Assets and Liabilities 1

LIABILITIES Paid-up Capital and Reserves Paid-up working capital of Rs.22,348 crores and reserves of Rs.94,240 crores in 2003- 04 to bring abouther constituted 5.9% of liabilities of scheduled commercial banks. Banking edict Act, 1949 The Banking Regulation Act 1949 stipulates provisions to ensure adequacy of minimum pay capital and reserves. For a company incorporated in India a minimum ante up capital of Rs.5 lakhs is prescribed. In the case of a banking company incorporated outside India, Rs.15-20 lakhs depending on location is prescribed. It has to alluviation further, cash or securities for Rs.15-20 lakhs with the Reserve Bank of India (RBI). Foreign banks ar also required to sting with the RBI, 20 percent of the reach from opeproportionns in India every year. They may be exempted for a specified period, if their deposits are adequate in relation to their deposit liabilities. Profits deposited with the RBI are considered an asset of the bank on which the claims of all creditors of the bank in India shall be the first charge. Guidelines for licensing of clean banks were issued by RBI in 1993 as a branch of reforms process. RBI revised the guidelines again in January 2001 for entry of tonic private sector banks.

The guidelines formulated by the RBI in January 1993 in regard to entry of new banks have stepped up the requirement of capital. Now a bank has to be registered as a public control company with a paid-up capital of Rs.200 crores, (January 2001); the initial capital should be raised to Rs.300 crores at heart 3 years; promoters contribution should be 40% of capital at any point of time; NRI participation limited to 40% of paid-up capital; capital adequacy proportion 10%; NBFCs with good track record and net worthy of Rs.200 crores (Rs.300 crores in 3 years) may be converted into a bank; NBFC desiring conversion should have capital adequacy ratio of 12%; and net NPAs not more than 5%. It has been recognize that the solvency of banks depends not only on the stability of the... If you want to get a full essay, order it on our website: Ordercustompaper.com

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