BANKING STRUCTURE OF INDIA| CUET ECONOMICS| L-3

The Banking system of a country is an important pillar holding up the financial system of the country’s economy. The major role of banks in a financial system is the mobilization of deposits and disbursement of credit to various sectors of the economy. The existing, elaborate banking structure of India has evolved over several decades.

In This Article:

• Structure of the Indian Banking System

• Scheduled, Non-Scheduled Banks and Development Banks

• Commercial Banks

• Cooperative Banks

• Development Banks

• Conclusion

Structure of the Indian Banking System

Reserve Bank of India is the central bank of the country and regulates the banking system of India. The structure of the banking system of India can be broadly divided into scheduled banks, non-scheduled banks and development banks.

Banks that are included in the second schedule of the Reserve Bank of India Act, 1934 are considered to be scheduled banks. 

All scheduled banks enjoy the following facilities:

Such a bank becomes eligible for debts/loans on bank rate from the RBI

Such a bank automatically acquires the membership of a clearing house.

All banks which are not included in the second section of the Reserve Bank of India Act, 1934 are Non-scheduled Banks. They are not eligible to borrow from the RBI for normal banking purposes except for emergencies.

Scheduled banks are further divided into commercial and cooperative banks.