Principles & Practices

of Banking and
Insurance
Internal Assignment for FY
Topic: Types of Banks
Assigned by: Patricia Mam
Prepared by: Yog Mehta
Roll No.: 8023 (FY), 8125 (SY)
 Table of Contents
• Introduction
• Scheduled banks
• Different types of banks
• a) Reserve Bank of India
• b) Commercial banks
• c) Cooperative banks
• d) Regional Rural Banks
• e) Development banks
• Sources
 Introduction
• There are many different types of banks
operating in India.
• The most important of these are commercial
banks, which can either be scheduled or non
scheduled.
• Nationalised banks are also categorised as
commercial banks
• There are cooperative banks established with
the intent of establishing a mutualised system
of credit

Scheduled banks
• Scheduled banks are the ones listed in the
Second Schedule to the Reserve Bank of India
Act. As per Section 42(6) of the Act, the
minimum capital required was ₹5 lakhs,
however, the minimum capital is ₹100 crores.
• Scheduled banks can use refinance, cash chest,
emergency borrowing, clearing house facilities
of the RBI. In return, they have to maintain strict
compliance & cash reserves. Most banks in
India are scheduled, except for some local area
& rural Cooperative banks.
 List of scheduled banks
(commercial)
• State Bank of India • Bank of India
• SBI's 7 subsidiaries - • Canara Bank
State Banks of • Central Bank of India
Hyderabad, Mysore,
• Dena Bank
Patiala, Saurashtra,
Travancore, Bikaner & • Indian Bank
Jaipur, Indore • Indian Overseas Bank
• Allahabad Bank • Punjab National Bank
• Bank of Baroda • Syndicate Bank
• Bank of Maharashtra • UCO Bank
 List of scheduled banks
(commercial)
• Union Bank of India • Vijaya Bank
• United Bank of India • Catholic Syrian Bank
• Industrial
Development Bank of • City Union Bank
India • Federal Bank
• Andhra Bank
• Dhanlaxmi Bank
• Corporation Bank
• New Bank of India • ING Vysya Bank
• Oriental Bank of • Jammu & Kashmir
Commerce Bank
• Punjab & Sind Bank • Karnataka Bank
 List of scheduled banks
(commercial)
• Karur Vysya Bank • IndusInd Bank
• Lakshmi Vilas Bank • Development Credit
• Nainital Bank Bank
• Ratnakar Bank • ICICI Bank
• South Indian Bank • Kotak Mahindra Bank
• Tamilnad Mercantile • Yes Bank
Bank • IDFC First Bank
• Axis Bank
• HDFC Bank
 Reserve Bank of India
• Originally a private Bank in 1935
• Central bank of India & Apex regulator of the
banking & financial system
• Nationalised on 1st January 1949
• Managed by a Central Board of Directors, 4
Local Board of Directors & the Committee of
the Central Board of Directors
• Central Board members are the Governor, 4
Deputy Governors & 15 nominees of the Central
Government
 Reserve Bank of India
• Issues Notes • Supervising authority
• Manages the money • Credit control
supply • Development of the
• Banker to the financial system
government • Export finance
• Banker's Bank • Interest rate
• Foreign exchange management
management &
control
 Commercial Banks
• Commercial banks can be either scheduled or
non scheduled, but almost all are scheduled.
• Scheduled banks are further divided into public
sector, private sector and foreign banks.
• Commercial banks are primarily motivated by
profit
• They are the most important depositories of
public savings & the most important lenders
 Commercial Banks
• Accept deposits • Commercial banks
• Lend to borrowers provide size, liquidity
and time
• Create credit transformation to
• Discount bills of credit depositors; and low
• Transfer & remittance interest rates &
of funds liquidity to borrowers.
• Other miscellaneous They also act as
functions intermediaries in the
financial system
• Act as agents
Cooperative banks
• Cooperative banking in India started in 1904
with efforts by the government.
• They are integral to the institutional framework
of community development and financial
inclusion
• They are not driven by profit, all surplus is
shared while deficits are financed by members
• Cooperative banks have a federal structure of
three tiered linkages & vertical integration
 Cooperative banks
• They are managed by a Board of Directors on a
one member one vote basis
• They are supported, sponsored and subsidized
by respective governments
• They also get financial & other forms of
support from the RBI, NABARD and other
regulatory and supervisory bodies
• Can be divided into rural or urban; central, state,
district or local area; long term or short term
 Regional rural banks
• Set up by an Act of Parliament in 1976 to
develop the rural economy through promotion
of agriculture, trade, commerce and industry;
as well as through the extension of credit to
small farmers, labourers, artisans and small
entrepreneurs.
• Their maximum authorised share capital is ₹5
crores. The Central Government invests at least
₹25 lakhs are maximum ₹1 crore in RRBs, while
commercial banks invest 35% of the required
capital.
 Regional rural banks
• There are 196 RRBs in India which cover 349
districts.
• Total deposits and advances across all RRBs
are about ₹1800 crores each.
• RRBs are not required to maintain the Statutory
Liquidity Ratios or Cash Reserve Ratios.
• They are regulated and supervised by NABARD,
as well as the Central & State Ministries of
Finance
 Regional rural banks
• SBI has 30 RRBs in India in 13 states with 2349
branches (16% of total RRB branches)
• There are 14,475 rural banks in India, 2126
(19%) of them are located in remote rural areas.
• Some notable RRBs are:
1. Haryana State Cooperative & Apex Bank
2. Syndicate Bank
3. Sindhanur Urban Souharda Cooperative Bank
 Development banks
• The RBI has established multiple development
banks for achieving national economic
objectives.
• They were inspired by the establishment of the
International Bank for Reconstruction &
Development (IRBD) set up after World War II
which was set up for financing the
development of under developed countries.
 Development banks
• IDBI Bank • Small Industries
• Industrial Finance Development Bank of
Corporation of India India (SIDBI)
(IFCI) • NABARD
• Industrial Credit & • Export Import (Exim)
Investment Bank
Corporation of India • National Housing
(ICICI Bank) Bank (NHB)
• Discount Finance
House of India (DFHI)
 Different types of banks
• There also exist investment banks who help
with capital deployment & financial advisory
• Foreign banks have also been active in India.
Some prominent banks are: Standard Chartered,
Deutsche Bank, Bank of America, Citibank
among others
• With the advent of the internet and mobile
phones there have been multiple payment
banks set up to facilitate easy payments
 Sources
• Vipul's BBI Series Textbook: Principles and
Practices of Banking and Insurance, pages 36
to 84
• Wikipedia entries for 'Reserve Bank of India',
'Banking in India'

• Thank You