enacted to safeguard the interest of the depositors and to control the abuse of powers by controlling the banks by any means necessary
and to the interest of Indian economy in general.
This act applies to the following categories of banks
list of 3 items
o Nationalized banks
o Non-nationalized banks
o Co-operative banks in the manner and to the extent specified in the act
The objective of Banking Regulation Act, 1949 is to:
list of 5 items
Prevent such bank failures by prescribing minimum capital requirements
Ensure the balanced development of banking companies
Give powers to RBI to approve the appointment, reappointment, and removal of the chairman, directors, and officers of the banks
Safeguard the Interests of Depositors
Facilitate strengthening the banking system of the country.
Provision under banking regulation act 1949:
list of 1 items
- Bank Branch Licensing in India – Section 23
The opening of branches by banks is governed by the provisions of Section 23 of the Banking Regulation Act, 1949 (the Act). In terms of these provisions,
banks without the prior approval of the RBI, cannot open a new place of business in India or abroad or change otherwise than within the same city, town
or village, the location of the existing place of business. Foreign banks are allowed to operate in India through branches only.
Before granting any license under this section, the Reserve Bank may require to be satisfied by an inspection of the books of the company that the following
(i) that the company is in a position to pay its present or future depositors in full as their claims accrue;
(ii) that the affairs of the company are not likely to be conducted in a manner detrimental to the interests of its present or future depositors;
(iii) in the case of the carrying on of banking business by such company in India will be in the public interest and that the government or laws of the
country in which it is incorporated does not discriminate in any way against banking companies registered in India and that the company complies with all
the provisions of this Act, applicable to banking companies incorporated outside India.
The Reserve Bank may cancel a license granted to a banking company under this section:
(i) If the company ceases to carry on banking business in India; or
(ii) If the company at any time fails to comply with any of the conditions imposed upon it; or
(iii) Any banking company aggrieved by the decision of the Reserve Bank cancelling a licence under this section may, within thirty days from the date on
which such decision is communicated to it, appeal to the Central Government. The decision of the Central Government shall be final.
Thus, every banking company which likes to start banking business in India must obtain licence from RBI.
list of 1 items
- Minimum Paid-up Capital and Reserves (Sec. 11):
Sec. 11 (2) of the Banking Regulation Act, 1949, provides that no banking company shall commence or carry on business in India, unless it has minimum paid-up
capital and reserve of such aggregate value as is noted below:
(a) Foreign Banking Companies:
In case of banking company incorporated outside India, aggregate value of its paid-up capital and reserve shall not be less than Rs. 15 lakhs and, if it
has a place of business in Mumbai or Kolkata or in both, Rs. 20 lakhs.
(b) Indian Banking Companies:
(i) If it has places of business in more than one State, Rs. 5 lakhs, and if any such place of business is in Mumbai or Kolkata or in both, Rs. 10 lakhs.
(ii) If it has all its places of business in one State, none of which is in Mumbai or Kolkata, Rs. 1 lakh in respect of its principal place of business
plus Rs. 10,000 in respect of each of its other places of business in the same district in which it has its principal place of business, plus Rs. 25,000
in respect of each place of business elsewhere in the State.
list of 1 items
- Cash Reserve (Sec. 18):
Under Sec. 18, every banking company (not being a Scheduled Bank) shall, if Indian, maintain in India, by way of a cash reserve in Cash, with itself or
in current account with the Reserve Bank or the State Bank of India or any other bank notified by the Central Government in this behalf, a sum equal to
at least 3% of its time and demand liabilities in India.
The Reserve Bank has the power to regulate the percentage also between 3% and 15% (in case of Scheduled Banks).
list of 1 items
- Statutory Liquidity Ratio (SLR) (Sec. 24):
According to Sec. 24 of the Act, in addition to maintaining CRR, banking companies must maintain sufficient liquid assets in the normal course of business.
The section states that every banking company has to maintain in cash, gold or unencumbered approved securities, an amount not less than 25% of its demand
and time liabilities in India.
This percentage may be changed by the RBI from time to time according to economic circumstances of the country.
list of 1 items
- Inspection of books of accounts: Section 35
This Section was incorporated with a view to safeguard the interest of shareholders and depositors of banking companies, as a result of which bank directors
and managers are likely to be cautious in employing the funds of their institutions.This section provides wide powers to RBI to cause an inspection of
any banking company and its books and accounts.
list of 1 items
- Powers and functions of Reserve Banks:Section 36
The Reserve Bank may—
(a) Caution or prohibit banking companies or any banking company in particular against entering into any particular transaction or class of transactions,
and generally give advice to any banking company;
(b) On a request by the companies concerned and subject to the provision of section [44A], assist, as intermediary or otherwise, in proposals for the amalgamation
of such banking compa-nies;
(c) give assistance to any banking company by means of the grant of a loan or advance to it under clause (3) of sub-section (1) of section 18 of the Reserve
Bank of India Act, 1934 (2 of 1934);
(d) [at any time, if it is satisfied that in the public interest or in the interest of banking policy or for preventing the affairs of the banking company
being conducted in a manner detrimental to the interests of the banking company or its depositors it is necessary so to do,] by order in writing and on
such terms and conditions as may be specified therein—
(i) require the banking company to call a meeting of its directors for the purpose of considering any matter relating to or arising out of the affairs
of the banking company; or require an officer of the banking company to discuss any such matter with an officer of the Reserve Bank;
(ii) depute one or more of its officers to which the proceedings at any meeting of the Board of directors of the banking company or of any committee or
of any other body constituted by it;
require the banking company to give an opportunity to the officers so deputed to be heard at such meetings and also require such officers to send a report
of such proceedings to the Reserve Bank;
(iii) Appoint one or more of its officers to observe the manner in which the affairs of the banking company or of its offices or branches are being conducted
and make a report thereon;
(2) The Reserve Bank shall make an annual report to the Central Government on the trend and progress of banking in the country, with particular reference
to its activities under clause (2) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934), including in such report its suggestions, if any,
for the strengthening of banking business throughout the country.
(3) The Reserve Bank may appoint such staff at such places as it considers necessary for the scrutiny of the returns, statements and information furnished
by banking companies under this Act, and generally to ensure the efficient performance of its functions under this Act.
list of 1 items
- Accounts and Audit (Sees. 29 to 34A): The above Sections of the Banking Regulation Act deal with the accounts and audit. Every banking company, incorporated
in India, at the end of a financial year expiring after a period of 12 months as the Central Government may by notification in the Official Gazette specify,
must prepare a Balance Sheet and a Profit and Loss Account as on the last working day of that year, or, according to the Third Schedule, or, as circumstances
According to Sec. 30 of the Banking Regulation Act, the Balance Sheet and Profit and Loss Account should be prepared according to Sec. 29, and the same
must be audited by a qualified person known as auditor. Moreover, every banking company must furnish their copies of accounts and Balance Sheet prepared
according to Sec. 29 along with the auditor’s report to the RBI and also the Registers of companies within three months from the end of the accounting
list of 1 items
- Use of words ‘bank’, ‘banker’, ‘banking’ or ‘banking company’ (Sec.7): According to Sec. 7 of the Banking Regulation Act, no company other than a banking
company shall use the words ‘bank’, ‘banker’, ‘banking’ or ‘banking company’ and no company shall carry on the business of banking in India, unless it
uses the above mentioned words in its name.
The Reserve Bank of India (RBI) is the
of India, which was established on April 1,
1935, under the Reserve Bank of India Act. The Reserve Bank of India uses
create financial stability in India, and it is charged with regulating the country’s currency and
Objective of RBI
list of 2 items
To regulate the issue of Banknotes.
To secure monetary stability in the country.
list of 1 items
To meet the economic challenges by modernizing the monetary policy framework.
Meaning of currency chests:
Currency chests are branches of selected banks where bank notes and rupee coins are stored on behalf of the Reserve Bank of India for further distribution
of these notes and coins across the country through bank branches in their area of operation. The RBI has set up over 4,075 currency chests all over the
Origin of the Reserve Bank of India
1926: The Royal Commission on Indian
and Finance recommended the creation of a
central bank for India.
1927: A bill to give effect to the above recommendation was introduced in the Legislative Assembly. But it was later withdrawn due to lack of agreement
among various sections of people.
1933: The White Paper on Indian Constitutional Reforms recommended the creation of a Reserve Bank. A fresh bill was introduced in the Legislative Assembly.
1934: The Bill was passed and received the Governor General’s assent
1935: The Reserve Bank commenced operations as India’s central bank on April 1 as a private shareholders’ bank with a paid up capital of rupees five crores
(rupees fifty million).
1942: The Reserve Bank ceased to be the currency issuing
of Burma (now Myanmar).
