Bank types & structure of banking in India

1) Central Bank

The Reserve Bank of India (RBI) serves as the Central Bank of India and is responsible for regulating and controlling the monetary and banking system in the country.

2) Commercial Banks

These are the most common types of banks and include public sector banks, private sector banks, and foreign banks. They provide various services like savings and current accounts, loans, and investments.

These are the most common types of banks and include public sector banks, private sector banks, and foreign banks. They provide various services like savings and current accounts, loans, and investments.

Public Sector Banks: Owned and operated by the government, examples include State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB).

Private Sector Banks: These are privately owned and managed banks, such as HDFC Bank, ICICI Bank, and Axis Bank.

Foreign Banks: These banks have branches in India and are headquartered in foreign countries. Some examples are Citibank, Standard Chartered, and HSBC.

Regional Rural Banks (RRBs): These banks cater to rural and semi-urban areas and are owned by the government, commercial banks, and state governments.

3) Cooperative Banks : A Co-operative Bank is registered under the Co-operative Societies Act of 1912 and is run by an elected managing committee. It works on a non-profit, no-loss basis and mainly serves entrepreneurs, small businesses, self-employment, and more in urban areas.

In rural areas, it mainly functions to finance agriculture-based activities like farming, livestock, and hatcheries. There are mainly two types of Co-operative Banks:

Types of Cooperative Bank Function Description
State Co-operative Banks A State Co-operative Bank is a federation of the central Co-operative banks that will act as a custodian of the Co-operative banking structure in the State.
Urban Co-operative Banks The Urban Co-operative Bank is the primary Co-operative bank located in urban and semi-urban areas. The banks essentially lent to smaller borrowers, and businesses centred around a community, locality, and more.


4) Payment Banks

The payment banks are a relatively new banking model in the country that has been conceptualised by the RBI. This bank is allowed to accept a restricted deposit. This amount is limited to Rs. 1 lakh for a customer. The bank also offers services such as ATM cards, net banking and more.


5) Small Finance Banks

  • These banks primarily serve the unserved and underserved sections of the population, including small businesses and low-income individuals.
  • This type of bank is licensed under Section 22 of the Banking Regulation Act 1949, and it is governed by the Provisions Act of 1934.

6) Scheduled Banks

These banks are covered under the 2nd Schedule of RBI Act 1934, and they need to have a paid-up capital of Rs. 5 lahks or more.

7) Non-Scheduled Banks

The non-scheduled banks are local area banks that are not listed in the 2nd Schedule of the RBI Act 1934.

Scheduled vs non-scheduled banks


Meaning of Scheduled Bank

The banks in the Indian banking system are sub categorized as Scheduled Banks, Non-Scheduled Banks, Private Banks and Public Banks. Scheduled banks are those banks that are listed under Schedule II of the Reserve Bank of India Act, 1934.

Types of Scheduled Banks in India

The banks listed in Schedule II are further classified as –

  • Scheduled Commercial Public Sector Banks
  • SBI and its associates
  • Scheduled Commercial Private Sector Banks
  • Old Private Banks
  • New Private Sector Banks
  • Scheduled Foreign Banks in India

Main functions of these banks

Given below is a list of the most important functions of these Scheduled Banks - -

  • Acceptance of deposits from the public –
  • Provide demand withdrawal facility –
  • Lending facility - Transfer of funds –
  • Issue of drafts –
  • Provide customers with locker facilities –
  • Dealing with foreign exchange

Differences Between a Scheduled Bank and Non-Scheduled Bank


Scheduled Bank

  • They are listed in the second schedule of the RBI Act.
  • These have a paid up capital of Rs. 5 lakhs or more and comply with all the requirements of the RBI.
  • They maintain a cash reserve ratio with RBI.
  • They are authorized to borrow funds from the Reserve Bank of India.
  • They are comparatively more financially stable.

Non-Scheduled Bank

  • They are not listed in the second schedule of the RBI Act.
  • There is no such condition that needs to be fulfilled for it to be considered a non-scheduled bank.
  • They maintain the CRR amount with themselves.
  • They are not allowed to borrow from RBI.
  • These banks are riskier.


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