Banking in India Part 1

Banking in India – Part 2

Part 2

Types of Banks

  • Banks in India can be classified into public sector banks, cooperative banks, commercial banks, small finance banks, regional rural banks, etc.

Commercial Banks

  • Any organisation that deals with the deposits and loans to businesses can be referred to as a commercial bank.
  • Commercial banks are allowed to issue bank checks and drafts and accept term and call deposits.
  • Commercial banks also serve as moneylenders through issuance of loans and overdrafts.
  • They also provide a variety of deposit accounts, including checking, savings, and time deposits.
  • These institutions are run for profit and are often listed on the stock market.

Commercial Banks can be further divided into the following:

Public Sector Banks

  • These are banks in which the Government of India owns the majority of shares.
  • SBI, Bank of India, Canara Bank, Punjab National Bank etc are examples of public sector banks.

Private Sector Banks

  • The majority of a Private Sector bank’s shares are held by private individuals/corporations.
  • These banks are set up to be limited-liability corporations.
  • Examples of private sector banks include ICICI Bank, Axis Bank, HDFC, Federal Bank of India etc.

Regional Rural Banks

  • Regional Rural Banks were established in accordance with the provisions of an Ordinance promulgated on September 26, 1975, and the RRB Act, 1976.
  • They are set up with the goal of ensuring adequate institutional credit for agriculture and other rural sectors.
  • RRBs are only allowed to operate in the areas that have been designated by the Government as covering one or more districts in the state.
  • RRBs are jointly owned by Gol, the relevant State Government, and Sponsor Banks.
  • The issued capital of an RRB is divided among the above groups in the proportions of 50%, 15%, and 35%, respectively.
  • Prathama Grameen Bank set up in the year 1975 is the 1st RRB in the country.

Foreign Banks

  • These banks are registered and have their headquarters in a foreign country, but they have branches in our country.
  • Examples of Foreign banks in India include HSBC, Citibank, Standard Chartered Bank, etc.

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