1947: The Reserve Bank stopped acting as banker to the Government of Burma.
1948: The Reserve Bank stopped rendering central banking services to Pakistan.
of India nationalized the Reserve Bank under the Reserve Bank (Transfer of
Public Ownership) Act, 1948.
Structure of RBI:
1.Central Board — All the activities of RBI are governed by the Central Board of Directors in accordance with the Reserve Bank of India Act. This is the
main committee of the Central bank responsible for superintendence of the general affairs of the bank. The Central Board consists of 21 members. The structure
of the Central Board is as follows:
list of 1 items
One Governor and Four Deputy Governors – Governor is the chairperson of the Central Board. Governor can nominate one of the 4 Deputy Governors as chairman
in his absence. Governor and 4 Deputy Governors are the full time officials and nominated by Government of India. The highest term in the office is up
to 5 years or till the age of 62 years, whichever commences earlier. However the term may be fixed by the Government. Governor and Deputy Governors are
eligible for extension of their terms as well as for re-appointment. Out of the four Deputy Governors, traditionally two are from RBI ranks and
list of 4 items
are selected from the Executive Directors of the bank. One is an economist and the other person will be nominated from the public sector banks who hold
the designation of chairperson. Indian Administrative Services officers are also eligible to be selected as Deputy Governors of RBI.
Four Directors to represent Local Boards – These are Non-official directors and nominated by Central Government. They are selected from the four local
boards, one from each of the Delhi, Mumbai, Kolkata and Chennai Local Boards. Their term depends on their membership of the Local Boards.
Ten directors nominated by Government of India – These are also non-official directors and nominated by central government as experts in different walks
of life like Business, Finance and cooperation, Industry and so on. They are nominated for 4 years term with the possibility of re-appointment.
Two government officials – They are nominated by Central Government from Finance Ministry or Secretary position and terms are determined by the government
- Assistive Board – For Central Board of Directors in RBI, there are two assistive entities. The Governor of RBI is the chairperson for both these entities.
list of 2 items
Board of Financial Supervision (BFS) — Constituted in 1994, this entity was designated to supervise financial institutions that include commercial banks,
non-banking financial companies and financial institutions and provide guidance to RBI on supervisory and regulatory issues. They focus on consolidated
accounting and on legal issues involved in bank frauds. They are also involved in separation of non-performing assets and formulating banks’ supervisory
Board for Payment and Settlement System (BPSS) – This was constituted in the year 2005 by RBI as a committee. This supervises and regulates the payment
and settlement systems. Chaired by Governor, this committee comprises of all four deputy Governors and two non-official directors from the Central Board.
- Local Board – Four Local boards of RBI are located in Mumbai, Chennai, Kolkata and New Delhi. These Local Boards represent West, South, East and North
regions respectively. Each
Local Board consists of 5 members and appointed by Central Government. They are appointed for a term of 4 years. Local board represents regional and economic
matters and advise the Central Board on specific matters as needed basis. They represent the co-operative and indigenous banks and are delegated with specific
activity from Central Board as applicable.
Function of RBI
list of 9 items
- Issuer of Currency
The Reserve Bank has a separate Issue Department, which is entrusted with the issue of currency notes. The assets and liabilities of the Issue Department
are kept separate from those of the banking department.
Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue bank notes of all denominations.
The Government of India makes one rupee notes and coins and small coins and RBI on its behalf, distributes all over the country as agent of the Government.
Originally, the assets of the Issue Department consisted of not less than two-fifths of gold coin, gold bullion or securities, provided the amount of
gold was not less than ` 40 crores in value.
The remaining three-fifths of the assets might be in form of rupee coins, Government of India rupee securities, eligible bills of exchange and promissory
notes payable in India.
Due to the emergencies of the Second World War and the post-war period, these provisions were considerably modified.
Since 1957, the Reserve Bank of India is required to maintain gold and foreign exchange reserves of ` 200 crores, of which at least ` 115 crores should
be in gold. The system as it exists today is known as the minimum reserve system.
- Banker to Government
Reserve Bank of India Acts as a government banker, agent and adviser.
list of 2 items
The Reserve Bank is an agent of Central Government and of all State Governments in India, except that of Jammu and Kashmir.
The Reserve Bank has the obligation to transact government business, to keep the cash balances as deposits free of interest, to receive and to make payments
on behalf of the government.
list of 5 items
Carry out government exchange remittances and other banking operations.
The Reserve Bank of India helps the government — both the Union and the states to float new loans and to manage public debt.
It makes Ways and Means Advances (WMA) to the governments for 90 days.
It makes loans and advances to the states and local authorities.
It acts as adviser to the government on all monetary and banking matters.
- Banker to bank:
list of 4 items
It is the custodian of their cash reserves. Banks of the country are required to keep a certain percentage of their deposits with the central bank; and
in this way the central bank is the ultimate holder of the cash reserves of commercial banks.
Central bank is lender of last resort. Whenever banks are short of funds, they can take loans from the central bank and get their trade bills discounted.
The central bank is a source of great strength to the banking system.
It acts as a bank of central clearance, settlements and transfers. Its moral persuasion is usually very effective so far as commercial banks are concerned.
The scheduled banks can borrow from the Reserve Bank of India on the basis of eligible securities.
- Custodian of Cash Reserves of Commercial Banks:
The commercial banks hold deposits in the Reserve Bank and the latter has the custody of the cash reserves of the commercial banks.
- Custodian of Country’s Foreign Currency Reserves:
The Reserve Bank has the custody of the country’s reserves of international currency, and this enables the Reserve Bank to deal with crisis connected with
adverse balance of payments position.
- Central Clearance and Accounts Settlement:
Since commercial banks have their surplus cash reserves deposited in the Reserve Bank, it is easier to deal with each other and settle the claim of each
on the other through book keeping entries in the books of the Reserve Bank. The clearing of accounts has now become an essential function of the Reserve
- Controller of Credit:
Since credit money forms the most important part of supply of money, and since the supply of money has important implications for economic stability, the
importance of control of credit becomes obvious. Credit is controlled by the Reserve Bank in accordance with the economic priorities of the government.
Image result for method of credit control by rbi
list of 4 items
- Bank rate: It is the rate of interest at which central bank lends funds to commercial banks. During excess demand or inflationary gap, central bank
increases bank rate. Borrowings become costly and commercial banks borrow less from central bank. During deflationary gap central bank decreases the bank
rate. It is cheap to borrow from the central bank or the part of the commercial banks which in turn the Commercial banks also decreases their lending rates.
- Open market operations: The open market operations means buying and selling of bonds and shares by RBI is open market. It is also called buying and
selling of government security by the central bank from the public and commercial banks.
- Cash Reserve Ratio (CRR): It is the ratio of bank deposits that commercial bank has to keep with the central bank. At the time of inflation the RBI
increases the rate of CRR, similarly at the time of deflation RBI decreases the rate of CRR.
- Statutory Liquidity Ratio (SLR): Every bank required to maintain a fixed percentage of its assets in the form of cash or other liquid assets called
SLR. At the time of inflation the RBI increases the SLR, similarly at the time of deflation RBI decreases the rate of SLR.
list of 2 items
- Repo rate: Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in
the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation.
- Reverse Repo rate: Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country. In other
words, it is the rate at which commercial banks in India park their excess money with Reserve Bank of India usually for a short-term.
list of 4 items
- Margin requirements: It is the difference between the market value of loan and the security value of loan. At the time of inflation the margin requirement
value decreases by RBI for discouraging people and commercial banks for approaching more and more amount of loan. On the other hand at the time of deflation
the RBI increases the value of margin just to encourage issuing of more amount of loan to the commercial banks and general public.
- Moral suasion: It refers to written or oral advices given by central bank to commercial banks to restrict or expand credit.
- Direct Action: Sometimes the RBI directly takes action against the commercial banks. It takes action to such type of commercial banks who are not following
the rules regulation of RBI. It cancels their registration or nationalization of commercial banks.
- Rationing of credit: It is the related to limiting the amount of credit, which is issued by all the commercial banks. RBI fixes the size of issuing
the credit according to the requirement of the country.
table with 3 columns and 5 rows
Parameter of Comparison
Scheduled banks are those that are listed and governed by the rules that are prescribed in the Reserve bank of India Act of 1934
The non-scheduled banks are those that are exempt from the rules that govern the stronger financial institutions in India.
Safety and Security
They are generally more financially sound and unlikely to harm the interests and welfare of the depositors.
These banks are riskier to do business with.
Cash Reserve Ratio
Maintained with Reserve Bank of India.
Each bank takes it upon itself to maintain the cash reserve ratio.
