Banking is defined in Sec.5(b) of Banking Regulations Act (BRA) 1949 as “Accepting for the purpose of lending or investment deposits of money from public repayable on demand or otherwise & withdrawable by cheque, draft, order or otherwise.
Banking Company (defined in Sec.5(c ) of BRA 1949) means any company which transacts the business of banking in India.
Banker (defined in Sec.3 of N.I. Act 1881) includes any person acting as a banker and any post office saving bank.
Deposits:- Repayable on demand:- Savings Bank Deposits , Current Deposits. (CASA) , Flexi Deposit. Cheque book provided.
Repayable otherwise than on demand:- Recurring Deposits, Fixed Deposit, Reinvestment Plan, Regular Income cum Recurring Deposit (RIRD) etc.Lending:-
(A) Fund Based Lending:-
1) Loans – Demand (Repayable within 35 months) & Term Loans
2) Overdraft Facility
3) Cash Credit Facility against pledge or hypothecation of goods, against hypothecation of book-debts or against assignment of supply Bills (Bills drawn for goods and services supplied to Govt. or Semi-Govt. departments
4) Bills Purchased / Discounted.
(B) Non Fund Based Facilities:-
1) Letters of Credit (L/Cs)
3) Co-acceptance Limits
SLR Investments (Presently 24% of Demand & Time Liabilities)
Investments in approved Govt. & Semi-Govt. Securities classified as
i. Held to Maturity (HTM)
ii. Held For Trading (HFT)
iii. Available For Sale (AFS)
Banking Business:- (Sec.6 of BRA 1949):- Activities in addition to Banking Business
1. Primary Functions:-
a) Agency Functions:-
i. Collection of Cheques & Bills
ii. Sale and purchase of securities. ( Bank-Agent, Customer – Principal)
b) Remittance of Funds:-
Through Demand Draft (DD), Mail Transfer (MT), Telegraphic Transfer (TT), Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT)
c) Trustees & Executors
d) Execution of Standing orders / Instructions,