Types of banks

There are different types of banks in every country. Each type performs mainly certain
functions. Banks have been classified on the basis of their functions.There are several
definitions for the term “Bank”. some of them are

accepted in settlement of other people’s debt to each other”.

According to the Indian Banking Regulation Act defined banking as the ‘Accepting the
deposits of money from the public which are repayable on demand for the purpose of
lending or investment of the money acquired from the public in the form of deposits’.

DIFFERENT TYPES OF BANKS

Commercial Banks
Commercial banks are the banks that accept money in the form of deposits from the public
and give loans and advances to its customers by charging interest. They mobilize small
savings and promote the growth of trade and commerce. Generally, commercial banks lend
money for a short period only. They only provide working capital to the organizations. But in
recent times commercial banks are providing long-term capital also to the organizations.

There are several types of deposits which are accepted by the commercial banks like

⦿ Savings Deposits
⦿ Current Deposits
⦿ Fixed Deposits
⦿ Seasonal Deposits
⦿ Recurring Deposits, etc

The Commercial banks give different types of loans and advances to the businessmen like

⦿ Cash Credits
⦿ Overdrafts
⦿ Loans
⦿ Discounting Bills

Co-operative Banks
Co-operative Banks are the banks that usually provide short term, medium term, long term
credit to agricultural purposes. Co-operative Banks also provides loans to small-scale
artisans. Co-operative Banks usually provide credit facilities to farmers, small-scale
industries, etc at a cheaper rate of interest. Co-operative Banks are mainly situated in rural
areas and can also be seen in urban areas.

Central Bank
Every country has its own Central Bank. The Central bank aims at non-profit functioning. It
regulates the monetary and credit system of the country. Central Bank acts as controller,
supervisor, and regulator of the activities of commercial banks and other financial institutions
in the country. The Central bank is considered as the apex institution of the country’s money
market.

Functions of Central Bank

⦿ Note issue
⦿ Credit control
⦿ It acts as a banker to the banks
⦿ It acts as a banker to the government
⦿ It maintains the foreign exchange reserves of the country
⦿ It maintains the Gold reserves of the country

Industrial Banks
Industrial banks are also called as Investment Banks. Industrial banks provide long-term
loans to the industries. Industries require long-term capital for buying machinery,
construction of buildings, expansion of operations, etc. These capital required by industries is
provided by industrial banks for industrialists to grow their businesses. Industrial banks
accept long-term deposits from the public. They secure capital by issuing shares and
debentures.

Agricultural Banks
Agricultural Banks are the banks which provide agricultural credit to the farmers. The
Agricultural Development Banks provide medium term and long term credit. Some examples
of Agricultural Banks in India are Agricultural Finance Corporation, Agricultural Refinance
and Development Corporation, National Bank for Agricultural and Rural Development
(NABARD).Agricultural Banks are established by the government to promote agricultural
credit in the country.
Savings Bank
Savings Banks mainly concentrates on the mobilization of savings of the people. In India
Post offices run by Postal department act as savings banks. Since Commercial banks are
providing these facilities of savings banks to the public, the need for separate savings bank is
fading.

Foreign Exchange Banks

Foreign Exchange Banks are the banks which provide finance for foreign trade.These banks
accept deposits from the public. Foreign Exchange Banks are specialized banks in providing
credit for the foreign trade. These banks usually have their branches in foreign countries for
uninterrupted functioning of their services.But in recent times commercial banks are also
financing foreign trade.

Exchange Banks
Exchange Banks are the banks which operate by financing the imports and exports of the
country. These banks are mainly concerned with providing foreign exchange to their
customers and help to promote international trade. They also offer to discount of foreign bills
of exchange to their customers.

Private Bankers
Private Bankers are the individuals who do banking business individually or as a partnership.
It is purely an unorganized sector.Most of the private bankers do not receive or accept any
deposits from the public, they do banking business with their own capital. They lend money
to the people for high-interest rates.

Chit Funds
There are chit funds in India. They provide finance to trade and commerce. However, they
cannot be called as banks in the regular sense. The Chit fund business is very large in a
country like India. it is also an unorganized sector in India.

CONCLUSION
Thus banks are classified on the basis of their functions in which they are specialized. But it
must be noted that Commercial Banks are now providing services of agricultural banks, they
are providing loans for industries as industrial banks, they are even expanding their services
into foreign exchange replacing the foreign exchange banks. Therefore the commercial banks
are raising their capabilities for attracting a large number of customers.

Anks

Define a customer
Give short description of woods vs martins case before
giving categories of a bank customers
What are the different categories of customers in any
bank?
Individual and Joint:

When an account is opened in individual name, it is called as individual account. For

example- an account opened in the name of “A”

When an account is opened in joint names, the account is called as joint account.
Example – the account in the name of “A” and “B”.

While opening a joint account, a maximum of four individuals can jointly open an
account

In the case of joint accounts, the depositors should record the operation conditions with
the bank namely – E or S (Either or survivor); Former or survivor and Jointly

In the case of joint account with operation condition – “E or S”, anyone of the customers
can operate the account and there is no requirement for getting concurrence of the
remaining parties

In the case of joint account with operation condition – “Jointly”, all parties should sign
the cheques or authorize the payment for withdrawal of money from the account

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In the case of joint account with operation condition – “Former or survivor”, only the
first person can operate the account and the other parties can have the right to operate
the account only on the death of the first person (former)

Individuals can open all types of deposit accounts with the bank

02. Clubs/Associations/Charitable Institutions/Trusts:

Clubs are bodies where like minded people join together for some specific purpose.
Example – Chess club, Ladies club, Children’s club etc., Clubs are managed by
authorized persons namely; the president, secretary and treasurer. Such persons are
elected by the members of the club through a resolution.

