Types of Banks in India
Reserve Bank of India
There are various kinds of banks that exist in India at different hierarchical level. The Indian banking structure has at the apex the RBI entrusted with the responsibility for the formulation and implementation of the monitory policies of the country, regulating the banking sector, issuing and managing currency, purchasing and selling of government securities, and managing the foreign exchange position of the country. It performs the same functions as central banks do all over the world. But the RBI has taken developmental function also. Under this, it is responsible for institutionalizing of the vast savings of the country, through spread of banking habits and banking infrastructure.
These banks are those which are included in the second schedule of RBI Act, 1935, others are non-scheduled banks. To be included in the second schedule a bank (a) must have a paid up capital and reserves of not less than Rs.5 lakhs, (b) it must also satisfy the RBI that its affairs are not conducted in a manner detrimental to the interests of its depositors.
Non Scheduled Banks
These banks are those joint stock banks that are not listed in the second schedule to the RBI Act, in 1939, i.e., when the RBI Act had been around for four years, there were about 1500 joint stock banks in the country of which as many as about 1400 were unscheduled.
Public Sector Banks
The Public Sector Banks (PSB) comprises of;
1) The State Bank Group - The State Bank of India is unique among the public sector banks because they were mandated by the governing act to extend banking facilities on a large scale and more particularly to rural and semi-urban areas and they also have traditionally conducted the treasury operations on behalf of the central and state governments and has, therefore, had a close relationship with the government departments and undertakings.
2) Nationalized Banks- The Nationalized Banks Group originally comprised 20 banks of which 14 were nationalized in 1969 and 6 in 1980 and one of them – the New Bank of India, was later merged with Punjab National Bank.
3) Regional Rural Banks- Regional Rural Banks came into existence on 2nd October, 1976. The need for these banks was felt because despite the existence of co-operative banks over last several decades and the progress recorded by the commercial banks since their nationalization, there still exists, a vast gap in supply of credit to the rural areas.
Private Sector Commercial Banks
The Private Sector Commercial Banks comprise the unscheduled joint stock banks as well as some of the schedule banks. They are expected to start functioning in a professional manner so as to improve the image of commercial banking system and to win the confidence of the depositing public. Some of the private banks are ICICI bank, HDFC Bank etc.
The Co-operative credit structure in India for short and medium term loans is a three tier federal structure. At the apex in each state is a State Co-operative Bank (SCB), at the district levels are the District Central Co-Operative Banks (DCC), and at the base are the primary credit societies, agricultural credit societies in village and urban co-operative banks and credit societies of the structure only the state cooperative banks figure in the second schedule of the RBI Act and hence have the status of scheduled banks.
The Foreign Banks include the branches in India of those banks which are incorporated abroad. Opening of branches in India of these foreign banks is largely by lateral matter with that country although the RBI remains the licensing authority. These foreign banks operate in India mainly from the Metropolitan cities and maintain a strong profile in banking business related to foreign trade.
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