The project on "Banking & Financial Services" is ancillary to the main project titled "Indian Banking in the New Millenium". The purpose of the exercise is to discuss the host of new financial services that have come to become part of the domain of banking services in the decontrolled, liberalised banking in the new Millenium. Rightly the project starts with the article on "Universal Banking" typical of the thinking and aspiration of the Banks at present.

Banks have now as a global development come to diversify their approach and extend many services that blur the difference between "banking service" and "financial service". They sell products like insurance cover, mutual fund investments, trading on the stock exchange on behalf of its customers etc. In short the thinking now is to develop as "Universal Banking Organizations", described as "supermarket for financial products".

The new innovative developments in information technology and telecommunication has enabled banks to successfully carry out this product diversification and enter into financial services at a rapid spree. This project carries out an analysis of this trend and describes the reforms that have taken place in the Insurance, & Mutual Fund sectors and the capital markets. Initially we start with more information on Universal Banking

Presently the project covers six modules as under:

1. Module: 1 - Universal Bank & Financial Services>

   The module describes how Banks have now as a global development come to diversify their approach and extend many services that blur the difference between "banking service" and "financial service". They sell products like insurance cover, mutual fund investments, trading on the stock exchange on behalf of its customers etc. In short the thinking now is to develop as "Universal Banking Organizations", described as "supermarket for financial products". It describes the concept of Universal Bank and also provides RBI guidelines for existing commercial banks to upgrade themselves into Universal Banks.

2. Module: 2 - Digital Cash & Electronic Money

   It has been witnessed across the globe, especially in developed economies that there has been a gradual switchover from the use of paper-based payments media to those based on electronics. While the basic characteristics of these new instruments are by and large similar to those of old, paper-based instruments, these, however, present a different set of challenges to policy makers. Electronic money (e-money) also called digital-cash is one such new product which has appeared on Indian horizon recently. The module describes all about digital cash and also describes RBI policy paper on digital cash.

3. Module: 3 - Credit Cards

   Credit Cards have finally arrived in India. The card industry which is growing at the rate of 20% per annum is flooded with cards ranging from gold, silver, global, smart to secure�.the list is endless. From just two players in early 80s, the industry now houses over 10 major players vying for a major chunk of the card pie.

   The module provides information about credit cards, debit cards and smart cards

4. Module: 4 - Public Debit & How RBI Manages the same

   The Debt Markets play a very crucial role in any modern economy. And more so in the case of developing countries like India which need to employ a large amount of capital and resources for achieving the desired degree of industrial and financial growth. The Indian Debt Markets are today one of the largest in Asia and includes securities issued by the Government (Central & State Governments), public sector undertakings, other government bodies, financial institutions, banks and corporates. The Indian Debt Markets with an outstanding issue size of close to Rs.7000 Billion (or Rs. 7,00,000 Crores) and a secondary market turnover of around Rs.24,000 Billion (in the previous year - 2002) is the largest of the Indian financial markets.

   The module gives a descriptive account of debt market in India in particular about the market for Government securities and how it is being managed by RBI

5. Module: 5 - National Dealing System & Clearing Corporation of India Ltd

   Several measures were taken to continue the momentum initiated by Reserve Bank for developing the Government securities market. One of the important steps is setting up of the Clearing Corporation of India Ltd. (CCIL) with State Bank of India (SBI) as the chief promoter and five other banks and financial institutions as co-promoters. The CCIL will act as a central counter-party in the settlement of all trades in Government securities, Treasury Bills, Repos and foreign exchange. The CCIL will facilitate clearing and settlement of Government securities and foreign exchange transactions by reducing the counter-party risk through multilateral netting of transactions. CCIL will clear transactions in repos and Government securities between its members reported on the Negotiated Dealing System (NDS) of the Reserve Bank and also the rupee-U.S. dollar spot and forward deals. The Reserve Bank has already opened current account and SGL account for CCIL and given approval for its membership to Indian Financial Network (INFINET). CCIL is putting in place the hardware and software and has held many meetings with banks for finalising operational procedures/modalities, changes to systems of member banks, etc. The first phase of the project is expected to go live in November 2001, along with the expected commencement of parallel run of NDS......
   
   (paragraph 1.21 of RBI Publication "Progress & Trends in Banking for year 2002")

   Negotiated Dealing System (NDS) is an electronic dealing platform in government securities and money market instruments. A Negotiated Dealing System (NDS) (Phase I) has already been operationalized effective from February 15, 2002.

   The module deals with details about both NDS & CCIL

6. Module: 6 - Trading of G-sec through Stock Exchanges

   The module deals with the arrangements with both NSE and BSE for trading in Government securities, in particular in the retail segment.