Synopsis On A Comparative Study On Impact Ofapex Bank Decission

SYNOPSIS ON A COMPARATIVE STUDY ON IMPACT OFAPEX BANK DECISSION ON CRR POLICY WITH REFERECE TO LOCAL AND NATION WIDE BANKS IN ELURU.

SUBMITTED TO Ms. S.A.P. SIREESHA (FACULTY GUIDE)

SUBMITTED BY P. BHASKAR DEEKSHIT 7NBEL018

NEED FOR THE STUDY INTRODUCTION OF CASH RESERVE RATIO: A cash reserve ratio (or CRR) is the percentage of bank reserves to deposits and notes. The cash reserve ratio is also known as the cash asset ratio or liquidity ratio. India's central bank ordered commercial banks to hold a larger share of deposits in cash, and raised a key short-term lending rate in a bid to curb high inflation that has stoked fears of overheating. The reserve ratio is sometimes used as a tool in monetary policy, influencing the country's economy, borrowing, and interest rates. However, Central banks rarely alter the reserve requirements due to the fact that it would cause immediate liquidity problems for banks with low excess reserves. Instead, open market operations are used. As of 2006 the required reserve ratio in the United States was 10% on transaction deposits (component of money supply "M1"), and zero on time deposits and all other deposits. An institution that holds reserves in excess of the required amount is said to hold excess reserves. The Reserve Bank of India stipulates the cash reserve ratio — the proportion of deposits that commercial banks must hold in cash to control the availability of money in the market and there by control the inflation..

RBI AS CONTROLLER OF CREDIT: The Reserve Bank of India is the controller of credit i.e. it has the power to influence the volume of credit created by banks in India. It can do so through changing the Bank rate or through open market operations. According to the Banking Regulation Act of 1949, the Reserve Bank of India can ask any particular bank or the whole banking system not to lend to particular groups or persons on the basis of certain types of securities. Since 1956, selective controls of credit are increasingly being used by the Reserve Bank. The Reserve Bank of India is armed with many more powers to control the Indian money market. Every bank has to get a license from the Reserve Bank of India to do banking business within India, the license can be cancelled by the Reserve Bank of certain stipulated conditions are not fulfilled. Every bank will have to get the permission of the Reserve Bank before it can open a new branch. Each scheduled bank must send a weekly return to the Reserve Bank showing, in detail, its assets and liabilities. This power of the Bank to call for information is also intended to give it effective control of the credit system. The Reserve Bank has also the power to inspect the accounts of any commercial bank.

As supreme banking authority in the country, the Reserve Bank of India, therefore, has the following powers: (a) It holds the cash reserves of all the scheduled banks. (b) It controls the credit operations of banks through quantitative and qualitative controls. (c) It controls the banking system through the system of licensing, inspection and calling for information. (d) It acts as the lender of the last resort by providing rediscount facilities to scheduled banks.

OBJECTIVES

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To study the credit control policy of RBI

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To study the lending patterns of banks in present scenario.

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To study the investment patterns of customers in present scenario.

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To know the influence of RBI’s CRR policy on various banks in Eluru.

LIMITATIONS •

CRR policy may change during the study.

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Lending patterns depends on the concern branch officials.

METHODOLOGY Primary data collected through questionnaire from various branch officials of nation and local banks in Eluru. Secondary data sourced by internet and various books.

INTRODUCTION TO THE BANKING INDUSTRY: The RBI also manipulates the repurchase rate, the rate at which it lends to commercial banks in the short term. India's brisk economic expansion — the economy is growing close to 9 percent for the second straight year — has boosted middle-class incomes, but it is also driving up prices with too much money chasing fewer goods. The spike in inflation has triggered concerns that the economy might be overheating and could be headed for a hard landing unless inflation is contained. "In the light of the current macroeconomic, monetary and anticipated liquidity conditions, and with a view to containing inflation expectations, it is critical to take demonstrable and determined action on an urgent basis” The banking section will navigate through all the aspects of the Banking System in India. It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few years. The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc. has been well defined under three separate heads with one page dedicated to each bank. to get better under stand on banking industry we have to analyze the following • • •

History of Banking in India Nationalizations of Banks in India Scheduled Commercial Banks in India

The first deals with the history part since the dawn of banking system in India. Government took major step in the 1969 to put the banking sector into systems and it nationalized 14 private banks in the mentioned year. This has been elaborated in Nationalization Banks in India. The last but not the least explains about the scheduled and unscheduled banks in India. Section 42 (6) (a) of RBI Act 1934 lays down the condition of scheduled commercial banks. The description along with a list of scheduled commercial banks is given on this page. BANKS IN INDIA: In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players. All these details and many more is discussed over here. The banks and its relation with the customers, their mode of operation, the names of banks under different groups and other such useful information’s are talked about. One more section has been taken note of is the upcoming foreign banks in India. The RBI has shown certain interest to involve more of foreign banks than the existing one recently. This step has paved a way for few more foreign banks to start business in India.