They are allowed to borrow money from the Reserve Bank of India for the purposes of
Do not qualify to borrow any loans from the Reserve Bank of India.
table with 3 columns and 5 rows
Parameter of Comparison
undertaking regular banking activities.
Are mandated to file their returns with the Reserve Bank of India periodically, preferably once a year.
No such provision exists. However, they have to publish and submit their returns to the shareholders and stock exchange where they are listed.
Membership of the clearinghouse
These may qualify to join the clearinghouse. For this reason, they allow for interbank financial transfers and clearance of checks.
Are ineligible for membership in the clearinghouse. Because of this, the non-scheduled banks cannot facilitate the interbank financial transfers and the
clearance of checks.
These are banking institutions that have no less than 5 lakh rupees in their reserves.
Their reserves are less than the mandatory 5 lakh rupees.
Proportional reserve system:
Under the proportional reserve system, certain proportion of currency notes (40%) are backed by gold and silver reserves and the remaining part of the
note issue by approved securities.
India adopted this method on the recommendation of Wilton Young Commission. According to the Reserve Bank of India Act 1933, not less than 40 per cent
of the total assets of the Issue Department should consist of gold bullion, gold coins and foreign securities, with the additional provision that gold
coins and gold bullion were not at any time to be less than Rs. 40 crores.
The proportional reserve system was later replaced by the minimum reserve system by the Reserve Bank of India (Amendment) Act, 1956.
The proportional reserve system has the following advantages:
(i) It guarantees convertibility of paper currency.
(ii) It ensures elasticity in the monetary system; the monetary authority can issue paper currency much more than that warranted by reserves.
(iii) It is economical and can be easily adopted by the poor countries.
The proportional reserves system suffers from the following defects.
(i) Under this system, it is easy to expand currency but very difficult to reduce it. The reduction of currency has deflationary effects in the economy.
(ii) There is wastage of gold because large amount of gold lies in the reserve and cannot be put to productive use.
(iii) The convertibility of paper notes is not real. In practice, high denomination notes are converted into low denomination notes and not into coins.
TYPES OF BANKING SYSTEM:
Unit Bank is a type of bank under which the banking operations are carried by a single branch with a single office and they limit their operations to a
limited area. Normally, unit banks may not have any branch or it may have one or two branches. This unit banking system has its origin in United State
of America (USA) and each unit bank has its own shareholders and board of management.
According to Shapiro, Soloman and White,” An independent unit bank is a corporation that operates one office and that is not related to other banks through
either ownership or control.”
Advantages of Unit Banking: Unit banking system has the following advantages:
- Easy Management: The management and control of unit banks is much easier and effective due to the small size and operations of the banks. There are
less chances of fraud and irregularities in the financial management of the unit banks.
- Localised Banking: Unit banking is localized banking. The unit bank has the specialised knowledge of the local problems and serves the requirements
of the local people in a better manner than branch banking. Since the bank officers of a unit bank are fully acquainted with the local needs, they cannot
neglect the requirements of local development.
- Quick Decision: A great advantage of unit banking is that there is no delay of any kind in taking decisions on important problems concerning the unit
- No Monopolistic Tendencies: Unit banks are generally of small size. Thus, there is no possibility of generating monopolistic tendencies under unit banking
- Promotes Regional Balance: Under unit banking system, there is no transfer of resources from rural and backward areas to the big industrial commercial
centres. This tends to reduce regional in balance.
- Initiative in Banking Business: Unit banks have full knowledge of and greater involvement in the local problems. They are in a position to take initiative
to tackle these problems through financial help.
- Flexibility in operation: The unit banks are more flexible. The manager of the unit bank can use his discretion and arrive at quick decision.
- No Inefficient Branches: Under unit banking system, weak and inefficient branches are automatically eliminated. No protection is provided to such banks.
- No diseconomies of Large Scale Operations: Unit banking is free from the diseconomies and problems of large-scale operations which are generally experienced
by the branch banks.
Disadvantages of Unit Banking: The following are the disadvantages of unit banking system:
- Limited Scope: The scope of unit banking is limited. They do not get the benefits of large scale operations.
- No. Distribution of Risks: Under unit banking, the bank operations are highly localised. Therefore, there is little possibility of distribution and
diversification of risks in various areas and industries.
- Inability to Face Crisis: Limited resources of the unit banks also restrict their ability to face financial crisis. These banks are not in a position
to stand a sudden rush of withdrawals.
- Lack of Specialization: Unit banks, because of their small size, are not able to introduce, and get advantages of, division of labor and specialization.
Such banks cannot afford to employ highly trained and specialized staff.
- Operates only in urban areas and big towns: Unit banks, because of their limits resources, cannot afford to open uneconomic banking business is smaller
towns and rural area. As such, these areas remain unbanked.
- Costly Remittance of Funds: A unit bank has no branches at other place. As a result, it has to depend upon the correspondent banks for transfer of funds
which is very expensive.
- Difference in Interest Rates: Since easy and cheap movement of does not exist under the unit banking system, interest rates vary considerably at different
- Local Pressures: Since unit banks are highly localised in their business, local pressures and interferences generally disrupt their normal functioning.
- Undesirable Competition: Unit banks are independently run by different managements. This results in undesirable competition among different unit banks.
Branch banking system:
Branch Bank is a type of banking system under which the banking operations are carried with the help of branch network and the branches are controlled
by the Head Office of the bank through their zonal or regional offices. Each branch of a bank will be managed by a responsible person called branch manager
who will be assisted by the officers, clerks and sub-staff. In England and India, this type of branch banking system is in practice. In India, State Bank
of India (SBI) is the biggest public sector bank with a very wide network of branches.
Advantages of Branch Banking: Branch banking system has the following advantages:
- Economies of Large Scale operations: Branch banking enjoys the advantages and economies of large scale operations. Under branch banking system economies
can maintained through large scale of operations and wider geographical coverage increase public confidence in the banking system.
- Economy of Cash Reserves: Under branch banking system a particular branch can operate without keeping large amounts of reserves. In time of need, resources
can be transferred from one branch to another. It is not easy for a .unit bank to draw on another unit bank.
- Proper use of capital: There is a proper use of capital under the branch banking system. Since the resources are transferred from one branch to another.
So the capital can be properly used by investing in the profitable branches.
- Economy of Costs: Branch banking has the advantage of effecting remittances of funds from one place to another with greater ease and at a lesser cost
than unit banking, for inter-office indebtedness can be far more easily adjusted.
- Risks-spreading Economy: The spreading of risks geographically is another major advantage of the branch banking system. In branch banking, losses incurred
one branch can be offset by profits earned by the profit making branches which is not possible in case of unit banking.
- Easy and cheaper transfer of funds: Since the branches of bank under branch banking are spread all over the country, it is easier and cheaper, for it
to transfer funds from one place to another.
- Greater Safety and Liquidity: Branch banking also offers a wider scope for the selection of diverse securities and varied investments, so that a higher
degree of safety and liquidity can be maintained.
- Balanced economical growth: Under branch banking, the banking facilities can be made available to all cities, towns, and even backward areas in the
country. Thus, branch banking is very helpful in achieving a balanced growth of the country’s economy.
- Convenient for the Central Bank’s Supervision: Under a system of branch banking it is more convenient for the central bank or the government to regulate
and supervise the activities of banks, as control becomes more effective and easier since only the head office is to be dealt with for the purpose.
- Provision for Training the Personnel: Finally, branch banking provides the best training ground for personnel. A person may be trained in a small branch
Where the pressure of work is less and he may be transferred later to an active branch.
Disadvantages or Demerits of Branch Banking: Branch banking generally suffers from the following limitations:
- Danger of Mismanagement: Under the branch banking system a number of difficulties as regards management, supervision and control, a number of branches
undue expansions lead the danger of mismanagement.
- Delays in Decision-making: The system of branch banking also suffers from red tape and delay on account of the inadequate authority of branch managers.
Usually, application for big credits has to be referred to the head office by the branch manager. This causes delay and gives little initiative to branch
- Lack of Personal Contact: A large bank tends to become more and more impersonal in its dealings. The general managers have hardly any personal contact
with the local people or the staff of different branches.
- High operating and maintenance expenses: Branch banking is very expensive, because with the opening of too many branches, establishment and maintenance
charges of the branches are bound to be high and, as a result, profits may shrink.
- Concentration of Monopoly Power in the hands of few banker: Branch banking sometimes creates monopoly power in the hands of few large bankers. Such
a monopoly power in the hands of a few big bankers is a source of danger to the community whose goal is a socialistic pattern of society.
- Lack of initiative: Branch banking lacks initiative. No branch office can take independent decisions and also branch manager has limited powers.
