Non-Scheduled banks are those Banks whose names do appear in the list of scheduled Banks maintained by the Reserve Bank.
However, Non-schedule banks come within the sweep of the banking regulation act,1949 and are therefore obliged to follow the Reserve Bank’s guidelines and provisions of the act.
For instance, Non-schedule banks are required to have a minimum capital of Rs 5 lakhs, these banks have to comply with the cash reserve requirements condition of the Reserve Bank etc.
Non scheduled Banks are not eligible for having financial assistance from Reserve Bank except under emergency situations. Non-schedule banks are also deprived of privileges available to scheduled Banks.
Scheduled bank refers to those banking institutions whose names are included in the second schedule of the Central Bank of India Act 1934.
Under Section 42(6) of the Reserve Bank of India Act, a banking company included in this scheduled list must fulfil the following conditions –
- The paid-up capital and reserve of the bank should not be less than 5 lakhs.
- The bank must satisfy the Central Bank that its affairs are not conducted in a manner detrimental to the interest of the depositors.
- The bank must be a corporation or cooperate with society and not a partnership or single own firm.
Types Of Scheduled Bank:
- Scheduled commercial bank – Indian as well as foreign banks.
- 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:
- Public sector banks
- Private Sector banks
- Foreign Banks
- 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:
- State Cooperative bank’s
- Primary credit society
- 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.
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.
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.