Types of Banks

What is Banking?
Banking is defined as the accepting purpose of lending or investment of deposits, money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise — this definition is given in Indian Banking Regulation Act (1949).

Types of Banks:Some important types of banks in countries like India are discussed below

Central Bank :- In each country there exists central bank which controls a country’s money supply and monetary policy. It acts as a bank to other banks, and a lender of last resort. India Reserve Bank of India (RBI) is the Central Bank.

Scheduled & Non Scheduled Banks :- Under the Reserve Bank of India Act, 1939, banks were classified as scheduled banks and non scheduled banks.. The scheduled banks are those which are entered in the second schedule of RBI Act, 1939. Scheduled banks are those banks an which have a paid up capital and reserves of aggregate value of not less than Rs 5 lakhs and which satisfy RBI.

All Commercial Banks, Regional Rural Banks, State Cooperative Banks are scheduled banks. On the other hand, non-schedule banks are those banks whose total paid up capital is less than Rs 5 lakh and RBI has no specific control over these banks. These banks are not included in the second schedule of RBI Act, 1934.

Commercial Banks :- Commercial banks may be defined as, any banking organization that deals with the deposits and loans of business organizations. Commercial banks issue bank checks and drafts, as well as accept money on term deposits.

Public Sector Banks :- These are banks where majority stake is held by the Government of India. Examples of public sector banks are SBI, Bank of India, Canara Bank, etc.

Private Sector Banks :- These are banks where majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. Examples of private sector banks are ICICI Bank, Axis Bank, HDFC, etc.

Foreign Banks :- These banks are registered and have their headquarters in a foreign country but operate their branches in our country. Examples of foreign banks in India are : HSDC, Citibank, Standard Chartered Bank, etc.

Regional Rural Banks :- Regional Rural Banks were established under the provisions of an Ordinance promulgated on the 26th September 1975 and the RRB Act , 1976.

Cooperative Banks :- A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks function on the basis of “no-profit no-loss”. Anyonya Co-operative Bank Limited (ACBL) is the first co-operative bank in India located in the city of Vadodara in Gujarat.

Development Banks :- Development banks are specialised financial institutions. To promote economic development, development banks provide medium term and long term loans the entrepreneurs at relatively low rate of interest rates. Some examples of development banks in India are Industrial Development Bank of India (IDBI), Industrial Financial Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI) etc.

Exim Bank :- It is popularly known as ‘Export Import Bank’. Such banks provide long term financial assistance to the exporters and importers.

NABARD :- NABARD was established by an Act of Parliament on 12th July 1982to implement the National Bank for Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC).
SIDBI :- The Small Industries Development Bank of India (SIDBI) is a state- run bank aimed to aid the growth and development of micro, small and medium scale industries in India.

NBFC :- A non- banking financial company (NBFC) is a company registered under the companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/ stock/ bonds/ debentures/ securities issued by government, but does not include any institution whose principal business is that of agricultural activity, industrial activity, sale/ purchase/ construction of immovable property. NSFCs are doing functions akin to that of banks; however there are a few differences:

(i) An NBFC cannot accept demand deposits (demand deposits are fund deposits at a depositary institution that are payable on demand – immediately or within a very short period – like your saving or current accounts.)
(ii) It is not a part of payment and settlement system and as such cannot issue cheaques to its customers
(iii) Deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks.

Micro Credit :- It is a term used to extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families.

Micro Finance :- Micro finance offers poor people access to basic financial services such as loans, savings, money transfer services and micro insurance.

Investment Bank :- A financial institution that deals primarily with raising capital, corporate mergers and acquisitions, and securities trades. It aids companies in acquiring funds.

See also:

Post a comment