The Banking Industry in India

Banking in India

The banking industry in India is the backbone of the economy. Not only India but the banking industry is also the backbone for every country’s economy.

Banks are the financial institutes that granting credits and accepting deposits from various entities. And play a major role in maintaining the economic position of a country.

In India, the Reserve Bank of India (RBI) is the apex body that governs and monitors bank across India. RBI is responsible for regulating the monetary policy in India.

Let us see the Banking industry

FUNCTIONS OF BANK

Major functions of the banks are almost same –

  1. Acceptance of deposits from the public
  2. Provide demand withdrawal facility
  3. Lending facility
  4. Transfer of funds
  5. Provide customers with locker facilities
  6. Dealing with foreign exchange

In the classification of the Banking industry in India mainly the classification divided into 4 parts Commercial Banks, Small Finance Banks, Payment Banks, Co-operative Banks.

Classification of Indian Banking

COMMERCIAL BANKS

All major economic activities are done by Commercial banks of India. Their primary function is to accept deposits and lend loans to the general public, corporate and government.

Few categories falls under the Commercial Banks. Those are Public Sector Banks, Private Sector Banks, Foreign Banks, Regional Rural Banks, Development Banks.

PUBLIC SECTOR BANKS

These are the nationalized banks. The total amount of deposits in the Indian banking system, around 64% of deposits in these banks. But the Indian government held the Majority of stakes in these banks.

In terms of volume, State Bank of India (SBI) is the largest public sector bank in India.

The merger of the PSU banks will help in increasing the productivity, efficiency and boosting the economy along with reducing the number NPA’s.

In the previous year 10 public Sector Banks were merged into 4 banks. As of now, India has 12 public Sector Banks. Those 12 banks are given below –

  • Punjab National Bank
  • Indian Bank
  • State Bank of India
  • Canara Bank
  • Union Bank of India
  • Indian Overseas bank
  • UCO Bank
  • Bank of Maharashtra
  • Punjab and Sind Bank
  • Bank of India
  • Central Bank of India
  • Bank of Baroda
PRIVATE SECTOR BANKS

These banks in which major stake is held by private shareholders. All the banking rules and regulations laid down by the RBI it is same as PSU banks. The list of private-sector banks in India are given below

  • Axis Bank
  • Bandhan Bank
  • City Union Bank
  • DCB Bank
  • Dhanlaxmi Bank
  • Federal Bank
  • HDFC Bank
  • ICICI Bank
  • IndusInd Bank
  • IDFC FIRST Bank
  • Jammu & Kashmir Bank
  • Karnataka Bank
  • Karur Vysya Bank
  • Kotak Mahindra Bank
  • Lakshmi Vilas Bank
  • Nainital bank
  • RBL Bank
  • South Indian Bank
  • Tamilnad Mercantile Bank
  • YES Bank
  • IDBI Bank
  • Catholic Syrian Bank
FOREIGN BANKS

India is one of the fastest-growing countries and has been attracting vast foreign direct investment (FDI) inflows in different sectors.

India has a bunch of commercial banks, public sector banks, private banks and foreign banks. But Foreign banks have been making a notable contribution to India’s economy.

Headquarters of foreign banks are in the outside of India but operates in India as a private entity. But these banks are under the compulsion to follow the regulations of its home country as well as the country in which they are operating.

In the below list has some of the top Foreign Banks which operating in India:

  • Citi Bank
  • Standard Chartered Bank
  • HSBC Bank
  • Deutsche Bank
  • Royal Bank of Scotland
  • DBS Bank
  • Barclays Bank
  • Bank of America
  • Doha Bank
  • Bank of Baharin and Kuwait
REGIONAL RURAL BANKS

Regional Rural Banks are also commercial banks but they are established with the main purpose of offering credit to weaker sections of the society. Like agricultural labourers, marginal farmers and small enterprises. They generally function at regional levels in various states of India. And they have branches in selected urban areas as well.

SMALL FINANCE BANKS

The main purpose of having small finance banks is to expand access to financial services in rural and semi-urban areas. And is aimed to supply financial inclusion to parts of the society that are not served by another type of banks.

These banks can do nearly everything that a normal commercial bank can do but at a much smaller scale. These banks take deposits and lend to underserved sections of customers.

It includes small business units, small and marginal farmers, micro and small industries, and even entities in the unorganised sector.

The list of Small Finance Banks in India are given below –

  • Au Small Finance Bank Ltd.
  • Fincare Small Finance Bank Ltd.
  • ESAF Small Finance Bank Ltd.
  • Ujjivan Small Finance Bank Ltd.
  • North East Small Finance Bank Ltd.
  • Capital Small Finance Bank Ltd.
  • Equitas Small Finance Bank Ltd.
  • Suryoday Small Finance Bank Ltd.
  • Utkarsh Small Finance Bank Ltd.
  • Jana Small Finance Bank Ltd.

COOPERATIVE BANKS

Co-operative banks work on the no-profit no-loss basis and mostly give service to entrepreneurs, micro and small businesses in urban areas. In rural areas, they mostly finance agriculture-based operations.

There two types of a cooperative bank, those are Urban Co-operative Banks, State Co-operative Banks.

PAYMENT BANKS

This is a pretty new model of the bank in the Indian Banking industry. It was conceptualized by the Reserve Bank of India.

The main purpose of Payment banks is to widen the reach of payment and financial services to small businesses, low-income households, migrant labourers in a very secured technology-enabled environment.

The amount is currently limited to Rs.1 Lakh per customer. And they offer services like ATM cards, debit cards, net-banking and mobile banking.

The list of Payment Banks in India are given below –

  • Airtel Payments Bank
  • Fino Payments Bank
  • India Post Payments Bank
  • Jio Payments Bank
  • NSDL Payments Bank
  • Paytm Payments Bank

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