Structure of Indian Banking System

Indian Banking Structure

There is a different division that is done when it comes to the Indian banking structure. Each group is known to have their own sets of limitations and benefits when it comes to operations. In addition to this, groups are targeting a specific market to make operations easy. There are different groups that work for the rural form only while there are some that take care of urban and rural. However, other only work in the major towns and cities to help in growing.

Now, comes the point, what actually banking is? It is a system in which the public deposits the money. However, they need an account where the money is deposited and withdrawn as per their convenience. It also has the ability to lend some money in the form of loans.

Banking Structure in India

There are many sub-categories of the banks. However, these categories depend on the form of money saved and in which process will it be saved. Before moving towards its structure, one must know about the RBI – Reverse Bank of India and also about the lesser known structure of Indigenous Banking.

Indigenous Banking – During the 2000-1400 BC, in Vedic Times, the bankers form this type of banking system used to work as the money lender, financial internal trade, money chargers, etc for the internal bills exchange and hudis. They were usually known as mahajans, seths, shroffs, chettis, etc. It started to face decline during the British invasion.

RBI – Reverse Bank of India – It is the central bank that works as the authority for a bank in India. In addition to this, it also controls and maintains all other banking systems with ease. The name is designed to this bank due to its rights reversed over another type of banks. One can consider it as higher authority that has supreme power to work on the structure. They are of three types that are further subdivided.

  1. Commercial Bank

The first and foremost bank that falls under the RBI is a commercial bank. These type of banks are stated that works for the mobile saving of individuals or citizens. In addition to this, it is provided to them in small or large industries level in order to work on the requirement of the capital works. These are the main part which divided into private and public sector banks.

Here the public sector banking has occupied around 94 per cent of the total business that is in India. It is said to be dominant in terms of commercial banks. There are many banks that work as the public bank that will include SBI that is followed by a total of 7 associate banks. Apart from this, there are 19 other banks that are added to the list.

  1. Regional Rural Bank

Another form of bank system is RRB or Regional rural banks system. It is the latest and newest addition to the whole group if we talk about the system. Even though it is present in the list since 1970. The main objective behind the formation of this system is to develop the economy in rural terms. In order to do so, they were provided with the deposits facilities and credits to support their agricultural requirements. It is sponsored by the commercial banks on the individual nationalized level.

Other than this, it helps to ensure that they are able to get their basic demands done with ease in the rural areas. Their motto is to offer facilities to marginal or small level farmers such as rural artisans, agricultural labor, and even small level entrepreneurs that are coming from rural areas.

  1. Cooperative Bank

The final form so the structure is for the cooperative banks. In this, the banks are controlled by the States Cooperative Credit Societies Act provision. Their main focus is mainly on the rural sector or agricultural sector which works as their beneficiaries. However, there are mainly two types of operations performed in the whole system such as non-agriculture and a dominant part that will be agriculture.

When it comes to agricultural credit provisions then there are mainly two types of factors or separate corporative agencies. The first one is for the long-term credit goals. While other is for the medium-term or short-term credits goals. There will be three tiers of the later one with federal structures.

  • SCB – State Cooperative Bank at the Apex level
  • CCB – Central Corporative Bank at the intermediate level
  • PAC – Primary Agricultural Credit Societies at the village level

However, when it comes to the long-term level then it comes under the supervision of Land Development Banks. RBI funds go to the CCB and SCB that are stacked up as the agricultural sector. Cooperative Credit Movement that is a part of the rural sector works on the urban areas as well. Hence, there are different SCB that work for the urban areas in the form of urban corporative banks.

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