When you hear the term bank, the first image that strikes your mind is of any commercial bank. However, there are different types of banks in India for different purposes. Today, in this article, we will know about different types of banks in India.
Central bank:
A central bank is the backbone of any economy. In each country, it is entrusted with the responsibility of guiding and regulating the banking system. The central banking authority in India is the Reserve Bank of India. It is the apex bank and enjoys the highest financial powers and draws power from RBI Act. It does not deal directly with the public, it is a bank of banks. It contains deposit accounts of all banks. It gives advance amounts to the banks as and when required. It regulates the amount of money and credit and supervises and controls the currency transactions of all banks.
The Reserve Bank prints and manage the circulation of currency. It also plays the role of banker to the government and maintains the details of government receipts, payments and loans taken from various sources. It also determines the rate of interest on loans. This central bank also performs the function of the keeper of currency, foreign exchange reserves, gold and other securities.
Commercial Banks:
Commercial banks are those banks that accept deposits from the general public and provide short term retail loans to their customers. Banking There is also different types of commercial banks such as public sector banks, private sector banks and foreign banks. These banks are regulated by the RBI. Types of commercial banks are:
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- Public Sector Commercial Banks.
- Private Sector Commercial Banks
- Foreign Banks
Cooperative bank:
When a co-operative society does banking business, it is called a co-operative bank. Co-operative banks generally give loans at low-interest rates. The control and inspection of these banks are also done by the Reserve Bank of India as well as respective state governments. Types of a cooperative bank:
- Primary credit committee
- Central co-operative bank
- State co-operative bank
Small Finance bank:
Small Finance Bank is allowed to provide Basic Banking Services, especially in remote areas. Their function includes accepting deposits from customers and giving small loans. The purpose of starting this bank is to bring that part of the population into the ambit of banking services, which are away from the services of Scheduled banks.
Moreover, they are not allowed to form their own subsidiaries. There are many small finance banks serving customers today including Equitas Small Finance Bank, AU Small Finance Bank, Suryodaya Finance Bank, Ujjivan Small Finance Bank.
Payments bank:
The purpose of starting the Payments Bank is to provide banking facilities to even weaker sections of the society including migrant labourers and low-income families. They are allowed to accept deposits up to Rs 2 lakh. These people can open an account in the payment bank and use it to send or request for money from others.
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Payment banks cannot give loans to customers. Many payment banks including Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, Paytm Payments Bank are offering banking services.
Development Bank:
Development banks were set up as associate institutions of the Reserve Bank of India. Development Banks are those financial institutions that provide medium-term and long term loans to industries. After independence, there was a rapid development of industries in India, which demanded huge financial investment and more promotion. As a result, these institutions were established, development banks help in the promotion, expansion and modernization of industries. Along with providing finance for a medium and long term, these banks also invest capital in industrial undertakings. It also provides technical advice and assistance when required.
Special Purpose Bank:
There are some banks that work in a particular activity or area, hence they are called Special Purpose Banks. EXIM, NABARD, SIDBI and NHB are examples of banks in this category.
Foreign Exchange Banks:
Foreign exchange banks provide finance only for foreign trade. Every country wants the price of its goods in its own currency. Due to this, the problem of converting the currency of one country into the currency of another country arises. To solve this problem, foreign exchange banks are established. These banks come into play in such a situation. These banks exchange the money with other currencies.