🏦 Types of Banks in India

The banking system in India plays a vital role in the country’s economic growth and financial stability. It acts as the backbone of financial transactions, promoting savings, investments, and development. Banks in India are categorized based on their ownership, functions, and target customers. Let’s explore the main types of banks in India.

1. Scheduled and Non-Scheduled Banks

Scheduled Banks are listed under the Second Schedule of the Reserve Bank of India (RBI) Act, 1934. They meet certain criteria laid down by the RBI and enjoy various privileges, including borrowing from the RBI.

Non-Scheduled Banks, on the other hand, are not included in this list and are usually smaller in size with limited operations.

2. Commercial Banks

Commercial banks are the most common type of banks and primarily deal with deposits, loans, and investment services.

They are further classified into:

• Public Sector Banks: Majority-owned by the Government of India (e.g., State Bank of India, Punjab National Bank, Bank of Baroda).
• Private Sector Banks: Owned by private individuals and institutions (e.g., HDFC Bank, ICICI Bank, Axis Bank).
• Foreign Banks: Banks with headquarters outside India but operating within the country (e.g., Citi Bank, HSBC, Standard Chartered Bank).
• Regional Rural Banks (RRBs): Established to serve rural areas and support agriculture and small-scale industries.

3. Cooperative Banks

Cooperative banks operate on the principles of cooperation, self-help, and mutual assistance. They cater mainly to rural and semi-urban areas, providing affordable credit to farmers and small businesses.

They are of three types:

• Primary Credit Societies
• District Central Cooperative Banks
• State Cooperative Banks

4. Development Banks

These are specialized financial institutions that provide long-term finance for industrial and infrastructural development.

Examples include:

• Industrial Development Bank of India (IDBI)
• National Bank for Agriculture and Rural Development (NABARD)
• Small Industries Development Bank of India (SIDBI)
• Export-Import Bank of India (EXIM Bank)

5. Payment Banks

Introduced by the RBI to promote financial inclusion, Payment Banks can accept deposits (up to ₹2 lakh per customer), provide remittance services, and issue debit cards.

However, they cannot lend money or issue credit cards.

Examples: Airtel Payments Bank, Paytm Payments Bank, India Post Payments Bank.

6. Small Finance Banks

These banks are designed to provide basic banking services to the unorganized and underserved sectors such as small farmers, MSMEs, and low-income households.

Examples: AU Small Finance Bank, Equitas Small Finance Bank, Ujjivan Small Finance Bank.

7. Central Bank

The Reserve Bank of India (RBI) is the central bank of the country. It regulates and supervises all other banks, manages monetary policy, issues currency, and maintains financial stability in the economy.

Conclusion

The Indian banking system is diverse and dynamic, catering to the needs of every section of society — from farmers to entrepreneurs and from rural India to global investors. Together, these banks ensure financial inclusion and economic progress for the nation.

📄 One PDF is attached below, prepared by our team member Tannabi Rout— Team MacroEdTech (Economics).