Structure of Banking Sector
in India
Scheduled bank
Which is registered in the second schedule of the reserve
bank of India 1934. It includes these banks, which have a paid-up capital and
reserve of an aggregate value of not less than 5 lakh and must satisfy the
criteria laid down under section 46(6)(a) of the act.
bank of India 1934. It includes these banks, which have a paid-up capital and
reserve of an aggregate value of not less than 5 lakh and must satisfy the
criteria laid down under section 46(6)(a) of the act.
These are the banks where more than 50% stake is held by the
government.
government.
Example : Bank of Baroda, Bank of India, Indian bank.
Non-Scheduled bank
Its means a banking company as define in clause (c) of
section 5 of the banking regulation act 1949 (10 of 1949), which is not a schedule
bank. Banks with reserve capital of less than 5 lakh qualify as non-schedule
bank, these banks are not governed by according to the RBI act they receive no benefit
from the RBI.
section 5 of the banking regulation act 1949 (10 of 1949), which is not a schedule
bank. Banks with reserve capital of less than 5 lakh qualify as non-schedule
bank, these banks are not governed by according to the RBI act they receive no benefit
from the RBI.
Cooperative banks
A co-operative bank is a financial entity that belongs to
its members, is at the same time the
owners and the customers of their bank. Co-operative banks are often created by
persons belonging to the same local or professional community or sharing a
common interest. Co-operative banks generally provide their members with a wide
range of banking and financial services ( loans, deposits, banking account ).
its members, is at the same time the
owners and the customers of their bank. Co-operative banks are often created by
persons belonging to the same local or professional community or sharing a
common interest. Co-operative banks generally provide their members with a wide
range of banking and financial services ( loans, deposits, banking account ).
· Cooperative
banking institutions takes DEPOSITS and LEND MONEY in most parts of the world
banking institutions takes DEPOSITS and LEND MONEY in most parts of the world
· It differs
from STOCKHOLDERS BANK.
from STOCKHOLDERS BANK.
· Follows
all PRUDENTIAL banking regulations.
all PRUDENTIAL banking regulations.
· It provides
FINANCIAL ASSISTANCES to the people with small means to protect them from the
debt trap of the money lenders.
FINANCIAL ASSISTANCES to the people with small means to protect them from the
debt trap of the money lenders.
· Its often
created by a person belonging to the same local or personal community or sharing
a common interest.
created by a person belonging to the same local or personal community or sharing
a common interest.
· Wide range
of banking and financial and financial services, ( LOANS, DEPOSITS, AND BANKING
ACCOUNTS ETC…).
of banking and financial and financial services, ( LOANS, DEPOSITS, AND BANKING
ACCOUNTS ETC…).
Central cooperative banks
These are the federations of the credit societies in a
district.
district.
The funds of the bank consist of share capital, deposits,
loans and overdrafts from state co-operative banks and joint stocks.
loans and overdrafts from state co-operative banks and joint stocks.
They also conduct all the business os a stock bank.
State cooperative banks
The state cooperative bank is a federation of central
co-operative bank and acts as a watchdog of the co-operative banking structure
in the state.
co-operative bank and acts as a watchdog of the co-operative banking structure
in the state.
Its funds are obtained from share capital, deposits, loans
and overdrafts from the reserve bank of India.
and overdrafts from the reserve bank of India.
The state cooperative banks lend money to central
co-operative banks and primary societies and not directly to the farmers.
co-operative banks and primary societies and not directly to the farmers.
They also know as apex banks.
Example : Andhra Pradesh state co-operative bank Ltd, the
Bihar state bank Ltd, Chhatisgarh rajaya sahakari bank maryadit, the goa state
co-operative bank Ltd, the Gujarat state co-operative bank Ltd.
Bihar state bank Ltd, Chhatisgarh rajaya sahakari bank maryadit, the goa state
co-operative bank Ltd, the Gujarat state co-operative bank Ltd.
Indian bank
Indian banks are those banks, which are incorporated in
India.
India.
Commercial bank
A commercial bank is a type of bank / financial institution
that provide services such as accepting deposits, making business loans, and
offering basic investment products.
that provide services such as accepting deposits, making business loans, and
offering basic investment products.
The commercial bank established with an objective to help
businessmen. These banks collect money from the general public and give short-term
loans to businessmen by way of cash credits. Overdrafts, etc.
businessmen. These banks collect money from the general public and give short-term
loans to businessmen by way of cash credits. Overdrafts, etc.
