Banking Awareness Notes Part - 1

Indian Banking Structure

Indian banking structure is as follows:

a)     Central Bank (RBI)

b)     Specialised Banks

c)     Commercial Banks

d)     Development Banks

e)     Co-operative Banks

a) Central Bank:

As its name signifies, a bank which manages and regulates the banking system of a particular country is the Central Bank. It provides guidance to other banks whenever they face any problem (that is why the Central Bank is also known as a banker’s bank) and maintains the deposit accounts of all other banks.

·   Central Banks of different countries: Reserve Bank of India(INDIA),  Federal Reserve System (USA), Swiss National Bank (SWITZERLAND),       Reserve Bank of Australia (AUSTRALIA) State Bank of Pakistan (PAKISTAN).

b) Specialised Banks:

Specialised Banks are those banks which are meant for some special purposes. For examples: NABARD, EXIM bank, SIDBI, IDBI.

·      NABARD: National Bank for Agriculture and Rural Development. This bank is meant for financing the agriculture as well as rural sector. It actually promotes research in agriculture and rural development.

·     EXIM Bank: Export Import Bank of India. This bank gives loans to exporters and importers and also provides valuable information about the international market. If you want to set up a business for exporting products abroad or importing products from foreign countries for sale in our country, EXIM bank can provide you the required support and assistance.

·     SIDBI: Small Industries Development Bank of India. This bank provides loans to set up the smallscale business unit / industry. SIDBI also finances, promotes and develops small-scale industries whereas IDBI (Industrial Development Bank of India) gives loans to big industries.

c) Commercial Banks:

Normal banks are known as commercial banks, their main function is to accept deposits from the customer and on the basis of that they grant loans. (Loans could be short-term, medium term and long-term loans.) Commercial banks are further classified into three types.

·    Public Sector Banks (PSB): Government banks are known as PSBs since the majority of their stakes are held by the Government of India. (For example: Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharastra, Canara Bank, Central Bank of India etc).

·     Private Sector Banks: In these banks, the majority of stakes are held by the individual or group of persons. (For example: Bank of Punjab, Bank of Rajasthan, ICICI Bank, Axis Bank etc).

·     Foreign Banks: These banks have their headquarters in a foreign country but they operate their branches in India. For e.g. HSBC, Standard Chartered Bank, ABN Amro Bank etc.

d) Development Banks:

Such banks are specially meant for giving loans to the business sector for the purchase of latest machinery and equipments. Examples: SFCs (State Financial Corporation of India) and IFCI (Industrial Finance Corporation of India).

e) Co-operative Banks:

These banks are nothing but an association of members who group together for self-help and mutual-help. Their way of working is the same as of commercial banks. But they are quite different. Co-operative Banks in India are registered under the Co-operative Societies Act, 1965. and regulated by the RBI.