Page 132 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 8: Banking Systems

Interest: The rate of interest has been deregulated by the apex monetary authority which suggests Notes
that the rate of interest offered by one bank for a retail lending scheme may not match with the
one offered by the other bank. The rate of interest is decided by the individual banks.

Figure 8.1: Composition of Retail Lending
(RBI report on Trend & Progress of Banks 2002-03)

1 Housing ` 34654 Crores 50%
2 Consumer durables ` 6904 Crores 10%
3 Loans to Individuals agt Shares etc. ` 1762 Crores 5%
4 Other Priority Sector/ Personal Loans ` 26089 Crores 35%
5 TOTAL ` 69409 Crores 100%

Source: Iyengar, G. Vijayaragavan, “Introduction To Banking” 2011, (P-307), Excel Books Pvt. Ltd.
8.2.2 Retail Banking – Liability Focused Segment (Deposit Accounts)

Saving Fund Account/Savings Bank Account

A saving fund account may be opened by a properly introduced individual singly or jointly,
minors of the age of 10 years and above and minors under natural/legal guardianship.
Saving fund account cannot be opened in the name of any business concern whether proprietary/
company/partnership or association. Savings fund account cannot be opened in the name of:
Panchayat Samitis
Government departments

State housing boards
Water/Sewerage and Drainage Boards
Housing Corporations/societies
State Text Book Publishing Corporations
Municipal corporations

Industrial Development Authorities
State Electricity Boards
State Text Book Publishing Corporations

Metropolitan Development Authority
Any bank including land development banks
The following are the exceptions to the above. Saving Fund account can be opened in the name
of the following:

Any Government dept./body/agency in respect of grants/subsidies released for
implementation of schemes sponsored by Central Government subject to production of
an authorization from respective Govt. departments to open savings fund account, e.g.,
District Rural Development Agency, Member of Parliament Local Area Development
Scheme, Khadi and Village Industries Board, Agriculture Produce Market Committee.
Companies licensed under Section 25 of Companies Act, 1956, which are permitted not to
add to their names the word “limited “, e.g., Indian Banks Association.

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