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TYPES OF BANKS

MR. CHANDRU SHREE S M

II YEAR B.ED

LOYOLA COLLEGE OF EDUCATION

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There are different types of banks performing different sets of functions.
Though all types of banks deal in money, each type cater to the needs of different sectors.

Introduction

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Banks can be classified as follows:
Based on the functions of banks.
Based on the status given by the RBI - Reserve Bank of India
Based on the ownership pattern

CLASSIFICATION

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1. Based on the functions of banks

1. Central Bank

A central bank being generally recognized as a bank which constitutes the apex of the monetary and banking structure of its country and which performs as best as it can, in the national economic interest.

Ex: RBI

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2. Commercial Banks

Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport, etc. in order to earn profit.

Ex: SBI, Karur Vysa Bank etc..

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3. Development Banks

Huge finance required for investment, expansion and modernisation of big industries and others are granted by a separate type of banks called development Banks. They are also called industrial banks.

Ex : IFCI, SIDBI etc..

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4. Cooperative Banks

All cooperative banks in India are owned by its customers or members who are farmers, small traders and others.

Cooperative banks in India are either urban based or rural based.

Ex : NAFED

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5. Foreign Banks

Banks which have registered office in a foreign country and branches in India are called foreign banks.

Ex : YES Bank

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6. Regional Rural Banks-RRBs

The RRBs were formed under the Regional

Rural Bank Act 1976, jointly by the Central Government, State Government, and a

sponsor bank .

Ex: Pallavan Grama Bank

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7. Specialised Banks

Some banks are created for special purposes by the Government. Export and Import Bank of India was set up through Export-Import Bank of India

Act, 1981

Ex: EXIM Bank

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8. Local Area Banks

Local Area Bank (LAB) scheme was introduced by the RBI in August 1996. They are small private sector banks established in rural and semi-urban areas. Each bank serves two or three adjoining districts only.

Ex: Coastal Bank

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9. Small Finance Banks

Small Finance Banks (SFBs) are private sector banks set up in unbanked and underbanked regions of the country to achieve financial inclusion.

Ex : ESAK Bank

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10. Payment Bank

Payment banks are formed to widen the spread of payment and f inancial services to small businesses, low-income households, and migrant labourers.

Ex : Airtel Payments Bank

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2. Based on the Status given by the RBI

Scheduled Banks and Non Scheduled Banks

All banks which satisfied the norms and included in the Second Schedule to the RBI Act, 1934 are called scheduled banks.
There is no non-scheduled commercial bank (private sector, public sector and foreign banks) in India.
There are five Urban Cooperative Banks and three Local Area Banks which function as non-scheduled banks in India.

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3 . Based on the Ownership Pattern

Any bank in which not less than 51 percent of shares are owned by the Government are called Government banks or public sector commercial banks (Total 21).
All nationalized banks (19 banks, in 2017), SBI and IDBI Ltd. are public sector commercial banks.
Ex: IFCI, SIDBI, EXIM Bank et.