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Financial Activities Tax
The Financial Activities Tax' and 'Financial Stability Contribution' were propsoed by G-20. The
Interim Report of the G-20 on Fair and Substantial Contribution by the Financial Sector of April
2010 for 'financial stability contribution' proposed a flat rate levy on all financial institutions and
'financial activities tax' levied on profits and remuneration.

Purpose of these taxes is to help pay for future financial clean-ups and reduce systemic
risk by shrinking the size of the financial sector.
The proposal was recently discussed at the G-20 meeting at Busan,Republic of Korea in June
2010, which called for implementation of levy taking each nations 'circumstance and options'.
India's view was that there was need for better and well placed regulation rather than imposing
levy on bank balance sheets.
Functions of RBI
The RBI established by RBI Act 1934 in 1935 and nationalized in 1949 is the central banking
and monetary authority of India. It acts as a regulator and supervisor of the Banks.

Every country has its own central bank such as Federal Reserve of United States.
Please note that most of the central banks of the world were established during the early 20th
century and RBI was one of them. Following is the list of the establishment of some of the major
banks in the world.
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Federal Reserve Bank of United States was established via Federal Reserve Act 1913
Bank of England is the oldest established central bank among the major countries. It was
established in 1694 as a private entity and remained so till 1946 when it was nationalized.
The central Bank of China is People's Bank of China and it was established in 1948
One more older bank is Banque de France , the central Bank of France which was
established in 1800.
1. Following are major functions of RBI:
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2.
3.
4.
5.
6.
7.
8.
Currency authority
Control of Money supply and credit
Management of Forex
As banker to the government
Maintenance of India's financial infrastructure
Banker of the banks
Supervision of the Banks.
In the commercial Banking system, the two functions of RBI viz. Banker of the Banks and
Supervision are very important. As the Banker's Bank , RBI carries out the following functions:
1. Holds a part of the Cash Reserves of the banks
2. Short term lending
3. Centralized clearing facilities.
LORL:
RBI is known as Lender of Last Resort because, banks are supposed to meet their shortfalls of
cash from other sources and if the other sources don't meet the demand, then they approach RBI.
CRR:
CRR is Cash Reserve Ratio , the share of the liquid cash that the banks have to keep with the
RBI. Current CRR 6%.
Supervisory Functions:
These functions are related to banking license, branch expansion, liquidity, management and
working methods, amalgamation, reconstruction and liquidation.
List of Scheduled Banks in India
The scheduled banks are of two types
1. Scheduled Commercial banks
2. Scheduled Co-operative Banks
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They are further divided as follows:
classification of banks in India
Current Number of Nationalized Banks:
There are 26 Nationalized Banks in the country at present. They are as follows:
1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. IDBI Bank Ltd.
11. Indian Bank
12. Indian Overseas Bank
13. Oriental Bank of Commerce
14. Punjab & Sind Bank
15. Punjab National Bank
16. Syndicate Bank
17. UCO Bank
18. Union Bank of India
19. United Bank of India
20. Vijaya Bank
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State Bank Group
1.
2.
3.
4.
5.
6.
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of India
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore

State Bank of Indore has merged with SBI from August 26, 2010.
Current Number of Old Private Banks
There are 14 Old Private sector Banks in the country as follows:
1. Catholic Syrian Bank Ltd.
2. City Union Bank Ltd.
3. Dhanalakshmi Bank Ltd.
4. Federal Bank Ltd.
5. ING Vysya Bank Ltd.
6. Jammu & Kashmir Bank Ltd.
7. Karnataka Bank Ltd.
8. Karur Vysya Bank Ltd.
9. Lakshmi Vilas Bank Ltd.
10. Nainital Bank Ltd.
11. Ratnakar Bank Ltd.
12. SBI Commercial & International Bank Ltd
13. South Indian Bank Ltd.
14. Tamilnad Mercantile Bank Ltd.
The number of the old Private Banks in India was 15 until recently
and the latest reports from RBI (2009-10) show this 15. The Bank of Rajasthan Ltd has recently
merged with ICICI Bank Ltd.
Current Number of New Private Banks
There are 7 New Private sector Banks in India as follows:
1. Axis Bank Ltd.
2. Development Credit Bank Ltd
3. HDFC Bank Ltd.
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4.
5.
6.
7.
ICICI Bank Ltd.
IndusInd Bank Ltd.
Kotak Mahindra Bank Ltd.
Yes Bank Ltd
Current Number of Foreign Banks
As of end of 2009, there were 32 Foreign Banks in India with 293 branches. 43 foreign banks
were operating in India through representatives of offices.

