What is Repo Rate?

Ans:- Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the
rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get
money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more
expensive.
2. What is Cash Reverse Ratio?
Ans:- Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI
decides to increase the percent of this, the available amount with the banks comes down. RBI is
using this method (increase of CRR rate), to drain out the excessive money from the banks.
3. What is Reverse Repo rate?
Ans:- Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks.
Banks are always happy to lend money to RBI since their money are in safe hands with a good
interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to
this attractive interest rates. It can cause the money to be drawn out of the banking system. Due to
this fine tuning of RBI using its tools of CRR, Bank
Rate, Repo Rate and Reverse Repo rate our banks adjust their lending or investment rates for
common man.
4. What is Inflation?
Ans:- Inflation is defined as an increase in the price of bunch of Goods and services that projects the
Indian
economy. An increase in inflation figures occurs when there is an increase in the average level of
prices in Goods and services. Inflation happens when there are less Goods and more buyers, this will
result in increase in the price of Goods, since there is more demand and less supply of the goods.
5. What is a Bank Rate?
Ans:- Bank rate is the rate at which RBI gives to the commercial banks. Whenever RBI increases its
rates, the
effect will be shown on the commercial banks. In this case, the commercial banks have to increase
the interest rates for their profits.
6. What is Globalization?
Ans:- Globalization (or globalisation) in its literal sense is the process or transformation of local or
regional
phenomena into global ones. It can be described as a process by which the people of the world are
unified into a single society and function together. This process is a combination of economic,
technological, sociocultural and political forces. Globalization is often used to refer to economic
globalization, that is, integration of national economies into the international economy through trade,
foreign direct investment, capital flows, migration, and the spread of technology.
7. What is Non-Performing Asset?
Ans:- A debt obligation where the borrower has not paid any previously agreed upon interest and
principal repayments to the designated lender for an extended period of time. The nonperforming
asset is therefore not yielding any income to the lender in the form of principal and interest
payments. For example, a mortgage in default would be considered non-performing. After a
prolonged period of non-payment, the lender will force the borrower to liquidate any assets that were
pledged as part of the debt agreement. If no assets were pledged, the lenders might write-off the
asset as a bad debt and then sell it at a discount to a collections agency. Any asset that is not
effectively producing income. Notes: For example, an overdue loan would be considered non-
performing.

Repo (Repurchase) Rate

Repo rate is the rate at which banks borrow funds from the RBI to meet the gap between the demand they are
facing for money (loans) and how much they have on hand to lend.

If the RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it
wants to make it cheaper for banks to borrow money, it reduces the repo rate.

Reverse Repo Rate

This is the exact opposite of repo rate.

The rate at which RBI borrows money from the banks (or banks lend money to the RBI) is termed the reverse repo
rate. The RBI uses this tool when it feels there is too much money floating in the banking system
If the reverse repo rate is increased, it means the RBI will borrow money from the bank and offer them a lucrative
rate of interest. As a result, banks would prefer to keep their money with the RBI (which is absolutely risk free)
instead of lending it out (this option comes with a certain amount of risk)

Consequently, banks would have lesser funds to lend to their customers. This helps stem the flow of excess money
into the economy

Reverse repo rate signifies the rate at which the central bank absorbs liquidity from the banks, while repo signifies
the rate at which liquidity is injected.

Bank Rate
This is the rate at which RBI lends money to other banks (or financial institutions .
The bank rate signals the central bank’s long-term outlook on interest rates. If the bank rate moves up, long-term
interest rates also tend to move up, and vice-versa.
Banks make a profit by borrowing at a lower rate and lending the same funds at a higher rate of interest. If the RBI
hikes the bank rate (this is currently 6 per cent), the interest that a bank pays for borrowing money (banks borrow
money either from each other or from the RBI) increases. It, in turn, hikes its own lending rates to ensure it
continues to make a profit.

Call Rate

Call rate is the interest rate paid by the banks for lending and borrowing for daily fund requirement. Si nce banks
need funds on a daily basis, they lend to and borrow from other banks according to their daily or short-term
requirements on a regular basis.

