Bhagwan Mahavir College of Commrace and

Management Studies

Course - TYBBA - 6
Subject – Financial Institutions and Markets
Unit- 2 Banking and Non banking financial Institution
Prepared by- Ms. Twinkle Mehta / Mr. Divyakant Dulera

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Table of Contents
THE BANKING AND NON BANKING FINANCIAL INSTITUTIONS ......................................... 3
1. Reserve Bank of India (RBI) .................................................................................................. 3
2. Banking Structure in India ...................................................................................................... 3
3. Scheduled Banks .................................................................................................................... 4
2.1. Commercial Banks: ......................................................................................................... 5
2.2. Co-operative Banks ....................................................................................................... 14
4. Non- scheduled Banks: ......................................................................................................... 21
5. Developmental/Specialized Banks ........................................................................................ 21
6. Non-Banking Financial Institutions/Companies (NBFCs) ..................................................... 22
6.1. Functions/Role of NBFCs ................................................................................................. 23
7. Insurance Companies – Role of IRDI ................................................................................... 24
8. Bank Capital and banking Innovation ................................................................................... 28
8.1. Innovative Banking ....................................................................................................... 28
9. Mutual fund (Growth of Indian Mutual fund and its regulation) - Role of AMFI .................. 30
9.1. History of Mutual Funds in India ................................................................................... 31
9.2. Growth of Indian Mutual fund ....................................................................................... 33
9.3. Introduction of AMFI .................................................................................................... 34
9.4. Regulation of Mutual Funds in India ............................................................................. 34
9.5. Legal structure of Mutual Funds .................................................................................... 35
9.6. Objectives of AMFI ...................................................................................................... 35
Sample Question ............................................................................................................................. 36

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THE BANKING AND NON BANKING FINANCIAL
INSTITUTIONS

1. Reserve Bank of India (RBI)

The Reserve Bank of India (RBI) is India‟s central banking institution, which
controls the monetary policy of the Indian rupee. It commenced its operations on 1
April 1935 during the British Rule in accordance with the provisions of the Reserve
Bank of India Act, 1934 and in 1949 it was nationalized.

The Central Office of the Reserve Bank was initially established in Calcutta but
was permanently moved to Mumbai in 1937. The Central Office is where the
Governor sits and where policies are formulated. Sir CD Deshmukh was the first
Governor of RBI. The RBI hasfour Zonal offices at Chennai, Delhi, Kolkata,
Mumbai and 20 regional offices mostly locatedin the state capitals and 11 sub-
offices.

Reserve Bank of India Act, 1934 is the legislative act under which the Reserve
Bank of India was formed. This act along with the Companies Act, which was
amended in 1936, weremeant to provide a framework for the supervision of
banking firms in India.

The Preamble of the Reserve Bank of India describes the basic functions of the
Reserve Bankas: “to regulate the issue of Bank notes and keeping of reserves with a
view to securing monetary stability in India and generally to operate the currency
and credit system of the country to its advantage”.

RBI is managed by Central Board of Directors. It is the main committee of the

Central Bank. The Board consists of a Governor, and not more than four Deputy
Governors, four Directors to represent the four regional boards, two from the
Ministry of Finance and 10 other directors from various fields which accounts to 21
members in total.

2. Banking Structure in India

The current Banking Structure in India has evolved over several decades, is
complex, and hasbeen fulfilling the economy's credit and banking needs. In today's
Banking Structure in India, there are several layers to cater to the distinct and varied
needs of different customers and borrowers. The Banking Structure in India played
a critical role in mobilizing deposits and encouraging economic development. The
performance and strength of the banking structure improved noticeably after the
financial sector reforms (1991).

Reserve Bank of India (RBI) is Central Bank of India also known as Apex Bank of
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 India which was established on 1st Jan 1935. RBI is the supreme bank or we can
say the head of allbanks which is responsible for regulating and monitoring each
type of banks in India. The Reserve Bank is also responsible for implementing
monetary policy, issuing currency notes, formulating various guidelines to control
inflation, deflation etc. The following structure displays the entire banking system
in India.

Banking Structure in India

3. Scheduled Banks

Scheduled Banks are those banks which are listed in 2nd schedule of RBI Act 1934.
In other words, the banks which follow the guidelines of the 2nd schedule of RBI
Act 1934 fall under the category of Scheduled Banks. Scheduled banks can take
loans from RBI at Repo rate or bank rate. They must, however, meet certain
requirements, such as maintaining an average daily CRR (Cash Reserve Ratio)
balance with the central bank at the rates set by it. The RBI allows Scheduled Banks
to raise debts and loans at bank rates.

Some major criteria to be scheduled banks are as follows.

 Banks must deposit 500 crores to RBI as a paid-up capital.
 Banks must open 25% of its branches in rural areas.
 A total of Rs. 5 lakh in paid-up capital and reserves are needed
 At least 40% of loan must be distributed to priority sectors like SC/ST,
PH,Housing, Education etc.

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 The benefits enjoyed by scheduled banks are often denied to non-scheduled banks.
These banks have certain privileges and benefits, such as:
1) The ability to obtain a refinancing facility from the central bank.
2) Access to currency storage facilities.
3) Membership in the clearinghouse is automatic

The scheduled banks can be further classified as follows.

1. Commercial Banks
2. Co-operative Banks

2.1. Commercial Banks:

These banks are governed by the Indian Banking Regulation Act of 1949, and
according to it, banking is the accepting of money from the public for lending and
investment. The Commercial Banks are those financial institutions which accept
deposit and provide services like loans, credit, opening bank accounts, locker
facilities, foreign exchange and other digital services like mobile banking, Internet
Banking, NEFT, RTGS etc. These banks are basically profit-making and consumer-
oriented institutions. In other words, these banks deal with the financial requirements
of the general public.

The commercial banks are the financial institutions which are authorised to receive
deposits from public, industries and commerce as well as cater short, medium and
long term requirements of individuals, entrepreneurs and corporate in form of
different types of loans/ advances. In addition, commercial banks also provide

various other banking services like internet banking, debit card, credit card, money
transfer, foreign exchange, bill discounting, letter of credit etc.

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Functions Commercial Banks

(A) Primary Functions

 Accepting Deposits – Commercial banks accept deposits from their customers in

the form of saving, fixed, current and recurring deposits.
 Savings Deposits – Savings deposits allow a customer to credit funds towards
their accounts for up to a certain limit. These deposits are preferred by individuals
with a fixed income, utilized to create savings over time. Withdrawals can be made
either by signing a withdrawal form or by issuing a cheque or by using an ATM
card. Normally banks put some restriction on the number of withdrawal from this
account. Interest is allowed on the balance of deposit in the account. The rate of
interest on savings bank account varies from bank to bank and also changes from
time to time. A minimum balance has to be maintained in the account as prescribed
by the bank.

