What is Para Banking?

Banks can undertake certain eligible financial services or activities either departmentally or by setting up subsidiaries is called Para Banking. We could also define Para banking activities as the activities which are done by a Bank apart from its normal day to day activities (like deposit, withdrawal etc.).

 Activities of Indian Banks which come under Para Banking are as follows

  • Banks’ investment in Venture Capital Funds (VCFs)
  • Banks as sponsors to Infrastructure Debt Funds
  • Equipment leasing, Hire purchase business and Factoring services
  • Primary Dealership business
  • Underwriting of Corporate Shares and Debentures
  • Underwriting of bonds of Public Sector Undertakings
  • Retailing of Government Securities
  • Mutual Fund Business
  • Money Market Mutual Funds (MMMFs)
  • Cheque Writing Facility for Investors of MMMFs
  • Insurance business
  • Pension Fund Management (PFM) by banks
  • Referral Services
  • Membership of SEBI approved Stock Exchanges
  • Portfolio Management Services
  • Safety Net’ Schemes
  • Disclosure of commissions/ remunerations