- 1 Commercial Banks
- 2 FAQs Commercial Banks
- 2.1 What is the regulatory framework governing commercial banks in India?
- 2.2 What are Scheduled Commercial Banks (SCBs), and how are they distinguished from Non-Scheduled Commercial Banks?
- 2.3 What are the primary factors determining an SCB’s status, and why are they significant?
- 2.4 How are SCBs categorized in India, and what are the different groups they fall into?
- 2.5 What is the significance of Regional Rural Banks (RRBs), and how are they structured?
- 3 More Articles
Commercial Banks
Governed under Banking Regulations Act, 1949. Commercial Banks can be categorized into two segments:
- Scheduled Commercial Banks (SCBs) and
- Non Scheduled Commercial Banks.
- Scheduled Commercial Banks are officially listed in the Second Schedule of the RBI Act, 1934 and fall under the regulatory framework of the Banking Regulation Act, 1949.
- Two primary factors determine an SCB’s status:
- A minimum paid-up capital and reserves of 5 lakh, ensuring the bank’s resilience and ability to manage deposits responsibly and Maintaining operations that prioritize the welfare of depositors, as determined by the Reserve Bank of India (RBI).
- SCBs in India are categorized into five different groups as follows:
- State Bank of India
- Nationalized Banks
- Indian Private Banks
- Private Sector Foreign Banks
- Regional Rural Banks (RRBs) : Established on recommendations of the Narasimham Working Group (1975), in accordance with the Regional Rural Banks Act of 1976; Ownership: 50% by the Central Government, 35% by the Sponsor Bank, and 15% by the State Government.
FAQs Commercial Banks
What is the regulatory framework governing commercial banks in India?
Commercial banks in India are governed under the Banking Regulation Act of 1949, which provides the legal framework for their operations and supervision.
What are Scheduled Commercial Banks (SCBs), and how are they distinguished from Non-Scheduled Commercial Banks?
SCBs are officially listed in the Second Schedule of the RBI Act of 1934 and meet certain criteria such as minimum paid-up capital and reserves of Rs 5 lakh. Non-Scheduled Commercial Banks do not meet these criteria and are not listed in the Second Schedule.
What are the primary factors determining an SCB’s status, and why are they significant?
An SCB’s status is determined by factors such as minimum paid-up capital and reserves of Rs 5 lakh and maintaining operations prioritizing the welfare of depositors. These factors ensure the bank’s financial resilience and ability to responsibly manage deposits, contributing to depositor confidence and stability in the banking system.
How are SCBs categorized in India, and what are the different groups they fall into?
SCBs in India are categorized into five groups: State Bank of India, Nationalized Banks, Indian Private Banks, Private Sector Foreign Banks, and Regional Rural Banks (RRBs). Each group has its unique characteristics and functions within the banking sector.
What is the significance of Regional Rural Banks (RRBs), and how are they structured?
RRBs were established based on recommendations of the Narasimham Working Group in 1975 and the Regional Rural Banks Act of 1976. RRBs serve rural areas and are structured with ownership divided among the Central Government, Sponsor Bank, and State Government to ensure focused development and financial inclusion in rural regions.
