BANKING SYSTEM IN INDIA: TYPES
The State Bank of India is the largest and oldest functioning in India since 1806. Today, there are several types of banks to facilitate different types of needs in India. The Reserve Bank of India acts as the central banking institution and is responsible for regulating the functioning of the banking system in India.
Following are the types of banks functioning in India:
The banks listed in the second schedule of the Reserve Bank of India Act, 1954 are scheduled banks and generally include private sector banks, nationalised banks etc. whereas non-scheduled banks are the ones which have not been included in the list under the second schedule have a paid-up capital of less than Rs 5 Lakh.
These banks are based on the profit-making objective and deal with matters like collecting deposits, lending money, fulfilling the working capital needs of large business entities etc.
The banks registered under the Cooperative Societies Act, 1912 are called cooperative banks and can be categorised as non-profit making institutions. These banks are managed by an elected body of members and a set of rules developed by a community.
These banks, as the name suggests, function in the rural areas to meet the rural and agricultural needs.
Development banks focus on serving the long-term economic needs of industries, entrepreneurs, companies etc. These specialised institutions are responsible for industrial and economic growth in the country.
The investment banks act as intermediary between the issuing entity and the individuals who wish to invest. These institutions also perform other important functions such as facilitating mergers, underwriting, financial advising etc.
