Banking Awareness forms an important part of Bank exams. Study our Banking Awareness topics to excel in Bank exams.
Bank – A bank is a financial institution that accepts deposits from the public and grants loans. The difference of interest rate between this acceptance and deposit and grating of loan is a major source of income for the banks.
Types of Banks
Reserve bank of India – RBI is the central bank of India established in 1935.
Scheduled Banks and Non-Scheduled Banks– A scheduled bank is one that is listed in the second schedule of RBI Act, 1934. Banks having paid up capital of at least Rs 5 lakh are eligible for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934.
Non- scheduled banks are those which are not included in the second schedule of the RBI Act, 1934. A non-scheduled bank doesnot have to maintain CRR with the RBI. Also it cannot lend money from RBI under LAF.
Commercial Banks– Commercial banks are joint stock companies, incorporated as a banking company that operates for the profit motive. Cooperative banks are cooperative organisations and work for service motive. Cooperative Banks will be discussed in another post.
Public Sector Banks– These are banks where majority stake is held by the Government of India. It includes the 19 Nationalised banks, State Bank of India and IDBI Bank. (List in Annex I)
Private Sector Banks– These are banks majority of share capital of the bank is held by private individuals. Local Area Banks, Small Finance Banks and Payments Banks are Private Sector Banks.
Local Area Banks– In 1996 it was decided to allow the establishment of local banks in the private sector. These banks were expected to bridge the gaps in credit availability and enhance the institutional credit framework in the rural and semi-urban areas and provide efficient and competitive financial intermediation services in their area of operation. The minimum start-up capital of a LAB was fixed at Rs.5 crore.
Foreign Banks– These banks are registered and have their headquarters in a foreign country but operate their branches in our country.
Regional Rural Banks– Formed under Regional Rural Bank Ordinance 1975. (Replaced later by Regional Rural Bank Act, 1976(2) of 1976 of Government of India).
- Regional Rural Banks (RRBs) were set up with a view to developing the rural economy by providing credit for the purpose of development of agriculture, trade, commerce, industry and other facilities, particularly to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs.
- The first Regional Rural Bank “Prathama Grameen Bank” was set up on October 2, 1975. Sponsor Bank- Syndicate Bank. Head Office- Moradabad
- The Government of India, the concerned State Government and the sponsor bank contribute to the share capital of RRBs in the proportion of 50%, 15% and 35%, respectively.