ABSTRACT

Global financial institutions play a crucial role in routing funds across countries and, as a result, in passing monetary policy from one country to the next. In this research, we investigate whether worldwide transmission is influenced by the business structures of financial organisations. We use secret supervisory data from the Netherlands, Spain, and the United States to see if the transmission works differently through banks, insurance companies, and pension funds. The transmission of monetary policy differs significantly between the three types of institutions, the three banking systems, and the banks within each banking system. Banks transmit home country monetary policy abroad, with the direction and level of transmission dictated by their business strategies and balance sheet characteristics.

INTRODUCTION

People in today’s society may put their hard-earned money in banks and financial institutions without having to worry about their assets being safe. We are all reaping the full benefits of the different programmes offered by various banking institutions throughout the country, which were unheard of by our predecessors. In the earlier years, there was no regular system which permitted people to safeguard the money and mostly used to treasure the money in their own houses.

During the British colonial period, India’s banking system was built. The British East India Company is credited with founding three Indian banks: the Bank of Bengal in 1809, the Bank of Bombay in 1840, and the Bank of Madras in 1843. All three banks were merged to form the Imperial Bank, which was later acquired by SBI in 1955.

A bank is a financial entity that is authorised to accept deposits and make loans to people in need. Other services provided by banks include currency exchange, wealth management, financial services, safe deposit boxes, and so forth. Apart from taking deposits and lending money to businesses and individuals, a bank’s major role is to disburse payments and keep money safe and investing the funds in securities.

BANKING INSTITUTIONS

Financial institutions, also referred to as banking institutions, are businesses that act as financial market middlemen. In general, there are three different sorts of financial institutions:

• The oldest financial institution in the world was founded at Banca Monte dei Paschi di Siena, founded in 1472.

Depository institutions – Banks, building societies, credit unions, trust companies, and mortgage lending businesses are examples of deposit-taking institutions that take and manage deposits as well as issue loans.Contractual institutions – insurance companies and pension funds.

1. Investment institutions – investment banks, underwriters, brokerage firms.

Financial institutions can be distinguished broadly into two categories according to ownership structure:

1. Commercial Banks
2. Cooperative Banks

Some analysts believe that financial institutions are becoming more homogenized, with a tendency to invest in comparable regions and pursue similar business methods. Small-scale producers may be underserved as a result of this, with fewer banks targeting certain target groups.

DIFFERENT TYPES OF BANKS

Scheduled and non-scheduled banks are the two types of banks. Commercial banks and cooperative banks are the two types of scheduled banks. Public sector banks, private sector banks, foreign banks, and Regional Rural Banks are the several types of commercial banks (RRB). Cooperative banks, on the other hand, are divided into two categories: urban and rural. Apart from these, a fairly new addition to the structure is payments bank.

1.     SCHEDULED BANKS

The Reserve Bank of India Act, 1934, covers schedule banks in the 2nd Schedule. A bank that has a paid-up capital of Rs. 5 lakh or more is considered a schedule bank. These banks are eligible to borrow at bank rates from the RBI.

2.     COMMERCIAL BANKS

Commercial Banks are regulated under the Banking Regulation Act, 1949 and their business model is designed to make profit. Their primary function is to accept deposits and grant loans to the general public, corporate and government. Commercial banks can be divided into-

1. Public Sector Banks
2. Private Sector Banks
3. Foreign Banks
4. Regional Rural Banks

3.     PUBLIC SECTOR BANKS

These are the nationalised banks, which account for more than 75% of the country’s overall banking business. The government owns the majority of these banks’ shares.

SBI is India’s largest public sector bank by volume, and after merging with its five associate banks (as of April 1, 2019), it now ranks among the top 50 banks in the world.

