Type of Banks

Because banking needs are diverse, we need distinctive kinds of banks. Banks are classified into four types: commercial banks, cooperative banks, specialised banks and the central bank.

• Commercial Banks — institutions dealing in money, governed by the Indian Banking Regulation Act, 1949, under which banking means accepting deposits from the public for lending or investment. They are of two kinds:
  • Public sector banks — the government has a major stake; examples: SBI, PNB, IOB.
  • Private sector banks — owned, managed and controlled by private promoters and free to operate per market forces; examples: HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Jammu and Kashmir Bank.
• Cooperative Banks — governed by the State Cooperative Societies Act, meant essentially to provide cheap credit to their members. They are an important source of rural (agricultural) credit in India.
• Specialised Banks — foreign-exchange banks, industrial banks, development banks and export–import banks catering to unique needs. They provide financial aid to industries, heavy turnkey projects and foreign trade.
• Central Bank — supervises, controls and regulates the activities of all the commercial banks of a country and also acts as the government's banker. It controls and coordinates the country's currency and credit policies. The Reserve Bank of India (RBI) is India's central bank.

Banking and social objectives …