Banking Awareness Study Material
Commercial Banking in India
In India only those banks are called Commercial Banks which have been established in
accordance with Indian Companies Act, 1913. These banks were established in India after the advent of the East India Company. Bank of Hindustan was the first Commercial Bank in India. It was established in 1770.
Structure of Commercial Banking
Commercial Banks are the institutions that ordinarily accept deposits from the people and advances loans. In India, such banks alone are called Commercial Banks which have been established in accordance with the provisions of the Banking Regulation Act, 1949. Commercial Banks may be Scheduled Banks or Non-Scheduled Banks.
Scheduled Banks
According to RBI Act 1934, “ A Scheduled Bank is that bank which has been included in the second schedule of the Reserve Bank.” To be eligible for this concession, a bank must satisfy the following three conditions :
- It must have paid up capital and reserves of an aggregate value of at least Rs. 5 lakhs
- It must satisfy the RBI norms that its affairs are not conducted in a manner detrimental to the interests of its depositors
- It must be a corporation and not a partnership or a single owner firm.
Non-Scheduled Banks
These are those banks of which the total capital is less than Rs. 5 lakhs. These are not included
in the second schedule of the Reserve Bank. Reserve Bank has no specific control upon these
banks. But they have to send details of their business to the Reserve Bank every month.
Present Structure of Scheduled Commercial Banks in India
The Commercial Banks of India can be classified into three types :
- Public Sector Banks : There are 107 public sector banks. Out of these , 1 State Bank + 5 Subsidiary + 19 Nationalized Banks + 82 Regional Rural Banks.
- Private Sector Banks : There are 21 private sector banks. Out of which, 7 are new and 14 are old private sector banks.
- Foreign Banks : There are 32 foreign banks operating in India.
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