Banks are the financial institutions that perform the function of accepting deposits and granting loans. However, there are various types of banks in India , each of which is responsible for performing different functions. Also, the bank accepts deposits from the public at a significantly lower rate known as the Deposit Rate and lends money at a much higher rate known as the Lending Rate.
Functions of Banks in India
The major functions of banks are identical, but the people with whom each sector or type deals may differ. Its Function includes:
1) Accepts Deposits from the public
2) Provide demand withdrawal facility
3) Credit facility
4) Money transfer
5) Issuance of Drafts
6) Provide locker facilities to its customers
7) Manages and Controls Foreign Exchange
TYPES OF BANKS IN INDIA:
The Banking Structure of India includes:
1) Central Bank
The Central Bank of our country is the Reserve Bank of India. Each country has a Central Bank that oversees and regulates the other banks in the country. Above all, the Central Bank’s primary function is to serve as the government’s bank and to guide and regulate the country’s other banking institutions. The following are the functions of a country’s central bank:
1) Role of an Advisor to other financial institutions
2) Note-Issuing Authority
3) Putting monetary policies into action
4) Supervisor of financial system
In other words, the country’s Central Bank is one of the most important Banks in India. In addition, it is recognised as the Banker’s Bank since it assists all other banks of the country and oversees their activities. Also, the Central Bank controls the country’s financial system under government supervision.
2) Commercial Banks
These are established under the Banking Companies Act, 1956. Moreover, they operate on a commercial basis, with profit making as their primary goal. Also, they have a unified structure and are owned by the government, state governments, or even any private entity. In addition, Commercial Banks function in all sectors, from rural to urban. Unless instructed by the RBI, these banks do not charge concessional interest rates. Commercial banks’ primary source of funding is public deposits.
Moreover, Commercial banks are classified into three types:
Public sector Banks – A bank which the government or the central bank of the country owns the majority of stakes.
Examples of Public Sector Banks: State Bank of India, Bank of Baroda, Canara Bank.
Private sector Banks – A bank in which a private organization, an individual, or a group of people owns the majority of the stacks.
Examples of Private Sector Banks: Axis Bank, HDFC Bank, ICICI Bank
Foreign Banks – This category includes banks with headquarters in foreign nations and branch offices in our country.
Examples of Foreign Banks: CITI Bank, Deutsche Bank, DBS Bank Ltd., United Overseas Bank Ltd.
3) Cooperative Banks
These banks are established under the State Government’s Act . And they provide short-term loans to the agricultural sector and other allied businesses. Above all, Cooperative Banks’ primary objective is to encourage social welfare by providing loans at concessional rates.
Moreover, Cooperative Banks are arranged in a three-tiered structure:
- Tier 1 (State Level)- State Cooperative Banks (regulated by RBI, State Govt, NABARD), Funded by the RBI, the government, and NABARD. The money is then distributed to the general public. These banks are subjected to CRR and SLR concessions (CRR = 3%, SLR = 25%). The state government owns and controls it, and top management is elected by its members.
- Tier 2 (District Level) – Central/District Cooperative Banks
- Tier 3 (Village Level)- Agricultural Cooperative Banks
Conclusion
In conclusion, in India, the process of modern banking began in the late 18th century. The ‘Bank Of Calcutta,’ founded in 1806 and now known as the ‘State Bank Of India’. Above all, it is the country’s oldest profit-making bank. Moreover, currently there are 34 banks in India , with 12 public sector banks and 22 private sector banks. In addition, the various types of banks in india are explained. Above all, banks with its wide banking structure in India have greatly helped in the country’s economic development and cultivated a saving culture among its citizens.
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Banks are the financial institutions that perform the function of accepting deposits and granting loans. However, there are various types of banks in India , each of which is responsible for performing different functions. Also, the bank accepts deposits from the public at a significantly lower rate known as the Deposit Rate and lends money at a much higher rate known as the Lending Rate.
Functions of Banks in India
The major functions of banks are identical, but the people with whom each sector or type deals may differ. Its Function includes:
1) Accepts Deposits from the public
2) Provide demand withdrawal facility
3) Credit facility
4) Money transfer
5) Issuance of Drafts
6) Provide locker facilities to its customers
7) Manages and Controls Foreign Exchange
TYPES OF BANKS IN INDIA:
The Banking Structure of India includes:
1) Central Bank
The Central Bank of our country is the Reserve Bank of India. Each country has a Central Bank that oversees and regulates the other banks in the country. Above all, the Central Bank’s primary function is to serve as the government’s bank and to guide and regulate the country’s other banking institutions. The following are the functions of a country’s central bank:
1) Role of an Advisor to other financial institutions
2) Note-Issuing Authority
3) Putting monetary policies into action
4) Supervisor of financial system
In other words, the country’s Central Bank is one of the most important Banks in India. In addition, it is recognised as the Banker’s Bank since it assists all other banks of the country and oversees their activities. Also, the Central Bank controls the country’s financial system under government supervision.
2) Commercial Banks
These are established under the Banking Companies Act, 1956. Moreover, they operate on a commercial basis, with profit making as their primary goal. Also, they have a unified structure and are owned by the government, state governments, or even any private entity. In addition, Commercial Banks function in all sectors, from rural to urban. Unless instructed by the RBI, these banks do not charge concessional interest rates. Commercial banks’ primary source of funding is public deposits.
Moreover, Commercial banks are classified into three types:
Public sector Banks – A bank which the government or the central bank of the country owns the majority of stakes.
Examples of Public Sector Banks: State Bank of India, Bank of Baroda, Canara Bank.
Private sector Banks – A bank in which a private organization, an individual, or a group of people owns the majority of the stacks.
Examples of Private Sector Banks: Axis Bank, HDFC Bank, ICICI Bank
Foreign Banks – This category includes banks with headquarters in foreign nations and branch offices in our country.
Examples of Foreign Banks: CITI Bank, Deutsche Bank, DBS Bank Ltd., United Overseas Bank Ltd
Conclusion
In conclusion, in India, the process of modern banking began in the late 18th century. The ‘Bank Of Calcutta,’ founded in 1806 and now known as the ‘State Bank Of India’. Above all, it is the country’s oldest profit-making bank. Moreover, currently there are 34 banks in India , with 12 public sector banks and 22 private sector banks. In addition, the various types of banks in india are explained. Above all, banks with its wide banking structure in India have greatly helped in the country’s economic development and cultivated a saving culture among its citizens.
Was the blog helpful? Follow Digital and IT Solution for more such informative blogs.
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