Structure of Banking in India

Structure of Banking in Inida

Reserve bank of India is the apex financial institution in India. It monitors the financial system in India. Established on 1st April 1935 under the RBI act 1934 which was then nationalized in 1949. Headquarter of RBI is in MUMBAI. The logo of RBI is enclosed with a Banyan tree and Royal Bengal Tiger.

What actually RBI does?

  • Regulates the Financial System
  • Manages foreign exchange
  • Act as Banker’s bank
  • Issues Currency
  • Act as Government’s Bank

Key Pointers

  • RBI was set up under Hilton young commission
  • RBI decides Bank rate, Repo rate, Reverse repo rate and CRR
  • RBI issues the currency based on “ Minimum reserve system ”
    i.e. RBI requires to hold currency of ₹ 200 Cr, of which not less than ₹ 115 Cr in gold form

Subsidiary of RBI

  • National Housing Bank (NHB)
  • Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
  • National Bank for Agriculture and Rural Development (NABARD)
  • Deposit Insurance and Credit Guarantee Corporation (DICGC)

Structure of Banking

Structure-of-banking-in-India

Non-Scheduled and Scheduled Bank

Non-scheduled Bank

  • Don’t come under RBI act 1934
  • Need to maintain a minimum balance with the bank itself

Scheduled Bank

  • Almost all banks are scheduled Indian
  • Scheduled bank comes under the 2nd schedule of the RBI act 1934
  • Need to maintain a minimum balance with RBI

2 Types of Scheduled banks

Scheduled Cooperative
Scheduled Commercial

Scheduled Cooperative Bank

  • Mainly serve the small industry and self-employed workers
  • Registered under the Cooperative Societies Act, 1912
  • 2 Types – 1. Urban Cooperative
    2.Rural Cooperative bank

Three Types of RURAL COOPERATIVE BANK

A) State Cooperative Banks- They operate at the apex level in states
B) District Central Cooperative Banks-They operate at the district levels
C) Primary Agricultural Credit Societies-They operate at the village or grassroots level

Scheduled Commercial Bank

PUBLIC SECTOR BANK

  • Major stakes are owned by the central government
  • Total 21 Public Sector Bank
  • Largest PSB – State Bank Of India
  • All PSB are not Nationalized Bank
  • Banks which are PSB but not Nationalized
    1.IDBI
    2.Bhartiya Mahila bank

PRIVATE SECTOR BANK

  • Government stakes are less than 50 %
  • Total 21 Private Sector Bank
  • Largest Private sector bank – HDFC
  • All private sector banks are obviously Non Nationalized bank
    E.g. – HDFC, ICICI, AXIS, RBL, DCB

FOREIGN BANKS

  • Banks of foreign HQ working in INDIA
  • These come under FDI policies of the government
  • 73 % FDI for foreign private bank
  • 20 % FDI for foreign public sector bank
  • E.g. Citi bank, Standard Chartered, HSBC, Deutsche

REGIONAL RURAL BANK

  • Main motive to serve banking facilities in the rural area
  • RRB act 1976
  • Set up on Recommendation of Narsimham committee
  • Father of RRB – M.Swaminathan
  • Total 57 RRB

Banking Awareness Book

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