Banking in India
Types of Banks
- Banks in India can be classified into public sector banks, cooperative banks, commercial banks, small finance banks, regional rural banks, etc.
- Any organisation that deals with the deposits and loans to businesses can be referred to as a commercial bank.
- Commercial banks are allowed to issue bank checks and drafts and accept term and call deposits.
- Commercial banks also serve as moneylenders through issuance of loans and overdrafts.
- They also provide a variety of deposit accounts, including checking, savings, and time deposits.
- These institutions are run for profit and are often listed on the stock market.
Commercial Banks can be further divided into the following:
Public Sector Banks
- These are banks in which the Government of India owns the majority of shares.
- SBI, Bank of India, Canara Bank, Punjab National Bank etc are examples of public sector banks.
Private Sector Banks
- The majority of a Private Sector bank’s shares are held by private individuals/corporations.
- These banks are set up to be limited-liability corporations.
- Examples of private sector banks include ICICI Bank, Axis Bank, HDFC, Federal Bank of India etc.
Regional Rural Banks
- Regional Rural Banks were established in accordance with the provisions of an Ordinance promulgated on September 26, 1975, and the RRB Act, 1976.
- They are set up with the goal of ensuring adequate institutional credit for agriculture and other rural sectors.
- RRBs are only allowed to operate in the areas that have been designated by the Government as covering one or more districts in the state.
- RRBs are jointly owned by Gol, the relevant State Government, and Sponsor Banks.
- The issued capital of an RRB is divided among the above groups in the proportions of 50%, 15%, and 35%, respectively.
- Prathama Grameen Bank set up in the year 1975 is the 1st RRB in the country.
- These banks are registered and have their headquarters in a foreign country, but they have branches in our country.
- Examples of Foreign banks in India include HSBC, Citibank, Standard Chartered Bank, etc.
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