Banking comprises two parts: Monetary Authorities—Central Bank, and Depository
Credit Intermediation. credit intermediation and related services industry
provides banking services to consumers and businesses. It secures the money of
depositors, provides checking and debit card services, and lends money to
consumers and businesses through credit cards, mortgages, car loans, investment
loans, and lines of credit.
There are three basic types of banks:
- Commercial Banks
- Savings and Loan
Associations
- Credit Unions
Although some of the differences between these
types of banks have lessened, there are key distinctions. Commercial banks,
which dominate this industry, offer a full range of services for individuals,
businesses, and governments. Commercial banks come in a wide range of sizes,
from large global banks to mid-size regional and small community banks. In
addition to typical banking services, global banks lend internationally and
trade foreign currencies. Regional banks have numerous branches and automated
teller machine (ATM) locations throughout a multi-state area and provide banking
services to individuals and local businesses. Community banks are based locally
and have fewer branches than regional or global banks.
The economic reforms undertaken in the last 15 years have brought about a
considerable improvement in the health of banks and financial institutions in
India. The banking sector is a very important sector of the Indian economy. The
sector has made a marked improvement in the liberalization period. There has
been extraordinary progress in the financial health of the commercial banks with
respect to capital adequacy, profitability, asset quality and risk management.
Deregulation has opened new doors for banks to increase revenues by entering
into investment banking, insurance, credit cards, depository services, mortgage,
securitization, etc.