- Regional imbalances: Branch banking encourages regional imbalances. The financial resources of economically backward areas tend to get transferred to
industrial and business centres. Due to which backward areas continue to be neglected and remain over backward.
table with 3 columns and 14 rows
It can be formed easily.
The formation process of branch bank is very complex.
It is generally a sole proprietorship organization
It is treated as a company organization.
- Scale of operation
The scale of operation is too small.
The scale of operation is very wide.
Its liability is unlimited
Its liability is small or limited.
Its scope of service is small.
Its scope of service is large.
It is involved with minimum expenses per annum.
It is involved with high expenses per annum.
It provides less opportunity for employment.
It provides high opportunity for employment.
It holds smaller amount of liquidity.
It holds huge amount of liquidity.
The amount of deposit is small
The amount of deposit is large.
Its run the business with small amount of capital
Its run the business with huge amount of capital.
It can provide small amount of loan
It can provide huge amount of loan
The type of management is simple
The type of management is complex.
It gains smaller amount of profit per year.
It gains higher amount of profit per year.
Group banking system:
Group Bank is a system of banking under which there will be holding company controlling the subsidiary companies which carry out banking business. In some
cases, both the holding and subsidiary companies may carry out banking business. An example in India is SBI which has many subsidiary banks such as State
Bank of Mysore, State Bank of Indore, State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Patiala and State Bank of Travancore. These
subsidiaries carry out banking and other operations such as leasing, merchant banking and so on.
Merits of Group Banking: Following are the advantages of Group Banking:
- Efficient Management: The holding company stimulates efficiency of the group banks. The group banks are efficiently managed being under the overall
control of Holding Company.
- Adequate Liquidity: There is high degree of liquidity of the concerned group being the whole group of banks is controlled and managed by one parent
company. The member banks have to maintain the requisite degree of liquidity.
- Economical: It is an economical system of banking, because many expenses such as advertisement and publicity are done collectively be the group as whole
under the direct control of the holding company.
- Specialization: In Group banking, different subsidiary companies tend to specialize in different aspects of banking. This promotes the overall efficiency
of the group system.
Disadvantage of Group Banking: Main demerits of Group Banking are as under:
- Right Control: There is rigid control in Group Banking due to lack of flexibility which often leads to corruption.
- Less Mobility of Funds: Funds are less mobile in Group Banking than Branch banking system.
- Few Branches: Group Banking has relatively very few branches as compared to Branch Banking
Chain banking is also a USA banking system. It is a banking system where the same individual or group of individuals controls two or more banks, as against
control by a holding company under group banking. This is done by stock ownership in two or more banks.
The mixed banking system is one in which the commercial banks advance both short-term and long- term loans to commerce and industry. Under the British
banking system, the commercial banks give short- term loans to commerce and industry.
But in other European countries like Germany, the Netherlands, Hungary and Belgium, the mixed banking system operates whereby the commercial banks lend
money to meet the short-term and long-term requirements of industry and commerce. Mixed banks perform the usual banking functions and also provide industrial
TYPES OF BANKS
- i) Commercial Banks:
A commercial bank is a financial institution which performs the functions of accepting deposits from the general public and giving loans for investment
with the aim of earning profit.
(ii) Central Bank:
Central Banks is the apex institution which supervises and controls the entire banking system. Each country has one central bank. The Reserve Bank of India
(RBI) is the central bank of our country.
Industrial banks provide long term and medium term finance to industrial units; for purposes of modernization, expansion etc. These also provide technical
and managerial guidance to industrial units. Industrial Development Bank of India (IDBI), Industrial Credit and Investment Corporation of India (ICICI)
etc. are examples of industrial banks.
(iii)Land Mortgage Banks (or Agricultural Banks):
These banks provide long-term finance to farmers, against the mortgage of agricultural land etc. for purchasing tractors, installation of modem agricultural
facilities, buying cattle, seeds, fertilizers etc.
(iv) Merchant Banks:
These banks specialize in providing financial services to companies, like issue management, underwriting, consultancy services etc. SBI Capital Market
is a leading example of a merchant bank, in India.
(v) Exchange Banks: These banks provide financing for foreign trade; and deal in foreign exchange.
(vi) Co-Operative Banks:
These banks are registered under the Co-operative Societies Act, and function on principles of co-operation. They accept deposits from members and grant
loans to them at low rates of interest.
(vii) Foreign Banks:
Most of foreign banks in India are subsidiaries of foreign banks. They are owned and managed by foreign promoters. Some foreign banks in India are – Citibank,
Bank of America, Standard Chartered Bank, American Express, and Hong-Kong Bank.
The main objective of a savings banks is an encourage thrift among people; so that they can save for future. In India, there are hardly any independent
savings banks. Mostly these are operated as a part of the post office called Postal Savings banks.
Advantages of E-banking or Internet banking
- Convenience: Banks that offer internet banking are open for business transactions anywhere a client might be as long as there is internet connection.
Apart from periods of website maintenance, services are available 24 hours a day and 365 days round the year. In a scenario where internet connection is
unavailable, customer services are provided round the clock via telephone.
- Low cost banking service: E-banking helps in reducing the operational costs of banking services. Better quality services can be ensured at low cost.
- Higher interest rate: Lower operating cost results in higher interest rates on savings and lower rates on mortgages and loans offers from the banks.
Some banks offer high yield certificate of deposits and don’t penalize withdrawals on certificate of deposits, opening of accounts without minimum deposits
and no minimum balance.
- Transfer services: Online banking allows automatic funding of accounts from long established bank accounts via electronic funds transfers.
- Ease of monitoring: A client can monitor his/her spending via a virtual wallet through certain banks and applications and enable payments.
- Ease of transaction: The speed of transaction is faster relative to use of ATM’s or customary banking.
- Discounts: The credit cards and debit cards enables the Customers to obtain discounts from retail outlets.
- Quality service: E-Banking helps the bank to provide efficient, economic and quality service to the customers. It helps the bank to create new customer
and retaining the old ones successfully.
- Any time cash facility: The customer can obtain funds at any time from ATM machines.
Disadvantages of E-banking Internet banking
- High start-up cost: E-banking requires high initial startup cost. It includes internet installation cost, cost of advanced hardware and software, modem,
computers and cost of maintenance of all computers.
- Security Concerns: One of the biggest disadvantages of doing e-banking is the question of security. People worry that their bank accounts can be hacked
and accessed without their knowledge or that the funds they transfer may not reach the intended recipients.
- Training and Maintenance: E-banking requires 24 hours supportive environment, support of qualified staff. Bank has to spend a lot on training to its
employees. Shortage of trained and qualified staff is a major obstacle in e-banking activities.
- Transaction problems: Face to face meeting is better in handling complex transactions and problems. Banks may call for meetings and seek expert advice
to solve issues.
- Lack of personal contact between customer and banker: Customary banking allows creation of a personal touch between a bank and its clients. A personal
touch with a bank manager can enable the manager to change terms in our account since he/she has some discretion in case of any personal circumstantial
change. It can include reversal of an undeserved service charge.
A debit card is a bankcard that allows depositors to pay third parties directly from their bank account balances electronically. A debit card is a bankcard
that allows depositors to pay third parties directly from their bank account balances electronically.
1.Any consumer who is not credit worthy or finds it difficult to obtain a credit card can
easily apply a debit card, allowing to make plastic transactions.
2.The debit card user can use the limited amount available in his account, thereby preventing the
user from racking up
as a result of its use. Such cards do not charge any interest, late fees,
or fees exclusive to credit cards.
3.Debit cards removes the hassles associated with having writing checks as payments like
showing ID or give out personal information at the time of the transaction.
4.Besides avoiding check writing altogether, check cards debits funds from the user’s account on
the spot. This in turn finalizes the transaction at the time of purchase and unlike a credit card
doesn’t require paying any bill at a later date. Moreover a debit card doesn’t require writing an
insecure check containing the holder’s personal information.
5.Unlike credit cards, debit cards don’t charge any higher fees or interest rates when cash
advanced is obtained. A debit card user can obtain cash from an ATM or a PIN based transaction
at no any extra charge, other than a foreign ATM fee.
1.Unlike credit cards, debit cards don’t provide its users with any grace period. They are quick and pay now deal. 2.Debit cards provide lower levels of
security protection than credit cards. Theft of the users PIN using skimming devices is much easier than with a signature-based credit transaction. If
your wallet is lost or stolen, the thief will likely have all the information they need to use your debit card for internet transactions. 3.Debit cards
have pre-set spending limits. One can spend only with the amount available in his/her account. 4.Another peril the debit card users face is accidental
charges. Many banks charge an overdraft fee, for money transaction and many also set a limit of daily, weekly or monthly transactions you can use your
debit card for. And crossing this limit can also result in serious charges to your
account. 5.Debit Cards do not allow you to build your credit history.
