Definition of Banker

Acc to banking regulation act of 1949, sec 5(b), Banking is defined as accepting for the purpose of Lending of Investment of deposits of money received from the public and repayable on demand and withdrawable by cheque, draft, order or otherwise.Definition of Banker

Functions of a BankPrimary Function: Accepting DepositsSaving depositsCurrent depositsFixed depositsRecurring deposistsLending Loans and AdvancesOverdraftCash Credit

Functions of a BankSecondary Functions.Agency FunctionsTransfer of fundsCollection of cheques.Periodic payments.

General Utility Services

Issue of Drafts and Letter of CreditSafety Locker FacilityUnderwriting of Shares and debenturesDealing in Foreign exchange.Social Responsibility programmes such a public welfare campaigns, Adult Literacy programmes.

1. SCHEDULED BANKS The Scheduled Banks are defined as banks included in the second schedule of Reserve Bank of India (RBI) act, 1934 that consists on criteria laid down vide section 42 (6) (a) of the act[2] Paid-up capital[3] and reserves[4] of at least Rs 5 lakh (Rs 0.5 million)Affairs not conducted in a prejudicial manner to the interests of its depositorsBanks that comply to the requirements stated in the definition are scheduled banks and be further differentiated into commercial and cooperative banks whose functions and customers vary on the basis of the financial needs of the country

. NON-SCHEDULED BANKS

Non-Scheduled banks are banks not included in the second schedule of RBI act and have paid-up capital and reserves less than Rs 5 lakh. These banks are the opposite of Scheduled Banks and act like private limited companies with limited benefits (or protection) from RBI. Non-scheduled banks comprise Local Area Banks (LABs) that provide credit to individuals or businesses locally. For example, Coastal Area Bank or Coastal bank is a private bank established under the Companies Act and approved by RBI as a LAB, headquartered in Vijaywada, Andhra Pradesh. Coastal Bank claims to be be profitable since its inception in 1999 and all the deposits upto Rs 1 lakh (Rs 0.1 million) are insured by Deposit Insurance and Credit Guarantee Corporation (DICGC) an extended arm of RBI. The financial services offered by Coastal bank include Deposit accounts such as Savings Account, Current Account, Recurring Deposit, Fixed Deposits,

DEMAT or DEMATERIALISED ACCOUNTis an account an individual or an Indian citizen is offered (as a financial service) by a bank to hold or trade shares or securities electronically (via Internet banking) instead of taking physical possession of shares certificates. DEMAT account is offered by Depository Participants (DPs) which are financial intermediaries (select banks or brokering houses) that are registered with SEBI that facilitate trade of shares and securities for every individuals. Some of the characteristics of a DEMAT account are Account opening fee provided by individuals to DPs, internet password and transaction password provided by DPs to individuals, Annual maintenance fee paid by individuals to DPs, Custodian fee paid by individuals to DPs, Transaction fee for trading shares and securities. Examples of DPs are ICICI bank, Axis bank HDFC bank, Karvy Consultants (brokering house),

Measures of Credit ControlBank Rate Policy. whenever a bank has a shortage of funds, they can typically borrow from the central bank based on the monetary policy of the country. The borrowing is commonly done via repos, where the repo rate is the rate at which the central bank lends short-term money to the banks against securities.

Cash Reserve RatioCRR means. Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks dont hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivlanet to holding cash with RBI. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, When a banks deposits increase by Rs100, and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6 with RBI and Bank will be able to use only Rs 94 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment.

Statutory Liquidity RatioThis term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved securities to liabilities (deposits) It regulates the credit growth in India. RBI is empowered to increase this ratio up to 40%.

Repo RateRepo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against securities. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate

Reverse Repo rateItis the rate at which banks park their short-term excess liquidity with the RBI. The banks use this tool when they feel that they are stuck with excess funds and are not able to invest anywhere for reasonable returns. An increase in the reverse repo rate means that the RBI is ready to borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep more and more surplus funds with RBI.

Direct TaxesDirect Taxes are the taxes that are levied on the income of individuals or organisations. Income tax, corporate tax, inheritance tax are some instances of direct taxation. Income tax is the tax levied on individual income from various sources like salaries, investments, interest etc. Corporate tax is the tax paid by companies or firms on the incomes they earn.

Indirect Taxes Indirect taxes are those paid by consumers when they buy goods and services. These include excise and customs duties. Customs duty is the charge levied when goods are imported into the country, and is paid by the importer or exporter. Excise duty is a levy paid by the manufacturer on items manufactured within the country. Usually, these charges are passed on to the consumer.

Sales taxTax imposed as a percentage of the price of goods (and sometimes services). The tax is generally paid by the buyer but the seller is responsible for collecting and remitting the tax to the tax authorities.

Value Added Tax

VAT is the indirect tax on the consumption of the goods, paid by its original producers upon the change in goods or upon the transfer of the goods to its ultimate consumers. It is based on the value of the goods, added by the transferor. It is the tax in relation to the difference of the value added by the transferor and not just a profit.

Method of Collection of VAT

There are two methods for collection of VAT in India. In the first method, tax is charged separately on the basis of the tax which is paid on purchase, and the tax that is payable on the sale (shown separately in the invoice). Therefore, the difference between the tax paid on purchase and the tax payable on sale as per the invoice is the VAT.In the second method, tax is collected and charged on the aggregate value of the tax payable on sale and purchase, by applying the rate of tax applicable to the goods. Therefore, the difference between the sale price and purchase price would be VAT. It means VAT is the tax which consumers ultimately face, which is collected at each stage.

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