CRR
Also called the cash reserve ratio, refers to a portion of deposits (as cash) which banks have to keep/maintain with
the RBI. This serves two purposes. It ensures that a portion of bank deposits is totally risk-free and secondly it
enables that RBI control liquidity in the system, and thereby, inflation by tying their hands in lending money
SLR
Besides the CRR, banks are required to invest a portion of their deposits in government securities as a part of their
statutory liquidity ratio (SLR) requirements. What SLR does is again restrict the bank’s leverage in pumping more
money into the economy.

RBI :-
The Reserve Bank of India is the central bank of India, and was established on April 1, 1935 in
accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the
Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937.
Though originally privately owned, RBI has been fully owned by the Government of India since
nationalization in 1949.
Duvvuri Subbarao who succeeded Y. Venugopal Reddy on September 2, 2008 is the current Governor
of RBI.

IF you wish to the Current rates visit the RBI SITE

.

SBI:- Chairman [Om Prakash Bhatt]

The eight banking subsidiaries are:

1-State Bank of Bikaner and Jaipur (SBBJ)

2-State Bank of Hyderabad (SBH)
3-State Bank of India (SBI)
4-State Bank of Indore (SBIR)
5-State Bank of Mysore (SBM)
6-State Bank of Patiala (SBP)
7-State Bank of Saurashtra (SBS)
8-State Bank of Travancore (SBT)
SBS is recently merged in SBI.
* SBI has recently opened its 10000 th branch in Puduvayal, Tamilnadu on March 9.
* In Lucknow there is a branch of SBI which has all the staffs r female.
• SBI's net profit in 2007-08 is 288 crore n 229 crore in 2006
• STATE WISE LIST OF SBI BRANCHES

Andhra Pradesh 950

Arunachar Pradesh 42
Assam 230
Bihar 593
Chandigarh 32
Chattisgarh 3
Delhi 239
Goa 66
Gujrat 562
Haryana 198
Himachal Pradesh 164
J & Kashmir 134
Jharkhand 388
karnataka 382
Kerala 288
M.P 436
Maharashtra 944
manipur 19
Meghalya 89
Mijoram 26
Nagaland 46
Urissa 562
Punjab 281
Rajistan 243
Sikkim 26
Tamilnadu 38
Tripura 36
U.P 1370
Uttranchal 318
West Bengal 799
INFORMATION ABOUT 10000TH BRANCH- Finance Minister P Chidambaram on march 9th inaugurated
the 10,000th branch of State Bank of India (SBI) in Puduvayal –Tamilnadu, making it the second bank
in the world to have as many branches. A Chinese bank is the only other in the world to have so
many branches. SBI chairman O P Bhatt was also present at the inauguration ceremony. A small
panchayat (village council) town in the Chettinad
region, Puduvayal is well known for its rice mills and the Friends Volleyball Club. Puduvayal means
'new farm' in
Tamil. SBI has 10000 branches,The 9118th branch was inaugurated by P.Chidambaram in Pudukottai
in Tamil Nadu on October 30 this year,can anyone tell the branches opened after it.SBI is also aiming
to open about 250 branches this year.

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business of banking,
which is specified as:[3]
conducting current accounts for his customers paying cheques drawn on him, and collecting cheques
for his customers. In most English common law jurisdictions there is a Bills of Exchange Act that
codifies the law in relation to negotiable instruments, including cheques, and this Act contains a
statutory definition of the term banker: banker includes a body of persons, whether incorporated or
not, who carry on the business of banking' (Section 2,
Interpretation). Although this definition seems circular, it is actually functional, because it ensures
that the legal basis for bank transactions such as cheques do not depend on how the bank is
organised or regulated.