Credit card is a card issued by a financial institution authorizing the holder to buy goods or services on credit. Credit cards usually charge high interests
and are used for short-term financing. Interests usually start one month after a purchase is made and bank sets credit limits according to the client’s
list of 6 items
Purchasing Power: Credit Cards enable users to make big ticket purchases they might not otherwise be able to afford.
Rewards: Many cards offer rewards programs that will accrue points, discounts, or other benefits like frequent flyer miles.
Convenience: Credit cards reduce the need to carry cash. Most retailers accept credit cards and they are pretty much required for online purchases.
Track ability: The electronic record keeping that comes with credit cards make it easy to track your spending and identify fraud.
Use during an emergency: There are times when money is the simple solution to an emergency. If you get hit with an unexpected expense, credit cards can
be the quick and easy solution you need.
Builds credit history: Responsible use of a credit card over time builds your credit history, qualifying you for better interest rates and other financial
list of 4 items
Overspending: Credit cards can make life easier, but they can also make overspending easier as well. With a credit card, you’re spending money you don’t
necessarily have yet. If you’re not careful, this can quickly lead to unexpected debt.
Interest and fees: Using credit is essentially borrowing. And you’re not borrowing for free. Mismanaging a credit card can lead not only to a high balance,
or maxed-out card, but also to debt in the form of interest and fees.
Fraud: Credit cards (and other electronic forms of payment) carry unique dangers. Credit cards can be stolen, their numbers can be copied, and they can
be used to steal your money and identity.
Mounting Debt: If you carry a balance on your credit card from month to month, it can be very easy for charges and interest to rack up. Many people don’t
expect credit cards to be gateways to extra debt, but if you’re not careful, that’s exactly what happens.
FUNCTIONS OF COMMERCIAL BANKS:
Image result for commercial bank functions
list of 1 items
Accepting Deposits: The primary function for which the commercial banks were established is to accept deposits from the general public, who possess surplus
funds and are willing to deposit them so as to earn interest on it.
Types of deposits
There are various products offered by the bank to the customers for the deposit of their money, which includes savings account, current account, fixed
deposit and recurring deposit.
list of 1 items
Advancing Loans: Next important function performed by the commercial bank is lending money to the individuals and companies. The banks make loans to
the customers in the form of term loans, cash credit, overdraft and discounting of bills of exchange.
Types of loans
(i) Cash Credit:
Cash credit refers to a loan given to the borrower against his current assets like shares, stocks, bonds, etc. A credit limit is sanctioned and the amount
is credited in his account. The borrower may
withdraw any amount within his credit limit and interest is charged on the amount actually withdrawn.
(ii) Demand Loans:
Demand loans refer to those loans which can be recalled on demand by the bank at any time. The entire sum of demand loan is credited to the account and
interest is payable on the entire sum.
(iii) Overdraft Facility:
It refers to a facility in which a customer is allowed to overdraw his current account upto an agreed limit. This facility is generally given to respectable
and reliable customers for a short period. Customers have to pay interest to the bank on the amount overdrawn by them.
(iv)Discounting Bills of Exchange:
It refers to a facility in which holder of a bill of exchange can get the bill discounted with bank before the maturity. After deducting the commission,
bank pays the balance to the holder. On maturity, bank gets its payment from the party which had accepted the bill.
Commercial banks also perform certain agency functions for their customers. For these services, banks charge some commission from their clients.
Some of the agency functions are:
(i) Transfer of Funds:
Banks provide the facility of economical and easy remittance of funds from place-to-place with the help of instruments like demand drafts, mail transfers,
(ii) Collection and Payment of Various Items:
Commercial banks collect cheques, bills,’ interest, dividends, subscriptions, rents and other periodical receipts on behalf of their customers and also
make payments of taxes, insurance premium, etc. on standing instructions of their clients.
(iii) Purchase and Sale of Foreign Exchange:
Some commercial banks are authorized by the central bank to deal in foreign exchange. They buy and sell foreign exchange on behalf of their customers and
help in promoting international trade.
(iv) Purchase and Sale of Securities:
Commercial banks buy and sell stocks and shares of private companies as well as government securities on behalf of their customers.
(v) Income Tax Consultancy:
They also give advice to their customers on matters relating to income tax and even prepare their income tax returns.
(vi) Trustee and Executor:
Commercial banks preserve the wills of their customers as trustees and execute them after their death as executors.
(vii) Letters of Reference:
They give information about the economic position of their customers to traders and provide the similar information about other traders to their customers.
General Utility Functions:
Commercial banks render some general utility services like:
(i) Locker Facility:
Commercial banks provide facility of safety vaults or lockers to keep valuable articles of customers in safe custody.
Commercial banks issue traveler’s cheques to their customers to avoid risk of taking cash during their journey.
(iii) Letter of Credit:
They also issue letters of credit to their customers to certify their creditworthiness.
(iv) Underwriting Securities:
Commercial banks also undertake the task of underwriting securities. As public has full faith in the creditworthiness of banks, public do not hesitate
in buying the securities underwritten by banks.
(v) Collection of Statistics:
Banks collect and publish statistics relating to trade, commerce and industry. Hence, they advise customers on financial matters. Commercial banks receive
deposits from the public and use these deposits to give loans. However, loans offered are many times more than the deposits received by banks. This function
of banks is known as ‘Money Creation’.
TYPES OF CARDS
Cards can be classified based on their usage, issuance, and payment by the cardholders. There
are three types of cards
list of 2 items
o A debit card can be used to withdraw cash up to the customer’s bank account’s limit. Therefore, debit cards are linked to bank accounts and issued by
o To, use debit cards customers should have enough balance. Debit cards are used for withdrawing cash from an ATM, purchase of goods and services at Point
of Sale (POS)/ E-commerce (online purchase) both domestically and internationally. Also used for domestic fund transfer from one person to another.
list of 5 items
o In the case of credit cards, a customer can withdraw money beyond the amount of money present his bank account. However, there is a credit limit for
the cardholder up to which the extra money can be withdrawn.
o Also, the withdraw money will have to be paid back as dues along with interest charges as applied by the issuer of card within a time limit.
o It issued by banks / other entities approved by RBI.
o These cards are used to purchase goods and service at E-commerce (online purchase)/ Point of Sale (POS) through recurring transaction/ Interactive Voice
Response (IVR) or Mail Order Telephone Order (MOTO). In addition, it can be used domestically and internationally (provided it is enabled for international
o These cards are can be used to withdraw money from ATM and for transferring money to bank accounts, credit cards, debit cards, prepaid cards within the
list of 4 items
o The usage of Prepaid cards depends on who has issued the card. It issued by banks/non-bank entities.
o For issuing a prepaid card, one has to pay the amount in advance for using the money whenever required. Therefore, this type of card is never linked
to any bank account.
o The prepaid cards issued by banks can be used to withdraw money from ATM, purchase of goods and services at E-commerce (online purchase)/ Point of Sale
(POS) and for domestic fund transfer from one person to another. This one known as open system prepaid cards. However, when it issued by authorized non-bank
entities for the same usage it is known as semi-closed system prepaid cards. It can be used only domestically.
o One can store maximum Rs. 50,000/- at any point of time.
table with 2 columns and 7 rows
In debit card when you purchase something, money is deducted from your bank account.
In credit card, the issuer puts money toward the transaction, which is a loan and have to pay back within time limit.
Application process is easy.
Application process is difficult, depending on one’s credit score and other details.
Debit card linked to bank account when issued by bank.
Credit card also linked to bank account.
Debit card only issued by bank.
Credit card can be issued by bank/ other entities approved by RBI.
Can store any amount (i.e. present in bank account.
Can store any amount (amount present in bank account + extra amount permitted to drawn).
One cannot withdraw extra money than available in his account in debit card.
If one withdraws extra amount one has to pay back the amount with the rate of interest.
table with 2 columns and 3 rows
Penalty charges are not applicable in case of debit cards
The penalty is charged on non-payment or late payment of your credit card dues
Provides less security in case of faulty transactions
Provides better security in case of faulty transactions
Typically issued free with your savings account
Typically offered with joining and annual fees
Electronic funds transfer
An electronic funds transfer, or EFT, refers to the act of transferring money from one account to other electronically by using a computer or mobile network.
