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November 20, 2017

Scheduled Commercial Banks – Business in India

1. Liabilities to the banking system: Liabilities to the banking system indicate total liabilities of all scheduled commercial banks to the banking system which means the amount banks owe to each other. Banks invest in demand and time deposits of other banks, certificates of deposit (CDs), borrow from other banks in call/money/notice market, market repo etc. These liabilities are divided under three heads viz., demand and time deposits, borrowings and other demand and time liabilities. Net liability of a scheduled bank towards the Banking System is treated as a liability for the purpose of maintenance of cash reserve.

1.1 Demand and Time Deposits from Banks: Demand and Time Deposits from Banks includes inter-bank deposits in current, savings and fixed deposits accounts. Deposits of co-operative banks with the scheduled co-operative banks are not included in this item.

1.2 Borrowing from banks: Borrowing from banks represents the inter-bank borrowings and includes inter-bank deposits at call or short notice not exceeding 14 days.

1.3 Other Demand and Time Liabilities: Other Demand and Time Liabilities represent the amount due to the banking system which is not in the nature of deposits or borrowings. Whenever it has not been possible to segregate the liabilities to the banking system from the total of ‘Other demand and time liabilities’ the entire ‘Other demand and time liabilities’ are treated as liability to ‘Others’.

2. Liabilities to Others: Liabilities to Others are the most important and largest part of banks’ liabilities. It includes customer deposits, borrowings by the banks and other time and demand liabilities.

2.1 Aggregate Deposits: Aggregate Deposits is the total of demand and time deposits maintained in the bank.

2.1.1 Demand deposits: Demand deposits are liabilities which are payable on demand. They include current deposits, demand liabilities portion of savings bank deposits, margins held against letters of credit/ guarantees, balances in overdue fixed deposits, cash credit etc.

2.1.2 Time deposits: Time deposits are those which are payable otherwise than on demand and they include fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits etc.

2.2 Borrowings: Borrowings represent the total borrowings from outside the banking system apart from domestic borrowings. It also includes loans/borrowings from abroad by banks in India. Borrowings from the Reserve Bank of India are excluded from this item.

2.3 Other Demand and Time Liabilities: Other Demand and Time Liabilities (ODTL) include interest accrued on deposits, bills payable, unpaid dividends, suspense account balances representing amounts due to other banks or public, net credit balances in branch adjustment account, any amounts due to the banking system which are not in the nature of deposits or borrowing. Such liabilities may arise due to items like (i) collection of bills on behalf of other banks, (ii) interest due to other banks and so on. If a bank cannot segregate the liabilities to the banking system, from the total of ODTL, the entire ODTL may be shown against this item.

3. Borrowing from Reserve Bank: Borrowing from Reserve Bankrepresents the total borrowings from the Reserve Bank of India. Borrowing under Repo account and other refinance facilities are included under this head.

4. Cash in Hand and Balances with Reserve Bank: Cash in hand and Balanceswith Reserve Bank represents the total of cash in hand with banks and their balances with the Reserve Bank of India.

4.1 Cash in hand: Cash in handrepresents notes and coins held by the banks as till money. Currencies of foreign countries are not included.

4.2 Balances with Reserve Bank: Balances with Reserve Bankrepresents the total of the actual outstanding balances maintained by the scheduled banks in their current accounts with the Reserve Bank of India and includes the minimum balances to be maintained with the Bank in terms of Section 42(1). The balances, if any, maintained by the banks incorporated outside India with the Reserve Bank of India in terms of Section 11(2) of the Banking Regulation Act, 1949 are also included in this item.

5. Assets with the Banking System of a bank include balances and advances of the bank with the banking system. It is the sum of 5.1, 5.2, 5.3 and 5.4.

5.1 Balances with Other Banks: Balances with Other Banks in current account represent the demand deposits held with other banks. Balances with other banks in other accounts are the amount held with other banks, in accounts other than the ‘current account’.

5.2 Money at Call and Short Notice: Money at Call and Short Noticerepresents the amount made available to the ‘banking system’ by way of loans or deposits repayable at call or short notice of a fortnight or less.

5.3 Advances to Banks: Advances to Banksrepresent the loans other than money at call and short notice (5.2) made available to the banking system. Advances granted by scheduled state co-operative banks to co-operative banks are excluded from this item.

5.4 Other Assets: Other Assetsrepresent any amount due from the banking system which cannot be classified under the above sub-category. Amount, if any, held with other banks under the inter-bank remittance facilities scheme is included in this item.

6. Investments: Investments indicate the outstanding position of the total investment in Government and other approved securities by the banks.

6.1 Investments in Government Securities: Investments in Government Securities includes investments in the securities of the Central and State Governments including treasury bills, postal obligations such as national savings certificates etc. Government Securities deposited by foreign scheduled banks under Section 11(2) of the Banking Regulation Act, 1949 are also included here.

6.2 Other Approved Securities: Other Approved Securities include the investment in the securities of State associated bodies such as Electricity Board, Housing Board, and Corporation Bonds, debentures of Land Development Bank, shares of Regional Rural Banks etc. which are treated as approved securities under Section 5(a) of the Banking Regulation Act, 1949.

7. Bank Credit is arrived at by summing up food credits (7.1) and non-food credits (7.2) which are defined below.

7. a1 Food Credit relates to the advances made by the scheduled commercial banks to Food Corporation of India, State Governments and State Co-operative agencies for food procurement operations.

7. a2 Non-food Credit comprises:

Loans are a one of the most important and largest advance made against with or without securities; a loan may be in the form of demand loan.

Cash-credits are an arrangement by which a banker allows his customer to borrow money up to a certain limit. Cash credit arrangements are usually made against the security of commodities pledged with bank.

Overdrafts represent all types of credit facilities (other than by way of bills purchased and discounted) such as demand loans, term loans, cash-credits, overdrafts, packing credit etc.granted to constituents other than banks.

7b.2 Inland Bills: Inland Bills represent the total bills drawn and payable in India, including the demand drafts and cheques, purchased and discounted by all the scheduled banks. This excludes bills rediscounted with the Reserve Bank of India and other financial institutions.

7b.4 Foreign Bills represent the foreign bills which cover all import and export bills including demand draft drawn in foreign currencies and payable in India, purchased and discounted by all the scheduled banks.

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