Banking Financial Services

Management Unit 1
Overview of Indian Banking
System

Overview of Indian Banking

System

Banking Definition
According to Sec.51 (1) b, Banking
Regulation Act 1979 Banking means
accepting for the purpose of lending
or investment of deposits of money
from the public, repayable on
demand or otherwise and withdrawal
able by cheques, draft, order or
otherwise

The Bank Market Structure

in India
Bank Market
Structure

Commercia
l Bank

Financial
Institution

Non
Banking
Finance
companies

Cooperativ
e
Institution

Commercial Bank structure

Public
Sector
Banks(26)

Regional
Rural
Bank

Commercial
Banks

Foreign
Banks

Nationalized Bank (20)

SBI Group(6)

Private
Sector
Banks
Old(13
)
New(7
)

Public Sector Banks

There are a totally 27 public sector banks in India.
Public sector bank are regulated by the statutes of the
parliament and some important provision in the
banking regulation act
State bank of India is regulated by the SBI 1955
Subsidiaries of SBI regulated by the SBI(subsidiary
bank)act1959
Nationalized bank regulated by the banking companies
act 1970 & 1980
The statutes also stipulate that the government must
hold a minimum shareholding of 51 % in Nationalized
bank and 55% in SBI and SBI in turn will hold 51% in its
subsidiaries
Foreign investment in any form cannot exceed more
than 20% of the total paid up capital

Private Sector Banks

As on 2013, there were 21 private sector banks in India
out of which 13 is classified as old and remaining 7
classified as New
The licenses for private bank is given based on the
principal that ownership and control is well diversified
and sound corporate governance principles are
observed
New private bank can enter the market with a paid up
capital of 200 crores, which should be increased to
300Crs over the following three years
No single entity can have shareholding or ownership of
more than 10% of the paid up capital
Aggregate foreign investment in any Indian private
sector bank cannot be more than 74%

Foreign Banks
Foreign banks are required to invest an assigned capital
of USD25 million upfront at the time of opening their
first branch in India
They can operate in any the following ways
Through Branches
Through wholly owned subsidiaries
Through subsidiaries with maximum aggregate of 74%
ownership in a private sector bank

Foreign bank can have asset share, equity stake and FII
in Indian banking system
In the first phase, FB were allowed to establish wholly
owned subsidiary with a minimum capital requirement
of 300crs or spin off the existing operations into a
subsidiary

Regional rural Banks

Regional rural bank was created for rural credit delivery
and to ensure financial inclusion
Their capital base is held by the central government,
relevant state government and the commercial bank
that sponsor them in the ratio of 50:15:35
Recent initiative is to recapitalize and to amalgamation
of RRB with their sponsor bank

NBFI

Non Banking Financial Institution(NBFI)-The

components
Non
banking financial institutions are heterogeneous
group of institution that caters to a wide range of
financial requirements
They can be grouped as
Financial institutions
NBFC
Primary Dealers

Financial
Institutions
Non Banking
Finance
companies
Primary
Dealers

Financial Institution Structure

All India Fis-EXIM
bank, NABARD,
NHB,SIDBI

Specialize
d FIsIVCF,ICICI
Venture,
TFCI

Financial
Institution

State
Level FISFC, SIDC

Investme
nt
Institution
-LIC, GIC

 Financial Institution that fall under the category of NBFI

complement banking in providing a wide range of financial
services to a variety of customers and stake holders
While bank provide payment and liqidity service, NBFI
offers equity and risk based product
All India FIs can be classified into
Lending institution EXIM
Refinancing Institution NABARD, NHB, SIDBI

Investment Companies like LIC & GIC deploy their

resources for long term investment
The RBI act of 1934 was amended in the year 1997 to
bring a comprehensive legislative framework for
regulating NBFC.
The amendment called for compulsory registration and
maintenance of net owned funds for all NBFCs.
Two major categories of NBFC in India are
NBFC-D
NBFC-ND

 Housing finance companies are special type of NBFC.