 Fixed Deposits – This type of deposit account allows the deposit to be made of an
amount for a specified period. This period of deposit may range from 15 days to
three years or more during which no withdrawal is allowed. However, on request,
the depositor can encash the amount before its maturity. In that case, banks give
lower interest than what was agreed upon. The interest on a fixed deposit account
can be withdrawn at certain intervals of time. At the end of the period, the deposit
may be withdrawn or renewed for a further period. Banks also grant a loan on the
security of the fixed deposit receipt.

 Current Deposits – Big businessmen, companies, and institutions such as schools,

colleges, and hospitals have to make payment through their bank accounts. Since
there are restrictions on the number of withdrawals from a savings bank account,
that type of account is not suitable for them. They need to have an account from
which withdrawal can be made any number of times. Banks open a current account
for them. Like a savings bank account, this account also requires a certain minimum
amount of deposit while opening the account. On this deposit, the bank does not
pay any interest on the balances. Rather the account holder pays a certain amount
each year as an operational charge.

These accounts also have what we call the overdraft facility. For the convenience of
the accountholders banks also allow withdrawal of amounts in excess of the balance
of the deposit. This facility is known as an overdraft facility
 Recurring Deposits- Recurring Deposit account or RD account is a form of
account wherein the account holder needs to deposit a fixed amount every month
until it reaches the fixed maturity date. Any individual or an Institution can open a
recurring deposit account either separately or jointly. Periodic or monthly
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 installments that needto be added can be as low as Rs.50/- or may vary from bank to
bank The interest rate varies depending upon the bank you choose to open an
account with Premature withdrawal of the amount is permitted, provided a sum of
amount is deducted as penalty.

 Providing Loans and advances – One of the main functions of commercial banks
is providing credit to organizations and individuals, and profit from the earned
interest. Usually, banks retain a small reserve for their expenses while offering the
remaining amount to customers as various types of short and long-term credits.

 Cash Credit – Commercial Banks and their Functions include extending advances
to individuals and organizations against bonds, inventories, and other types of
securities. This facility, commonly known as cash credit, provides a more
substantial sum when compared to other forms of credit.

 Short-Term Credits – Short-term loans are usually pledged without any security,
offering a smaller loan amount and repayment tenor. These are also referred to as
personal loans.

 Credit Creation – A unique function of commercial banks is credit creation.

Instead of offering liquid cash, banks create a line of credit and transfer the loan to a
business or commercial body all at once.

(B) Secondary Functions

The following can be considered as the secondary functions of commercial banks –

 Agency services: Commercial banks provide the facility of agency services to our
customersthese are follow:

 Collection & Payment of Cheques:

Commercial banks collect and make payment of cheques on the behalf of their customers.

 Collection of Interest and dividends:

Commercial Banks collect dividend and interest on shares on behalf of their
customers. For this purpose, the customer financially free informs the issuer of the
security to pay interest or dividend in his account of the bank.

 Purchase & Sale of Security:

If the customer directs his bank to purchase and sale securities on his behalf, the
bank will do this by charging a nominal commission.

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  Execution of Standing Instructions:
Bank also executes instructions of his customers by charging nominal charges. For
instance, if a person has to pay Rs. 600 to the insurance company and Rs. 200 as
rent every month thenBank will make monthly payments on the written order of the
customer.

 Trustee:
Bank also acts as a trustee on behalf of the customer. In this capacity, the bank takes
care of the affairs of its client.

 Transfer of Fund:
Bank also performs the function of transferring fund from one place to another by
charging nominal commission.
 Agent:
Banks also act as an agent or representative of customer at home and abroad. These
servicesusually include –

 Acting as an administrator, trustee, or executor of a customer-owned estate.

 Assisting customers with tax returns, tax refunds, and other similartasks.
 Serving as a platform to pay premiums, bills etc.
 Offering a platform for electronic transaction of funds, processing of
cheques, drafts, bills, etc.

General Utility Services: Other than the agency functions, the banks also
provideother facilities to the public. Some of these are mentioned below:

I. Providing locker Facilities – Commercial banks provide locker facilities to

customers who want to store valuables and jewellery safely. Locker facilities
eliminate the impending risk of theft or loss, which prevail when kept at home.
II. Dealing in Foreign Exchange – Commercial banks help provide foreign exchange
to individuals and organizations that export or import goods from overseas.
However, only certain banks which have the license to deal in foreign exchange are
eligible for such transactions.

III. Exchange of Securities – Another function of commercial banks is to trade in

bonds and securities. Customers can purchase or sell the units from the financial
institution itself, which offers more convenience than alternate approaches.
IV. Discounting Bills of Exchange – The main function of a commercial bank in today
date is to discount bills of businesses. Bill discounting is considered a profitable
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 investment for banks. Bills create a steady flow of funds, while not becoming a
risky venture during payment as it is considered as a negotiable instrument. These
also do not involve the financial institution in any litigation.

Classification of Commercial Banks

The Commercial Banks can be classified as below.

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 2.1.1. Public Sector Banks (PSBs)

Those banks in which more than 50% stake is held by Government of India is
defined as Public Sector Banks and the shares of these banks are listed on the stock
exchange too.

SBI was the first bank in India that was nationalised in 1955. After SBI, 14 banks
were nationalised in 1969 and the remaining 7 banks were nationalized in 1980.
These were the banks that were relatively bigger in size.

List of Public Sector Banks in India

 Bank of BarodaBank of India

 Bank of MaharashtraCanara Bank
 Central Bank of IndiaIndian Bank
 Indian Overseas BankPunjab & Sind Bank
 Punjab National Bank
 State Bank of India
 UCO Bank
 Union Bank of India

2.1.2. Private Sector Banks:

Private Sector banks are those banks where major stakes (51%) is of private
entities. In these banks, most of the equity is owned by private bodies, corporations,
institutions or individuals rather than government. These banks are managed and
controlled by private promoters. The shares of private sector banks are also listed in
the stock exchange.

List of a few Private Sector Banks in India

 Axis Bank Ltd.