Types of electronic funds transfer
National Electronic Fund Transfer (NEFT)
list of 5 items
Meaning – It is way in which you can transfer fund from any bank account to any other bank account holder in India. NEFT is based on batch processing
Minimum amount – Rs. 1
Maximum amount – There is no upper ceiling for transferring money through NEFT, but generally RTGS is used for transfer of Rs 2,00,000 or above
Time limit – The transactions are processed in hourly batches. There are twelve settlements from 8 A.M. to 7 P.M. on the weekdays (Monday – Friday) and
six settlements from 8 A.M. to 1 P.M. on Saturday. The maximum time consumed is 2 hours from the submitting of the transaction in a batch.
Availability – NEFT is not available on the bank holidays, RBI holiday and Sunday.
Real Time Gross Settlement (RTGS)
list of 5 items
Meaning – It is way in which you can transfer fund from any bank account to any other bank account holder in India in real time.
Minimum amount – Rs 2,00,000
Maximum amount – No limit
Time limit – The transactions are processed on order basis i.e. Real time. The RTGS service is available from 8 A.M to 8 P.M. on the weekdays (Monday
– Friday) and from 8 A.M. to 3:30 P.M. on Saturday. The transfer is instant but the bank is allowed to take up to 2 hours for crediting the amount to the
Availability – RTGS is not available on the bank holidays, RBI holiday and Sunday.
Inter Mobile Payment Service (IMPS)
list of 5 items
Meaning – It is way in which you can transfer fund from any bank account to any other bank account holder in India anytime.
Minimum amount – Rs 1
Maximum amount – Banks are allowed to set their own limit for IMPS.
Time limit – It is real time. The depositor account is credited in less than 1 minute from the submission of transaction.
Availability – IMPS can be done 24X7 even on bank holidays, RBI holiday and Sunday
Role of commercial bank in the economic development of a country
list of 1 items nesting level 1
- Mobilising Savings for Capital Formation:
list end nesting level 1
People in developing countries have low incomes but the banks induce them to save by introducing variety of deposit schemes to suit the needs to individual
To mobilize dormant savings and to make them available to the entrepreneurs for productive purposes, the development of a sound system of commercial banking
- Existence of a Large Non-monetized Sector:
A developing economy is characterized by the existence of a large non-monetized sector, particularly, in the backward and inaccessible areas of the country.
The existence of this non-monetized sector is a hindrance in the economic development of the country. The banks by opening branches in rural and backward
areas can promote the process of monetization in the economy.
- Financing Industrial Sector:
Commercial Banks provide short-term and medium- term loans in the industry. In India, they undertake financing of small scale industries and also provide
hire-purchase finance. These banks not only provide finance for industry but also help in developing the capital market which is underdeveloped in such
- They Help in Monetary Policy:
The Commercial Banks help the economic development of a country by following the monetary policy of the Central Bank. The Central Bank is dependent upon
those Commercial Banks for the success of the monetary management in keeping with requirements of a developing economy.
- Commercial Banks Help in Financing Internal and External Trade:
The banks provide loans to wholesalers and retailers to stock goods in which they deal. They also help in the movement of goods from one place to another
by providing all types of facilities
such as discounting and accepting bills of exchange, providing overdraft facilities, issuing drafts etc. They help by giving finance both exports and imports
of developing countries.
- Provision for Long-term Finance for the Improvement of Agriculture:
Normally, commercial banks grant short-term loans to the trade and industries in developed countries. But in developing countries new businesses and improvement
in agriculture need long-term loans for proper development. Therefore, the commercial banks should change their policies in favour of granting long-term
loans to trade and industries.
- They Help in Financing various Consumers’ Activities:
People in developing countries do not possess sufficient financial resources to buy costlier goods like house, scooter, refrigerator etc. They help by
giving loans to purchase these items which raises the standard of living of the people in developing countries
- Need for Sound Banking System:
For the improvement of the banking system in a developing country the following points need special stress:
(i) In developing countries, there should be proper facility of cheap remittance facilities to enable the movement of funds from one place to another,
so as to meet the requirements of trade and industry.
(ii) It should always be remembered that in developing countries loans should be given for productive purposes only and not for consumption and speculative
(iii) It will be better and encouraging if long-term credit is given to agriculture and small scale industries.
(iv) The use of cheques, drafts etc. is popularized among the people.
Types of Deposit Account:
Savings account refers to an account that is meant for people who keep their saving to fulfill their financial requirements in future. It allows to earn
interest on the balance maintained.
Features of Saving Account
The main features of saving account in bank are as follows:
list of 15 items
- The main objective of saving account is to promote savings.
- There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account Number) details are required to be
furnished for doing cash transactions exceeding र50, 000.
- Withdrawals are allowed subject to certain restrictions.
- The money can be withdrawn either by cheque or withdrawal slip of the respective bank.
- The rate of interest payable is very nominal on saving accounts. At present it is between 4% to 6% p.a in India.
- Saving account is of continuing nature. There is no maximum period of holding.
- A minimum amount has to be kept on saving account to keep it functioning.
- No loan facility is provided against saving account.
- Electronic clearing System (ECS) or E-Banking are available to pay electricity bill, telephone bill and other routine household expenses.
- Generally, equated monthly installments (EMI) for housing loan, personal loan, car loan, etc., are paid (routed) through saving bank account.
- It provides a facility such as Electronic fund transfer (EFT) to other people’s accounts.
- It helps to do online shopping via facility like internet banking.
- It aids to keep records of all online transactions carried on by the account holder.
- It provides immediate funds as and when required through ATM.
- The bank offers number of services to the saving account holders.
Features of saving account
In nationalized banks, the minimum amount for account opening is Rs.100/- and for many of the private banks is Rs.500/-.
Number of Applicants
The account can be either opened individually or jointly with another individual. The cheques can be signed by any of the joint holders for withdrawal
of funds, however, the account closure form has to be signed jointly by all the account holders.
Rate of Interest
Initially banks used to pay interest on the lowest balances in the savings account between the 11th and last day of the month. From April 2010, the interest
is calculated on a daily basis on the balances in the account and the bank interest paid,varies from 3.5% to 6%. The RBI monitors
interest rate only upto Rs.2lacs. Over Rs.2 lacs, the bank can decide the rate of interest to be paid to the account holder.
The transaction refers to the withdrawals or the deposits made in the account. There are usually no limitations on transactions in savings account but
few banks do assign limitations.
Minimum Amount in Account
All banks specify a minimum average balance to be maintained in the account. However, some banks immediately penalize the holders for withdrawals below
the minimum required balances.
ATM/Debit Card facility
On opening of the account, the ATM/debit card is provided to each of the account holders. This card can be used withdrawing money from the bank at any
time 24×7 and also enables purchases from stores.
With all banks having online services now, it is easier to access account balances or carry out transactions online.
An investor is also given the option of having a current account in the bank for maintaining liquidity. A current account is usually opened by a business
Of this current account, the account holder is permitted to draw according to a fixed limit provided by the banker in agreement with the account opening
association. In India, it is not only prestigious but also convenient to open a current account. This does not carry the benefit of any interest. In fact,
interest is charged by the bank for using this facility.
Features of Current Account
The main features of current account are as follows:-
list of 12 items
- Current bank accounts are operated to run a business.
- It is a non-interest bearing bank account.
- It needs a higher minimum balance to be maintained as compared to the savings account.
- Penalty is charged if minimum balance is not maintained in the current account.
- It charges interest on the short-term funds borrowed from the bank.
- It is of a continuing nature as there is no fixed period to hold a current account.
- It does not promote saving habits with its account holders.
- Banker requires KYC (Know your Customers) norms to be completed before opening a current account.
- The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly.
- There is no restriction on the number and amount of deposits.
- There is also no restriction on the number and amount of withdrawals made, as long as the current account holder has funds in his bank account.
- Generally, bank does not pay any interest on current account. Nowadays, some banks do pay interest on current accounts.
Types of Current Accounts:
Types of Current Accounts:
- Standard Current Accounts – This type of account requires the customer to maintain a minimum monthly average balance. The account does not provide any
interest on the deposited amount. However, it provides cheque book facility, debit card, overdraft facility etc. to its customers.
- Basic Current Accounts – It is ideal for customers with low wage income like pensioners, young people etc. It helps the customers to manage their finances
rather easily. However, there are some restrictions on the daily cash withdrawal limit.
- Premium Current Accounts – This is a kind of account that comes with exclusive offers and benefits to the customers. This account is best suited for
carrying out large value transactions.
- Packaged Current Accounts – This current account type provides the account holders with lots of perks and benefits. It comes with exclusive features
like medical support, travel insurance and more.
- Foreign Currency Accounts – Foreign Currency Accounts are offered to NRIs or individuals who want to carry out frequent transactions in foreign currencies.
- Single Column Cash Book: This type is more of a cashbook that allows transaction but doesn’t offer other features such as overdraft facility. It records
daily transactions under separate debit and credit columns.
