COMPONENTS OF THE INDIAN BANKING SYSTEM
| ENTITIES | LIABILITIES | ASSETS | EXAMPLES |
|---|---|---|---|
| Individuals | Mortgages, Loans, Taxes | Deposits, Banknotes, Government Securities (G-Secs), Stocks, Bonds, Fund Units, SDLs, Benefit Payments | High Net-Worth Individuals, Retail Investors, Family Offices, Other Individuals |
| Businesses and Non-Profits | Loans, Bonds, Equity, Commercial Paper, Taxes | Deposits, Banknotes, Subsidies | Tata Group, Reliance Industries, Infosys, Indian Red Cross Society, Small and Medium Enterprises |
| Financial Institutions | Deposits, Fund Units, Securities Issued, Taxes | Loans, Mortgages, G-Secs, SDLs, Stocks, Bonds, Commercial Paper, Bank Reserves, Deposits, Banknotes, Bailouts | State Bank of India, HDFC Bank, ICICI Bank, SBI Mutual Fund, Life Insurance Corporation of India |
| Foreign Sector | Deposits, Stocks, Bonds, Loans, Taxes | G-Secs, Stocks, Bonds, Loans, Fund Units, Deposits, Banknotes | Reserve Bank of Japan, Norges Bank Investment Management, Foreign Portfolio Investors (FPIs), Global Corporations |
| Public Authorities, Government Trust Funds, State Governments | Bonds, SDLs, Benefit Payments | Government Securities, (State) Taxes | Employees’ Provident Fund Organisation (EPFO), National Pension System (NPS Trust), State PSUs like NTPC, Indian Railways, Government of Maharashtra |
| Reserve Bank of India (RBI) | Banknotes, Bank Reserves | Government Securities, Foreign Exchange Reserves, SDLs | Reserve Bank of India (Mumbai, Regional Offices) |
| Government of India | Government Securities, Subsidies, Bailouts | Taxes | — |
NOTES
The components here are very similar to the Components of the US Banking System. Standard notes regarding the US system applies. There are some differences.
- The Banknotes are Indian Rupees, issued by the Reserve Bank of India (RBI).
- Government Securities (G-Secs) are the US Treasuries analog.
- Foreign Exchange Reserves (US Dollars, Euro, Yen) form a significant part of the asset side of RBI. This is unlike the US case, which does not feature currencies other than US Dollars. (Thus, Bank Reserves and Foreign Exchange Reserves are delineated separately in the Indian case.)
- Foreign Exchange Reserves in the assets side of the RBI correspond to the bank reserves and banknotes in the liabilities side of the Federal Reserve and other significant central banks.
- Unlike the Federal Reserve, the RBI does not hold large quantities of Mortgage Backed Securities. Instead, it is heavily involved with the management of State Development Loans (SDLs) on its assets side.