Scheduled Commercial Banks in India- Types and functions

Scheduled Commercial Banks (SCBs) in India refer to banks that are included in the Second Schedule of the Reserve Bank of India Act, 1934. These banks are regulated by the Reserve Bank of India (RBI) and have to comply with the rules and regulations issued by the central bank. There are two types of Scheduled Commercial Banks in India:

  1. Public Sector Banks (PSBs): These are banks in which the majority of the stake is held by the government. PSBs play a significant role in promoting financial inclusion and social welfare schemes in the country. Some examples of PSBs include State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda.
  2. Private Sector Banks (PVBs): These are banks in which the majority of the stake is held by private shareholders. Private sector banks are known for their innovative products and services and are generally more technology-driven. Some examples of PVBs include HDFC Bank, ICICI Bank, and Axis Bank.

Functions of Scheduled Commercial Banks in India:

  1. Accepting deposits: SCBs accept deposits from the public, including savings accounts, current accounts, fixed deposits, and recurring deposits.
  2. Lending money: SCBs provide various types of loans to individuals and businesses, including personal loans, home loans, car loans, and business loans.
  3. Issuing credit cards: SCBs issue credit cards to their customers, allowing them to make purchases and pay bills on credit.
  4. Providing investment services: SCBs provide various investment services, including mutual funds, demat accounts, and stock trading.
  5. Foreign exchange services: SCBs provide foreign exchange services, including currency exchange, remittances, and travel cards.
  6. Payment and settlement services: SCBs provide various payment and settlement services, including RTGS, NEFT, IMPS, and UPI.

In summary, Scheduled Commercial Banks in India play a crucial role in the country’s financial system by accepting deposits, providing loans, offering investment and foreign exchange services, and facilitating payment and settlement services.