The residuary non banking finance companies also a
accepts deposits from the public
NBFC-ND can be further classified as NBFC-ND-SI where
SI means systematically important
NBFC with asset size of more than 100cr is classified as
NBFC-D
NBFC-ND-SI
(category A)
(254)

NBFC Category by
liability(12225)

NBFC-ND
(Category-B)
(11969)

Residuary NBFC(2)

NBFC-ND-SI
(354)

NBFC Structure based on Activity

NBFC category by
activity/asset

Asset Finance Companies

Investment Companies
Loan companies
Infrastructure Finance companies
Core investment companies
Infrastructure debt fund
Micro finance companies
NBFC factors

Primary Dealer
(21)

Primary Dealer
Bank PDs(13)

Standalone PDs(13)

Aprimary dealeris a firm that buys government

securities directly from a government, with the intention
of reselling them to others, thus acting as amarket
maker of government securities. The government may
regulate the behavior and numbers of its primary dealers
and impose conditions of entry.

Structure of the Co-operative Banking structure

UCBs
(1606)

Schedule
d
(51)
NonSchedule
d
(1555)

Credit
Cooperatives

Rural
Cooperati
ve

Long
Term
(717)
Short
term
(92,833)

Multi
State
(25)
Single
State
(26)
Multi
State
(21)
Single
State
(1534)

SCARDBs
(20)
StCBs
(31)

PCARDBs
(697)
DCCB
s
(370)

PACSs
(92,43
2)

StCB-State Co-operative bank; DCCB- District Central Co-operative

bank; PACS-Primary Agriculture Credit Society; SCARDB-State Cooperative agriculture and rural development bank; PCARDB-primary cooperative agriculture and rural development bank

Primary Functions
a) Accepting deposits
The most important activity of a commercial bank is to mobilise deposits
from the public. Thus, deposits with the bank grow along with the interest
earned. If the rate of interest is higher, public are motivated to deposit more
funds with the bank. There is also safety of funds deposited with the bank.
b) Grant of loans and advances
The second important function of a commercial bank is to grant loans and
advances. Such loans and advances are given to members of the public and to
the business community at a higher rate of interest than allowed by banks on
various deposit accounts.
Loans: A loan is granted for a specific time period. Generally, commercial
banks grant short-term loans. But term loans, that is, loan for more than a
year, may also be granted. The borrower may withdraw the entire amount in
lump sum or in installments. However, interest is charged on the full
amount of loan. Loans are generally granted against the security of certain
assets. A loan may be repaid either in lump sum or in instalments.
Advances: An advance is a credit facility provided by the bank to its
customers. It differs from loan in the sense that loans may be granted for
longer period, but advances are normally granted for a short period of time.
Further the purpose of granting advances is to meet the day to day
requirements of business. The rate of interest charged on advances varies
from bank to bank. Interest is charged only on the amount withdrawn and
not on the sanctioned amount.

Modes of short-term financial assistance

i) Cash credit
Cash credit is an arrangement whereby the bank allows the
borrower to draw amounts upto a specified limit. The amount is
credited to the account of the customer. The customer can withdraw
this amount as and when he requires. Interest is charged on the
amount actually withdrawn. Cash Credit is granted as per agreed
terms and conditions with the customers
ii) Overdraft
Overdraft is also a credit facility granted by bank. A customer who
has a current account with the bank is allowed to withdraw more than
the amount of credit balance in his account. It is a temporary
arrangement. Overdraft facility with a specified limit is allowed either
on the security of assets, or on personal security, or both.
iii) Discounting of Bills
Banks provide short-term finance by discounting bills, that is,
making payment of the amount before the due date of the bills after
deducting a certain rate of discount. The party gets the funds without
waiting for the date of maturity of the bills. In case any bill is
dishonoured on the due date, the bank can recover the amount from
the customer.

