The structure of banking system in india-Nelson Fernandes

2. 1. Reserve Bank of India:
Reserve Bank of India is the Central Bank
of our country. It was established on
1st April 1935 under the RBI Act of 1934.
It holds the apex position in the banking
structure. RBI performs various
developmental and promotional
functions.

3.  2. Commercial Banks:
 Commercial bank is an institution that accepts
deposit, makes business loans and offer related
services to various like accepting deposits and
lending loans and advances to general customers
and business man.
 These institutions run to make profit. They cater
to the financial requirements of industries and
various sectors like agriculture, rural
development, etc. it is a profit making institution
owned by government or private of both.

4.  Commercial bank includes public sector,
private sector, foreign banks and regional
rural banks:
 A] Public sector banks:
 It includes SBI, seven (7) associate banks and
nineteen (19) nationalized banks. Altogether
there are 27 public sector banks. The public
sector accounts for 90 percent of total
banking business in India and State Bank of
India is the largest commercial bank in terms
of volume of all commercial banks.

5.  b. Private sector banks:
 Private sector banks are those whose equity is
held by private shareholders. For example,
ICICI, HDFC etc. Private sector bank plays a
major role in the development of Indian
banking industry.

6.  c. Foreign Banks:
 Foreign banks are those banks, which have
their head offices abroad. CITI bank, HSBC,
Standard Chartered etc. are the examples of
foreign bank in India.

7.  d. Regional Rural Bank (RRB):
 These are state sponsored regional rural
oriented banks. They provide credit for
agricultural and rural development. The main
objective of RRB is to develop rural economy.
Their borrowers include small and marginal
farmers, agricultural labourers, artisans etc.
NABARD holds the apex position in the
agricultural and rural development

8.  3. Co-operative Bank:
 Co-operative bank was set up by passing a co-operative
act in 1904. They are organised and managed on the
principal of co-operation and mutual help. The main
objective of co-operative bank is to provide rural credit.
 The cooperative banks in India play an important role even
today in rural co-operative financing. The enactment of
Co-operative Credit Societies Act, 1904, however, gave the
real impetus to the movement. The Cooperative Credit
Societies Act, 1904 was amended in 1912, with a view to
broad basing it to enable organisation of non-credit
societies.

9.  Three tier structures exist in the cooperative
banking:
 i. State cooperative bank at the apex level.
 ii. Central cooperative banks at the district
level.
 iii. Primary cooperative banks and the base or
local level

10.  4. Scheduled and Non-Scheduled banks:
 A bank is said to be a scheduled bank when it
has a paid up capital and reserves as per the
prescription of RBI and included in the second
schedule of RBI Act 1934. Non-scheduled
bank are those commercial banks, which are
not included in the second schedule of RBI
Act 1934.

11.  5. Development banks and other financial
institutions:
 A development bank is a financial institution,
which provides a long term funds to the
industries for development purpose. This
organization includes banks like IDBI, ICICI,
IFCI etc. State level institutions like SFC’s
SIDC’s etc. It also includes investment
institutions like UTI, LIC, and GIC etc.