There are a total of 22 nationalized banks in the country namely below:

1. State Bank of India
2. Bank of India
3. Allahabad Bank
4. Bank of Maharashtra
5. Canara Bank
6. Indian Overseas Bank
7. IDBI Bank
8. Oriental Bank of Commerce
9. Central Bank of India
10. Corporation Bank
11. Andhra Bank
12. UCO Bank
13. Bank of Baroda
14. Union Bank of India
15. Union Bank of India
16. United Bank of India
17. Vijaya Bank
18. Dena Bank
19. Indian Bank
20. Punjab & Sind Bank
21. Punjab National Bank
22. Syndicate Bank

4.     PRIVATE SECTOR BANKS

These include banks in which private owners own a majority of the stock or equity. All of the RBI’s banking laws and regulations will be applied to private sector banks as well. The following is a list of India’s private-sector banks:

1. HDFC Bank
2. ICICI Bank
3. Axis Bank
4. YES Bank
5. IndusInd Bank
6. Kotak Mahindra
7. Bankkotak logo
8. DCB Bank
9. Bandhan Bank
10. IDFC Bank
11. City Union Bank
12. Tamilnad Mercantile Bank
13. Nainital Bank
14. Catholic Syrian Bank
15. Federal Bank
16. Jammu and Kashmir Bank
17. Karnataka Bank
18. Dhanlaxmi Bank
19. South Indian Bank
20. Lakshmi Vilas Bank
21. RBL Bank
22. Karur Vysya Bank

5.     FOREIGN BANK

A foreign bank is one that has its headquarters outside of India yet operates as a private business in India. These banks are required to respect the regulations of both their home country and the country in which they operate. Some of India’s leading foreign banks include Citibank, Standard Chartered Bank, and HSBC.

6.     REGIONAL RURAL BANK

These are also scheduled commercial banks, but their primary goal is to provide loans to the poorest members of society, such as agricultural labourers, marginal farmers, and small businesses. They usually function at a regional level in several Indian states and may also have branches in specific urban areas. RRBs also perform the following critical functions:

• Providing banking and financial services to rural and semi-urban areas
• Government operations like disbursement of wages of MGNREGA workers, distribution of pensions, etc.
• Para-Banking facilities like debit cards, credit cards and locker facilities

7.     SMALL FINANCE BANK

This is a specialised banking segment in the country, with the goal of bringing financial inclusion to people who aren’t covered by regular banks. Micro industries, small and marginal farmers, unorganised sector entities, and small business units are among the key clientele of small finance institutions. These are licensed under Section 22 of the Banking Regulation Act, 1949 and are governed by the provisions of RBI Act, 1934 and FEMA.

Some popular examples of small finance banks are as follows-

1. AU Small Finance Bank Ltd.                            
2. Capital Small Finance Bank Ltd.
3. Fincare Small Finance Bank Ltd.
4. Equitas Small Finance Bank Ltd.
5. ESAF Small Finance Bank Ltd.
6. Suryoday Small Finance Bank Ltd.
7. Ujjivan Small Finance Bank Ltd.
8. Utkarsh Small Finance Bank Ltd.
9. North East Small Finance Bank Ltd.
10. Jana Small Finance Bank Ltd.

8.     CO-OPERATIVE BANKS

Cooperative banks are governed by an elected managing committee and are governed by the Cooperative Societies Act of 1912. They primarily serve entrepreneurs, small firms, industries, and self-employment in metropolitan areas and operate on a no-profit, no-loss premise. They mostly fund agriculture-related operations in rural areas, such as farming, cattle, and hatcheries.

9.  PAYMENTS BANK

 In the Indian banking business, this is a relatively new bank model. It was created by the RBI and is permitted to receive restricted deposits. The maximum amount per customer is now Rs. 1 lakh. They also provide ATM cards, debit cards, online banking, and mobile banking services.

CONCLUSION

Thus banks are classified on the basis of their functions in which they are specialized. But it must be noted that Commercial Banks are now providing services of agricultural banks, they are providing loans for industries as industrial banks, and they are even expanding their services into foreign exchange replacing the foreign exchange banks. Therefore the commercial banks are raising their capabilities for attracting a large number of customers.

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