Different types of banks in India

Posted on by Finance Infopedia

In India, various types of banks cater to different financial needs and serve different segments of the population. Here are the main types of banks in India:

Scheduled Commercial Banks:

Scheduled Commercial Banks (SCBs) in India are banks that are included in the Second Schedule of the Reserve Bank of India Act, 1934. These banks are regulated by the Reserve Bank of India (RBI) and are authorized to carry out banking activities such as accepting deposits, providing loans, and offering various financial services.

The inclusion of a bank in the Second Schedule signifies that it meets certain criteria and has fulfilled specific requirements set by the RBI. These requirements typically relate to factors such as capital adequacy, organizational structure, governance, and adherence to prudential norms. Being a scheduled bank brings certain privileges and obligations for the institution.

Scheduled commercial banks in India play a crucial role in the country’s financial system. They accept deposits from the public, provide loans and advances, issue debit and credit cards, offer various banking products and services, and facilitate financial transactions. These banks also participate in the country’s payment and settlement systems and act as intermediaries in the flow of funds within the economy.

As of my knowledge cutoff in September 2021, the following are some of the scheduled commercial banks in India:

Please note that this is not an exhaustive list, and several other scheduled commercial banks are operating in India. The banking landscape in India is dynamic, and new banks may emerge or existing banks may undergo changes over time. It is advisable to refer to the latest information from the Reserve Bank of India or other credible sources for the most up-to-date list of scheduled commercial banks in India.

Scheduled commercial banks also play a significant role in facilitating the government’s financial operations. They act as intermediaries for government transactions, such as collecting taxes, distributing subsidies, and managing government securities.

Scheduled commercial banks in India are subject to various regulations and guidelines imposed by the Reserve Bank of India. These regulations aim to maintain the stability of the banking system, promote transparency, protect the interests of depositors, and ensure proper risk management by the banks.

The functions and services provided by scheduled commercial banks in India are diverse. They accept various types of deposits, including savings accounts, current accounts, fixed deposits, and recurring deposits. These banks offer loans and credit facilities to individuals, businesses, and other entities. They provide services such as remittances, foreign exchange transactions, wealth management, insurance products, and investment advisory services.

Public Sector Banks (PSBs):

Public sector banks are owned and operated by the government of India. These banks play a crucial role in providing banking services to various sections of society, including rural and underserved areas. Public sector banks often have a wide network of branches across the country. The government’s ownership ensures that these banks have a social objective of promoting financial inclusion and supporting economic development.

Here are the 12 public sector banks in India

  • State Bank of India (SBI)
  • Punjab National Bank (PNB)
  • Bank of Baroda (BOB)
  • Bank of India (BOI)
  • Canara Bank
  • Union Bank of India
  • Indian Bank
  • Central Bank of India
  • Indian Overseas Bank
  • UCO Bank
  • Bank of Maharashtra
  • Punjab & Sind Bank

Here you can read more about public sector banks.

Private Sector Banks:

Private sector banks in India refer to banks that are owned and operated by private individuals or corporations rather than the government. These banks are established as separate entities and operate with the primary objective of generating profits for their shareholders. Private sector banks often focus on innovation, technology, and customer service to attract customers. They are known for their efficiency, modern banking practices, and personalized services.

Unlike public sector banks, which are owned and controlled by the government, private sector banks are governed by the Companies Act and are regulated by the Reserve Bank of India (RBI), the country’s central banking institution.

Some notable private-sector banks in India include

  • ICICI Bank
  • HDFC Bank
  • Axis Bank
  • Kotak Mahindra Bank
  • Yes Bank
  • IndusInd Bank
  • Federal Bank
  • RBL Bank.

These banks have established themselves as trusted financial institutions and have a significant presence across the country. They operate through an extensive network of branches and ATMs, along with digital platforms for convenient and accessible banking services.

Foreign Banks:

Foreign banks in India have originated and are headquartered outside India but have established a presence in the country to offer banking and financial services. These banks operate either through branches, representative offices, or subsidiaries.

These banks bring global banking expertise and international standards to the Indian market. They cater to the banking needs of individuals, businesses, and multinational corporations. Foreign banks often specialize in specific services or customer segments and offer a wide range of financial products and services.

As of my knowledge cutoff in September 2021, several foreign banks have a presence in India. These banks operate branches, representative offices, or subsidiaries in the country. Some of the notable foreign banks in India are:

  • Citibank: Citibank is a subsidiary of Citigroup and has been operating in India since 1902. It offers a wide range of banking services to retail and corporate customers.
  • Standard Chartered Bank: Standard Chartered has a significant presence in India and has been operating in the country since 1858.
  • HSBC Bank: HSBC has been operating in India since 1853.
  • Deutsche Bank: Deutsche Bank has been operating in India since 1980.
  • Barclays Bank
  • Bank of America: Bank of America has a subsidiary in India called Bank of America Merrill Lynch. It offers services such as corporate banking, investment banking, and treasury services.
  • JPMorgan Chase Bank

The presence of foreign banks in India provides various benefits, including increased competition in the banking sector, access to global financial networks, and expertise in international banking practices. These banks cater to both retail customers, such as individuals and small businesses, as well as corporate clients and institutional investors.

Foreign banks in India offer a range of services similar to domestic banks, including savings and current accounts, loans, credit cards, wealth management, investment banking, and trade finance. They also provide specialized services such as cross-border transactions, foreign exchange, and international remittances.

It’s important to note that the presence and operations of foreign banks in India may be subject to regulations and guidelines set by the Reserve Bank of India (RBI), the country’s central banking institution. These regulations ensure that foreign banks operate within the framework of Indian banking laws and contribute to the stability and development of the Indian banking sector.

Regional Rural Banks (RRBs):

RRBs are financial institutions that are established to provide banking and financial services in rural areas. These banks are jointly owned by the central government, state government, and a sponsor bank (usually a public sector bank). RRBs focus on agricultural and rural development, providing banking services to farmers, artisans, and small businesses in rural areas. They play a significant role in promoting financial inclusion and rural economic growth.

Here you can read more about regional rural banks.

Cooperative Banks:

Cooperative banks are owned and operated by cooperative societies or groups. They are based on the cooperative principles of mutual assistance and collective ownership. Cooperative banks serve the banking needs of their members and promote the interests of specific communities or groups. Urban cooperative banks (UCBs) operate in urban and semi-urban areas, while rural cooperative banks (RCBs) cater to the rural population. These banks provide financial services to individuals, self-help groups, small businesses, and agricultural cooperatives.

Here you can read more about cooperative banks.

Conclusion

In summary, the different types of banks in India vary in terms of ownership, regulatory framework, target customer segments, and focus areas. Each type of bank has a specific role to play in the Indian banking sector, catering to the diverse financial needs of the population and contributing to economic development.