Banking System in India , Types of Banks , Project of Bank

Banking System in India , Types of Banks , Project of Bank

Types of Banks, Project, Banking System in India

A bank is a financial institution of a country, they lend and accept money from the general public, companies and other institutions. In the economy of the country banking system play a vital role. Banks promote saving among people and use the same for investment and allocation of resources.

In India banking system consists of RBI on the top, followed by commercial, development and cooperative banks. Banking system act as a common ground for the general public and entities looking to save and invest. The most important function of a bank in addition to accepting money is the mobilization of resources efficiently. The role played by a bank and banking system is crucial for the development of the country.

Structure of banking in India

RBI:

  • RBI was nationalized in the year 1949.
  • RBI is the head of all banks, making it a central authority in terms of monetary matters.
  • RBI is known as bankers bank, it controls the banking system and structure in India
  • It is the sole authority for issuing notes in India.
  • It supervises banking operation and implementation of regulation and rules relating to monetary policy in India

Commercial Banks

  • These banks are designed to make profits and regulated by RBI
  • The primary function of commercial banks is to accept deposit and grants loans to various categories such as general public, corporate and government institutions.
  • It is future divided into private, public, foreign and regional rural banks.

Public sector banks are nationalized and major players in the banking system of India. On the other hand in private banks, the major stake is owned by private shareholders.

Foreign banks are one that has headquarters in a different country but operates in India, these banks have to adhere to the rules of both home and operating country.

The last category in commercial banks is regional rural banks, which were established for providing easy access to credit by the weaker section of the society.

Development Bank

The concept of the development bank is of recent origin in the Indian banking system.

  • It is a specialized institution with multiple purposes.
  • They offer all forms of financial assistance to business in the form of loans, underwriting, investment, etc. example IFCI, IDBI, UTI
  • One distinguishing feature of the development bank is that they do not accept deposits.

Cooperative banks

These banks fall under the regulation of cooperative societies Act, 1912.

  • Cooperative Banks are run by the elected members of the society
  • The operation module is “on loss no profit “basis.
  • They work in rural and urban areas offering loan facilities to small business owners and for agricultural-based activities.
Conclusion

The banking system in India has undergone many changes in recent times. Yet the Indian banking system is strengthened with the establishment and nationalizing of RBI.

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