The business of banking is in many English common law countries not defined by statute but by
common law, the
definition above. In other English common law jurisdictions there are statutory definitions of the
business of banking
or banking business. When looking at these definitions it is important to keep in mind that they are
defining the
business of banking for the purposes of the legislation, and not necessarily in general. In particular,
most of the
definitions are from legislation that has the purposes of entry regulating and supervising banks
rather than
regulating the actual business of banking. However, in many cases the statutory definition closely
mirrors the common law one. Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit account, paying
and collecting cheques drawn by or paid in by customers, the making of advances to customers, and
includes such other business as the Authority may prescribe for the purposes of this Act; (Banking
Act (Singapore), Section 2, Interpretation).
"banking business" means the business of either or both of the following: receiving from the general
public money on current, deposit, savings or other similar account repayable on demand or within
less than [3 months] ... or with a period of call or notice of less than that period; paying or collecting
cheques drawn by or paid in by customers[4]
Bank is also defined as an organisation which mobilises the idle savings of the people and advances
it to others for
promoting economic activities.Or we can say bank is an organisation whose principle operations are
concerned with the accumulation of the temporarily idle money to the general public for the purpose
of advancing it to others
for expenditure.
Bank is different from other financial institution as it not only exchanges money but also creates
credit by the use
of credit instrument.Non banking financial institute mobilises the savings and advances loans.
1.SBI is the largest commercial bank of India.
2.It was established in 1806.
3.Formerly it was known as "Bank of calcutta" in 1806.
4.After that it was known by "Bank of Bengal" in 1809.
5.In 1921 it was renamed by "Imperial bank of india".
6.Nationalisation of SBI was held in 1955.
7.Head office of SBI - Mumbai.
8.Chairman of SBI - Mr. O.P. BHATT.
9.Recently SBS was merged in SBI.
10.Now SBI has only 6 associates banks.
11.As per fortune 500 list SBI was ranked 380 from the rank 495 in 2007.
12.As per fortune 500 list following are the data for SBI in $million :
*revenues:22402.2$million
*profits:2225$million
*assets:255854.9$million
*stockhplder's equity:15263.3$million
12.Governer of RBI-Duvvuri subbarao.
13.Finance secretary:Arun ramnathan
14.President of world bank-Robert zollick

HISTORICAL
State Bank of India is the successor to Imperial Bank of India. The latter was established in 1921 with
the
amalgamation of three Presidency Banks of Bombay, Bengal and Madras. State Bank of India came
into being on 1.7.1955 through the State Bank of India Act, 1955. The Banks of erstwhile princely
states of India joined the State Bank Group as subsidiaries under the State Bank of India (Subsidiary
Banks) Act 1959. Over the years, the Bank has expanded rapidly
Government acquires entire RBI shareholding in SBI In its biggest ever cash purchase, Government
on 29th June
2007, acquired entire Reserve Bank of India (RBI) shareholding in State Bank of India (SBI) consisting
of
31,43,39,200 equity shares with face value of Rs. 10/- each @ Rs. 1130.35 per share at a total
amount of Rs.
35,531,33,14,720 (Rupees Thirty five thousand five hundred thirty one crore, thirty three lakhs,
fourteen thousand
seven hundred twenty).
Though, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, known as
Takeover
Regulations, per se were not applicable in this transaction, for sake of greater transparency, the
valuation of RBI stake in SBI was worked out as per SEBI guidelines taking 28th February, 2007, as
the “reference date”, the day on which the decision of the Government to acquire RBI stake in SBI
was announced by Finance Minister
in his Budget Speech and the intention of the Government to acquire SBI was made public.
Government has also decided to acquire RBI shareholding in NABARD and NHB by June, 2008.

The Committee on Banking Sector Reforms (Narasimham Committee II), inter-alia, observed that it is
inconsistent
with the principles of effective supervision that the regulator is also an owner of a bank and this
would require
the Reserve Bank of India (RBI) to divest its holding in banks and financial institutions. In its
Monetary and Credit Policy for the year 2001-02, RBI announced its intention to transfer the
ownership of shares in State Bank
of India (SBI), National Housing Bank (NHB) and National Bank for Agriculture and Rural Development
(NABARD) in favour of the Government of India. Accordingly, RBI sent a proposal to transfer its
shares in these entities to the Government of India. RBI holds 59.73% stake in SBI, 72.50% in
NABARD and 100% in NHB.

Finance Minister, in his Budget Speech for the year 2007- 08, announced the proposal of the
Government to acquire entire stake of RBI in SBI, and provided a sum of Rs. 40,000 crore for transfer
of RBI shareholding in SBI to the Government of India. An Ordinance was promulgated to provide
requisite statutory provisions in State Bank of
India Act, 1955 to facilitate this transaction, and Government appointed 29th June, 2007 the date for
transfer
of stake.
Vista is the new Operating system. And Microsoft is going to release a new Operating system called "
Windows 7" by the end of next year

