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.

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:

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.

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 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.

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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