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April 2023

Sectoral Analysis: Banking Sector

By Sunil Gabhawalla | Rishabh Singhvi | Parth Shah
Chartered Accountants
Reading Time 33 mins
INTRODUCTION
 
The banking sector is the backbone of an economy. It not only acts as the guardian of monetary wealth but also aids in the economic growth of the nation by lending to various sectors of the economy. The sector is consumer-centric and therefore, a bank must be present where its consumer is. Therefore, a bank is required to have a branch in multiple locations across the country and at times, even outside India. This necessarily means that a bank must have sufficient human resources, apart from its’ technical resources which can serve its customer. Considering the economic importance of the banking sector, it has always been regulated across the globe. In India, the banking sector is regulated by the Reserve Bank of India. The RBI has prescribed various norms for banks to follow, such as capital adequacy norms, assets classification, etc. A bank is required to hold a certain class of investments and therefore, there are frequent transactions of purchase / sale of securities. The complex network within which the sector operates results in peculiar issues from the GST perspective. In this article, we have attempted to analyse the various issues which plague the sector.
 
TAXABILITY OF REVENUE STREAMS Interest Income
 
A bank carries out a range of activities for its clients
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