Structure of Indian Banking

The financial system in India has a very comprehensive structure. It represents a variety of banks, financial institutions, capital
market institutions, non-banks indigenous banking and financial institutions,

The banking system in India consists of the Central Bank (RBI), commercial banks, development banks, specialized
banks and foreign banks. Banking operating in India can be broadly classified into two categories viz., Commercial Banks
and Co-operative Banks.

(a)The Central Bank in the country is known as Reserve Bank of India, the supreme monetary and banking
authority in the country, has the responsibility to control the banking system in the country.
(b)The Commercial banks are the joint stock companies dealing in the money and credit. These banks mobilize savings
and make them available to large and small industrial and trading with mainly for working capital
requirements.
(c)Co-operative banks, organized on unit banking principle, are mainly rural based, although, there are some banks
operating in the urban areas. The state funds for the agriculture are mainly routed through the state
cooperative banks and central cooperative banks. The Regional rural banks came into being with the specific
objective to agriculture laborers, small and marginal farmers, artisans, small entrepreneurs in the rural area.
(d)A number of apex banks are working in specialized areas. They include NABARD, IDBI, EXIM bank and
National Housing Bank.
(e)Financial institutions like UTI, LIC, GIC and other subsidiaries such as mutual funds, investments, loan, hire
purchase and leasing companies are also a part of the banking network in the boarder sense. All
theseinstitutions undertake mobilization of resources, engage in long term investment and provide financial
services.
Within the category of Commercial banks, there are two types of banks namely Scheduled Commercial Banks and Non-
Scheduled Commercial Banks.

Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of
India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide
section 42 (6) (a) of the Act.

"Non-scheduled bank in India" means a banking company as defined in clause (c) of section 5 of the Banking Regulation
Act, 1949 (10 of 1949), which is not a scheduled bank".

Depending on the pattern of ownership commercial banks can be classified into three groups. They are (i) Public Sector
banks which include State Bank of India and Nationalized Banks and other Public Sector Banks, (ii) Private Sector
Banks consisting of Indian Private Sector Banks and Foreign Banks operating in India, (iii) Others comprising
Regional Rural banks and Local Areas banks.

Of these, public sector banks have a countrywide network of branches and accounts for over 70 per cent of total
banking business. They have a strong presence in rural and semi-urban areas. Private sector banks and foreign banks are
more techno-savvy and have limited number of branches. Public sector banks sponsor the RRBs and their activities are
localized.
Structure of Scheduled Commercial Banks in India.

RBI

Central Bank and Supreme Monetary

Scheduled Commercial Scheduled Co-operative Banks

banks (79)

Public Sector Rural

Private Sector Foreign Regional banks
Banks (27) Banks (22) Banks(30)

Old Private Sector New Private Sector Banks (7)

Scheduled Urban Co-
Banks (15)
operative
(Banks that existed (Banks that came into
before 1991) existence after 1991)
Scheduled State
Co-operative Banks

Other Public Nationalized State Bank of India and

Sector Banks (1) Banks (19) Its Associates (7)