Banking Pattern in India!!! So guys, in the previous post, we have studied Apex Bank of India: Reserve Bank of India. Now, in this post, we shall read about the Banking Pattern in India.
All banks which are included in the second schedule of the bank of India Act, 1934 are Scheduled banks. So, we divide scheduled banks into the following two broad categories,
- Scheduled Commercial Banks and
- Scheduled Co-operative Banks
Banking Pattern in India: Scheduled Banks
Commercial Banks
Commercial Banks defined as any banking organisation that deals with the deposits and loans of a business organisation. These banks issue bank cheques and drafts as well as accept money on term deposits.
These banks also act as moneylenders, by way of instalment loans and overdrafts. So, commercial banks also allow for a variety of deposits accounts,
- Checking,
- Savings and
- Time deposit Account.
These institutions are run to make a profit and owned by a group of individuals.
Commercial Banks are further divided into the following types,
- Public Sector Banks,
- Private Sector Banks,
- Foreign Banks and
- Regional Rural Banks (RRBs).
Public Sector Banks
The Government of India has the majority of the stake. Examples of Public sector banks are SBI, Bank of India, Canara Bank, etc.
Private Sector Bank
Private individuals held the majority of the share capital of these banks. These banks are registered as companies with limited liability. Examples of private sector banks are Axis Bank, HDFC Bank etc.
Foreign Banks
These banks are registered and have their headquarters in a foreign country but operate their branches in our country. So, examples of foreign banks in India are HSBC, Citibank, Standard Charted Bank etc.
Regional Rural Banks (RRB)
Under the provisions of an ordinance published on the 26th September 1975 and RRB Act, 1976, Regional Rural Banks established.
These banks have their own objective to ensure sufficient institutional credit for agriculture and other rural sectors.
The area of operation of RRB’s is limited to the area as notified by the government of India.
The Government of India, the concerned state government and sponsor Banks (all scheduled commercial banks and one state cooperative bank) are the owner of Regional Rural Banks.
So, the issued capital of an RRB is shared by the owners in the proportion of 50%, 15%, and 35% respectively.
Prathama Bank is the first Regional Rural Bank in India located in the city of Moradabad in Utter Pradesh.
Cooperative Banks
A cooperative bank are the institutions in which belonging members of the bank are both owners and customers of their banks.
So, cooperative 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 accounts etc.)
They provide limited banking products and are a specialist in agriculture-related products. So, cooperative banks are the primary financiers for,
- Agricultural activities,
- Some small-scale industries and
- Self-employed workers.
Co-operative banks work on the basis of “no profit – no loss“. So, Anyonya Co-operative Bank Limited (ACBL) is the first co-operative bank in India located in Gujarat.
State Bank of India
The Government of India nationalized the Imperial Bank of India in 1955. So, the Reserve Bank of India taking a 60% stakes and renamed it as the State Bank of India.
- SBI is the largest banking and financial services company in India by revenue, assets and market capitalization.
- It is a state-owned corporation with its headquarter in Mumbai, Maharastra.
- This bank is the oldest bank of India, existing from the British Era. Bank of Madras merged to other two presidency banks – Bank of Calcutta & Bank of Mumbai. So, the merging of these three banks formed the Imperial Bank of India. So, later Imperial bank of India became the State bank of India.
- SBI provides a range of banking products including products aimed at non-resident Indians (NRIs).
- The State Bank of India, with over 18,324 branches has the largest banking branch network in India.
The process of merging of State bank of Indore was completed by April 2010. So, State Bank of India’s merger with its five associate banks,
- State Bank of Patiala,
- State Bank of Bikaner and Jaipur,
- The State Bank of Raipur,
- State Bank of Travancore,
- State Bank of Hyderabad as well as with
- Bhartiya Mahila Bank (BMB)
became effective from October 1, 2017.
Non-Banking Subsidiaries of SBI
- Capital Markets Ltd.
- Funds Management Pvt. Ltd.
- Factors & Commercial Services Pvt. Ltd.
- Cards & Payments Services Pvt. Ltd.
- DFHI Ltd.
- SBI Life insurance Company Ltd.
- SBI General Insurence
So, guys, this was all about the Banking pattern in India. In the upcoming post, we shall discuss Inflation.
Thanks and Stay Wealthy. 🤑😊
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