Scheduled and Non-Scheduled Banks/ What are scheduled banks/ what are non scheduled banks
In India the
central banking authority is the Reserve Bank of India. It is also referred to
as the “Apex Bank”. It functions under an act called The Reserve Bank of India
Act’1934. All the banks and other financial institutions operating in India come
under the monitoring and control of RBI. RBI controls the banking sector in
India through an act called “the banking Regulations Act’ 1949. In the past,
when there were very few banks, RBI used to include all the scheduled banks in
its schedule. A Bank that is not
a scheduled bank is referred to as “Non scheduled” bank even in its banking
licence.
The difference lies in the type of banking activities that a
bank can carry out in India. In the case of a scheduled bank, it is licensed by
the RBI to carry on extensive banking operations including foreign exchange
operations, whereas, a non-scheduled bank can carry out only limited
operations. There are a number of factors considered by RBI to declare a bank
as a “scheduled Bank”, like the amount of share capital, type of banking
activities that the bank is permitted to carry out etc. An example of
difference between a scheduled and non-scheduled bank is dealing in “Foreign
Exchange”.
Commercial and cooperative banks
Commercial banks are by far the most widespread banking
institutions in India. They provide major products and services in India .A
commercial bank is run on commercial lines, for profits of the organization.
A co-operative bank on the other hand is run for the benefit
of a group of members of the co-operative body. A co-operative bank distributes
only a very small portion of its profit as dividend, retaining a major portion
of it in business.
All the nationalized banks in India and almost all the
private sector banks are commercial scheduled banks. There are a large number
of private sector co-operative banks and most of them are non-scheduled banks.
In the public sector also, within a state, starting from the State capital,
there are State Co-operative banks and District Central Co-operative Banks at
the District level. Under the District Central Co-operative Bank, there are
Co-operative Societies.
At present, In India, the banks can be bifurcated into
following categories.
(a) Public sector banks
(b) Private sector banks
(c) Co-operative banks
(i) State level
(ii) District level
(iii) Urban Co-operative Banks
(iv) State Co-operative agriculture and rural development
banks
(v) Primary Co-operative agriculture and rural development
banks
(d) Regional Rural banks
(e) Foreign banks
Besides, the Reserve Bank of India (hereinafter referred to
as RBI) acts as the central bank of the country. RBI is responsible for
development and supervision of the constituents of the Indian financial system
(which comprises banks and non-banking financial institutions) as well as for
determining, in conjunction with the central government, the monetary and
credit policies. They are also controlled by RBI.
Retail banking vs wholesale banking
Whole sale banking typically involves a small number of very
large customers such as big corporations and governments, whereas retail
banking consists of a large number of small customers who consume personal
banking and small business services. Wholesale banking is largely inter-bank;
banks use the inter-bank markets to borrow from or lend to other banks/large
customers, to participate in large bond issues and to engage in syndicated
lending. Retail banking is largely intra-bank; the bank itself makes many small
loans.
Most of the Indian public sector banks practice retail
banking; they are slowly practicing the concept of “wholesale banking”. On the
other hand, most of the well-stablished foreign banks in India and the recent
private sector banks practice wholesale banking alongside retail banking.
As a result of this difference, the composition of income
for a public sector bank is different. While a major portion of the income for
large public sector banks is from lending operations, in the case of any
private sector bank in India, the amount of non-operating income (other than
interest income) is substantially higher. The composition of other income
is–commission on bills/guarantees/letters of credit, counseling fees,
syndication fees, credit report fees, loan processing fees, correspondent bank
charges etc.
Global banking
Global Banking activities are an extension of various
activities listed above into the international market. Global banking primarily
consists of trade in international banking services and establishment of
branches and subsidiaries in foreign countries.
Special kinds of bank branches
Most Banks in India separate out the following activities
are special branches in areas are designated to mainly deal in these
activities. This is done to reap benefits of specialisation as these activities
are quite complex and hence letting only few employees in specialising them can
save a lot of resources.
(a) Foreign exchange Branches
(b) NPA recovery branches
(c) Service branches dealing in Clearing house
operations/Corporate banking and Industrial finance branches
(d) Personal banking branches
(e) Housing finance branch
(f) SSI branches
(g) Agricultural finance branches.
Incoming search terms:
scheduled banks,
non scheduled banks,
commercial banks,
cooperative banks
