A bank is an institution that accepts deposits of money from the public, which are repayable on demand and withdrawable by cheque. Such deposits are used for lending to others and not for financing its own business. The term lending includes both direct lending to borrowers and indirect lending through investment in open market securities. A sound banking system plays a pivotal role in the growth of a nation's economy.
Composition and current scenario
The Reserve Bank of India (RBI) is the supreme monetary authority responsible for controlling the banking system in the country. As per the Reserve Bank of India Act, 1934, banks in India are classified into scheduled and non-scheduled banks. Scheduled banks are those which are entered into the second schedule of the RBI Act, 1934. It includes those banks which have a paid-up capital and reserves of an aggregate value of not less than Rs.5 lakhs and which satisfy RBI that their affairs are being carried out in the interests of the depositors. Non-scheduled banks are those which have not been included in the second schedule of the Act. The scheduled banks comprise scheduled commercial banks and scheduled cooperative banks. Further, the scheduled commercial banks in India are categorised into five different groups according to their ownership and/or nature of operation:- (i) Nationalised Banks; (ii) State Bank of India and its associates; (iii) Regional Rural Banks (RRBs); (iv) Foreign banks; and (v) Other Indian private sector banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Co-operative Banks.
At present, there are 218 scheduled commercial banks (including foreign banks) in the country. These include 161 banks in the public sector, of which 133 are regional rural banks (RRBs). The remaining 28 banks consist of 19 nationalised banks, 8 banks in State Bank of India group and the Industrial Development Bank of India Limited (IDBI Ltd). Besides, there are only three non-scheduled banks in the country.
Private Sector Banks:
These are some of the leading private sector banks in India that offer financial solutions for businesses:
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