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Proportional Reserve System First let's understand the meaning of three words, namely:Proportion means a part, percentage or share of something regarded as a collective whole. Reserve implies something valuable stocked up systematically or stored carefully often on a large scale at a secured location. A System comprises a set of detailed procedures, routines, and methods that are supposed to be

RBI Issue Currency Notes in India Reserve Bank of India (RBI) has a sole right to issue currency notes in India. This right is guaranteed only to a particular entity (a person or organization) and nobody else. It is an unshared authority, an exclusive privilege, or a monopoly to do something without open competition. It is usually granted by a sovereign authority (e.g. parliament) to execute

Priority Sector Lending Meaning Priority sector plays an important role in the economic development of the country. Therefore, the Central (Federal) Government of any country gives this sector priority (first preference) in obtaining loans from banks at a low rate of interest. This is known as a ‘Priority Sector Lending’.Following important points cover the core meaning of priority sector

Functions of Development Banks The role or functions of development banks in India are depicted below.The nine important functions of development banks in India are as follows:To promote and develop small-scale industries (SSI) in India. To finance the development of the housing sector in India. To facilitate the development of large-scale industries (LSI) in India. To help the development of

Meaning of Development Banks Development banks are specialized financial institutions. They provide medium and long-term finance to the industrial and agricultural sector. They provide finance to both private and public sector. Development banks are multipurpose financial institutions. They do term lending, investment in securities and other activities. They even promote saving and investment

Non-Banking Activities All banks perform non-banking activities along with their traditional functions.A bank cannot survive without performing the following non-banking activities:Banks help their customers to make utility payments with ease. They perform merchant banking for their customers. They provide factoring services to their clients. They manage mutual funds and minimize investment

Changing Role of Banks in India The role of banks in India has changed a lot since economic reforms of 1991. These changes came due to LPG, i.e. liberalization, privatization and globalization policy being followed by GOI. Since then most traditional and outdated concepts, practices, procedures and methods of banking have changed significantly. Today, banks in India have become more

Banker-Customer Relationship The relationship between banker and customer is mainly that of a debtor and creditor. However, they also share other relationships.Some of the important relationships they share are depicted below.The banker-customer relationship is that of a:Debtor and Creditor, Pledger and Pledgee, Licensor and Licensee, Bailor and Bailee, Hypothecator and Hypothecatee, Trustee and