Some Operating Systems used are Windows 95, 98, 2000, XP, Vista , Linux, MacOS,
Advantages of Linux are, 1. Stability, 2. Low price, 3. Security, 4. Open Source (which allows user to
modify its
Source Code according to the user's needs)
Benefits of Laptop 1. Less weight 2. Portablility. 3. Less Space 4. Anywhere Access
GPS means Global Positioning System (Which helps to track and to find anything in the earth from
space)
Benefits of LCD : 1. Less Space 2. No strain to eyes 3. Consume less power 4. Clear Pictures ( As
most of the Banks r now using LCD monitors only)
BSNL, AIRTEL, RELIANCE, SIFY, are the broadband service providers
A network is simply a group of two or more Personal Computers linked together. Many types of
networks exist,
but the most common types of networks are Local-Area Networks (LANs), and Wide-Area Networks
(WANs).
In a LAN, computers are connected together within a "local" area (for example, an office or home). In
a WAN, computers are further apart and are connected via telephone/communication lines, radio
waves or other means
of connection.
Servers are maintained by continious updates of programmes , Upgradation , regular backups( which
a bank employee is doing everyday in his/ her system)
A computer virus is a computer program that can copy itself and infect a computer without
permission or knowledge of the user. Some popular Antivirus programmes are Symantec, AVG,
McAfee, (pronounce as MECAFEE), AVAST, KASPERSKY ((We are going to work in a computer
networked environment. so its desirable to have some knowledge in computers and its components
and their functions. I think computer guys shouln't asked deep questions from commerce like repo
rates, CRR, SLR etc. Also there will be no questions from softwares like JAVA, C++, UNIX , .Net, as
they are so advanced ))
As my friends' brother told interviewing panel have five or six members Only one person will be from
bank. the other's are postmaster, two college lecturer/ professor from various departments , a public
sector high official will be present in the panel and one of them will be chairperson.
they already prepared question to be asked. if ur interviewing time is coming after 20 candidates jus
ask the
questions that they have faced. Coz sometimes the questions may be repeated.

One question will be our introduction, two questions will be from our subjects, two questions will be
from SBI /
common bank concepts( may be abt establishment & history and abt nationalized and abt associate
banks) two general knowledge questions and two will be from current affairs). If you are from
Historical place or from place which is famous in any aspects then there will be question from it .( If
you are from Delhi means questions will be from the year of establishments of monuments or
specials abt them) That's all.

Computer questons
1 In which year & who invented C?
Ans. Denis Ritche in the year 1972.

2. Difference between C & C++?

Ans .C is a structured oriented programming language where
as C++ is a procedure oriented
programming language .

3 .Is C which level language?

Ans .C is a middle level language. Where as C++ is a high
level language.

4. What is ment by global declaration & local declaration?

Ans. The declaration that performed with in the main is called local declaration and outside the
main() function
is called global declaration.

5 .Difference between constants & variables?

Ans. Constants value can not be changed through out a program where as for a variable it can be
changed.

Wat is the name of the new browser and who released it Chrome . Released by Google.
2.Name some search Engines :Google , Yahoo Search , Ask, Cuil, Live Search, etc.
3.How many keys are in a standard keyboard . 108 keys
4.Wat is the common function of right button of a mouse? To select Alternate menu and to show
some basic function like copy, paste , cut, delete
5.How many types of printers are there - Dot matrix printers, Laser printer, thermal printers, Desk jet
printers etc
6.Wat is the expansion of LCD - Liquid Crystal Display
7.What is the latest version of Internet Explorer -Version 8 Beta 2( not a final release)
8.Name the primary storage unit and who are the leading manufacturers
Hard Disk Drive and Seagate, Hitachi, Sam sung, Maxtor, Western Digital
9.Tell the capacity of a single layer dvd - 4.7 GB
10. Tell abt Hard Disk Drive and its capacities - Hard disk is non-volatile storage device which stores
digitally encoded data on rapidly rotating platters with magnetic surfaces. The maximum availability
capacity of a
desktop for now is 1.5 TB
MB - Mega byte (1024 power 2 bytes)
GB - Giga byte (1024 power 3 bytes)
TB - Tera byte (1024 power 4 bytes)
Upto this capacity home pc HDD capacity is available
More are
PB - Peta byte (1024 power 5 bytes)
EB - Exa byte (1024 power 6 bytes)
ZB - Zetta Byte(1024 power 7 bytes)
YB - Yotta Byte (1024 power 8 bytes) means
1,208,925,819,614,629,174,706,176 bytes
11. What type of Operating systems are available - 32-bit operating system and 64 bit operating
system
12. What is the Special feature of Vista - It's having Aero graphical interface
1. what is meant by booting?
A. the process of starting a computer 4m power _ off state is called booting.
2. what is meant by cold booting and warm booting?
A. the process of starting a computer 4m its power off state is called cold booting. Where as
starting a computer 4m restart is called warmbooting.
3. what is meant by ROM?
A. read only memory.
4. what is meant by RAM?
A. random acess memory. It is also called as read
write memory.
5. difference between ROM and RAM?
A. ROM is non_volatile where as RAM is volatile.

