The banking industry is responsible for handling finances in a country which is inclusive of cash and credit. Banks are the institutional bodies which accept deposits and grant credit to the entities as well as play a massive role in managing the economic status of the country. Considering their importance in the economy is crucial, banks are under strict vigilance in every country.
In India, the RBI is the apex of the banking institutions which regulates the monetary policies in the country. Now, the bank industry is classified into four categories. It starts with a commercial bank, which is further divided into the public sector, private sector, foreign banks, and regional rural banks. On the other hand, cooperative banks get classified into urban and rural. Besides this, there is a new section called the payments bank.
Let us learn about these in detail –
These regulated by the Banking Regulation Act, 1949, run a business model designed to make a profit. Their main function is to accept deposits and offer loans to the public, corporates, and Government. Now, commercial banks are of two kinds –
Both these sectors have their internet banking and mobile app facilities today for making the financial experience smooth.
Small Finance Banks
This is a niche banking sector and aims to offer financial inclusions to sections of the society which are not provided by other banks. The primary consumers of small finance banks are micro industries, small and marginal farmers, unorganised sectors, and small business units. These banks come under Section 22 of the Banking Regulation Act, 1949 and governed by RBI Act, 1934 and FEMA.
This is a new section under the banking sector and was conceptualised by RBI. Such banks accept only restricted deposits. The current amount acceptable is INR 1 lakh. They also provide services such as ATM cards, debit cards, mobile and internet banking.
These banks registered under the Cooperative Societies Act, 1912, is run by the elected managing committee. They work on a no-profit no-loss basis and serve entrepreneurs, small businesses industries, and self-employed in the urban area. In rural areas, they finance agriculture-based activities such as farming, livestock, and hatcheries.
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