Tuesday, 1 April 2014

Definition and Classification of Banks.

DEFINITION

A Bank is a financial institution the primary function of which is to accept deposits from the public and lend these funds in the form of advances.

Bank is a financial supermarket. It is a one stop solution for all your financial needs.

CLASSIFICATION

The Reserve Bank of India Act, 1934, classified banks as scheduled banks and non-scheduled banks.

SCHEDULED BANKS.

Scheduled Banks are those which are entered in the second schedule of RBI Act, 1934. All commercial banks both Indian and Foreign, Regional Rural Banks and State co-operative Banks are Scheduled Banks.

Criteria to be a Scheduled Bank.

1) Should have minimum paid up capital as per the RBI Norms.
2) Will not take up activities that will adversely affect interests of depositors.

Facilities available to Scheduled Banks.

1) Eligible to get loans on bank rate from RBI.
2) Such Banks automatically acquire the membership of clearing house.

NON-SCHEDULED BANKS.

Non-Scheduled Banks are those, which are not included in the second schedule of RBI Act, 1934.

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