 HDFC Bank Ltd
 ICICI Bank Ltd.
 IDFC FIRST Bank Limited
 Kotak Mahindra Bank Ltd
 YES Bank Ltd

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Difference Between public sector bank and private sector bank

2.1.3. Foreign Banks:

The banks which is incorporated or has their headquarters in a foreign country and
open their branch in India as per RBI Act 1934 is known as foreign banks. There
are total foreign 44 banks operating their business in India. Some examples of the
foreign bank are:

 Citi Bank
 HSBC Bank
 Standard Chartered Bank
 Australia and New Zealand Banking Group Ltd.
 Deutsche Bank
 DBS Bank Ltd.
 United Overseas Bank Ltd
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  J.P. Morgan Chase Bank

2.1.4. Regional Rural Banks (RRBs)

These banks are generally operating at the regional area to facilitate backward
people in society. The purpose of RRBs to offer the banking services at the
doorstep of rural masses especially in remote areas. These banks provide services
like deposits, withdrawals, short term credit to the small farmers, labors, small
entrepreneurs to increase their productivity.

RRBs refer to Regional Rural Banks which were created in 1975. They were
created with the idea of developing something which is a combination of rural
characteristics and the professionalism of commercial banks. Government of India
chose to establish these RRBs keeping in mind the need of specialized institutions
for rural lending.

The shareholding in RRBs is fixed as:

 GOI – 50%
 Sponsor Bank – 35%
 State Government – 15%

The sponsor bank is supposed to provide all management support that is needed to
run the bank. Most of the nationalised commercial banks have been promoting
some RRBs by sponsoring them.

RRBs do full-fledged banking but have to lend 75% to the priority sector compared
to 40% priority sector lending done by other commercial banks including the
nationalized banks.

In Gujarat, RRBs are Baroda Gujarat Gramin Bank annd saurashtra Gramin Bank

Regional Rural Banks are regulated by RBI and supervised by National Bank
forAgricultureand Rural Development (NABARD) in India.

Functions of the RRBs in India

 Accepting deposits from members in current or savings accounts. They can also be
made in fixed or recurring deposits. Extending loans to the small and marginal
farmers, craftsmen and artisans, medium and small scale enterprises, housing, local
traders, renewable energy, etc. that need development and financial assistance.

 Disbursing wages is an important RRB function under the Mahatma Gandhi

National Rural Employment Guarantee Act (MGNREGA) and the Pradhan Mantri
Gram Sadak Yojana (PMGSY). It also disburses pensions under the poverty
alleviation schemes.

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  Providing agency services and general utility services to the customers, Assisting in
foreignexchange, money wire transfer, bill payments, etc

 Utility services like the ATM, issuance of debit cards, locker facilities, UPI, etc

The following banks have also been emerged as a part of commercial banks due to reforms in
banking sectors.

 Small Finance Banks

 Payment Banks

Small Finance Banks

As the name suggests this type of bank looks after the micro industries, small
farmers, and the unorganized sector. They shall primarily undertake basic banking
activities of acceptance of deposits and lending to unserved and underserved
sections of the society by providing them loans and financial assistance. These
banks are governed by the central bankof the country.
Given below is the list of the Small Finance Banks in our country.
 Au Small Finance Bank Ltd.

 Capital Small Finance Bank Ltd

 Fincare Small Finance Bank Ltd.

 Suryoday Small Finance Bank Ltd.

 Ujjivan Small Finance Bank Ltd.

 Utkarsh Small Finance Bank Ltd.

Payments Banks

A payments bank is like any other bank, but operating on a smaller scale without
involving any credit risk. In simple words, it can carry out most banking operations
but can‟t advance loans or issue credit cards. It can accept demand deposits (up to
Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and
other banking services like ATM/debit cards, net banking and third party fund
transfers.
The objective of the committee was to propose measures for achieving financial
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 inclusion and increased access to financial services.
Given below is a list of the few payments bank in our country:

 Airtel Payments Bank Ltd

 India Post Payments Bank Ltd

 FINO Payments Bank Ltd

 Paytm Payments Bank Ltd

2.2. Co-operative Banks

Cooperative Banks are the small-sized banks having the ability to operate in rural
or urban or semi-urban for the purpose of mutual help and cooperation, operating on
the basis of no profit no loss. A Co-operative bank is a financial entity which
belongs to its members, who are at the same time the owners and the customers of
their bank.

Co-operative banks in India are registered under the States Cooperative Societies
Act. The Co-operative banks are also regulated by the Reserve Bank of India
(RBI) and governed by the Banking Regulations Act 1949 and Banking Laws
(Co-operative Societies) Act, 1965.

The cooperative banks function on No profit No loss basis, which means their
main objective, as discussed above, are to help backward segmentof the society like
agriculturists, labours, small vendors, self-employed. The cooperative banks accept
deposits from its members and fulfill short term needs of those where the banking
services are still unavailable or those who are unable to get regular banking
services.

Features/Characteristics of Cooperative Banks:

 Small in size: Cooperative Banks are the small-sized banks having the ability to
operate in rural or urban or semi-urban for the purpose of mutual help and
cooperation.

 Registration: Co-operative banks are registered under the cooperative society Act.
The registration process in co-operative banks is quite easy and less time consuming
as compared to other banks.

 More focus on rural areas: Co-operative banks provide credit services to

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 agriculturalists and weaker sections of the society at comparatively lower rates.

 Customer Owned Entities: Co-operative bank members are both customer and
owner of the bank.

 Democratic Member Control: Co-operative banks are owned and controlled by

the members, who democratically elect a board of directors. Members usually have
equal voting rights, according to the cooperative principle of “one person, one
vote”.

 Profit Allocation: A significant part of the yearly profit, benefits or surplus is

usually allocated to constitute reserves and a part of this profit can also be
distributed to the co-operative members, with legal and statutory limitations.

 Financial Inclusion: They have played a significant role in the financial inclusion
of unbanked rural masses.

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 Structure of Co-operative Banks

The short-term co-operative credit structure operates with a three-tier system.

 Primary Credit Society (working at Rural level)

 Central Cooperative Bank (working at District level)
 State Cooperative Bank (working at State level)

Primary Credit Society:

The Primary Cooperative banks operate at the village/town level in which every
member belongs to the same village or town or nearby. The area finance by
these credit societies are individuals, personal finance, small scale business,
home finance etc.

Primary credit societies consist minimum of 10 members, one secretory and

working committee which ensures its proper functionality. Anyone who wants
to become it ‟s a member can pay a nominal fee and become a member of the
PCS.

These banks generate funds primarily from its members where the people with
surplus money become the lender and earn some interest on the contributed
amount, whereas peoplewho need money pay interest.

