Banks play an essential role in a country’s financial ecosystem. These financial institutions assist a country’s economy to flourish and allow retail customers and companies to securely store money and get credit among other services. The modern Indian banking system is divided into scheduled banks and non-scheduled banks.
Read on to know more about the types of scheduled banks, their examples, and how they operate in India.
The RBI grants a scheduled bank status to a financial institution only if it meets certain criteria in the RBI Act of 1934 and the Banking Regulation Act of 1949. Scheduled banks are those listed in Schedule II of the Reserve Bank of India Act of 1934 and constitute the majority of banks operating under the central bank. As per the rules, the bank’s paid-up capital and raised funds must be at least Rs. 5 lakh.
Scheduled banks are also members of clearing houses. They are responsible for maintaining an average daily cash reserve ratio with the central bank.
The RBI permits scheduled banks to issue loans at bank rates. The RBI has also laid specific management standards in RBI directions for 2015. Some of these standards include the selection of the CEO and other senior management personnel, the preservation of capital adequacy, asset quality, and profitability.
The primary functions of scheduled banks are mentioned below.
All Scheduled Banks listed with the RBI have major advantages over other banks.
The list of scheduled banks in India is lengthy due to its many institutions. Scheduled banks include all nationalised, cooperative, multinational, and regional rural banks.
Scheduled banks are further classified as follows:
Here is a list of scheduled commercial banks in the public and private sectors:
The following are some of the examples of scheduled commercial banks in India (public sector):
Below mentioned are few examples of scheduled commercial bank in India (private sector):
Here is the list of some of the foreign banks with branches in India:
These are the banks in which the government of India owns more than 50% of the stock. As a result, the government is the primary stakeholder in PSBs. As of 2022, there are 12 public sector banks, but there were once 27 banks that have now been merged.
These are the banks in which private entities have the most stake. There are 21 private sector banks in total. All private sector banks provide their consumers with various banking and financial services.
Private sector banks are classified into two types:
In India, there are 45 foreign banks. Foreign banks are international banks that must abide by the rules and regulations of both their home and host countries. They have several loan limits based on the capital of their partner banks.
Non-scheduled banks are those which are not regulated by the regulations of the RBI. They are not mentioned in the second schedule of the RBI Act of 1934. They must also meet the cash reserve requirement with their funds, not with the RBI. They are generally smaller in size, cover a limited range and have additional financial restraints as well.
Below are some of the critical differences between scheduled bank and non-scheduled banks:
|BASIS FOR COMPARISON||SCHEDULED BANKS||NON-SCHEDULED BANKS|
|Meaning||A scheduled bank means a banking company with a minimum paid-up capital of Rs. 5 lakh that does not jeopardise depositors’ interests||Non-scheduled banks do not follow the Reserve Bank of India’s rules or do not fall under the category of scheduled banks|
|Second Schedule||The second schedule includes these banks||The second schedule does not include them|
|Cash Reserve Ratio||Maintained with RBI.||Maintained with themselves.|
|Borrowing||Scheduled banks can borrow funds from the RBI for routine banking functions||Non-scheduled banks are not permitted to borrow funds from the RBI for routine banking purposes|
|Returns||Submitted regularly||There is no such requirement to submit periodic returns|
|Members of clearing house||It can become a member of the clearing house||It cannot become a member of the clearing house|
There are now many banks offering various services and catering to residents’ financial requirements as per the rules set by the RBI. The Reserve Bank of India, or RBI, sets the rules and regulations for India’s scheduled banks. These are licensed financial institutions that accept deposits and grants various loans, credit and debit cards, and other financial services.
Ans. Scheduled banks are those designated in Schedule II of the Reserve Bank of India Act of 1934. To qualify as a scheduled bank, the bank’s paid-up capital and raised funds must be at least Rs. 5 lakh. These banks are eligible for low-interest RBI loans.
Ans. To qualify as a scheduled bank, the bank’s paid-up capital and collected funds must be greater than Rs. 5 lakh. Scheduled banks are eligible for Reserve Bank of India loans at bank rates and are granted membership in clearinghouses.
Ans. The following are the advantages of being a scheduled bank under the Reserve Bank of India Act, 1934:
• It becomes eligible for debts/loans at the RBI’s bank rate.
• The clearinghouse membership is automatically acquired.
• The RBI is offering a discount on first-class exchange bills.
Ans. Scheduled banks are those mentioned in the Reserve Bank of India Act, 1934’s second schedule. To qualify as a scheduled bank, the bank’s paid-up capital and raised funds must be at least Rs. 5 lakh. Scheduled banks are eligible for low-interest Reserve Bank of India loans and membership in clearinghouses.
Ans. Scheduled banks are permitted to conduct standard banking operations such as receiving deposits, making loans, and providing other financial services. A scheduled bank can apply for bank rate loans from the RBI. They are also eligible to join clearing homes.
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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