Types of Banks

1. Commercial Bank

a. Foreign

b. Indian

- Private sector

- Public sector

> Nationalised

> Others

2. Development Bank

3. Cooperative Bank

4. Regional Rural Bank (RRB)

Scheduled Commercial Bank

Those banks which are mentioned in the list of the RBI Act 1934.
These banks are those who have the minimum paid up capital of Rs. 5 lakh in 1934.
All the banks in India are Scheduled Commercial Banks.

Non-Scheduled Commercial Bank

Main Objectives of Commercial Bank

To earn profit
To accept deposits
To give money on the situational and conditional basis
Selling and Purchasing of securities on customer's behalf
Keep the valuable items safe in lockers
On the behalf of Customer, act as paying agent for bills, rent, clearing of checks, giving interest
Transferring the funds from one place to another on the customer's wish
Giving salaries, pensions, providend funds, etc.
Overall objective is to provide banking and financial services to the common man

Development Banks

The main objective of the development bank is to develop the infrastructure of the country. Example of development banks are -

Functions of the Development Banks

Provide refinance facility to the Govt institutions
Provide finances to the Govt Schemes like MNAREGA
Provide Medium & Long term finances or loans (whereas Commercial banks provides loan for short term only)

Other Key Points

They get capital from the Govt, World Bank & by issuing bonds which is guaranteed by the Govt.
They do not deal with the individual customers.
They do not provide the facility of current account, saving account, drafts & cheques.
NABARD is the biggest Development bank of India.

Cooperative Banks

The Cooperative banking system has 3 level structures in India.

Primary Credit Society: It works at the village level and minimum 10 persons can form a primary credit society. They provide loans basically for 1 year and can go upto the maximum of 3 years.
Central Cooperative Society: It works at the district level. The Central Cooperative banks get loans from the state cooperative banks and they give it to primary credit society. The primary credit society and the central cooperative banks are controlled by the state govt.
State Cooperative Society: It works at the state level and they are only controlled by the RBI. The main aim is to act as a link between the RBI & the central cooperative banks. . The State Cooperative Banks has to give 60% of the total amount to the Primary sector and 25% to the weaker sections of the society.

Other Key Points

Saraswat Cooperative Bank in Maharashtra is the largest Cooperative Bank of India.

Regional Rural Banks (RRB)

Established on 2nd Oct 1975 by Mrs. Indira Gandhi in order to provide loans to the small and marginal farmers.
On 2nd Oct 1975, Five RRBs were started in India

Shareholding of RRB - 50% (RBI), 15% (State Govt), 35% (Sponsored Bank)
The Public sector bank who has maximum deposits in that area is appointed as the sponsor bank of RRB.

Wednesday, 9 December 2015