The Primary cooperative banks are at many places known as urban Cooperative
Banks (UCBs) they are registered as cooperative societies. They are registered
under the State Cooperative Societies Act or Multi-State Cooperative Act,
2002. The overall supervision of UCBs is done by the registrar of Co-operative

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 Societies (RCS). The Reserve Bank carries out all inspections and Surveillance(
close examination) of Primary Co-operative banks.

Central Credit Society:

The Central co-operative banks work at the district level. It is also called
District Co- operative Central Bank. The main purpose of the establishment of
DCCB is to provide banking to the rural people for the agricultural sector.
The Central Co-operative bank usually raises its capital from its funds,
deposits, and borrowings. The deposits come from cooperative societies, local
bodies, and individuals. Whereas the borrowings are from Banks like RBI and
Apex banks

These credit societies operate at the district level and responsible for
monitoring, auditing the primary credit societies and proper utilisation of
surplus funds. In other words, we can say Central Credit society is the head
office of primary Credit societies. There may be any number of primary credit
society in a district and each PCs report and invest their surplus funds in CCs.

CCs works as a mediator between State Cooperative Banks and Primary Credit
Societies. They help to regulate, inspect and operate PCs under the guidelines
passed from State Cooperative Banks.

State Cooperative Banks:

State Cooperative Bank is the supreme institution (Apex Institution) for the
Cooperative Credit Societies operating under RBI Banking Regulation Act
1949 at thestate level. Thus State Cooperative Banks follows the guidelines of
RBI and eligible to take advance from RBI at repo rate. This bank also raises
funds from the State Government and the surplus fund from the Central
Cooperative Society.

 Functions of Cooperative Banks:

Cooperative banks play a key role in banking especially in developing countries like
India. The main functions of cooperative banks are:

1. The Cooperative Banks play a crucial role in short term rural financing. for

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 example agricultural, cattle, street vendors, shopkeepers etc.
2. Cooperative banks establish a link between RBI and beneficiaries by a proper
hierarchy of cooperative banking. In simple words, the money borrowed from
cooperative society travels from state cooperative banks to central cooperative
society to primary credit societies to individuals and state cooperative society
take a loan from RBI.
3. The Cooperative Banks protect its members form money lenders and agents
who charge a high rate of interest and commission from borrowers.
4. Cooperative banks provide credit facilities to the farmers at a lower level of
interest because their objective is not to make a profit but provide service to its
members.
5. It provides cheap credit to masses in rural areas.
6. Cooperative Banks have discouraged unproductive borrowing personal
consumption and have established the culture of productive borrowing.
7. Cooperative credit movement has encouraged saving and investment,
insteadof hoarding money the rural people tend to deposit their savings in the
cooperative banks.
8. Cooperative societies have also greatly helped in the introduction of better
agricultural methods. Cooperative credit is available for purchasing improved
seeds, chemical fertilizers, modern implements, etc

 Difference between Commercial and Cooperative Bank:

The following comparison table contains every aspect based on which commercialbanks and
cooperative banks can be distinguished quickly

Bases Commercial Banks Cooperative Banks

Incorporation Banking Regulation Cooperative SocietyAct,

Act, 1949 1965

Main Objective Earn Profits Provide Banking Services

Types of Entity Private and Public Private

Rate of Interest Low High

Scope of Operation Larger Scale Limited Scale

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 Voting Rights NO YES

Reserve Policy Strictly maintains CRRand Comparatively less strict

SLR

Governing Body Reserve Bank of India RBI and NABARD

of Cooperative
Society

Non Performing Asset High Low

Merchant Banking Service YES NO

Mutual Fund YES NO

Bill Discounting & Letter YES NO

of Credit

Foreign Exchange YES NO

Services

Now let us discuss a point to point comparison between cooperative banks and
commercial banks in detail.

1) Incorporation: The commercial banks are registered under the Banking

Regulation Act 1949; on the other hand, cooperative banks are incorporated
under the Cooperative Society Act, 1965 of the respective states.

2) Primary Objective: The primary objective of commercial banks is to maximize

profits whereas the main objective of cooperative banks is to provide credit
facility to the poor/scheduled/backward people in society.

3) Types of Entity: The commercial bank can be either private or public entity;
however, cooperative banks can be a private entity only.

4) Rate of Interest: The rates of interest are comparatively higher in case of

cooperative bankswhereas commercial banks offer lower interest rates.

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 5) Scope of Operation: The commercial banks function at a larger scale and can
even function in abroad, on the other hand, cooperative banks operate at a small
scale and their operation can be limited to the district level as well.

6) Voting Rights: The members or beneficiary or borrower of cooperative

banks possess the voting rights through which they can influence the lending
policies of the banks. Contrary, the borrower/ customer of commercial banks are
an account holder of the bank who doesn‟t have such voting right to influence the
lending policy of commercial banks.

7) Reserve Policy (CRR & SLR): Although both cooperative banks and
commercial banks have to maintain the cash reserve ratio (CRR) and statutory
liquidity ratio (SLR), yet the strictness to follow CRR and SLR for cooperative
banks is less than the commercial banks.

8) Governing Body: Although commercial banks and cooperative banks both are
governed by the Reserve Bank, the central bank of India, yet the commercial
banks are under the control of the Reserve Bank directly, however, cooperative
banks have to follow the guidelines made by both Registrar of Cooperative
Society as well as RBI.

9) Non Performing Assets: The non-performing asset (NPA) is higher when it

comes to commercial banks whereas in case of cooperative banks NPA is
comparatively less.

10) Other Major Services: Commercial banks and cooperative banks can also be
distinguished based on their offered services. Some major differences are
explained below.

 Merchant Banking Services: Commercial banks also offer merchant

banking services whereas cooperative banks don’t offer such services
 Mutual Funds: Commercial banks or their subsidiary also offer SIP/ mutual
funds service to their customers but cooperative banks don’t.

 Bill Discounting and Letter of Credit: Commercial bank or it’s subsidiary

also offers invoice discounting and L/C facilities to manufacture or supplier
while the cooperative bank doesn’t provide such services.

 Foreign Exchange Services: Commercial banks may also provide foreign

exchange services, on the other hand, cooperative banks don’t provide such

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 kind of services.

