The Indian banking structure comprises a diverse set of institutions that perform a range of functions. Here is a detailed note on the functions of different types of banks in India:
- Reserve Bank of India (RBI):
The RBI is the central bank of India and is responsible for formulating and implementing monetary policy. It is also responsible for regulating and supervising banks in India. Some of the key functions of the RBI are:
- Conducting open market operations to manage liquidity in the banking system
- Setting the benchmark interest rates
- Issuing currency and managing the foreign exchange reserves
- Regulating and supervising the banking system to maintain financial stability
- Scheduled Commercial Banks:
Scheduled commercial banks are banks that are included in the Second Schedule of the Reserve Bank of India Act, 1934. These banks are regulated and supervised by the RBI. Some of the key functions of scheduled commercial banks are:
- Accepting deposits from the public
- Granting loans and advances to individuals and businesses
- Providing various types of banking services such as ATM services, online banking, etc.
- Issuing credit and debit cards
- Facilitating trade and foreign exchange transactions
- Managing the payment and settlement systems
- Non-Scheduled Banks:
Non-scheduled banks are banks that are not included in the Second Schedule of the Reserve Bank of India Act, 1934. These banks are also regulated and supervised by the RBI. Some of the key functions of non-scheduled banks are:
- Providing short-term finance to individuals and businesses
- Offering specialized banking services such as export financing, project financing, etc.
- Facilitating foreign exchange transactions
- Regional Rural Banks (RRBs):
RRBs are specialized banks that cater to the banking needs of rural areas. These banks are jointly owned by the central government, the concerned state government, and a sponsor bank. Some of the key functions of RRBs are:
- Providing credit and other banking services to small farmers, agricultural laborers, and rural artisans
- Supporting the development of agriculture and rural industries
- Promoting financial inclusion by providing banking services to the unbanked population in rural areas
- Co-operative Banks:
Co-operative banks are banks that are owned by their members who also use their services. These banks are regulated by the RBI and also by the Registrar of Co-operative Societies. Some of the key functions of co-operative banks are:
- Providing banking services to members and the local community
- Supporting agricultural and rural development
- Promoting financial inclusion by providing banking services to the unbanked population in rural areas
- Payment Banks:
Payment banks are specialized banks that are licensed by the RBI to provide limited banking services such as accepting deposits and making payments. These banks cannot lend money or issue credit cards. Some of the key functions of payment banks are:
- Accepting deposits from customers
- Facilitating digital payments and remittances
- Issuing debit cards and prepaid payment instruments
In conclusion, the Indian banking structure comprises a diverse set of institutions that perform various functions such as accepting deposits, granting loans, providing banking services, and promoting financial inclusion. The banking system in India is regulated and supervised by the RBI to maintain financial stability and promote the growth of the economy.