Required Documents needed to open a Current Account based on Business Type:
Sole proprietorship Firm
list of 6 items
- Two documents in the name of the sole proprietorship firm confirming the name and address — issued by a Government authority/ department, as registration/
- Passport-size colour photograph of the sole proprietor.
- Permanent Account Number (PAN Card)
- Identity and address proof of the sole proprietor.
- In case Power of Attorney (POA) has been granted for account operations, photograph, and identity and address proof of the POA holder should also be
- Account opening Cheque from existing Current Account
list of 5 items
- Latest passport-size colour photograph of the karta/ authorised signatories of the account.
- Identity and address proof of the karta/ authorised signatories of the account Current landline/ mobile number and e-mail ID.
- Permanent Account Number (PAN). The PAN should be in the name of the HUF.
- HUF Letter
- Account opening Cheque from existing Current Account or Karta’s Savings Account
list of 2 items
- Latest passport-size colour photographs of authorised signatories of the account.
- Identity and address proof of authorised signatories of the account
list of 8 items
- List of beneficial owners holding more than 15% in the firm (on letterhead).
- Identity and address proof of such beneficial owners as identified above.
- Communication address proof of the entity
- Permanent Account Number (PAN) of the entity.
- Current landline/ mobile number and e-mail ID of the entity
- Partnership deed.
- Partnership Letter.
- Account opening Cheque from existing Current Account.
Private/Public Limited Company
list of 13 items
- Certificate of incorporation.
- Memorandum of Association (MoA) and Articles of Association (AoA).
- Board Resolution (BR).
- Updated list of directors.
- Communication address proof of the entity, if it is different with the address mentioned on Certificate of registration
- Current landline/ mobile number and e-mail ID of the entity.
- Permanent Account Number (PAN) of the entity.
- Latest passport-size colour photograph of each of the authorised signatories.
- A copy of one valid photo identification and address proof of each of the authorised signatories.
- Shareholding pattern/ list of beneficial owners holding more than 25% in the company either directly or indirectly (on letterhead).
- Permanent Account Number (PAN)/ identity proof of such beneficial owners as identified above.
- Address proof of such beneficial owners as identified above.
- Identity and address proof of the Senior Managing Official in case the ultimate natural person is not identified as the beneficial owner.
table with 3 columns and 9 rows
BASIS FOR DIFFERENCE
Saving bank account is an account meant for individuals who like to save for meeting their future financial requirements.
Current account refers to a running account, in which there is no limit on the operation, during a working day.
To encourage savings of a person.
To support frequent and regular transactions.
Businessman or company
Provided by banks
Not issued by banks.
Less amount is required to open a savings
High amount is required for opening a
table with 3 columns and 2 rows
BASIS FOR DIFFERENCE
Recurring deposit Account:
Recurring deposit account is opened by those who want to save regularly for a certain period of time and earn a higher interest rate.
In recurring deposit account certain fixed amount is accepted every month for a specified period and the total amount is repaid with interest at the end
of the particular fixed period.
Features of Recurring Deposit Account:
The main features of recurring deposit account are as follows:-
list of 9 items
- The main objective of recurring deposit account is to develop regular savings habit among the public.
- In India, minimum amount that can be deposited is Rs.10 at regular intervals.
- The period of deposit is minimum six months and maximum ten years.
- The rate of interest is higher.
- No withdrawals are allowed. However, the bank may allow to close the account before the maturity period.
- The bank provides the loan facility. The loan can be given upto 75% of the amount standing to the credit of the account holder.
- The bank can utilize such funds for lending to businessmen.
- The bank may also invest such funds in profitable areas.
- The Recurring Deposit can be funded periodically through Standing Instructions which the instructions are given by the customer to the bank to credit
the Recurring Deposit account every month from his/her Savings or Current account.
Fixed Deposit Account
The account which is opened for a particular fixed period (time) by depositing particular amount (money) is known as Fixed (Term) Deposit Account.
The term ‘fixed deposit’ means that the deposit is fixed and is repayable only after a specific period is over.
Under fixed deposit account, money is deposited for a fixed period say six months, one year, five years or even ten years. The money deposited in this
account cannot be withdrawn before the expiry of period.
The rate of interest paid for fixed deposit vary (changes) according to amount, period and from bank to bank.
A Fixed Deposit Receipt (FDR) is nothing but a document provided by the bank after the applicant procures a FD scheme from their bank. This document contains
details such as the individual’s name, age, address, details of the scheme chosen by them such as deposit amount, tenure and interest rate applicable on
the deposit and so on.
Features of Fixed Deposit Account
The main features of fixed deposit account are as follows:-
list of 6 items
- The main purpose of fixed deposit account is to enable the individuals to earn a higher rate of interest on their surplus funds (extra money).
- The amount can be deposited only once. For further such deposits, separate accounts need to be opened.
- The period of fixed deposits range between 15 days to 10 years.
- A high interest rate is paid on fixed deposits. The rate of interest may vary as per amount, period and from bank to bank.
- Withdrawals are not allowed. However, in case of emergency, banks allow to close the fixed account prior to maturity date. In such cases, the bank deducts
1% (deduction percentage many vary) from the interest payable as on that date.
- The depositor is given a fixed deposit receipt, which depositor has to produce at the time of maturity. The deposit can be renewed for a further period.
Advantages of Fixed Deposit Account
The advantages of fixed deposit account are as follows:-
list of 8 items
- Fixed deposit encourages savings habit for a longer period of time.
- Fixed deposit account enables the depositor to earn a high interest rate.
- The depositor can get loan facility from the bank.
- On maturity the amount can be used to make purchases of assets.
- The bank can get the funds for a longer period of time.
- The bank can lend such funds for short term loans to businessmen.
- Fixed deposits indirectly boost economic development of the country.
- The bank can also invest such funds in profitable areas.
Types of Bank deposit customers:
Under Individuals, the following special types of customers also come:
list of 5 items
- Illiterate Persons.
- Blind Persons.
Under Non-Individual Customers the following customers come:
list of 4 items
- Joint Hindu Families.
- Partnership Firms.
- Joint Stock Companies.
Individual Customer (Single Person Account):
It is an account opened by one person in his/her own and individual capacity. Such type of accounts are maintained and operated upon only by the single
person who has opened the account. This sole and single person is the customer of the bank.
A minor is a person who has not completed 18 years of age. In case a guardian of his person or property is appointed by a court of law before he completes
his 18 years, the period of minority is extended to the completion of 21 years. As per section 11 of the contract act a minor is incompetent to contract
but section 26 of the Negotiable Instrument Act allows a minor to draw, endorse, deliver and negotiate a negotiable instrument.
However, a contact on behalf of a minor can be, entered into by his guardian.
The Guardian to a minor can be:
- Natural Guardian.
- Legal Guardian.
- Testamentary Guardian.
A person of unsound mind cannot make a valid contract. So, the bankers should not open an account in the name of a person of unsound mind. But a customer
may become lunatic after opening an account with the bank.
An illiterate person means a person who can’t sign his name. While opening of an account of such a person is unavoidable, the banker should obtain ( 1)
Left thumb impression on the account opening form and specimen signature card in the presence of an authorized bank official (2) Details of identification
marks should be noted on the account opening form and specimen signature card (3) At least two copies of photograph duly attested by any account holder/authorized
A blind person can be literate and also illiterate but there is no bar for these persons to open an account with any bank. The Banks take some extra precautions
while opening the accounts of blind persons as they cannot see.In case of blind persons all the terms and conditions of KYC norms are adhered to very strictly.
Besides obtaining thump impression or signatures of such persons in the account opening form and on the specimen signature slips the words BLIND PERSON
are written very boldly.
Joint Hindu Family (JHF):
Joint Hindu Family (JHF) (also known as Hindu Undivided family) is a legal entity and is unique for Hindus. It has perpetual succession like companies;
but it does not require any registration. The head of JHF is the Karta and members of the family are called co-parceners. The JHF business is managed by
is not a legal entity independent of partners. It is an association of persons.
Registration of a partnership is not compulsory under Partnership Act. However, many banks
insist on registration of a partnership. In any case, ie stamped partnership deed or Partnership
letter should be taken when an account is opened for a partnership. The partnership deed will
contain names of the partners, objective of the partnership, and other operational details, which
should be taken note of by the bank in its dealings.
While opening the partnership account following precautions must be taken by the banker: 1. The account must be opened in the name of firm. 2. Partnership
deed and changes made in it time to time must be studied carefully by the banker. 3. It is necessary that all the partners should sign on all the documents.