4. Non- scheduled Banks:

 The banks which are not listed in the 2nd schedule of RBI Act 1934 are called
Non- scheduled banks.
 These banks are not allowed to deal in foreign exchange.
 Non-scheduled banks, by definition, are those that do not adhere to the RBI's
regulations.
 They are not mentioned in the Second Schedule of the RBI Act, 1934, and are
therefore deemed incapable of serving and protecting depositors' interests.
 Non- scheduled banks must also meet the cash reserve requirement, but not with
reserve banks, but with themselves.
 They are generally smaller in size and have a range of influence that is somewhat
narrow. They are risky to do business with due to their financial limitations.
 The reserve capital of these banks is less than 5 lakh rupees.
 Except in emergencies, non-scheduled banks are not eligible for Reserve Bank
financial assistance. Non-schedule banks are often denied the benefits enjoyed by
scheduled banks.
 They are also not eligible to be a member of a clearinghouse. As a result,
unscheduled banks cannot facilitate interbank financial transactions and the
clearance of cheques.
 Non- scheduled banks are also known as Local Area Banks.
 There are only four local area banks in India which are as follows.

1. Coastal local area Bank ltd.- Vijaywada, Andhra Pradesh

2. Capital local area bank ltd. - Jalandhar, Kapoorthala and Hoshiarpur, Punjab
3. Krishana Bhima Samuriddhi Local area bank ltd. - Mahboobnagar, Andhra Pradesh
4. Subhadra Local area bank ltd: - Kolhapur, Maharashtra

5. Developmental/Specialized Banks

The development banks were established for the purpose of development of

different sectors like agriculture, housing, small industry and foreign trade.
These banks don‟t deal in public. Following are the list of development banks.

1. IFCI (Industrial Finance Corporation of India)

2. NABARD (National Bank for Agriculture and Rural Development)

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 3. EXIM Bank (Export-Import Bank)
4. NHB (National Housing Bank)
5. SIDBI (Small Industries Development Bank of India)
6. MUDRA Bank (Micro Unit and Development Refinance Agency Bank)

6. Non-Banking Financial Institutions/Companies (NBFCs)

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act,
1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other
marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business
but does not include any institution whose principal business is that of agriculture activity,
industrial activity, purchase or sale of any goods (other than securities) or providing any services
and sale/purchase/construction of immovable property.

A non-banking institution which is a company and has principal business of receiving deposits
under any scheme or arrangement in one lump sum or in installments by way of contributions or
in any other manner, is also a non-banking financial company (Residuary non-banking
company). The following the structure of NBFCs

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6.1. Functions/Role of NBFCs

Non-Banking Finance Companies (NBFCs) have played an important role in the Indian
financial system by complementing and competing with banks, and by bringing in
efficiency and diversity into financial intermediation. NBFCs have evolved considerably
in terms of operations, heterogeneity, asset quality and profitability, and regulatory
architecture.

 Hire Purchase services– A hire purchase service is a way through which the
seller delivers the goods to the buyer without transferring the ownership of the
goods. The payment of the goods is ensured to be made in installments. Once
the buyer pays all the installments of goods, then only ownership of the good is
transferred to the buyer.

 Retail Financing– Companies that provides short term funds for loans against
shares, gold, property, primarily for consumption purposes.

 Trade Finance– Companies dealing in Dealer/ Distributor finance so that they

can for working capital requirements, vendor finance, and other business loans.

 Infrastructural Funding– This is the largest section where major NBFCs deal
in. A lot portion of this segment alone makes up a major portion of funds lent,
amongst the different segments. This majority includes Real Estate, Railways or
Metros, Flyovers, Ports, Airports, etc.

 Asset Management Company– Asset Management Companies are those

companies that consist of fund managers (who invest in equity shares to gain
handsome gains) who invest the funds pooled by small investors and actively
manage it.

 Venture Capital Services– The companies that invest in small businesses are at
their initial stage but their success rate is high and are promising enough of
sufficient returnin the coming time.

 Micro Small Medium Enterprise (MSME) Financing– MSME is one of the

roots of our economy and millions of livelihoods depends on this sector that is
why the government announced such luring schemes for the MSME sector to
promote itsgrowth.

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  Financing for Long-Term: NBFC plays a key role in providing firms with
funds through equity participation. As against traditional banks, NBFCs supply
long-run credit to the trade and commerce industry. They facilitate to fund large
infrastructure projects and boost economic development. Long-term finance
permits growth with stable and soft interest rates.

7. Insurance Companies – Role of IRDI

Insurance is a contract, represented by a policy, in which a policyholder receives

financial protection or reimbursement against losses from an insurance company.

Insurance is a legal agreement between an insurer (insurance company) and an insured

(individual), in which an insured receives financial protection from an insurer for the losses he
may suffer under specific circumstances.

Under an insurance policy, the insured needs to pay regular amount of premiums to the insurer.
The insurer pays a predetermined sum assured to the insured if an unfortunate event occurs, such
as death of the life insured, or damage to the insured or his property.

Legally insurance has been defined as a contract where the insurer agrees to compensate the
insured against the losses incurred due to any unforeseen contingency. The contract also involves
a consideration which is called a premium. The maximum available benefit amount is called sum
assured or sum insured.

Insurance contract has been classified into two categories traditionally.

Life Insurance General Insurance

Term Life Insurance Health Insurance (Mediclaim) plans

Endowment Life Insurance Vehicle Insurance

Moneyback Plans Fleet Insurance

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Savings Plans Home/Property Insurance

Child Education Plans Fire & Hazards Insurance

Unit Linked Insurance Plans Travel Insurance

(ULIPs)

Liability Insurance

Keyman Insurance

Types of Insurance Policies

You can divide the insurance based on the type of coverage it is providing as below:

Life Insurance Policy

It is insurance on your life. You buy life insurance to ensure that your loved ones are financially
secured even when you are not around. If you are the only breadwinner, you would want your
family members to maintain the same living standards in the event of your untimely demise. The
nominee gets the sum assured in case of your death.

Health Insurance Policy

Although health insurance is usually counted as a general insurance contract, there are a few
differences. Health insurance covers your medical costs for expensive treatments. You can avail
two types of health insurance policies:

Mediclaim Insurance, which compensates you for the medical expenses

Critical Health Insurance, which offers lump-sum payments for dangerous and life-threatening
health conditions

Non-life Insurance Policy

These compensate for the losses sustained arising from a specific financial event that is not
related to life. Non-life insurance could be car insurance, home insurance, etc.

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You can avail insurance benefits under the following two types of policies:

Because of these two variants health insurance falls perfectly between general and life insurance
policies. Also, both health insurance policies are important in ensuring complete financial safety
for you and your family.