The IT Packages and services available in India can be broadly classified into the following 6 types:

(I) Stand-alone branch-level packages-

These are usually written in FoxPro, C or Dbase and handle specific functions at branches; these are
sometimes
networked on a LAN to simulate a TBA environment. But there are also high-end packages with a
central Server (which can be a Pentium PC or NT or a MINI or even a Main Frame, supported by
multiple (dumb or intelligent) terminals. Some of them use sophisticated RDBMS like ORACLE as
back-end and provide user-friendly front-end with Windows GUI.
(ii) Multi-branch solutions -
These are used to network a cluster of branches in a city (or spread over several cities); the account
maintenance
can be central (where facilities like Anywhere Banking are required) or can be distributed, networking
being achieved through Wide Area Network (WAN) on terrestrial lines / high speed lines/ satellite
networks - and now even wireless.
(iii) Foreign Packages -
Examples are Bank Master, Kappiti, Sanchez etc. These need to be extensively customised to suit
Indian requirements - but their strength lie in their proven capabilities in developing and offering
modern / global banking products /services that India is just ushering in.
(iv) Packages for specialized niche areas -
Like Asset Liability Management (ALM), Treasury Management, Trading / Dealing Room activities,
Custodial Services/ Depository Participant etc. These are high-end packages with sophisticated
analytical and decision tools.
(v) Service Branch / high-volume transaction processing packages -
These include, clearing, drafts issue/ payments / reconciliation (Remittances), Bills (payments/
collection/
purchases), Dividend Warrant Processing, inter-branch reconciliation etc. These are often developed
and
implemented by service providers to whom the work is outsourced.
(vi) IT Services -
These are not Packages in the sense, these are developed to handle specific problems like disaster
recovery, virus
protection, security handling, linking / networking multiple legacy systems between themselves or to
new
platforms or to new delivery channels like ATMs, etc.

SBI, LIC, UTI-AMC to manage pension funds A committee constituted by the Pension Fund Regulatory
and
Development Authority (PFRDA) has selected State Bank of India (SBI), UTI Asset Management
Company (UTIAMC) and Life Insurance Corporation (LIC) to be the first sponsors of pension funds in
the country under the new pension system (NPS) for government employees.
The three entities would float their respective pension funds to manage the money that has been
lying in public
account since the government switched over to the contributory pension scheme for all fresh recruits
at the
Centre from January 1, 2004.
All states, barring the three Left-ruled ones, have also adopted the new pension system for their
staff. As per
estimates, about five-lakh Central and state government employees have joined the scheme since it
came into being on January 1, 2004, leading to accumulation of around Rs 2,000-crore pension fund
corpus.
Under the NPS, employees have to contribute 10 per cent of their basic salary and dearness
allowance, with a matching contribution from their employer. This contributory system is in contrast
to the earlier system, in which employees used to get defined returns.
The sponsors will have to offer alternative products to employees including risk-free options under
which all funds
would be invested in government securities, and share-market linked products with variable returns
as well.
All states, barring the three Left-ruled ones, have also adopted the new pension system for their
staff. At present,
a total of about Rs 2,000 crore is available for fund management under NPS.
Pension Fund Regulatory and Development Authority (PFRDA) had invited Expressions of Interest
(EOI) from public sector entities for sponsoring Pension Funds for Government employees on 11th
May 2007. In response, EoIs were received from seven public sector entities namely, Canara Bank,
IDBI Capital Market Services Limited, Life Insurance Corporation of India, State Bank of India , UTI
Asset Management Company Private Limited, Securities Trading Corporation of India Limited and
Punjab National Bank.
NOTE- Pension Fund Regulatory and Development Authority was established by the Government of
India on 23rd August 2003 to promote old age income security by establishing, developing and
regulating pension funds, to protect the interests of subscribers to schemes of pension funds and for
matters connected therewith or incidental thereto.
Inflation refers d sitution of a persistent & appreciable rise in d general price level.It is a state of
imbalance &
results in decline in d puchasing power.It generally results when d supply of money in an economy
out strips d
available quantity of goods & services.To check inflation, reduction in crr is one of d the monetary
policy adopted by
central bank.This is done in order to supply more money to d hands of d people so that their
purchasing can be
increased. to check inflation they use the measure of increasing CRR.. n now as you said Decrease in
CRR should decrease inflation... that isnt right.. coz CRR and RR both have indirect relation with
inflation.. see if the CRR decreases, the money flow in market would increase n that in turn would
increase the demand for goods.. n you know if demand increase the supply then good would become
dearer.. so inflations goes up.. n vice versa.. so Increase CRR to reduce inflation n reduce CRR to
increase inflation.. CRR is used by RBI to control inflation. but if the money supply was below the
level,then also the CRR will be cut. now the RBI has cut CRR because of our poor GDP growth. Our
august GDP growth is very low. and so to improve the GDP growth CRR was cut by RBI
if the RBI cut crr then more money will be in the market . so more buyers will be there . but no
increase
in food materials . so more buyers and less stocks, there will be a demand supply problem. so price
of the materials
will increase . and so the inflation will also increase.