- All the instructions about the operation of the account must be signed by all the partners. 5. The specimen signatures on cards must be taken from the
partners and authorized person who will operate the accounts. 6. In case of advancing loan and execution of guarantee deed the banker will obtain the signatures
of all the partners. 7. A banker must observe the various provisions of Partnership Act in case of death, entry or withdrawal of any partner. 8. A declaration
and consent must be taken by the banker from all the partners in regard to the drawing and disbursement.
Joint stock companies (Limited Liability Companies):
A company is registered under companies Act has a legal status independent of that of the share
holders. A company is an artificial person which has perpetual existence with limited liability
and common seal.
Articles of Association,
Certificate of Incorporation,
Resolution passed by the Board to open account, name and designations of persons who will
operate the account with details of restriction placed on them are the essentials documents
required to open an account.
Precautions to be taken: 1. Checking Of Documents:- a. A banker must check the following documents of the certificates of incorporation. It is issued by
the registrar of Joint Stock Company. b. Certificate of business commencement. c. Memorandum of Association. d. Articles of Association. 2. Checking Of
Resolution:- Resolution of the company must be checked. It must be signed by the chairman and secretary of the company. It must contain the following documents:
- the name of authorized persons who will operate the account of the company. ii. The name of persons who will execute the documents on behalf of the
company. iii. All types of conditions related to powers about borrowing lending, mortgaging delegated by the company must be checked carefully by the banker.
- Directors Accounts In The Same Bank:- Accounts of company and personal accounts of the directors should be in the same bank. A bankers should keep an
eye that there should be no wrongful conversion of funds between the two. 4. Checking of Limit:- A banker must check that a company may not use the power
of borrowing than the fixed limit. 5. Winding up Case:-
If company is wound up and liquidator is appointed the banker will stop the payments till the instructions of the liquidator. 6. Charges With In Prescribed
Limit:- The banker of a company will also check that company has got the charges of mortgages within the prescribed limit or not.
Any person may create trust if he is competent to do any contract. But trust is created only for
lawful purposes. A trust must be for properly transfe
rable to the beneficiary.
Following precaution must be adopted by the
banker while opening an account
Examination of trust deed.
- A banker should study the deed carefully.
- Objectives of the trust.
iii. Appointments and powers of the
rights of trustees.
iiii. Names of trustees, and their limitation of powers.
- A banker must open the account in the name of trust.
- All the trustees should sign on the application form and signatures card.
- The banker should get clear instructions that who will operate the account.
- A banker must study the provisions related to delegation of powers of trustees.
- The banker must study the legal provisions also in regard to the advancing loan.
Relationship between the Banker and Customer
list of 7 items
Debtor – Creditor
Creditor – Debtor
Principal – Agent
Bailor – Bailee
Trustor – Trustee
Pledger – Pledgee
Mortgagor – Mortgagee
Debtor and Creditor Relationship
When customer deposits money with a bank the relationship of debtor and creditor will be established, in this case Banker is the Debtor and Customer is
the Creditor. It is the basic rule of banking law that in the case of a general deposit of money in the bank, the moment the money is deposited it becomes
the property of bank; here the bank and the depositor assume the legal relation of debtor and creditor.
Creditor and Debtor
When a bank grants loan and other credit facilities to the customer, the relationship between the banker and customer is reversed, that is Customer is
Debtor and Banker is Creditor. In such cases banker doesn’t carry/ hold the money of the customer but it is the money of the bank in the hands
of the customer. In all such cases when a customer’s account is over drawn, the customer does not cease to be a customer.
Principal and Agent
In some situations, the banker serves as agent of the customer (principal). Some of the agency activities of a banker are specified below:
list of 4 items
Collecting cheques on behalf of the customer
bills of exchange
Acting as an attorney, representative or executor of a customer
Buying and selling securities on behalf of his customer.
Bailor and Bailee Relationship:
Bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is fulfilled, be returned
or disposed of according to the directions of the person delivering them. The person delivering the goods is called the “bailor” and the person to whom
these are delivered is called the “bailee”.
Bailment is also an important type of relations between the banker and
It may arise in
the following situations:
list of 2 items
Availing safe custody services (lockers)
as security for availing credit from bank
In these cases Customer is the Bailor and the Bank is the Bailee
Pledger and Pledgee Relationship
Pledge means the bailment of goods as security for payment of a debt or performance of a promise. When credit facility is provided by a bank to its customers
against collateral security of movable property, the Relationship of Pledger and Pledgee is established.
In this case customer is the Pledger and banker is the pledgee.
Mortgagor and Mortgagee Relationship
Mortgage means the transfer of an interest in specific immoveable property for the purpose of getting the payment of money advanced or to be advanced by
way of loan, an existing or future debt, or the performance of an engagement which may give rise to a financial liability.
When credit facility is provided by the bank to a customer against the security of immovable property, the relationship of Mortgagor and Mortgagee is established.
In this situation:
list of 2 items
Banking ombudsman Scheme:
The Banking Ombudsman Scheme is an expeditious and inexpensive forum for bank customers for resolution of complaints relating to certain services rendered
by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking
services covered under the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme 2006.
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.
Steps of complaints:
list of 7 items
Write or e-mail to concerned bank branch, office or department
Write or e-mail to nodal officer at controlling office and head office of the bank
Write or e-mail to Director of Public Grievances, Govt of India, Cabinet Secretariat, Sansad Marg, New Delhi-110001
Complaint in appropriate form (along with copies of earlier correspondence with concerned bank) to Banking Ombudsman (Located at state capitals under
RBI Ombudsman Scheme)
District Consumer Forum (under Consumer Protection Act, 1985) complain in appropriate form.
In this article we will learn more about banking ombudsman, their role, appointment & tenure, grounds of complaints among others.
Banking ombudsman is a quasi-judicial authority created by Government of India to provide effective complaints resolutions. It is a senior official appointed
by RBI to address the complaints by the banking customers. Some people also call it ombudsman banking.
Grounds of Complaints 1) Complaints Pertaining to Deficiency in any of the Banking Services such as:-
list of 7 items
Non-payment or unreasonable delay in the payment /collection/ issue of cheques, drafts, bills etc.;
Non-acceptance, without sufficient cause, of small denomination notes and coins tendered for any purpose, and for charging of commission in respect thereof;
Non-payment or delay in payment of inward remittances;
Non-adherence to prescribed working hours;
Delay/failure to provide any banking facility (other than loans and advances) which has been promised in writing by the Bank
Delay/ non-credit of proceeds to the respective parties’ accounts, non-payment of deposit or non-observance of the RBI directives, with respect to the
rate of interest on bank deposits
Complaints from NRIs having accounts in India in relation to their remittances from abroad, deposits and other bank related matters;
list of 13 items
Refusal to open deposit accounts without any valid reason for this refusal;
Levying charges without adequate prior notice to the customer;
Non-adherence to RBI instructions on ATM / Debit Card /Prepaid Card / Credit Card operations in India by the bank or its subsidiaries
Non-adherence to RBI instruction with regard to Mobile Banking / Electronic Banking service in India.
Non-disbursement or delay in disbursement of pension (to the extent the grievance can be attributed to the action on the part of the bank concerned,
but not with regard to its employees);
Refusal to accept or delay in accepting payment towards taxes, as asked by Reserve Bank/Government;
Failure /Delay with regard to the issue, service or redemption of Government securities;
Forced closure of deposit accounts without any notice or without giving sufficient reason;
Refusal to close or delay in closing accounts;
Not following the fair practices code as adopted by the bank;
Non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;
Non-adherence to RBI guidelines on allied-banking activities like sale of insurance or mutual fund or other investment products by banks
Any other matter relating to the violation of RBI directives
2) Complaints Concerning loans & advances
list of 4 items
Non observance of RBI directives on interest rates
Delays in sanction or disbursement of loan applications
Non acceptance of loan application without any valid reason
Non observance of any other directives by RBI.
Rejection of complaints
1) If the complainant hasn’t first approached the bank named in the complaint and the complaint would be accepted only if the other bank has
list of 3 items
Rejected the complaint or
No reply received within 1 month after the concerned bank received the case or
Person is not satisfied with the reply given
2) If the complaint has been made to Ombudsman later than one year after the cause of action
3) If the complaint is in regards to the same subject matter which was settled though Banking Ombudsman in any previous proceedings
4) If the complaint for same subject matter is pending before any court, tribunal or arbitrator or a final order has already been passed by such an authority
5) If the complaint is frivolous, vexatious or malafide in nature
6) If there is no loss or damage caused to complainant
7) If it is pursued without sufficient cause and reasonable diligence
8) If the complaint is outside the purview of the scheme
9) If the bank branches fall outside the jurisdiction of Ombudsman as several states are clubbed together since it`s not available in all states.