SCHEDULED BANKS:

Scheduled Commercial Banks in India are categorised in 2 broad different groups according to their ownership
/ nature of operation.

1. Scheduled commercial bank – Indian as well as foreign banks.

2. Schedule state cooperative bank’s

A. Scheduled Commercial Bank :

A commercial bank is a financial institution that grants loans, accepts deposits and offers basic financial
products like a savings account and certificate of deposits to individuals and businesses.
The commercial bank’s funds come from money deposited by the bank customers in saving account, checking
accounts, money market accounts and certificates of deposits.

Types of Schedule Commercial Bank:

1. Public sector banks

2. Private Sector banks
3. Foreign Banks
4. Regional Rural banks

 Public Sector Banks:

Public sector banks are those banks in which the government has majority shareholding more than 51 percent.
Public sector banks are owned and controlled by the government either directly or indirectly through the
central banks. These banks are also known as the National Bank.

 Private Sector Banks :

Private sector banks are those banks in which the government has majority shareholding less than 51 per cent.
Private sector banks are those banks which are owned by private individuals or business corporation.

 Foreign Banks :

Foreign Banks are from out of the country it’s the origin. These banks are incorporated outside of the country
under the law of the home country but have a place of business in another country. Foreign Banks have their
presence from the British period in our country . Initially, they were allowed to operate only through branches
but now they are allowed to set up subsidiaries in India.
Some Example of Foreign Banks: Standard Chartered Banks, Hongkong Shanghai Banking Corporation,
American Express Banking Corporation, Bank of Tokyo, Citi Bank.

 Regional Rural Banks :

In order to provide efficient banking services in rural areas, regional rural banks were set  up in 1975 under the
sponsorship of the commercial bank’s. The regional rural banks are governed by the Regional Rural banks act
in 1976.

B. Scheduled State Cooperative Banks:

Cooperative banks are small-sized bank’s organised in the small cooperative sector which have the ability to
operate both urban and non-urban areas. Cooperative banks are registered under the cooperative societies
Act. The cooperative banks are regulated by the Reserve Bank of India. It is also governed by the Banking
regulation act 1949 and Banking laws act 1965.

Types of State Cooperative Banks:

1. State Cooperative bank’s

2. Primary credit society
3. Central cooperative bank’s
  State Cooperative Bank’s: 

These are the apex cooperative banks in all the states of the country. Cooperative banks mobilise funds and
help in the proper channelisation among various sectors. The money reaches the individual borrowers from
the state cooperative banks through the central cooperative banks and primary credit society.  The cooperative
bank’s in India finance rural areas under Farming, Cattle, milk and personal finance including others.

 Central Cooperative Bank’s: 

These banks operate at the district level. It may have some of the primary credit societies belonging to the
same district as their members.

 Primary Credit Society: 

These societies are formed as the village level or town level with the borrower or non-borrower members
residing in one locality. The operation of each society is restricted to a small area so that the members know
each other and are able to watch over the activities of all members to prevent frauds.

NON-SCHEDULED BANKS:

Non-Scheduled Bank consists primarily of smaller banks in the Cooperative Sector which are not listed in the
Second Schedule of Reserve Bank of India Act, 1934.

In finer terms, the banks which do not comply with the provisions specified by the central bank, within the
meaning of the Reserve Bank of India Act, 1934, or as per specific functions, etc. or as per the judgment of the
RBI, are not able to serve and protect the depositor’s interest, are known as non-scheduled banks.
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.
Non-Scheduled Banks are also required to maintain the cash reserve requirement, not with the RBI, but with
themselves, as no compulsion has been made by the RBI to deposit it in the RBI. These are local area banks.
There is also no requirement of submission of periodic returns to the central bank, in case of non-scheduled
banks.
Further, no such facility as the right to become the member of the clearing house is available to the non-
scheduled banks.

When it comes to privileges, scheduled banks is ahead of non-scheduled banks. Scheduled banks get
remittances through the offices of the Reserve Bank of India and its agents, for free or at concessional rates.
Moreover, borrowing facilities by Central Bank on the submission of the documents. Such facilities are not
provided to the non-scheduled banks.