Secondary functions
Agency Functions :
Various agency functions of commercial banks are To collect and
clear cheque.
To make payment of rent, insurance premium, etc.
To deal in foreign exchange transactions.
To purchase and sell securities.
To act as trusty, attorney, correspondent and executor.
To accept tax proceeds and tax returns.
General Utility Functions :
The general utility functions of the commercial banks include To
provide safety locker facility to customers.
To provide money transfer facility.
To issue traveller's cheque.
To accept various bills for payment e.g phone bills, gas bills, water
bills, etc.
To provide merchant banking facility.
To provide various cards such as credit cards, debit cards, Smart
cards, etc.

The RBI Act, 1934

The reserve bamk was established on April 1, 1935 in
accordance with the provisions of the reserve bank of
India Act 1934, with its central office at Mumbai since
inception
Objective of RBI
to regulate the issue of bank notes and keeping of
reserves with a view to securing monetary stability in India
and generally to operate the currency and credit system of
the country to its advantage
Main functions of RBI
Monetary authority
Regulator and supervisor of the financial system
Manager of exchange control
Developmental role
Related functions

The RBI Act, 1934

The RBI Was established on April 1, 1935 under
the RBI Act of 1934.
Originally, it was a
shareholder bank which was taken over by the
Central Government under the Reserve Bank Act,
1948.
It had a paid-up capital of Rs.5 crores.
There have been 78 amending acts, ordinances,
regulations and adaptation orders till 12th June,
2006.
The RBI Act consists of five chapters and five
schedules. A brief outlines of these chapters are
discussed followed by a summary of main
provisions of the Act

The RBI Act, 1934

Chapter I : Preliminary:
The act may be called the RBI Act, 1934 and extends to the whole
of India. It gives a number of definitions including that of the Bank,
Bank for International settlement as well as Export-Import Bank,
National Housing Bank, Small Industries Development Bank of India,
Scheduled Bank, State Financial corporation, State bank, Cooperative
bank etc.
Chapter II : Incorporation, Capital, management and Business:
It encompasses the establishment and incorporation of the bank,
provisions regarding share capital, offices, branches and agencies as
well as composition, function and meetings of its central board, local
boards, as well as terms like disqualification removal, etc. of directors.
Chapter III Central Banking functions:
This Chapter outline banks obligations and right to transact
government business, right to issue bank notes, their denomination,
form as well as reissue, recovery and issue of special bank notes. The
assets and liabilities of issue department, cash reserve ratios of
scheduled banks, publication of consolidated statement by bank,

The RBI Act, 1934

Chapter IIIA : Collection and furnishing of credit
information:
Provisions regarding the power of the bank to collect credit
information, procedure for furnishing information and prohibited
information are outlines in this chapter.
Chapter IIIB: Provisions relating to non-banking
institutions receiving deposits and financial institutions:
Chapter IIIC: Prohibition of acceptance of deposits by
unincorporated bodies:
This chapter specifies the deposits are not to be accepted in
certain cases.
Chapter IIID: Regulation of transactions in derivatives,
money market instruments or securities:
It gives the definition for derivatives, money market
instruments, repo and securities as well as specified
transactions in derivatives.

The RBI Act, 1934

Chapter IV : General Provisions
This chapter gives general provisions regarding
contribution of central government to reserve funds,
national,
rural,
industrial
and
housing
credit,
appointment, powers and duties of auditors, exemption of
banks from income tax and super tax, delegation of
powers, liquidation of the bank etc.
Chapter V Penalties:
This chapter lays down penalties for any person,
directors auditor and company whoever makes a wrong
statement willfully, whether in any application,
declaration, return, advertisement, book, account,
document, etc.
Any default in complying with regulation of this act is
also punishable.

