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Types of Banks in India

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Types of Banks in India

Introduction

The focus of banking is varied. The needs very different and the methods are different. The Banking institutions offer a miscellaneous collection of things of services from deposits in savings accounts. From housing and business loans to checking clearing, underwriting, and credit cards. The world is that changes quickly and globalization in the action. Technological advances are changing the landscape of the banking industry. Both individuals and business customers are demanding faster and innovative products & services.

The Banking industry is also heavily regulated. It has its own share of challenges to deliver the financial objectives to people and organizations. Thus, characteristics of one-person kinds are evolving. To cater to various business demands, social needs, and also global problems. Different banking institutions conduct their operations in a different manner. Hence they can be classified in a variety of ways. According to the applicable law and regulations. It is based on there has a substantial connection with. On the basis of ownership, on the basis of function, and also structure.

1. Central Banks

Every country has of its own. It is generally regulated by a special act. They are bankers’ banks, and these find their history from the Bank of England. It is called central because it occupies a central position in the banking system. It acts as the highest financial authority. The main function is to regulate and supervise the whole banking system in the country. It is a banker’s bank and controller of credit in the country. They guarantee firmly fixed monetary and financial policy from country to country.

It plays an important role in the economy of the country. Typical functions are implementing the monetary policy, managing foreign exchange and gold reserves, making decisions regarding the official interest rates. It is acting as a banker to the government and other financial institutions. It regulating and supervising the banking industry. These buy the government debt. They have a monopoly on the issuance of paper money.

It frequently acts as a lender of last resort to commercial banks. The Central bank of any country supervises to controls and regulates the activities of all the commercial financial institutions of that country. It also acts as a government banker. It controls and coordinates the currency and also credits the policies of any country. In India, the Reserve Bank of India is the central one. It is the narrowed one and the statutory institution in the money market of the country.

2. Scheduled & Non-Scheduled Banks

Scheduled Banks in India are those that have been included in the Second Schedule of the Reserve Bank of India. The RBI Act, of the year1934. The RBI in turn includes only those banks in this schedule. It satisfies the criteria that are laid down vide section 42 (6) (a) of the Act. As of the year 30 June 1999. There were 300 scheduled financial institutions in India. Having a total network of 64,918 branches.

The Scheduled commercial banks in India are State Bank of India and its associates 5, nationalized banks 20, foreign banks 45, private sector banks 32, co-operative banks, and also regional rural banks. The Scheduled Bank in India means the State Bank of India. It is constituted under the State Bank of India Act, of 1955 that is 23 of 1955. A subsidiary bank as defined in the State Bank of India is the Subsidiary Banks Act of the year 1959. That is 38 of the year 1959.

Non Scheduled Banks

A corresponding new one was constituted under section 3 of the Banking Companies. The Acquisition and Transfer of Undertakings Act of the year 1970. That is 5 of the year 1970. Under section 3 of the Banking Companies that is Acquisition and Transfer of Undertakings Act of the year 1980. That is 40 of the year 1980. Any other that is being included in the Second Schedule. To the Reserve Bank of India Act of the year 1934.

The 2 of the year 1934. But does not include a co-operative bank. The Scheduled Banks have paid-up capital. The reserves of the value of not less than Rs 5 lakhs. They are eligible for loans and other privileges. From the central bank like membership to the clearinghouse. The RBI has no particular control over non-scheduled banks. As they are not included in the second schedule of the RBI Act of the year 1934.

3. The Commercial Banks

Banking means accepting deposits of money from the public. For the purpose of lending or investment. The Deposit-taking institutions take the form of commercial banks. When they use the deposits for making commercial, real estate, and other loans. The Commercial banks in the modern capitalist societies.

They act as a financial mediator. They are raising funds from the depositors and lending the same funds to the borrowers. The commercial bank serves the interests of its depositors. By utilizing the funds that are collected in profitable ventures. In-return they offer a variety of services to their customers.

The Services provided by commercial banks are credit and debit cards, bank accounts, deposits and loans, and deposit mobilization. They also provide the secured and unsecured loans. These commercial banks are the oldest institutions in banking history. They generally have a huge network of branches that are spread throughout the area of their operations.

The Commercial banks may either be owned by the government. It may be run in the private sector.

4. The Public Sector Banks

Public sector banks are those in which the government has major support. They usually need to give special importance to social objectives than to profitability. The main objectives of public sector banks are to make sure there is no monopoly. This control of banking and financial services by a few of the individuals.

The business houses and to ensure the action with regulations. It promotes the needs of the underprivileged and weaker sections of society. Another gathering to the needs of agriculture and other priority sectors. It prevents the concentration of wealth and economic power.

These banks play a revolutionary role in lending. Particularly to the priority sector, give legal agriculture, small scale industries, and small businesses. In India, there are around 27 public sector banks. That has been nationalized by the government. To protect the interests of the majority of the citizens.

5. The State Bank of India & Associates

The State Bank of India is the oldest and also the largest bank of India. State Bank of India that is SBI is multinational banking. It is a financial services company that is based in India. It is a government-owned bank with its headquarters in the place of Mumbai, Maharashtra. As of the year December 2012, it had around15,003 branches, that has 157 foreign offices. Making it the largest banking and financial services company in India by its assets.

The Associates of State Bank of India:

State Bank of India has five associate banks. Which all use the State Bank of India logo. The State Bank of name, that is followed by the regional headquarters’ name. There has been a proposal to merge all the associate banks into a State Bank of India. To create a “megabank” and design the group’s operations. That has not taken shape to date.

So, this is the important information on the topic of Types of Banks in India. Here I have mentioned the types of banks and their functions.

If any Queries or Questions are persisting then, please feel free to comment on the viewpoints.

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