05-07-2013, 04:03 PM
Alternate Revenue Sources for the Bank with special reference to IDBI
Alternate Revenue.docx (Size: 48.84 KB / Downloads: 26)
Introduction:
Banking in India in the modern sense originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1770; both are now defunct. The oldest bank still in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.
In recent time, we has witnessed that the World Economy is passing through some intricate circumstances as bankruptcy of banking & financial institutions, debt crisis in major economies of the world and euro zone crisis. The scenario has become very uncertain causing recession in major economies like US and Europe. This poses some serious questions about the survival, growth and maintaining the sustainable development.
OBJECTIVES OF THE STUDY
This study has been undertaken to:
1. To study the current revenue sources for banks in India.
2. To study the alternate sources of revenue.
3. To study the contribution of each alternative source of revenue.
NEED OF THE STUDY
Alternate revenue sources form a vital part of income for banks and banks are therefore looking forward towards increasing their profitability through these sources. Some sources of fee income have been available to institutions for many years, but have recently taken on a more dominant position in the overall financial management strategies of banks. These include deposit service charges, credit card fees, fees associated with electronic funds transfer, demat etc. Although banks have made significant headway in generating traditional fee income, for banks to remain competitive with other financial institutions, they need to expand their product breadth and to improve sales, relationships, servicing, and investment know-how. New types of activities that generate fee income include securities brokerage, film financing, equity participation in business, real estate brokerage services, real estate development, real estate equity participation, and insurance brokerage activities. Banks also receive fee income from a number of offbalance sheet items including loan commitments, note issuance facilities, letters of credit, foreign exchange services, and derivative activities (contracts for futures, forwards, interest rate swaps, and other derivative contracts) The essential function of a bank is to provide services related to the storing of value and the extending credit because bank is a financial institution that provides banking and other financial services