type of inflation inflation r of 3 types

1)Demand pull inflation- It refers 2 a situtation where d total monetary demand persistently exceeds
total supply of
real goods & services at current prices, so that prices r pulled upwards by d continuous upward shift
of d aggregate
demand function.
2)cost push inflation- It refers 2 a situtation where prices persistently rise becoz of growing factor
costs.
3)stagflation- It refers 2 a situtation where a high rate of inflation occurs simultaneously with a high
rate of
unemployment.
Generally inflation is represented by demand pull inflation.

Nobel Prizes
Chemistry, Martin Chalfie
Chemistry, Osamu Shimomura
Chemistry, Roger Y. Tsien
Medicine, Françoise Barré-Sinoussi
Medicine, Luc Montagnier
Medicine, Harald zur Hausen
Physics, Makoto Kobayashi
Physics, Toshihide Maskawa
Physics, Yoichiro Nambu

SEBI
In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of
India through an executive resolution, and was subsequently upgraded as a fully autonomous body
(a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India
Act (SEBI Act) on 30th January 1992. In place of Government Control, a statutory and autonomous
regulatory board with defined responsibilities, to cover both development & regulation of the market,
and independent powers have been set up. Paradoxically this is a positive outcome of the Securities
Scam of 1990-91.

The basic objectives of the Board were identified as:

• to protect the interests of investors in securities;
• to promote the development of Securities Market;
• to regulate the securities market and
• for matters connected therewith or incidental thereto.

Since its inception SEBI has been working targetting the securities and is attending to the fulfillment
of its objectives with commendable zeal and dexterity. The improvements in the securities markets
like capitalization requirements, margining, establishment of clearing corporations etc. reduced the
risk of credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the
eligibility criteria, the code of obligations and the code of conduct for different intermediaries like,
bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit
rating agencies, underwriters and others. It has framed bye-laws, risk identification and risk
management systems for Clearing houses of stock exchanges, surveillance system etc. which has
made dealing in securities both safe and transparent to the end investor.

Another significant event is the approval of trading in stock indices (like S&P CNX Nifty & Sensex) in
2000. A market Index is a convenient and effective product because of the following reasons:
• It acts as a barometer for market behavior;
• It is used to benchmark portfolio performance;
• It is used in derivative instruments like index futures and index options;
• It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and also to
diversify the trading products, so that there is an increase in number of traders including banks,
financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through
the Exchanges. In this context the introduction of derivatives trading through Indian Stock Exchanges
permitted by SEBI in 2000 AD is a real landmark.

SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory framework for
derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement of
Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the
recommendations of the committee and approved the phased introduction of derivatives trading in
India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws" as
recommended by the Dr LC Gupta Committee for Regulation and Control of Trading and Settlement
of Derivatives Contracts.

SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM) in
the Indian Stock Index Futures Market. The report was submitted in november 1998.

However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to include
"derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The
necessary amendment was then carried out by the Government in 1999. The Securities Laws
(Amendment) Bill, 1999 was introduced. In December 1999 the new framework was approved.

Derivatives have been accorded the status of `Securities'. The ban imposed on trading in derivatives
in 1969 under a notification issued by the Central Government was revoked. Thereafter SEBI
formulated the necessary regulations/bye-laws and intimated the Stock Exchanges in the year 2000.
The derivative trading started in India at NSE in 2000 and BSE started trading in the year 2001.
Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new challenges
posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the
country. This is one of the main reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalisation of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for
withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank
transferred money from one branch to other in two days. Now it is simple as instant messaging or
dial a pizza. Money have become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the
journey of Indian Banking System can be segregated into three distinct phases. They are as
mentioned below:
• Early phase from 1786 to 1969 of Indian Banks
• Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
• New phase of Indian Banking System with the advent of Indian Financial & Banking Sector
Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal
Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank
of Madras (1843) as independent units and called it Presidency Banks. These three banks were
amalgamated in 1920 and Imperial Bank of India was established which started as private
shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank
Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central
Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve
Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the
functioning and activities of commercial banks, the Government of India came up with The Banking
Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act
of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the
supervision of banking in india as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit mobilisation
was slow. Abreast of it the savings bank facility provided by the Postal department was
comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it
nationalised Imperial Bank of India with extensive banking facilities on a large scale specially in rural
and semi-urban areas. It formed State Bank of india to act as the principal agent of RBI and to handle
banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July, 1969,
major process of nationalisation was carried out. It was the effort of the then Prime Minister of India,
Mrs. Indira Gandhi. 14 major commercial banks in the country was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with seven
more banks. This step brought 80% of the banking segment in India under Government ownership.
The following are the steps taken by the Government of India to Regulate Banking Institutions in the
Country:
• 1949 : Enactment of Banking Regulation Act.
• 1955 : Nationalisation of State Bank of India.
• 1959 : Nationalisation of SBI subsidiaries.
• 1961 : Insurance cover extended to deposits.
• 1969 : Nationalisation of 14 major banks.
• 1971 : Creation of credit guarantee corporation.
• 1975 : Creation of regional rural banks.
• 1980 : Nationalisation of seven banks with deposits over 200 crore.
After the nationalisation of banks, the branches of the public sector bank India rose to approximately
800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its reforms
measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name
which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The entire system
became more convenient and swift. Time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis
triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all
due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet
fully convertible, and banks and their customers have limited foreign exchange exposure.

STATE BANK OF INDIA OPENS INDIA'S FIRST OFFSHORE BANKING UNIT

State Bank of India has opened the first Offshore Banking Unit (OBU) in India at the SEEPZ Special
Economic Zone, New Bank Building, Andheri (East) Mumbai 400,096 on 17th July 2003 - another
landmark in the history of India's Financial Sector.
The OBU will be deemed as an overseas branch of the Bank and undertake the following activities :

1. Raise funds in convertible foreign currency as deposits and borrowings from Non Residents
sources.

2. Transact in foreign exchange with residents in India who are eligible to enter into or undertake
such transactions in terms of various Rules and Regulations as framed under Foreign Exchange
Management Act, 1999.

3. Open foreign currency accounts abroad as well as with other OBUs in India

4. Trade in foreign currencies in the overseas market and also with banks in India where both legs of
the transactions are denominated in foreign currencies.

5. Provide customised loan and liability products for the benefit of clients

6. Maintain Special Rupee account with an Authorised Dealer in India out of the convertible foreign
exchange resources for meeting local expenses

7. Buy Rupees from an Authorised Dealer in India to fund the Special Rupee Account.

List of Nationalised Banks,

1. Allahabad Bank
2. Bank of Baroda
3. Bank of India
4. Andhra Bank
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena bank
10. Indian Bank
11. Indian Overseas Bank
12. Oriental Bank of Commerce
13. Punjab National Bank
14. Syndicate Bank
15. Union Bank of India
16. United Bank of India
17. Punjab & sind Bank
18. UCO Bank
19. Vijaya Bank
Please check this list once