The BANKING REGULATION Act,

1949

The banking regulation act was passed as the

banking companies act 1949 and came into force
with effect from 16 March 1949. Subsequently it
was changed to banking regulation act 1949 with
effect from 1 March 1966.
Some important section of the act are given as
follows
Banking means accepting for the purpose of
lending or investment of deposit of money for
the public repayable on demand or otherwise
and withdrawal cheque, draft order or otherwise
Banking company means any company which
transacts the business of banking

The BANKING REGULATION Act,

1949

Demand liabilities are the liabilities which must be met

on demand and time liabilities means liabilities which
are not demand liabilities
A banking company may be engaged in businesses like
borrowing, lockers, letter or credit, travelers cheque
and mortgages
Cash reserve-scheduled banks to maintain 3 percent of
the demand and time liabilities by way of cash reserve
with themselves or by way of balance in a current
account with the RBI
Every bank is to maintain a percentage of it demand
and time liabilities by the way of cash, gold,
unencumbered securities 25-40 percent as on the last
Friday of second-the preceding fortnight-known as the
SLR

The BANKING REGULATION Act,

1949

Every bank has to publish its balance sheet as

on 31st march
The balance sheet is to audited by qualified
auditors
A published balanced sheet and auditors report
should be available to the public within 3
months from the end of the period to which
they refer. The RBI may extend the period by a
further 3 months

The BANKING REGULATION Act,

1949

This Banking Regulation Act Consolidated the law relating to banking and
provides for the nature of transactions which can be carried out by banks
in India, the control over management suspension and winding up of
banking companies and penalties for violating provisions of the Act. The
Act contains following five parts:
Part I : Preliminary
Part II : Business of Banking Companies
Part IIA : Control over management
Part IIB: Prohibition of certain activities in relation to banking companies
Part IIC: Acquisition of the undertakings of banking companies in certain
cases
Part III: Suspension of business and winding-up of banking companies
Part IIIA: Special provision for speedy disposal of winding-up proceedings
Part IIIB : Provisions relating to certain operations of banking companies
Part IV : Miscellaneous
Part V: Application of the Act of Cooperative Banks

Part I Preliminary:
It defines a banking companys demand and time
liabilities, secured and unsecured loans, managing agents,
managing directors, sponsored and subsidiary banks,
regional rural banks, etc.
Part II Business of Banking companies:
Specifies the businesses in which the bank may and must
not engage, prohibition on trading rules regarding director
and chairman, restriction on commission and brokerage,
loans and advances.
Nature of subsidiary companies,
requirement as to minimum paid-up capital and reserves,
account, balance sheets, licensing and auditing.
Part III: Suspension of business and winding-up of
banking companies
This part contains provisions for suspension of business,
winding up by High court, power to dispense with
meetings with creditors, preferential payment to
depositors, etc.

Part IV Miscellaneous:
This part lays down penalties for officers,
application for fines, special provisions for
private banking companies, change of name or
alternation of memorandum, power of central
government to make rules, etc.
Part V Application of the act to
cooperative banks:
It defines a cooperative bank, a cooperative
credit society, a multistate cooperative society.
Any dispute regarding their primary object or
principal business is referred to and determined
by the RBI. It also lays down requirements ads
to minimum paid-up capital and reserves.

The Negotiable
Instruments Act 1881

Negotiable Instrument
According to Section 13(i) a negotiable
instrument means a promissory note, bill of
exchange or cheque payable either on order or to
bearer.
An instrument may be negotiable either by
1. Statute : Promissory Notes , bills of exchange
and cheques are negotiable instruments under
Negotiable Instruments Act 1881 .
2. By Usage : Bank Notes , Bank Drafts , scripts,
treasury Bills etc

Transfer by Negotiation
Negotiation is a transfer of an instrument
from one person to another in such a
manner as to express title & to represent
the transferee the holder thereof.
Passing of possession
With intention to pass title
Must be transferred in such a manner that
the transferee becomes holder thereof.

