Banking Awareness: Banking System of India for Bank Tests

Banking Awareness Banking System of India

Meaning of Banking:

A Bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides Fundamental Banking Services such as accepting deposits and providing loans.

The following functions of the banks are as follows:

• To provide the security to the savings of customers
• To control the supply of money and credit
• To encourage public confidence in the working of the financial system, increase savings speedily and efficiently.
• To avoid focus of financial powers in the hands of a few individual and institutions.
• To set equal norms and conditions(i.e., rate interest, period of lending etc) to all types of customers.

Indian Companies (Amendment) Act, 1936:

The Indian Companies Act that was passed in 1913 introduced the institution of private companies in corporate sector in India. But the Act of 1913 did not provide the peculiar environment for Indian commerce, hence to remove these deficiencies, the Indian Companies (Amendment) Act was passed in 1936.

The Amendment Act, 1936 introduced various provisions relating to functioning of directors, guaranteeing payment of provident fund to employees etc. Further in October 1942, Companies Act was amended so that any company which uses world "Bank", "Banking" or "Banker" shall be deemed to be a banking company.

Banking Regulation Act, 1949:

The Banking Regulation Act, enacted in 1949, has been a milestone in the history of banking in India. This act provides a framework for regulation and supervision of commercial banking activity.

Reserve Bank of India:

Bank of India is the Central Bank of our country. On the recommendation Hilton Young Commission, it was established on 1st April, 1935 and in 1949 it was nationalised.

In terms of the preamble to the Reserve Bank of India Act 1934, " The main functions of the bank are to regulate the issuing of bank notes and keeping the reserve with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.