CLASSIFICATION OF BANKS - 15 Minutes Seminar Notes

 CLASSIFICATION OF BANKS - 15 Minutes Seminar Notes

1.    Central bank

RBI is the central bank of our country. The main function of central bank is to act as the government’s bank and guide and regulate the other banking institutions in the country.

2.    Co - operative bank

These banks are organized under the state government act. They give short term loans to the agriculture sector. They are organized in the 3 tier structure.

•     Tier 1 (state level) - state cooperation banks
  
•     Tier 2 (district level) - central / district cooperative banks
  
•     Tier 3 (village level) – primary agriculture cooperative banks
  

3.    Commercial bank

They operate on a commercial basis and its main objective is profit.

a. Public sector- A bank where the majority stakes are owned by the government or the central bank of the country.

b. Private sector- A bank where the majority stakes are owned by the private organization.

c. Foreign sector- The banks with their headquarters in the foreign countries and branches in our country.

4.    Regional Rural Bank

• It is established in 1975. It has a joint venture between central government (50%), state government (15%), and commercial bank (35%)
  
• There are 196 RRB have been established from 1987 to 2005.
  

5.    Specialized Bank

The banks that are introduced for specific purpose are specialized banks. Some of the specialized banks are:

•     SIDBI (Small Industries Development Bank of India)
  
•     EXIM (Exports and Import Bank)\
  
•     NABARD (National Bank for Agriculture and Rural Development)
  

6.    Local Area Bank (LAB)

Introduced in India in 1996. It is organized by private sector. Earning profit is the main objective. It is registered under Companies Act, 1956.

7.    Small Finance Bank

Providing loan and financial assistance to micro industries, small farmers and unorganized sector of the society. Examples of Small Finance Bank are:

•     Jan Small Finance Bank
  
•     Fin care Small Finance Bank
  
•     Utkarsh Small Finance Bank
  

8.    Payment Bank

People with an account in the payment bank can only deposit an amount of up to 100000 and cannot apply for loans or credit cards.

Online banking, Mobile banking, the issue of ATM, and Debit card can be done through payment banks. Some of the payment banks are:

•     Airtel Payment Bank
  
•     India Post Payment Bank
  
•     Fino Payment Bank
  
•     Jio Payment Bank
  
•     Paytm Payment Bank

Presented By,

Preethi chouhan

Banking Student 

Magme School Of Banking