Types of banks In India
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Types of banks In India

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1- Central Bank
2- Cooperative Banks
3- Commercial Banks
4- Regional Rural Banks (RRB)
5- Local Area Banks (LAB)
6- Specialized Banks
7- Small Financed Banks
8- Payments Banks


1- CENTRAL BANK- Our country’s central bank is the Reserve Bank Of India(RBI).It was set up in 1935. The RBI is also known as the ‘Government’s Bank’ or the ‘Banker’s Bank’ of India.The role of the RBI is regulating and guiding the other banks of the country and carry out a nation’s monetary policy and control it’s money supply. The function of Central Bank are as follows-
• Bank of Issue 
• Banker, Agent and Advisor to the Government 
• Custodian of Cash Reserves 
• Custodian of Foreign Balances,
• Lender of Last Resort 
• Clearing House for Transfer and Settlement
• Controller of Credit 
• Protection of Depositor’s Interest.


2- COOPERATIVE BANKS- These banks are regulated by the RBI and governed by the Banking Regulations Act 1949 and Banking Laws Act 1955 to provide short-term loans to agriculture and related industries.Its purpose is to enhance social welfare by providing low interest loans.There are total 31 cooperative banks in India.
        Features of the Cooperative Banks are as follows-
• Customer Owned Entity
• Profit Allocation
• Democratic Member Control
• Financial Inclusion
       There are 4 types of Cooperative banks are available in India-
A- Central Cooperative Banks
B- State Cooperative Banks
C- Primary Cooperative Banks
D- Land Development Banks


3- COMMERCIAL BANKS- Commercial banks is an institution which accept various types of deposits from the public especially from its clients, including saving accounts, recurring deposits, and fixed deposits.These deposits are returned whenever the customer demands it or after a certain time period.
        Commercial banks provide loans and advances in a various forms, like overdraft facility, cash credit, bill discounting, money at call etc. They also give demand and term loans to all types of clients against proper security.
           Commercial Banks further classified into three parts-
• Public Sector Banks- Public sector banks are those banks in which the government or the country’s central bank owns the majority of the stock.Currently there are 12 public sector banks in India. For example- State Bank of India, Punjab National Bank etc.
• Private Sector Banks- Private sector banks are those in which a private entity, an individual, or a group of people owns the majority of the stock.At present, there are 21 Private Sector Banks in India. For example- HDFC Bank, ICICI Bank etc.
• Foreign Banks- This category includes banks with headquarters in other nations and branches in the United States. There are around 46 foreign banks that are operating in India. For example- City Bank, Doha Bank, Bank of America etc.


4- REGIONAL RURAL BANKS (RRB)-  RRBs were founded in 2 October 1975 and are governed by the 1976 Regional Rural Bank Act. The main objective of the RRBs is to provide credit and other banking facilities to the small, marginal farmers, agricultural laborers, small artisans, etc. in the rural areas for boosting the rural economy.
            They are a government owned scheduled commercial banks of India that operate at regional level in different states of India.These banks are under the ownership of Ministry of Finance, Government of India(GOI). They were created to serve rural areas with basic banking and financial services.
             The RRBs were owned by the Central government with 50% State government with 15% and the sponsoring bank with 35% shareholding respectively.There are 43 RRBs in since 1 April 2020.


5- LOCAL AREA BANKS (LAB)- Local Area Banks are non-scheduled banks.
They are governed by the provisions of the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949.
          The main objectives of LAB are to provide an institutional mechanism for promoting rural and semi-urban savings and to provide credit for economic activities in local areas. The area of operation of LAB is limited to a maximum of three geographically contiguous districts and are allowed to open branches only in its area of operation.
           They are to be registered as Public Limited Companies under the Companies Act,1956 and are non-scheduled banks so they cannot borrow funds from the Reserve Bank of India(RBI), like other scheduled commercial banks.
List of Local Area Banks:
•Coastal Local Area Bank Ltd  
•Krishna Bhima Samruddhi LAB Ltd
•Subhadra Local Bank Ltd

6- SPECIALISED BANKS- Specialised Banks are those banks which cater to the requirements and provide overall support for setting up business and engage themselves in some specific area or activity are called specialised banks.
        Specialized Banks concentrate mainly on financing specialized economic and social activities. Specialized activities may be small and cottage industries financing. Financing the rural asset less and landless people etc.Examples of the specialised banks are-
• Export-Import Bank of India (EXIM) Bank
• Small Industries Development Bank of India (SIDBI)
• National Bank for Agricultural and Rural Development (NABARD)

7- SMALL FINANCED BANKS- Small Financed Banks are those banks which can provide basic banking service of acceptance of deposits and lending.The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.
    The main objective of these banks is to provide financial inclusion to those  sections of the economy which is not being served by other banks. Such as Small business units, micro and small industries and small farmers etc. Some of these Banks are as follows-
• Ujjivan Small Finance Bank.
• Janalakshmi Small Finance Bank.
• Equitas Small Finance Bank.
• A U Small Finance Bank.
• Capital Small Finance Bank.
• ESAF Small Finance Bank.
• Utkarsh Small Finance Bank.
• Suryoday Small Finance Bank.
• Fincare Small Finance Bank.

8- PAYMENTS BANKS-Payments Banks are those banks which can carry out most banking operations but can’t advance loans or issue credit cards. These banks are operating on a smaller scale without involving any credit risk.
         There are six types of payments banks in India which are as follows-
• Airtel Payments Bank
• India Post Payments Bank
• Fino Payments Bank
• Jio Payments Bank
• Paytm Payments Bank
• NSDL Payments Bank

Author || Shruti Jaiswal Lucknow

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