Characteristics

It is freely transferable
Better title
Right to sue
A negotiable instrument can be transferred any
number of times till its maturity
A negotiable instrument is subject to certain
presumptions

Presumptions
1. Consideration : Every negotiable instrument is
deemed to have been drawn and accepted ,
endorsed, negotiated, or transferred for
consideration
2. Date : Every negotiable instrument must bear
the date on which it is made or drawn
3. Acceptance : Every Bill of exchange was
accepted within a reasonable time after the date
mentioned therein and before the date of its
maturity
4. Transfer : Every transfer should be made before
the expiry

Meaning of Endorsement
When a maker or holder writes the persons name
on the face or back of the instrument & puts his
signatures thereto for the purpose of negotiation,
it is called endorsement.
Person who signs endorser
To whom it is endorsed endorsee.
A legal term that refers to the signing of a
documentwhich allows for the legaltransfer of a
negotiablefrom one party to another.
When an employer signs a check, they are
endorsing the transfer of money from the
business accounts to the account of the
employee.

Promissory Notes
Section 4 defines it as, A promissory note is an
instrument in writing containing an unconditional
undertaking, signed by the maker, to pay a
certain sum of money only to or to the order of a
certain person or to the bearer of the instrument.
The person who makes the promissory note is
called the maker.
The person to whom payment is to be made is
called the payee. e.g.
I promise to pay B or order rs. 500
I promise to pay B Rs.500 on D death, provided D
leaves me enough to pay that sum

Bill of Exchange
Section 5, is defined as A bill of exchange is an instrument
in writing containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of
money only to or to the order of a certain person or to the
bearer of the instrument.
Parties to bill of exchange :
Drawer The person who makes/orders to pay bill of
exchange.
Drawee The person who is directed to pay on bill. On
acceptance he becomes acceptor.
Payee The person to whom the payment is to be made.
Drawer & Payee can be the same person.
X sells goods worth Rs. 2000 to Y & allow him 3 months time
to pay the price. X then draws a bill on Y Three months
after date, pay to my order the sum of Rs. 2000 for value
received. X is drawer . Y is Drawee.

Cheques
Section 6, defines it as A cheque is a bill of
exchange drawn on a specified banker & not
expressed to be payable otherwise than on
demand.
It is always drawn on a bank
It is payable to bearer on demand
Parties To Cheque:
1. Drawer who makes the cheque
2. Payee to whom payment is to be made
3. Drawee Bank .

Meaning of Crossing of Cheque

Crossing of a cheque is a unique feature associated
with a cheque affecting to a certain level the
responsibility of the paying Banker and also its
negotiable Character.
Crossing of a Cheque is a direction to a particular
Banker by the Drawer that Payment should not be
made across the Counter. The payment on the
crossed Cheque can be collected only through a
Banker.
Crossing of the Cheque is affected by drawing two
parallel Transverse lines .
The Cheque that is not crossed is an open Cheque.

Various kinds of Crossing

1. General Crossing:- which bears across its face
the words & co. or the words not negotiable.
For general crossing two transverse lines on the
face of cheque are essential. The paying banker
shall pay only to a banker. There are two sloping
parallel lines, marked across its face
. The cheque bears an short form "& Co."between
the two parallel lines
. The cheque bears the words "A/c. Payee"
between the two parallel lines.
. The cheque bears the words "Not Negotiable"
between the two parallel lines.

Specimen of General Crossing

2. Special or Restrictive Crossing :- When a particular

bank's name is written in between the two parallel lines the
cheque is said to be specially crossed. Where a cheque
bears across its face an addition the name of banker either
with or without the words not negotiable. It contains:

The name of the banker across the face of cheque.

With the words not negotiable

In addition to the word bank, the words "A/c. Payee Only",
"Not Negotiable" may also be written. The payment of such
cheque is not made unless the bank named in crossing is
presenting the cheque. The effect of special crossing is that
the bank makes payment only to the banker whose name is
written in the crossing. Specially crossed cheques are more
safe than a generally crossed cheques.

