The document discusses scheduled and non-scheduled banks in India. Scheduled banks are included in the second schedule of the RBI Act of 1934 and must meet requirements for paid-up capital and collected funds. They are regulated by the RBI and have access to facilities like loans from the RBI. Non-scheduled banks are not included in the second schedule and do not have access to the same facilities, though they must still maintain cash reserve ratios. The key differences are that scheduled banks must follow RBI rules while non-scheduled banks do not, and scheduled banks can access RBI loans and clearinghouse membership.

1. Commercial Banks
in India
Dr. Pushpa Suryavanshi

11. Difference between Scheduled and Non-Scheduled
Banks
Banking sector of India can be broadly divided into two major
groups’
Banks which have been included in the second scheduled of
the RBI Act, 1934; are called the scheduled bank
Non scheduled banks are not included in the second schedule
of the RBI Act,1934.
Reserve bank of India is the highest monetary authority in the
country. It makes rules and regulations for the scheduled
commercial banks in India.
Commercial
Bank
Non-Scheduled
Banks.
Scheduled
Banks.

12. Definition of Scheduled Banks:
“Banks which have been included in
the second scheduled of the RBI Act,
1934”. The banks included in this
category should fulfill two conditions;
1. The paid up capital and collected
fund of the bank should not be less
than Rs. 5 lac.
2. Any activity of the bank will not
adversely affect the interests of the
depositors.

13. Definition of Scheduled Banks:
Scheduled Commercial Banks in India are categorized in 5 different
groups according to their ownership / nature of operation.
These bank groups are:
(i) State Bank of India
(ii) Nationalized Banks,
(iii) Regional Rural Banks,
(iv) Foreign Banks
(v) Other Indian Scheduled Commercial Banks (in the private sector).
Every Scheduled Banks enjoys following facilities;
1. Scheduled Banks are eligible for obtaining debts/loans on bank rate from
the RBI.
2. Scheduled Banks get the facility of the rediscount of first class exchange
bills from RBI. This facility is provided by the RBI only if the Scheduled Banks
deposit average daily cash with the RBI which is decided by the RBI itself
and presents the recurring statements under the provision of RBI Act, 1934
and Banking Regulation Act, 1949.

14. Definition of Non-Scheduled Banks:
Definition of Non- Scheduled Banks:
The banks which are not included in the list of the
scheduled banks are called the Non- Scheduled Banks. At
present there are only 3 such banks in the country.
Non- Scheduled Banks have to follow CRR conditions. These
banks can have CRR fund with themselves as no
compulsion has been made by the RBI to deposit it in the
RBI.
Non- Scheduled Banks are also not eligible for having loans
from the RBI for day to day activities but under the
emergency conditions RBI can grant loan to them.

15. Key differences between the Scheduled Banks and
Non- Scheduled Banks are;
1. Scheduled banks follow the rules made by the RBI while Non-
scheduled banks do not follow the rules made by the RBI.
2. Scheduled banks are eligible for inclusion in the second
schedule to the Reserve Bank of India Act, 1934 while Non-
scheduled banks are not included in the second schedule.
3. Scheduled banks are allowed to borrow money from RBI for
regular banking purposes while Non-scheduled banks are not
allowed.
4. Scheduled banks can become a member of clearing house while
Non-scheduled banks can't.
5. Scheduled banks and Non-scheduled banks both need to maintain
the Cash Reserve Ratio but Scheduled banks have to deposit this
amount in the RBI while Non-scheduled banks can deposit this
amount with themselves.
So from the above description it became clear that Scheduled banks
and Non-Scheduled Banks are different not only in their functioning
but also in the regulations made by the RBI. Scheduled banks do care
about the interests of the depositors while Non-Scheduled Banks
don’t do so because they are bound to follow the guidelines of RBI.