Under the WTO agreements, the Reserve bank of India has to allow a minimum of 12
Branches of all the foreign banks to be opened in a year.
Number of Branches and ATMs
Please note that if we count the number of the bank branches including the cooperative and local
area banks, the number is around 82000.
Out of this, the share of the Scheduled Commercial Banks is shown in the following table
Bank Branches (As at end-March 2010)
Sr. No
Name of the Bank
Scheduled Commercial Banks
Public Sector Banks
Nationalized Banks
Private Sector Banks
Foreign Banks
Branches
Rural Semi- urban
Urban Metro- politan Total
20,773 17,638
19,567 14,595
13,652 9,376 9,
1,201 3,037 3,
5
6
16,007| 14,742
12,920 11,743
607
8,961
027
2,762
60
237
69,160
58,825
41,596
10,027
308
Number of ATMs (As at end-March 2010)
Sr.
No Name of the Bank
Scheduled Commercial Banks
Public Sector Banks
Nationalized Banks
ATMs
On-site
32,679
23,797
12,655
Off-site
27,474
16,883
7,047
Total
60,153
0,680
19,702
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Private Sector Banks
Foreign Banks
8,603
279
9,844
747
18,447
1,026
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The Nationalized banks have around 4 times the number of branches of the Private sector
banks in India.
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Per cent of ATMs to Branches stands maximum for the Foreign Banks.
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The number of ATMs Private sector banks is almost equal to the number of ATMs in
Nationalized Banks, but half of the number of Public Sector Bank ATMs. This indicated
the high number of ATMs of the SBI group.
Please note the following:

Out of the total over 6 lakh habitations, the banking penetrates only 5%, where there is a
commercial bank branch.
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Just around 40% of the population in the country has a Bank account.
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This ratio is lowest in the North East states of India.
The number of the card holders are 13% (Debit Cards) and 2% (Credit Cards).
Position of Deposits in India
The nationalization of the banks was a turning point in the financial history of the country. It
boosted the faith of the public and since then the banks have been able to mobilize a considerable
size of financial savings of the household sector in India. Today, bank deposits are the dominant
instrument of savings in India.
Size of Household Saving:
To understand this we go to Economic Survey 2009-10.

Gross Domestic Savings (GDS) at current prices in 2008-09 were ` 18,11,585 Crore
which amount to 32.5% of GDP at market prices.
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It was 36.4% in 2007-08. This fall has been attributed to the fall in the rates of savings of
the public sector which stands at 1.4% in 2008-09 with respect to 5.0% in 2007-08.
The 32.5% growth is subdivided as follows:
Public Sector : 1.4% + Private Sector: 31.1 %= Total : 32.5 %
The 31.1 % of Private sector savings has largest fraction of household sector (22.6% which
amounts to 70% of the total private Sector), further the Financial saving is 10.4%, Saving in
Physical assets is 12.2% and Saving in Private Corporate sector is 8.4 %.
As per the RBI report 2008-09, the Financial Savings of the Household sector remains mobilized
as follows:
Figures are approximate in percentage
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Currency
Deposits with Banks
Deposits with Non-Banking Companies
Insurance Funds
Provident and Pension Funds
Others (after decreasing Government liabilities)
12.50%
55%
1.80%
20.10%
9.50%
1.10 %
Share of banks in Deposits:
We can see, that the largest fraction of the household savings is in the form of Bank Deposits,
followed by Insurance . The following table shows the share of the banks in this deposit:
Share of Deposits (2009)
Public Sector Banks
76.7
Nationalized Banks
49.1
State Bank Group
24.8
Other Public Sector Banks
2.8
Private Sector Banks
18.1
Old Private Sector Banks
4.9
New Private Sector Banks
13.2
Foreign Banks
5.2
Total SCBs
100
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Who decides Interest rates on bank Deposits?
Before 1992, banks had no freedom to decide the deposit interest rates. After the process of
deregulation of interest rates started in April 1992, almost all the interest rates have now been
deregulated and the banks have the freedom to fix their own deposit rates. (Few exceptions are
there). RBI now prescribes interest rates only in respect of savings deposits and NRI deposits.