Example : ICICI Bank, state bank of India, axis bank, and
HDFC Bank.
HDFC Bank.
Public sector bank
PUBLIC SECTOR BANKS (PSBs) are banks where a majority stake
( more than 50% ) is held by a government. The share of these banks is listed
on stock exchanges. There are a total of 21 PSBs in India.
( more than 50% ) is held by a government. The share of these banks is listed
on stock exchanges. There are a total of 21 PSBs in India.
The central government entered the banking business with the
nationalization of the imperial bank of India in 1955.
nationalization of the imperial bank of India in 1955.
A 60% stake was taken by the RESERVE BANK OF INDIA and the
new bank was named as the STATE BANK OF INDIA. The next major nationalization of
banks took place in 1969 nationalization of an additional 14 major banks.
new bank was named as the STATE BANK OF INDIA. The next major nationalization of
banks took place in 1969 nationalization of an additional 14 major banks.
The total deposits in the banks nationalized in 1969 amounted
to 50 crores. This move increased the presence of nationalized banks in India. With
84% of the total branches coming under government control.
to 50 crores. This move increased the presence of nationalized banks in India. With
84% of the total branches coming under government control.
The next round of nationalization took place in April
1980. The government nationalized six banks. The total of these banks amounted
to around 200 crores. This move led to a further increase in the number of
branches in the market. Increasing to 91% of the total branch network of the
country.
1980. The government nationalized six banks. The total of these banks amounted
to around 200 crores. This move led to a further increase in the number of
branches in the market. Increasing to 91% of the total branch network of the
country.
Example : state bank of India, Punjab national bank, bank of
Baroda, Canara Bank, Andhra bank, syndicate bank, state bank of Mysore, bank of
Maharashtra.
Baroda, Canara Bank, Andhra bank, syndicate bank, state bank of Mysore, bank of
Maharashtra.
Regional rural banks
RRBs are oriented towards meeting the needs of the weaker
sections of the rural population consisting of small & marginal farmers,
agricultural laborers, artisans & small entrepreneurs.
sections of the rural population consisting of small & marginal farmers,
agricultural laborers, artisans & small entrepreneurs.
As these banks were more suitable for rural development
work, preference should be given to them to open branches in rural banks.
work, preference should be given to them to open branches in rural banks.
The eligible business of commercial banks rural branches may
be transferred to RRBs.
be transferred to RRBs.
The losses in initial years of RRBs may be met by
shareholders & equity capital should also be raised.
shareholders & equity capital should also be raised.
The various facilities provided by sponsor banks should
continue for 10 years in each case.
continue for 10 years in each case.
Concessionary refinance by RBI should be continued.
The control, regulatory and promotional responsibilities
relating to RRBs should be transferred from the government of India to RBIs or
NABARD.
relating to RRBs should be transferred from the government of India to RBIs or
NABARD.
Example: Gorakhpur kshatriya Gramin bank, Haryana kshatriya
Gramin bank Bhiwani, Jaipur-Nagpur anchalik Gramin Bank Jaipur.
Gramin bank Bhiwani, Jaipur-Nagpur anchalik Gramin Bank Jaipur.
Private sector bank
Private sector banks refer to the banks whose majority of the stake is held by individuals and corporations.
Private banks should be established as public limited
companies under the Indian Companies Act 1956.
companies under the Indian Companies Act 1956.
Paid-up capital >300 crores.
The promoters’ share shall not be less than 40 percent.
The voting rights of a shareholder shall not exceed 10 percent.
Banks are required to observe priority sector lending
targets.
targets.
Eight banks were
set-up in the private sector and some mergers took place.
set-up in the private sector and some mergers took place.
Example : ICICI Bank, yes bank, IndusInd Bank, Kotak Mahindra
bank, axis bank.
bank, axis bank.
Foreign banks in India
Foreign banks are those banks, which are incorporated in
foreign country.they have set-up their branches in India.
foreign country.they have set-up their branches in India.
The first foreign bank to start its operation in India was a standard chartered bank in 1858. The second bank was CITI bank which started in
1902.
1902.
There are over 29 foreign banks that operate in India.
Foreign banks are also known for uprooting the unemployment
in India by offering a lot of job opportunities.
in India by offering a lot of job opportunities.
These banks have brought along with them the latest technologies
and banking practices.
and banking practices.
EXAMPLE: Royal Bank of Scotland, Switzerland’s UBS, US-based
GE Capital, industrial and commercial bank of china.
GE Capital, industrial and commercial bank of china.