Features of Insurance
1. Insurance is a tool for risk transfer.
2. Insurance is a community solution as several people, who are exposed to the same risk,
pool their funds together to bear the loss.
3. The contract is based on the ‘utmost good faith’ principle unlike other business contracts.
4. Insurance cover does not affect the chance of loss or minimise the magnitude of loss.
5. As a party to the insurance contract, you should always try to avoid, mitigate and
minimize the losses.
6. You can only insure against risks which are unpredictable in occurrence and magnitude.
7. Speculative, financial (betting) and business risks cannot be insured.
Benefits of Insurance
Financial Safety for Family:

They provide cover against life's uncertainties and protect you against losses arising from
different unexpected events in life.

Safety of Financial Status:

Certain events like medical emergencies can have a significant impact on your cash flow
management. Insurance ensures you don't have to pay out of pocket for such situations.

Wealth Creation Goals:

Insurance policies like ULIPs give you investment opportunities and help you fulfil your
essential financial goals.

Wealth Preservation:

Life insurance policies like endowment and money back are some of the safest long-term
investments possible. These plans help you preserve your wealth from inflation and taxes for
long periods.

Wealth Distribution:

Few investment plans offer the kind of safety offered by life insurance pension plans. After
retiring at the age of 60, you can live up to 100. Only life insurance pension plans can guarantee
a regular income for that period.

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History of Insurance
 Nationalization of life (LIC Act 1956) and non-life sectors (GIC Act 1972).
 1991: Government of India begins the economic reforms program and
financial sectorreforms
 1993: Committee on Reforms in the Insurance Sector, headed by Mr. R. N.
Malhotra, (Retired Governor, Reserve Bank of India) set up to recommend
reforms.
 1994: The Malhotra Committee recommends certain reforms having studied
the sector andhearing out the stakeholders.
 Constitution of the Insurance Regulatory and Development Authority of India
(IRDAI) in1999.
 Opening up of the sector to both private and foreign players in 2000.
 Increase in the foreign investment cap to 26% from 49% in 2015.
 The recent notification of 100% foreign direct investment (FDI) for insurance
intermediaries (announced in the Union Budget of 2019-20) has further
liberalized the sector.

Background of Insurance
 The insurance industry of India has 58 insurance companies 24 are in the life
insurance business, while 34 are non-life insurers.
 Among the life insurers, Life Insurance Corporation (LIC) is the sole public
sector company.
 There are six public sector insurers in the non-life insurance segment. In
addition to these, there is a sole national re-insurer, namely General Insurance
Corporation of India (GIC Re).
 Other stakeholders in the Indian Insurance market include agents (individual
and corporate), brokers, surveyors and third-party administrators servicing
health insurance claims.

Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory

body of insurance sector in India.

Establishment of IRDAI
 Insurance Regulatory and Development Authority of India (IRDAI) set up as autonomous
body under the IRDA Act, 1999
 The Authority acts as the regulator of the insurance industry in India and oversees the
functioning of the Life Insurance and General Insurance companies operating in the
country.
 The main objective of the IRDA is to protect the interests of the policyholder and regulate

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 the insurance industry.

Role and Functions of IRDAI

Role of IRDA

1. Regulates insurance companies: The working of insurance companies will be

regulated in the following aspects the persons to be employed, the nature of business,
covering of risks, Terms and agreements for covering risks etc., will be prescribed by
IRDA.
2. Promotes insurance companies: Corporate set-up is a must for establishing an
insurance company and they have to submit periodical reports to IRDA. Different kinds
of policies and different types of insurance are also suggested by IRDA to these insurance
companies.
3. Ensures growth of insurance and reinsurance companies: Here, the promotion of new
companies is encouraged. Even banks are also permitted to promote insurance companies
as a subsidiary.

Functions of IRDA

 Registering and regulating insurance companies

 Protecting policyholders‟ interests
 Licensing and establishing norms for insurance intermediaries
 Promoting professional organizations in insurance
 Regulating and overseeing premium rates and terms of non-life insurance covers
 Specifying financial reporting norms of insurance companies
 Regulating investment of policyholders‟ funds by insurance companies
 Ensuring the maintenance of solvency margin by insurance companies
 Ensuring insurance coverage in rural areas and of vulnerable sections of society

8. Bank Capital and banking Innovation

8.1. Innovative Banking

 Innovation means something new or something which had not been done before. The same
goes for banking section as well.
 There are many sections in banks which are going through or have gone through innovation
in recent past.
 They are no longer restricted to age-old (traditional) methods. Thus, to increase the business
avenues and capture the new market banks are resorting to innovation. This term innovative

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 banking is being in use a lot nowadays.

1. Innovative Banking
 There are many types of banking facilities that the banks have started in recent years. These
are the following types of innovative banking used by the banks these days:

2. Mobile Banking
 Mobile banking has been a revolution in the past few years. It has completely changed the
way banking systems are working. Thus, it is a system that allows customers to perform
many types of financial related services through a smartphone.
 These include services like ATM locations, bill payment alert, inter or intrabank payments,
bill payments, and many more. So, services are available at the fingertips of every person.

3. Internet Banking
 Internet coverage in the last few years has increased drastically. This service is online
banking, web banking, or virtual banking.
 Thus, this banking service allows its users to execute and perform any financial transaction
or service with the help of the Internet. The banking facilities are provided traditionally at a
local bank outlet.
 This includes bill payments, a deposit of money, borrowing of money, and other services are
all available at one place. This service happens with the use of the Internet facility. In India,
ICICI Bank was the first bank to avail it’s customers the facility of Internet banking.

4. Retail and Wholesale Banking

 Like other businesses, the banking sector to has evolved into retail and wholesale banking
and it is also one of the parts of innovative banking.
 Here, retail banking refers to the banking in which the transactions which are done daily by
the banks are executed with consumers.
 Thus, this is done instead of transactions with other banks or other corporate. The services
under this are:
• Personal loans
• Savings accounts
• Checking accounts
• Debit card
• Credit card
 Wholesale banking is completely the opposite of retail banking. It refers to the business
being conducted with the business and industrial entities.
 Thus, in wholesale banking, trading houses, domestic companies, and multinational
companies are included. So, there are many services which are included in the wholesale

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 banking and these services are:
• Value-added services
• Fund based services
• Non-fund related services
• Internet banking
5. Multinational and offshore banking
 Multinational banking is the banks that are present in more than one country. The main
services are available in more than one country in these services. Thus, these banks are also
called international banks.
 The first bank to offer its services outside India was Indian bank in 1946. Currently, Bank of
Baroda has the maximum number of the overseas franchise in India.
 While under offshore banking, the banking activities are performed in the currencies that are
different than the currency of the country in which the bank account is opened. The banking
services in these banks remain the same though.