Specimen of Special or
Restrictive Crossing

Right and Obligation of a

Banker

Right of a Banker
Following are the major rights that a banker can
exercise on his customer.
Right of Lien
Right of set-off
Automatic right of set off
Right of Appropriation
Right to charge interest
Right to charge service charges

Right of Lien
The right of a creditor (Bank) to retain goods
and securities owned by the debtor bailed (as
security) to the bank until the loan due from the
debtor is repaid is called the right of lien.
The creditor (bank) has the right to maintain
the security of the debtor but not to sell it.
Types of Lien
Particular Lien
General Lien

Particular Lien
Particular lien is one, in that the craftsman can
retain those goods on which he has spent time,
effort and money until he is paid. In Particular lien
the creditor doesnt have the right to retain all the
properties of the debtor.
Eg: Ambassador and fiat car example
General Lien
General lien gives the banker the right to retain
goods and securities delegated to him in his
capacity as a banker, in the absence of a contract
contradictory to the right of lien. It extends to all
goods/properties placed with him as a banker by
his customer which are not particularly identified
for another purpose.

Cases in which lien cannot exercise :

If the goods and securities have been entrusted
to the banker as a trustee or an agent
If a contract exists between the banker and the
customer that is contradictory with the bankers
right of general lien
The banker can exercise the right of lien only on
goods standing in the name of the borrower and
not jointly with others.
Right of lien is not applicable on documents
deposited for a special purpose or with specific
instruction that the earnings are to be utilized
for a specific purpose.

Right of Set Of
The banker has the right to set off the accounts
of its customer. This enables a debtor (Bank) to
set off a debt owed to him by a creditor
(customer) before the latter recovers a debt
due to him from the debtor.
funds should belong to the customer.
It can be exercised only after a notice is served
on the customer informing the customer that
the banker is going to exercise the right of setoff.
To be on the safe side bankers must take a
letter of set-off from the customer authorizing
the bank to exercise the right of set-off without
giving him any notice.

Automatic Set Of
Sometimes the set off will happen
automatically, it depends on the situation. In
automatic set off there is no need of permission
from the customer.
The cases in which automatic set off can exercise
are as follows :
In case of the death of the customer.
When the customer becomes insolvent.
If a Garnishee(court) order is issued on the
customers account by court.
When a bank receives the notice of second
mortgage on the securities already charged to
the bank.

Right of Appropriation
In the normal course of business, a banker
accepts payments from customers. If the
customers have more than one account or
he/she has taken more than one loan, the
customer has the right to direct his banker
against which debt the payment should be
appropriated/settled. If the customer does not
direct the banker and there is more than one
debt outstanding in his/her name, the bank can
exercise its right of appropriation and apply it in
payment of any debt. The banker can apply it
against time barred debts also. Once an
appropriation has been made it cannot be
reversed.

Right to charge interest

Right to charge service charges
Banks charge customers a particular amount if
their balance is below a predetermined amount,
for the usage of ATMs and withdrawals.
Banks are free to charge these but the Reserve
Bank of India expects banks to advise their
customers of these charges at the time of
opening an account and advise them when
changes are being made.

Obligation of the Banker

Banks have an obligation to honour the
cheques drawn on it if the customer has
sufficient funds in his account. It is also obliged
to honor cheques up to the overdraft limit of a
customer.
Banker is bound to act as per the directions
given by the customer. If directions are not
given the banker should act according to how
he is expected to act.
Banks are obliged to maintain secrecy of their
client accounts. There are times when
information may be revealed.
The conditions under which a banker is justified in
making disclosures

The conditions under which a banker is justified in

making disclosures
Under law
Under express or implied consent of the
customer
under the practices/usages in the banking
system
Disclosure in the Banks interest
Disclosure in public/national interest

