Posted in Finance, Accounting and Economics Terms, Total Reads: 341
Definition: Banking Department
Banking Department refers to a regulating or governing body that standardizes the processes of various financial institutions. Basically it gives a sort of guidelines for the banking industry, that is what are the best practices and what is not legal. It ensures that the financial institutions are stable, safe and accessible for all the consumers, be it a corporate consumer or retail consumer. The Banking department of any country is a very important entity, as the stability and proper functioning of the banking industry is dependent on that. It gives the confidence for the investors to invest in a given country. If the banking industry of any country is not stable, it gives bad signal to the investors, both local and foreign investors and hence hampers their confidence and hence the economy of that country suffers and there is a flat growth or sometimes negative growth rate. Hence, the role of the banking department of any country cannot be undermined. The Banking department should be separate from the powers of government for greater transparency and maintaining the credibility and having fast decision making capabilities.
During any inconsistency any consumer can file a complaint with the banking department against that particular financial institution. Banking department then handles the case and investigates and regulates the financial institution. The enforcement of the decision made by the banking department of any country is very important. After that only, other banks will take care of the best practices and wont indulge in bad practices and hence the investor confidence, both local and foreign will increase, giving good signal for the economy as a whole.
In India, Reserve Bank of India is responsible for maintaining the stability of the banking industry among other things. The main body is called Department of Banking Supervision, which comes under the Reserve Bank of India.