6. Narrow and Universal Banking

 Narrow banking includes keeping together the higher part of deposits in risk-free assets like
government securities. In India, this is basically in performance to reduce the size of the
NPAs.
 While commercial, investment, insurance, and many other financial activities combine to
form universal banking. Thus, in this practice every product is available.

9. Mutual fund (Growth of Indian Mutual fund and its regulation) - Role
of AMFI

 A mutual fund is a pool of money managed by a professional Fund Manager.

 A mutual fund is a commercial product that invests in stocks or bonds.
 A mutual fund is a pool of investment which is managed professionally for the purpose of
purchasing various securities and culminating them into a strong portfolio that will give
you attractive returns over and it will be above the risk-free returns which are currently
being offered by the market.
 If you own a mutual fund then it is like getting a slice of an apple. Just like that the
investors get units of the fund which are in proportion to their investments.
 For example, if there is a mutual fund that has total assets of $5000 and someone invests
$500, he/she will receive 10% units of that fund.

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 9.1. History of Mutual Funds in India

A strong financial market with broad participation is essential for a developed economy. With
this broad objective India’s first mutual fund was establishment in 1963, namely, Unit Trust of
India (UTI), at the initiative of the Government of India and Reserve Bank of India ‘with a view
to encouraging saving and investment and participation in the income, profits and gains accruing
to the Corporation from the acquisition, holding, management and disposal of securities’.

In the last few years the MF Industry has grown significantly. The history of Mutual Funds in
India can be broadly divided into five distinct phases as follows:

First Phase - 1964-1987

 The Mutual Fund industry in India started in 1963 with formation of UTI in 1963 by an
Act of Parliament and functioned under the Regulatory and administrative control of the
Reserve Bank of India (RBI).
 In 1978, UTI was de-linked from the RBI and the Industrial Development Bank of India
(IDBI) took over the regulatory and administrative control in place of RBI. Unit Scheme
1964 (US ’64) was the first scheme launched by UTI.
 At the end of 1988, UTI had 6,700 crores of Assets under Management (AUM).

Second Phase - 1987-1993 - Entry of Public Sector Mutual Funds

 The year 1987 marked the entry of public sector mutual funds set up by Public Sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC).
 SBI Mutual Fund was the first ‘non-UTI’ mutual fund established in June 1987, followed
by Canbank Mutual Fund (Dec. 1987), Punjab National Bank Mutual Fund (Aug. 1989),
Indian Bank Mutual Fund (Nov 1989), Bank of India (Jun 1990), Bank of Baroda Mutual
Fund (Oct. 1992).
 LIC established its mutual fund in June 1989, while GIC had set up its mutual fund in
December 1990. At the end of 1993, the MF industry had assets under management of
47,004 crores.

Third Phase - 1993-2003 - Entry of Private Sector Mutual Funds

 The Indian securities market gained greater importance with the establishment of SEBI in

31
 April 1992 to protect the interests of the investors in securities market and to promote the
development of, and to regulate, the securities market.

 In the year 1993, the first set of SEBI Mutual Fund Regulations came into being for all
mutual funds, except UTI. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton MF) was the first private sector MF registered in July 1993. With the entry of
private sector funds in 1993, a new era began in the Indian MF industry, giving the Indian
investors a wider choice of MF products. The initial SEBI MF Regulations were revised
and replaced in 1996 with a comprehensive set of regulations, viz., SEBI (Mutual Fund)
Regulations, 1996 which is currently applicable.
 The number of MFs increased over the years, with many foreign sponsors setting up
mutual funds in India. Also the MF industry witnessed several mergers and acquisitions
during this phase. As at the end of January 2003, there were 33 MFs with total AUM of
1,21,805 crores, out of which UTI alone had AUM of 44,541 crores.

Fourth Phase - Since February 2003 – April 2014

 In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI was
bifurcated into two separate entities, viz., the Specified Undertaking of the Unit Trust of
India (SUUTI) and UTI Mutual Fund which functions under the SEBI MF Regulations.
With the bifurcation of the erstwhile UTI and several mergers taking place among
different private sector funds, the MF industry entered its fourth phase of consolidation.
 Following the global melt-down in the year 2009, securities markets all over the world
had tanked and so was the case in India. Most investors who had entered the capital
market during the peak, had lost money and their faith in MF products was shaken
greatly.
 The abolition of Entry Load by SEBI, coupled with the after-effects of the global
financial crisis, deepened the adverse impact on the Indian MF Industry, which struggled
to recover and remodel itself for over two years, in an attempt to maintain its economic
viability which is evident from the sluggish growth in MF Industry AUM between 2010
to 2013.

Fifth (Current) Phase – Since May 2014

 The overall size of the Indian MF Industry has grown from 8.26 trillion as on 31st
January 2013 to 39.62 trillion as on 31st January 2023, around 5 fold increases in a span
of 10 years.
 The MF Industry’s AUM has grown from 22.41 trillion as on January 31, 2018 to 39.62
trillion as on January 31, 2023, around 2 fold increases in a span of 5 years.

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 The no. of investor folios has gone up from 6.83 crore folios as on 31-Jan-2018 to 14.28
crore as on 31-Jan-2023, more than 2 fold increase in a span of 5 years.
 On an average 12.42 lakh new folios are added every month in the last 5 years since
January 2018.
 The growth in the size of the industry has been possible due to the twin effects of the
regulatory measures taken by SEBI in re-energizing the MF Industry in September 2012
and the support from mutual fund distributors in expanding the retail base.

 MF Distributors have been providing the much needed last mile connect with investors,
particularly in smaller towns and this is not limited to just enabling investors to invest in
appropriate schemes, but also in helping investors stay on course through bouts of market
volatility and thus experience the benefit of investing in mutual funds.

 MF distributors have also had a major role in popularising Systematic Investment Plans
(SIP) over the years. In April 2016, the no. of SIP accounts has crossed 1 crore mark and
as on 31st January 2023 the total no. of SIP Accounts are 6.22 crore.

