Different Types of Banks in India: Number of Banks, Functions

The banking system was established in India in the late 17th century for commercial purposes. However, several other banks were also established, and their names and functions later changed. Presently, you will find 34 banks; 12 banks are public sector banks, and another 22 are private sector banks.

Generally, all banks are financial institutions run by the government or private organizations, mainly dealing with deposits and lending.

Bank of Hindustan was the first bank in Indian banking history, established in 1770, followed by the General Bank of India, Bank of Calcutta, and many others. However, the oldest bank, the ‘Bank of Calcutta, is now called the ‘State Bank of India‘, the most popular bank across India.

Since then, many banks have been established, and their functioning has also changed with time. So, if you are interested in knowing about different types of banks and their importance, this article will help you.

Types of Banks in India

There are many types of banks in India that you will find operated by the central government, state government and private organisations. Moreover, all the banks function for different purposes and areas. The bank list of all types of banks is given below.

  1. Central Bank (RBI)
  2. Cooperative Banks
  3. Commercial Banks
  4. Regional Rural Banks
  5. Local Area Banks
  6. Specialised Banks
  7. Small Finance Banks
  8. Payment Banks
  9. Foreign Banks

Central Bank (RBI)

Reserve Bank of India (RBI) is a central bank that regulates and guides all banking operations. In the present situation, RBI continues to monitor all these matters, such as dealing with bank frauds and legal issues related to consolidated accounting and provides notes and coins to the Indian public in the form of money.

RBI Functions:

The Reserve Bank of India (RBI) is the central bank that controls financial stability in all situations and maintains economic sovereignty.

  • Currency Regulator
  • Custodian of cash reserves
  • Banker and Advisor to the government
  • Lender of the Last Resort
  • Credit Controller
  • Guardian of the International Currency
  • Custodian of cash reserves
  • Protect the depositor’s interest
  • Clearing House for Transfer and Settlement

Cooperative Banks

These banks come under the Banking Regulation Act of 1949 and the Banking Laws Act of 1965. Co-operative banks are also financial institutions that work on lending functions to small businesses in semi-urban and rural areas.

The Co-Operative Bank is backed by the government and established for cooperation. It does not operate like a commercial bank where profit is the main objective.

  • These banks are governed by a law made by the state government.
  • The main objective of these banks is to provide short-term loans for businesses in semi-urban areas.
  • The objective of this bank is to increase social welfare by providing loans at low interest.

These banks are organised in the state in a three-tier format, i.e. state level, district level and village level.

Level I: The state government owns the ownership, and the various members elect the management. State-level cooperative banks are regulated and funded by the RBI, Government and NABARD and distribute the money to the public. Discounted CRR and SLR charges are also applicable to these banks. (CRR- 3%, SLR- 25%).

Level II: These banks provide their services in district or rural areas. They formulate and implement policies at the district level and provide facilities for short-term agricultural or commercial credit.

Level-III: A Primary Agricultural Credit Society (PAC) is a cooperative bank that provides loans to customers in rural areas with less complexity. They work with customers to teach them how to save money through deposits. It also offers various benefits and development to the larger society.

Commercial Banks

A commercial bank is also a financial institution where we can deposit money, withdraw our deposits in an emergency, take loans, etc. The banker is bound to repay the cash on demand by the depositor. The depositor can withdraw his money through Net banking, UPI, cheque, draft etc.

  • These banks, organised under the Banking Companies Act 1956, operate commercially, and their main objective is profit.
  • They have a unified structure and are owned by the government, state or private entity.
  • You will find these banks in all areas.

These banks are divided into the public sector, private, and foreign banks. Brief information about these banks is given below.

  • Public Sector Bank: This type of bank is called a government bank, in which the majority stake is with the government or under the central bank (RBI).
  • Private Sector Bank: A bank in which the majority stake is owned by a private organisation, individual, or group of people is called a private sector bank.
  • Foreign Banks: The headquarters of these banks are abroad, but you will find their branches in our country; these are all foreign banks.

List of Commercial Banks in India

Below is a complete list of all commercial banks in India:

Public Sector BanksPrivate Sector BanksForeign Banks
State Bank of IndiaAxis BankAustralia and New Zealand
Banking Group Ltd.
Allahabad BankCity Union BankAB Bank Ltd.
Bank of IndiaCatholic Syrian BankBank of Bahrain &
Kuwait BSC
Bank of BarodaDhanlaxmi BankCITI Bank
Bank of MaharashtraDevelopment Credit BankDeutsche Bank
Canara BankFederal BankDBS Bank Ltd.
Corporation BankHDFC BankHSBC
Central Bank of IndiaIDFCJ.P. Morgan Chase Bank
Dena BankIndusInd BankNational Australia Bank
Indian Overseas BankICICI BankStandard Chartered Bank
Indian BankJammu and Kashmir BankUnited Overseas Bank Ltd
Oriental Bank of CommerceKarnataka Bank
Punjab & Sind BankKotak Mahindra Bank
Punjab National BankKarur Vysya Bank
Syndicate BankNainital Bank
Union Bank of IndiaRatnakar Bank
UCO BankSouth Indian Bank
IDBI Bank Ltd.Tamilnad Mercantile Bank
Vijaya BankYes Bank

Bank Functions in India

All commercial banks, even all types of banks’ functions, are almost the same, but the types of dealings with customers can vary. Following are the bank functions of all the banks that are offered to the customers in India:

  • Acceptance of deposits
  • Demand clearance facility
  • Money transfer facility
  • Lending facility
  • Locker facility
  • Issuance of draft
  • Dealing with forex

In addition, there are several banking functions that all banks provide to customers.

