Broadly, the Indian banking sector can be divided into two types of banks- scheduled and non-scheduled.
Scheduled banks are those listed in the 2nd schedule of the RBI Act, 1934. As per law, the paid up capital and collected funds in these banks should not be less than Rs 5 lakhs. They are also eligible for loans from the central bank.
Scheduled banks are further classified into nationalized banks, the State Bank of India and its associate banks, regional rural Banks (RRBs), foreign banks, and private banks. Some of the state and urban co-operative banks too come under this category.
Allahabad Bank, Bank of India, Canara Bank, Indian Bank, Punjab and Sindh Bank, Punjab National Bank, Union Bank of India, Vijaya Bank, and Dena Bank are among the 27 nationalized banks in the country.
State Bank of Travancore, State Bank of Mysore, State Bank of Hyderabad etc. are the associate banks of the State Bank of India. It was in 1960 that SBI took over control of these associate banks.
The IDBI Bank and the Bharatiya Mahila Bank are other two important public sector banks functioning in the country.
Private sector banks include the ICICI Bank, Induslnd Bank, Federal Bank, Dhanalaxmi Bank, HDFC Bank, South Indian Bank, Yes Bank, Axis Bank etc. Doha Bank, BNP Paribas, HSBC, Australia and New Zealand Banking Group, and Standard Chartered Bank, are some of the popular foreign banks that operate in our country.
The first regional rural banks were opened in 1975 with the aim of providing banking facilities to rural areas in the country. The Kerala Gramin Bank, the Assam Gramin Vikash Bank, and the Vidarbha Konkan Gramin Bank are examples for RRBs.
Non-scheduled banks are those that do not come under the 2nd schedule of the RBI Act of 1934. They have a reserve capital of less than Rs 5 lakhs, and are not entitled to borrow from the RBI for normal banking purposes. An example is the Jammu and Kashmir Bank. The term ‘commercial banks’ are used for banks in both the categories- scheduled as well as non-scheduled. They are defined as banks operating for profit.