Indian Economy
General Knowledge

Banking Types

Scheduled and Non-scheduled Banks

» The scheduled banks are those which are entered in the second schedule of the RBI Act, 1934. These banks have a paid-up capital and reserves of an aggregate value of not less than Rs. 5 lakhs and satisfy the RBI that their affairs are carried out in the interest of their depositors.
» All commercial banks (Indian and foreign), regional rural banks and state co-operative banks are scheduled banks. Non scheduled banks are those which are not included in the second schedule of the RBI Act 1934. At present there is only one such bank in the country.

Regional Rural Banks

» The Regional Rural Banks (RRBs), the newest form of banks, have come into existence since middle of 1970s (sponsored by individual nationalised commercial banks) with the objective of developing rural economy by providing credit and deposit facilities for agriculture and other productive activities of all kinds in rural areas.
» The emphasis is on providing such facilities to small and marginal farmers, agricultural labourers, rural artisans and other small entrepreneurs in rural areas.
» First Regional Rural Bank was established on 2nd October, 1975.

Co-operative Banks

» Co-operative banks are so called because they are organised under the provisions of the Co-operative Credit Societies law of the states. The major beneficiary of the Co-operative Banking is the agricultural sector in particular and the rural sector in general. The first such bank was established in 1904.
» The Co-operative credit institutions operating in the country are mainly of two kinds : agricultural (dominant) and non-agricultural.
» At the apex is the State Co-operative Bank (SCB) (co-operation being a state subject in India), at the intermediate (district) level are the Central Co-operative Banks (CCBs), and at the village level are Primary Agricultural Credit Societies (PACs); Long-term agricultural credit is provided by the Land Development Banks.
» In the year 1991, Narsimhan Committee was constituted to advice on the issue of reconstruction of banking system.

Development Banks

Industrial Development Bank of India (IDBI) : established in 1964.
Main functions : Providing finance to large and medium scale industrial units.

Industrial Finance Corporation of India (IFCI) : established in 1948.
Main functions : (a) Project finance (b) Promotional services.

Industrial Credit and Investment Corporation of India Limited (ICICI) : established in 1991.
Main functions : Providing term loans in Indian and foreign currencies; Underwriting of issues of shares and debentures.

Small Industries Development Bank of India (SIDBI) : established in 1989.
Main functions : Providing assistance to small scale industries through state finance corporations, state industrial development corporations, commercial banks etc.

Export-Import Bank of India (Exim. Bank) was established in 1982.
Main functions : Coordinating the working of institutions engaged in financing export and import trade, Financing exports and imports.

National Housing Bank (NHB) : started operations in 1988.
Main functions : Development of housing finance in the country.

NABARD (National Bank for Agriculture and Rural Development) : was established in 1982. The paid-up capital of NABARD stood at Rs. 2000 crore as on 31 March 2010.
Main functions : to serve as an apex refinancing agency for institutions engaged in providing agricultural finance to develop credit delivery system to coordinate rural financing activities.