Regional Rural Banks

Regional Rural Banks were established on 26 September 1975 under an Ordinance and RRB Act 1976 to provide adequate banking and credit facilities in rural areas. These are also scheduled commercial banks established to give loans to the weaker sections of society.

They generally operate at the village level in various states of India, but you can also find their branches in urban areas.

  • Provides banking and financial services in rural and semi-urban areas.
  • Indian government operates these banks for wages of MNREGA workers, pension distribution, etc.
  • These banks also provide customers with ATM cards, credit cards and locker facilities.

Regional Rural Bank List

The Regional Rural Bank List is given below:

  • Andhra Pragathi Grameena Bank
  • Arunachal Pradesh Rural Bank
  • Assam Rural Development Bank
  • Bihar Gramin Bank
  • Chhattisgarh Rajya Gramin Bank
  • Baroda Gujarat Gramin Bank
  • Himachal Pradesh Gramin Bank
  • Bangiya Gramin Vikash Bank
  • Telangana Grameena Bank
  • Punjab Gramin Bank

Note: The name of this type of bank contains the word Grameen, from which you can easily know it is a Regional Rural Bank.

Local Area Banks

These types of banks are specially set up in rural areas to provide an opportunity to access financial products and services such as credit, deposits, transfers and other financial services.

Bank List:

  • Capital Local Area Bank Ltd
  • Coastal Local Area Bank Ltd
  • Krishna Bhima Samruddhi Local Area Bank Ltd
  • Subhadra Local Area Bank Ltd., Kolhapur

Specialised Banks

IDBI is a specialised Industrial Bank of India and was set up as a wholly-owned subsidiary of the Reserve Bank of India. It was established under an Act of Parliament in July 1964 to provide credit and other financial facilities to the industry.

However, many other institutions provide financial assistance and loans to develop the industrial sector. These banks, such as Housing Finance, EXIM, and Rural Credit Bank, are specialised banks in India.

Specialised bank List
  • Industrial Development Bank of India
  • Housing Finance Bank
  • EXIM Bank
  • Rural Credit Bank
Small Finance Banks

The Small Finance Bank provide the primary banking service and activities of accepting deposits and lending to the unserved and under-served sections. This type of bank also includes small business groups, marginal farmers, small industries and unorganised sectors for financial assistance.

Small Finance Bank List

Below is the list of Small Finance Banks:

  • Janalakshmi Small Finance Bank
  • A U Small Finance Bank
  • Ujjivan Small Finance Bank
  • ESAF Small Finance Bank
  • Suryoday Small Finance Bank
  • Equitas Small Finance Bank
  • Utkarsh Small Finance Bank
  • Capital Small Finance Bank
Payment Banks

A Payment bank is a new concept in the banking industry, regulated by the RBI. These banks can accept restricted deposits, which are currently limited to Rs 200,000 per user. This type of bank is similar to a regular bank but provides limited banking services compared to traditional banks. But, these banks offer debit cards, net banking and mobile banking services but cannot issue loans and credit cards.

List of Payment Banks

Following is the list of payment banks which you might have used.

  • Airtel M Commerce Services Ltd.
  • Aditya Birla Nuvo Ltd.
  • Fino PayTech Ltd.
  • Reliance Industries.
  • Tech Mahindra Ltd.
  • Sun Pharma
  • Vodafone M-Pesa Ltd.
Foreign Banks

According to the RBI, international banks exist in India with two fundamental principles: reciprocity and the other is a single mode of presence. The essential requirement is to meet 5 million capital as the minimum mark for business in India. These banks are given complete national treatment within the borders of India and are allowed to open their branches with limited restrictions as per their laws.

Foreign Bank List
  • Abu Dhabi Commercial Bank Limited
  • American Express Banking Corp
  • AB Bank Limited
  • Bank of America NA
  • Barclays Bank Plc
  • Bank of Bahrain and Kuwait BSC
  • Citibank N.A.
  • Cooperative Rabobank U.A.
  • Credit Agricole Corporate And Investment Bank
  • Credit Suisse AG
FAQs
Q: What are the types of commercial banks in India?

A: Commercial banks are three types: public sector, private, and foreign.

Q: Are the functions of the bank different from each other?

A: All commercial banks, even all types of banks’ functions, are almost the same, but the deals with the customer may differ.

About Bankshala team

We are a dedicated professional team, working closely with each other to provide quality content in the banking and finance sectors. Some editors have been investing in the stock market for almost 15 years and have a lot of experience.

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