How to start your own private bank in India | How to start a bank with no money
Friends, we are informing you about business ideas and strategies through our posts, today we will tell you about one such business. Today we will tell you How to start your own bank.
Almost all people keep their money in the bank to secure income in their hard work, as it is considered to be the most secure method. You don’t have to carry money in your pocket, you can withdraw and deposit money from your bank wherever you want. So now is the time for this business of private bank to be profitable for you. You may be wondering how to open a new bank? And can you open your own bank? Today we will tell you the answers to these questions through our post. So dedication to you you read this post in full.
The housewife, professional, or student all need this banking service, and the banking system of any country is the backbone of that country. And in India, you will find many types of banks, such as –
Public Sector Banks
Most of the public sector banks in India are nationalized. And all these banks are controlled by the government.
- State Bank of India (SBI)
- Bank of India (BOI)
- Allahabad Bank
- Bank of Maharashtra
- Indian Overseas Bank
- IDBI Bank
There are about 21 nationalized banks like these in India. Among these banks, the State Bank of India is the largest bank, and SBI Bank is one of the top 50 banks in the world.
Private sector banks
Private sector banks are under the control of private shareholders, which can be a company or an individual. These private banks have to comply with all the rules and regulations of the Reserve Bank of India.
- HDFC Bank
- Axis Bank
- Yes Bank
- ICICI Bank
- Kotak Mahindra Bank
Such banks are private sector banks.
Foreign Bank means that if a bank is doing its business in India and the headquarters of that bank is in another country, then all those banks fall under the category of Foreign Bank.
- HSBC Bank
- Standard Chartered
Banks in this category are foreign banks. And when Indian banks do business in another country, the Indian bank in that country will be called a foreign bank.
Small finance banks
Small finance banks are those people in society who cannot take financial loans from big banks for financial needs. Small finance banks were opened to support those people in society. All these banks operate mostly in villages or small areas.
- Fincare small finance bank
- Capital small finance bank
- Suryoday small finance bank
Such a category of banks is Small Finance Bank.
Corporate banks operate on the principle of being non-profit and without loss. Which is registered in the Cooperative Societies Act 1912. And all these banks help people for small businesses.
- Small businesses
- Self employee
All these corporate banks help people to open small businesses.
Payments Bank services are limited to payments. And using all these banks, the customer can pay up to a minimum of one lakh rupees. The activities of all these banks are respected by the Reserve Bank of India, and all these banks also provide all the facilities to the customers like credit cards, ATM cards, net banking, mobile banking.
- Paytm Payments Bank
- Airtel Payments Bank
- Jio Payments Bank
Banks in this category are Payments Banks.
You may have understood how many types of banks there are in India. How do you open a new bank? In India, you can only open a private bank, and you can find all the guidelines for opening a new bank on the official website of the RBI.
Eligibility criteria for opening a new bank
The Eligibility Criteria for opening a new bank are –
- Any individual who is a citizen of this country or a non-banking financial corporation who has assets worth around Rs 500 crore.
- Anyone with 10 years of experience in the banking or finance area.
- The private sector has been doing its business successfully for 10 years. The company has an asset of Rs 5,000 crore, and 80% of it has to be earned from the financial domain.
- Individuals or companies are not such financial defaulters.
- The company must hold 40 percent ownership of the bank for five years.
- Foreign shareholding for the first five years should not exceed 49%. And no single foreign shareholder can hold more than 5% of the shares.
New Bank Project Details
After completing the RBI guidelines, you will need to provide your bank’s project details. And in the Details Project Report, you need to know-
- How the bank will work
- What is the business plan of the bank?
- What kind of information technology will the bank use, and what will be its capability?
- Ground-level information of the bank should not be unrealistic.
- How the bank will achieve its financial goals.
All these things you have to mention in the project details of the bank.
The pattern of shareholding or management
You need to decide on the Pattern of shareholding or management along with the project details –
- Some people will be shareholders in your bank and some people will be in management.
- And what will be the foreign equity participation of your bank, all this information you need to inform the RBI.
- Also, people associated with the bank, promoter or shareholder expertise, track record of business, financial worth, memorandum, and articles of association.
- 10 years latest financial statement.
- Income tax return in three years.
You will have to declare a lot of such information to the RBI.
Bank Business Income Source
Customer Deposit Income
And with that, you also need to know that the bank has started the business for money income. Because the biggest source of income in India is depositing. From the amount of money that the customer of the bank deposits in the bank, to the capital bar of the bank. And the bank charges a minimum of a small amount from each customer for each transaction.
Customer Loan Income
Another major source of income for a bank is a loan. Most banks offer personal, educational, business and gold loans. Hey, the interest rate of all the loans is almost always high, and the bank makes a good profit from the interest. If a person wants to start his own business, the bank charges capital to all those people and charges interest from there.
Card service income
In addition to loans and deposits, banks provide a variety of cards to their customers. And those are the things that the bank charges a fixed amount from the customer to use, such as –
- ATM card
- Credit card
The bank also derives its income from many other sectors –
- Checking accounts
- Mutual fund revenue
- Savings account
- Custodian fees
- Investment management fees
Bank Physically present Proof
And after the completion of documents, registration, and licensing in this manner, the bank will have to provide proof of its physical presence to the RBI. This means that a bank has to open branches in small and big villages or towns of the country along with the headquarters air, which will help the bank to grow its business. Because the more people the bank can reach, the more its business will grow.
The bank must have its own or rented space to open a branch, and its security maintenance, to manage it, must be associated with facilities like employment, electricity, computer system, power backup.
Bank security system
After opening a bank, the portal of that bank needs a security system. And in this system, the bank will be able to provide its internal and customer banking services. And with the help of this security system, the bank will be able to save money from hacking, online Ford, own system, and customer deposit. For this, every bank has to secure its network system. Hey, to maintain the system, the bank company needs to employ a server or skill operating system. It costs a lot for another banking company.
Bank official website
A bank’s website is not just for providing information to the people, we can see customer account details on the bank’s official website. And the bank customer can get updates about transactions, online payments, and accounts through the bank’s official website. For this we want a secure website of the bank to be able to handle all the customer data of the bank securely.
People go to ATMs almost every time they need money. For this the bank has to provide good ATM service to its customers. Withdrawal of ATM service money as well as benefits like deposit and passbook printing. ATMs need to have bank availability, cleanliness, and security guards.
Branding and advertising
If we talk about branding and advertising, then when any bank starts its service, the bank has to spend on its branding and advertising to increase the customer base of that bank so that the bank can deal with its competitor. You also need to let people know what services you are offering at your bank, and why those services are better than other banks. When people find out about the services and specialties of a bank, they will open an account with that bank. For this, most banks advertise on TV and digitally. And to do all this costs the bank a hefty amount.
Another important thing about a bank is its employees. A minimum of 7 to 10 people is required to run a small branch of any bank. And the more the bank increases its services, the more manpower the bank will need.
- Branch manager
- Branch Cashier
- Loan Consultant
- Customer Executive
Running a bank requires a large number of employees. The bank incurs a lot of expenses for the recruitment and salary of the employee.
And in this way, the activities associated with the banking sector and the banking sector become very large. And it may not be easy to give all the information of our short post. If we have tried our best to give you full information so that you do not have to go to any other website to find out information about it.
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