9.2. Growth of Indian Mutual fund

 Average Assets under Management (AAUM) of Indian Mutual Fund Industry for the
month of January 2023 stood at 40, 80,311 crore.
 Assets Under Management (AUM) of Indian Mutual Fund Industry as on January 31,
2023 stood at 39,62,406 crore.
 The AUM of the Indian MF Industry has grown from 8.26 trillion as on January 31, 2013
to 39.62 trillion as on January 31, 2023 around 5 fold increase in a span of 10 years.
 The MF Industry’s AUM has grown from 22.41 trillion as on January 31, 2018 to 39.62
trillion as on January 31, 2023, around 2 fold increase in a span of 5 years.
 The Industry’s AUM had crossed the milestone of 10 Trillion (10 Lakh Crore) for the
first time in May 2014 and in a short span of about three years, the AUM size had
increased more than two folds and crossed 20 trillion (20 Lakh Crore) for the first time
in August 2017. The AUM size crossed 30 trillion (30 Lakh Crore) for the first time in
November 2020. The Industry AUM stood at 39.62 Trillion ( 39.62 Lakh Crore) as on
January 31, 2023.
 The mutual fund industry has crossed a milestone of 10 crore folios during the month of
May 2021.
 The total number of accounts (or folios as per mutual fund parlance) as on January 31,
2023 stood at 14.28 crore (142.8 million), while the number of folios under Equity,
Hybrid and Solution Oriented Schemes, wherein the maximum investment is from retail

33
 segment stood at about 11.43 crore (114.3 million).

9.3. Introduction of AMFI

 Association of Mutual Funds in India (AMFI) was incorporated on 22 nd august,
1995.AMFI is an apex body of all Asset Management Companies (AMC) which has been
registered with SEBI.
 Association of Mutual Funds India has helped the Indian Mutual Fund Industry to enter
into a healthy and professional market, maintaining the market ethics and standards. It
attempts to promote the interests of both Mutual Funds and unit holders.

9.4. Regulation of Mutual Funds in India

 Market regulator SEBI oversees all mutual fund schemes in India. It issues strict
guidelines that AMCs must follow while managing funds. The guidelines call for
complete transparency related to a mutual fund scheme which includes full disclosure of:
• fund value
• expenses
• fund utilization as per the scheme’s objectives

Some important regulations to know are:

 Every mutual fund must be registered with SEBI.

 A mutual fund is always set up as a trust, with sponsors, trustees, an asset management
company (“AMC”) and a custodian.
 An AMC of a mutual fund should have at least 50% independent directors, a separate
board of trustees which includes 50% independent trustees and independent custodians so
as to manage any conflict of interest among fund managers, custodians, and trustees.
 A single mutual fund can float different schemes but they have to be individually
approved by the trustees and all offer documents have to be filed with the SEBI.
 SEBI lays down certain restrictions on the fees that AMCs can charge for mutual funds
and there is also a cap on the expenses that can be added to the fund.
 Mutual funds can advertise, but advertisements cannot have statements that are
misleading. For instance, no mutual fund can guarantee a return since returns depend on
market performance.
 SEBI stipulates the following for open-ended and close-ended funds:
 An open-ended scheme needs a minimum corpus of 50 crores
 A closed-ended scheme needs at least 20 crores corpus
 SEBI checks mutual funds every year in order to make it in compliance with the
regulations and guidelines.

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 9.5. Legal structure of Mutual Funds
Legally, a mutual fund has five main entities:

What role does each entity play in the workings of a mutual fund? Let’s find out!

1. Sponsor: The sponsor brings the capital to start a mutual fund. For example, ICICI Bank and
Prudential Plc. are the sponsors of ICICI Prudential Mutual Fund. All sponsors must comply
strictly with the SEBI guidelines.

2. Trust and Trustee: The sponsor sets up a trust and appoints trustees to manage the Trust's
operations. The trustee has two main functions:

a) to ensure that all funds are executed as per the defined objectives

b) to protect the investors’ interests at all times

3. Asset Management Company (AMC): The trustee appoints an AMC to manage the
investors’ funds. The AMC charges a fee for providing this service.

4. Custodian: The custodian protects the securities held by the mutual fund. The custodian also
sees to it that the securities are used for the intended purposes only.

5. Registrar and Transfer Agent (RTA): The AMC often outsources its back-end operations to
an RTA. That’s because RTAs are professionally managed companies with expertise in mutual
fund operations investor-related issues. The RTA handles day-to-day operations such as:

9.6. Objectives of AMFI

The core of the formation of AMFI was with a view to increase investor awareness and ensures
the safety and security of the interest of all the participants of the mutual fund industry,
especially the investors with this view; AMFI has set a few objectives which are mentioned
below.

 Ensuring that the AMCs and all the other parties in the mutual fund industry follow the
code of conduct and the standards defined by AMFI.
 Increasing investors’ awareness and safeguarding their interests.
 Taking disciplinary actions against the violators of the code of conduct set by AMFI
 Providing a safe and concrete portal for the investors to address their grievances and
registration of complaints against any party like find managers, brokers, or fund houses.
 Safeguarding the interest of the AMCs
 Representing the government, RBI, SEBI, etc. on all matters relating to mutual funds.
 To review guidance and directions from SEBI and work with them on matters concerning
the mutual fund industry or any aspect of the same.
 To maintain a high professional and ethical standards in all areas of operation of the

35
 industry.
 To recommend and promote the top class business practices and code of conduct which is
followed by members and related people engaged in the activities of mutual fund and
asset management.
 To interact with SEBI and works according to SEBIs guidelines in the mutual fund
industry.
 To do represent the Government of India, the Reserve Bank of India and other related
bodies on matters relating to the Mutual Fund Industry.
 To develop a team of well qualified and trained Agent distributors.
 To promote proper understanding of the concept and working of mutual funds for the
investor.

Sample Question
1. Draw Banking structure in India.(2)
2. What is scheduled bank and its classification? (3)
3. Explain commercial bank and give example. (3)
4. Explain co-operative bank and give example. (3)
5. Explain the primary and secondary function of commercial bank. (5)
6. What is recurring deposited? (2)
7. What are classifications of commercial bank? (5)
8. Write 6 differences between public and private bank. (3)
9. What do you mean by non banking financial institute? (2)
10. Explain any 5 role of NBFC. (3)
11. Full form of IRDAI. (2)
12. Write any 5 Function of IRDAI. (3)
13. What is mutual fund? (2)
14. Who is regulatory body of Mutual Fund? (2)
15. Write 6 Objectives of AMFI. (3)
16. Write a note on Mutual fund. (5)
17. Write a detail note on insurance industry in India. (5)
18. What is banking innovation? (2)
19. What are recent innovation take place in banking industry? (5)
20. Write Objectives of AMFI. (5)
21. Write a Note on Legal structure of Mutual Funds. (5)

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37