Banking – The major types of banks and their role in India
The industry of Banking in India is very powerful and the economy of the country is solely dependent on the performance and the financial decision of the Reserve Bank of India. In layman language we can say that bank is one such institution which is involved in the activity of receiving deposits which can be withdrawn via cheque and on the other hand the deposits are used by bank for lending money to public. In short we can say to get the identity of a bank the deposited amount must be used for lending purpose in form of loan to the people or commercial houses of the country.
Types of Banks – The Major Ones
To know the concept of banking better take a look at the major types of Banks in the industry
- Organized Bank: Banks which are governed and acts under the control of Reserve Bank of India – Commercial, Agricultural and industrial Banks
- Unorganized bank: Banks which are not under control of Reserve Bank of India – Indigenous banks
- Scheduled Bank: These banks are part of RBI ACT 1939 with paid up capital amounting to no less than 5 Lakh and it also includes aggregate value – All commercial, Cooperative and Rural Banks
- NON – Scheduled Bank: Central Bank has no control on this category of banks and these banks are not present in RBI Act, 1934 schedule. The paid up capital of these banks are less that amount 5 lakhs
- Central Bank: For India the Central bank, is Reserve Bank of India which is controlling the flow and supply of money. It decides the monetary policy and lends money to other banks.
- Commercial Banks: This category of banks deals with common man directly and take deposit from them and also lend money in form of loans against interest and acts towards creation of credit for the growth of economy
- Development Banks: These banks are responsible for providing medium to long term loans to entrepreneurs at affordable rates and help in economic development
- Cooperative bank: These banks are formed under Co- operative society’s law and offer credit to agricultural people like farmers are low rate of interest
The other major types of banks include: NABARD, Exim bank and Exchange bank