credit appraisal
Chapter-1 Introduction
Definition of banks
In India, the definition of the business of banking has been given in the Banking Regulation Act, (BR Act), 1949. According to Section 5(c) of the BR Act, 'a banking company is a company which transacts the business of banking in India.' Further, Section 5(b) of the BR Act defines banking as, 'accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal, by cheque, draft, and order or otherwise.' This definition points to the three primary activities of a commercial bank which distinguish it from the other financial institutions. These are: (i) maintaining deposit accounts including current accounts, (ii) issue and pay cheques, and (iii) collect cheques for the bank's customers.
1.1 Banking Industry Overview
Today, banks play a very important role in the economic growth of the country. The health of the economy is closely related to the soundness of the banking system. The activities of the banks lead to a stronger economic growth.
Bank is the main confluence that maintains and controls the “flow of money” to make the lending mechanism possible. Government uses it to control the flow of money by managing Cash Reserve Ratio (CRR) and thereby influencing the inflation level. The functions of banks include accepting deposits from the public and private institution and then to direct them as loans and advances to various companies for growth and development of industries. The banks take the deposits at a lower rate of interest and give loans at a higher rate, thus constituting the only source of income for banks.
Banking in India has undergone startling changes in terms of growth and structure. Organized banking was active in India since the establishment of The General Bank of India in 1786. The Reserve Bank of India (RBI) was established as the central bank in1955. The Imperial Bank of India, the largest bank at that time,
Definition of banks
In India, the definition of the business of banking has been given in the Banking Regulation Act, (BR Act), 1949. According to Section 5(c) of the BR Act, 'a banking company is a company which transacts the business of banking in India.' Further, Section 5(b) of the BR Act defines banking as, 'accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal, by cheque, draft, and order or otherwise.' This definition points to the three primary activities of a commercial bank which distinguish it from the other financial institutions. These are: (i) maintaining deposit accounts including current accounts, (ii) issue and pay cheques, and (iii) collect cheques for the bank's customers.
1.1 Banking Industry Overview
Today, banks play a very important role in the economic growth of the country. The health of the economy is closely related to the soundness of the banking system. The activities of the banks lead to a stronger economic growth.
Bank is the main confluence that maintains and controls the “flow of money” to make the lending mechanism possible. Government uses it to control the flow of money by managing Cash Reserve Ratio (CRR) and thereby influencing the inflation level. The functions of banks include accepting deposits from the public and private institution and then to direct them as loans and advances to various companies for growth and development of industries. The banks take the deposits at a lower rate of interest and give loans at a higher rate, thus constituting the only source of income for banks.
Banking in India has undergone startling changes in terms of growth and structure. Organized banking was active in India since the establishment of The General Bank of India in 1786. The Reserve Bank of India (RBI) was established as the central bank in1955. The Imperial Bank of India, the largest bank at that time,