Banks are financial institutions that perform deposit and lending functions. There are various types of banks in India and each is responsible for performing different functions.
In terms of the government exam syllabus, a candidate must know the types of banks and the role of each of them in managing the financial system of a country.
Banks in India (UPSC Notes)
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The bank takes deposits at a much lower rate from the public called the deposit rate and lends money at a much higher rate called the lending rate.
Banks can be classified into various types. Given below are the bank types in India:-
This is an important topic for the IAS Exam. In this article, aspirants will get information on the banking system in India, its functions, and the type of banks in India.
The types of banks in India, their functions and the list of banks under each section form a very important part of the banking awareness syllabus which is included in most Government exams.
The major functions of banks are almost the same but the set of people each sector or type deals with may differ. Given below the functions of the banks in India:
Apart from the above-mentioned list, various utility functions also need to be performed by the various banks.
Aspirants can read about different bank exams in the linked article.
The Reserve Bank of India is the central bank of our country. Each country has a central bank that regulates all the other banks in that particular country.
The main function of the central bank is to act as the Government’s Bank and guide and regulate the other banking institutions in the country. Given below are the functions of the central bank of a country:
In other words, the central bank of the country may also be known as the banker’s bank as it provides assistance to the other banks of the country and manages the financial system of the country, under the supervision of the Government.
These banks are organised under the state government’s act. They give short-term loans to the agriculture sector and other allied activities.
The main goal of Cooperative Banks is to promote social welfare by providing concessional loans
They are organised in the 3-tier structure
The commercial banks can be further divided into three categories:
Given below is the list of commercial banks in our country:
| Commercial Banks in India | ||
| Public Sector Banks | Private Sector Banks | Foreign Banks |
| State Bank of India | ||
Bank of Maharashtra
Central Bank of India
Indian Overseas Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab & Sind Bank
Union Bank of India
United Bank of India
City Union Bank
Jammu and Kashmir Bank
Lakshmi Vilas Bank
South Indian Bank
Tamilnad Mercantile Bank
Development Credit Bank (DCB Bank Ltd)
Kotak Mahindra Bank
National Australia Bank
Westpac Banking Corporation
Bank of Bahrain & Kuwait BSC
United Overseas Bank Ltd
J.P. Morgan Chase Bank
Standard Chartered Bank
Aspirants can check the list of Regional Rural banks in India in the linked article.
Certain banks are introduced for specific purposes only. Such banks are called specialized banks. These include:
There are various other specialized banks and each possesses a different role in helping develop the country financially.
As the name suggests, this type of bank looks after the micro industries, small farmers, and the unorganized sector of society by providing them with loans and financial assistance. These banks are governed by the central bank of the country.
Given below is the list of the Small Finance Banks in our country:
| AU Small Finance Bank | Equitas Small Finance Bank | Jana Small Finance Bank | Northeast Small Finance Bank |
| Capital Small Finance Bank | Fincare Small Finance Bank | Suryoday Small Finance Bank | Ujjivan Small Finance Bank |
| Esaf Small Finance Bank | Utkarsh Small Finance Bank |
A newly introduced form of banking, the payments bank has been conceptualized by the Reserve Bank of India. People with an account in the payments bank can only deposit an amount of up to Rs.1,00,000/- and cannot apply for loans or credit cards under this account.
Options for online banking, mobile banking, the issue of ATMs, and debit cards can be done through payments banks. Given below is a list of the few payments banks in our country:
Banks in India (UPSC Notes)
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Commercial banks are of three types i.e., Public sector banks, Private sector banks and Foreign banks.
The functions of commercial banks are of two types – Primary functions and Secondary functions. The primary functions of a commercial bank are accepting deposits and granting loans & advances.If the rate of interest is higher, the public is motivated to deposit more funds with the bank. The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The secondary functions of banks are issuing letters of credit, cheques, demand draft, transferring money from one account to another, providing locker facilities etc.
Repo rate is the rate at which the RBI lends to commercial banks by purchasing securities while bank rate is the lending rate at which commercial banks can borrow from the RBI without providing any security.
Read to know more about various banking sector reforms in India.
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