Financial Statement of Banks in India

Bank in India have to prepare their financial
statements in accordance with the third
schedule of section 29 of the Banking
regulation Act
Schedule
A typicalLiability
balance sheet has 12
schedules,
with
Schedule
Asset
1 schedule
Capital
Cash and
13-16 allocated to06the income
balance with RBI
2 statement
Reserve & surplus
07
Balance with banks
& money with call
3 Deposits
4 Borrowings
5 Other Liability & provisions 10
12 Contigent Liability
Income Statement
Schedule
Income
13 Interest Earned
expended
14 Other Income
expenses

08
09

Investments
Advances
Fixed Assets
11
Other Assets
Schedule
15
16

Expenses
Interest
Operating

Capital
Bank has to show the Authorized, Subscribed and Paid
up capital
Reserves and Surplus
1) Statutory reserve
- Not less than 20% of the previous year profits
2) Capital reserve
- excess depreciation on investments or profit on sale
of investment or assets are carried to the capital
reserve
3) Share premium
- this include any premium on the issue of share capital
of the bank
4) Revenue and other reserve
- This will comprise all other reserve not included above
5) Balance in profit and loss account

Deposits
1) Demand deposits
2) Saving Deposits
3) Term Deposits
Borrowings
)In bank balance sheer, borrowings will show under two category
Borrowings in India
Borrowing outside India

Other Liabilities and Provisions

)Bills payable
)Inter office adjustments
)Interest accrued
)Others Provisions made for IT, Bad debts,
depreciation in securities, unclaimed dividend,
proposed dividend, provisions made for specific
purpose

Bank Asset
1) Cash and balance with RBI
2) Balance with banks and money at call and short
notice
3) Investments
4) Advances
5) Fixed Assets
6) Other Assets
Cash and balance with RBI
CRR
Cash in hand and cash in vaults
Balance with banks and money at call and
short notice
All lending to inter bank money markets
Deposits in other Indian banks and foreign banks

Investment
To minimize the discriminate investment by the
banks, RBI has drawn up a set of guidelines
under which the investment will be slotted
Government Securities
Approved Securities
Shares
Debentures and bonds
Subsidiaries and joint venture
Other investment like foreign investment

All investment should be categorized as

permanent and current investment and the
same should be periodically marked to market

Loans and Advances

They are categorized under
1) By nature of credit facility
- Bills purchased and discounted
- Cash credit, overdraft, loan payable on demand
- Term loans
2) By security arrangements
- Secured by tangible asset
- Covered by Bank/government guarantee
- Unsecured advance
3) By sector
- Priority sector
- Public sector advances
- Banks
- Others

Fixed Asset
1) Premises (including land)
2) Other fixed asset(including furniture and
fixture)
3) Asset on lease
Other Asset
1) Interest accrued
2) Inter office adjustments
3) Advanced Tax paid/ TDS
4) Stationery and stamps
5) Non banking asset acquired in satisfaction of
claims
6) Others

Contingent liability
1) Claims against the bank not acknowledged as
debt
2) Liability for partly paid investment
3) Liability on account of outstanding forward
exchange contract
4) Guarantees given on behalf of outside
constituents
5) Currency swaps
6) Interest rate swaps, currency options and
interest rate futures
7) Other items for which the bank in contingently
liable

Income statement of Bank in India

Income
1) Interest Earned
> Interest/ discounts on advances/bills
> Income from investment
> Interest with balance with RBI
> Others
2) Other Income
> Commission, exchange and brokerage
> Profit/loss on investment
> Profit/loss on revaluation of investment
> Profit/loss on sale of building and other asset
> Profit on exchange transaction
> Income earned by the way of dividend
> Miscellaneous income

Income statement of Bank in India

Expenses
1) Interest Expensed
> Interest on deposits
> Interest on RBI/Interbank Borrowings
> Other interest
Operating Expenses
> Salaries, rent, taxes and EB
> Printing and Stationery, Advertisement and publicity
> depreciation on bank property
> director fees, allowance and expenses
> auditor fees and expenses
> Law charges
> Postage, Telephone, Repairs & Maintainance
> Insurance & Other expenses
Provisions and Contingencies
- provisions made for loan losses, diminution in value of
investment.