India’s Payment system consists of several bank-to-bank transfers of payment technologies as well as payments through mobile banking systems. We shall study these systems in this chapter in detail. Payment in Cash Banknotes and coins as a share of GDP in India currently in India is at an all-time high of 14.5%. It is comparable…
Regional Rural Banks (RRBs) Regional rural banks are established under the RRB Act, 1976. The aim behind the establishment of RRBs was to take banking services to the doorsteps of the rural masses, especially in remote areas with no access to banking services. Two duties: To provide credit to the weaker sections of the society…
Niche banking are those banks that target a specific market or specific type of project and bridge the needs of banks tailored to the specific needs of certain categories of customers. Why do we need such a banking system? What is the problem with the banking system that is run under the Scheduled commercial banks?…
Financial inclusion has been defined as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low-income groups at an affordable cost”. – Dr. Rangarajan (Chairman: committee on financial inclusion). Elements of Financial Inclusion Financial inclusion essentially means access to the Banking system. This includes…
Any loan for which the principal or the interest payment remains overdue for more than 90 days is known as a Non performing Assets (NPA) in India. It is a bad loan for which there is very little chance of recovery by a bank. Mounting NPAs has the potential of bringing down the whole banking…
The Reserve Bank of India The Reserve Bank of India was set up by the RBI Act, 1935 and was nationalised on 1st Jan 1949; Its responsibilities are noted in its preamble as follows: “To regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and…
Money and credit form the basis of financial transactions. Credit is an agreement between a ‘borrower’ and a ‘lender’ of money in which a borrower takes a sum from the lender to pay it back at a later time, usually after adding ‘interest’. Terms of Credit: Every credit in the market is governed by the…
In this chapter, we shall study Money and Banking and the monetary flow in the economy. Money is the most vital exchange in any economic activity. We have already seen that economic activity includes all those actions that involve the production, distribution, and consumption of goods and services. The basic assumption about all economic exchanges…