Like clubs, associations are bodies formed by persons pertaining to a specific group –
example: Teachers’ association, students’ association etc., The associations are also
managed by authorized persons and the authorized persons are elected by the members
through a resolution

Trusts and charitable institutions are bodies formed with an intention to serve the public
and they are also managed by authorized persons

At the time of opening an account with the bank by the abovementioned bodies, the copy
of resolution has to be submitted to the bank and the bankers allow operation in the
accounts as per the conditions stipulated in the resolutions in regard to banking
operations.

Clubs, associations, charitable institutions and trusts can open all types of accounts with
the bank

03. Hindu Undivided family:

Hindu Undivided family is one where more than one family exist. For example in a joint
hindu family, there can be twenty family members including children

The family members may be having accounts in their individual names

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Apart from the individual accounts, the family as a whole can have one account in the
name of the family. These types of accounts are opened for the purpose of saving income
tax

The hindu undivided family is managed by karta and the seniormost male member in the
family occupies the position of karta

When an account is opened in the name of hindu undivided family, the karta operates
the account

Hindu undivided family can open all types of accounts with the bank

04. Proprietorship firms:

When business is done by one single individual it is called as a proprietorship concern

The business firm is called as proprietorship firm and when the individual who conducts
the business is a male member, he is called as a proprietor and when the individual is a
female member, she is called as proprietrix.

Proprietorship firms can open current account and all types of term deposits with the
bank

They are not permitted to open savings deposit account

05. Partnership firms:

Partnership firm is one where more than one individual join together for a common
business purpose

The do business for the purpose of earning a profit

In a partnership firm, there can be minimum of two partners and maximum of twenty
partners
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However, when the partnership firm is engaged in doing banking business, there can be
maximum of ten partners only

Partners enter into the contract of partnership by means of an agreement called as

partnership agreement

The partnership agreement contains the entire details about the contract between the
partners in all respects

At the time of opening an account in the name of partnership firm, the copy of
partnership deed has to be produced to the bankers

The partnership deed can be either registered or not registered

It has to be registered with the Registrars of firms

Bankers do not demand registration of the partnership deed at the time of opening a
deposit account; however, at the time of availing loan facilities with the banks, the deed
has to be registerered and such intimation has to be communicated to the bankers

06. Companies:

Companies are perpetual bodies. They exist by means of collective efforts of different
individuals called as shareholders.

Shareholders provide capital to the organization and they are the owners of the
organization

However, the organizations are managed by board of directors representing the body of
individuals elected by the shareholders specially for the purpose of management of the
organisation

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Companies are formed according to the terms and conditions as prescribed in Indian
Companies act 1956

The companies are classified into private limited company and public limited company

In the case of private limited company, the minimum members permitted are two and
the maximum members permitted are fifty

According to the recently amended Indian Companies act 2013, the maximum members
permitted are 200

At the time of opening an account with the bank, they have to produce the copies of the
following to the bankers – Memorandum of association, articles of association,
certificate of incorporation, certificate of commencement of business and board
resolution

Memorandum of association is termed as the parent document for the company and it
consists vital details about the company

Articles of association contains details about the internal management of the company

At the time of formation of the company, it has to be registered with the Registrar of
companies and it is called as the certificate of incorporation

At the time of commencement of the company, it has to be registered with the Registrar
of companies and it is called as the certificate of commencement of business

Decisions taken during the course of board meeting are recorded in the board resolution

07. Minors:

Deposit accounts can be opened in the names of minors

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The accounts in the names of minors can be classified into two categories

The account operated by the minor himself – self operated account

The account operated by the natural guardian on behalf of the minor

Minor is a person who has not attained the age of eighteen years as on the date of
opening an account

When a minor is ten years and above, he can open an account with the bank without
represented by the natural guardian provided the minor is literate and is able to sign the
cheques and read the rules and regulations of the deposit account

He is provided with a pass book and debit card

In the case of other minors, the account is opened on behalf of the minor by the natural
guardian (Father or mother) and when the minor attains the age of eighteen he is
permitted to operate the account duly informing the bank

Minors should not be granted any loans and the bank cannot recover any loans granted
to the loans since the minor is incompetent to enter into a contract with any person

However, in the case of deposits held in the names of minors, when a loan has to be
availed against the security of the deposit, the natural guardian has to execute loan
documents on behalf of the minor while obtaining such loans and the proceeds should be
necessarily spent for the benefit of minor only.

08. Blind persons:

Blind persons are also permitted to open deposit accounts with the banks

However, as and when the blind persons are willing to do any transaction, he should be
accompanied by a literate witness

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The witness should sign the relevant forms along with the blind person

09. The illiterate persons:

Illiterate persons are permitted to open deposit accounts with the bank

In the case of illiterate persons, instead of signature, left hand thumb impression is
obtained while they are withdrawing funds from the accounts

The illiterate persons are provided with pass book

They have to come in person to the bank branches while withdrawing funds from the
accounts and in this connection they have to use withdrawal slips instead of cheque
book.