Commercial Banks of India and its types

Commercial Banks are regulated under the Banking Regulations Act, 1949. They are profit making institutions and earn profit in the form of interest, commission, etc. Their primary function is to accept deposits and grant loans to households, entrepreneurs, businessmen, etc.

 

The operations of all commercial banks are regulated by the Reserve Bank of India (RBI) which is also known as the central bank or apex bank of India.

Oudh Commercial Bank (1881-1958) – the first commercial bank of India. 

 

Types-

 

The Commercial Banks can be broadly classified under two heads:-

                                               i.          Scheduled Banks

                                             ii.          Non-scheduled Banks

SCHEDULED BANKS

 

Scheduled banks are those banks that are included in the second schedule of the RBI Act, 1934.

 

Based on stake holdings, scheduled bank mainly divided into two types:-

·        Public Sector Banks

·        Private Sector Banks

 

1)   Public Sector Banks

Banks in which majority of stake i.e., more than 50% holds by government are known as Public Sector Banks (PSBs). The shares of these banks are listed on stock exchanges. Since these are owned and controlled by the government. Thus, the main objective of a PSB is to provide service to the society, not to make profits.

 

There are total 12 PSBs in India as on April, 2020 (Government Shareholdings %):-

 

                                     i.          State Bank of India (61.00%)

                                   ii.          Bank of Baroda (63.74%)

                                 iii.          Union Bank of India (67.43%)

                                 iv.          Punjab National Bank (70.22%)

                                   v.          Canara Bank (72.55%)

                                 vi.          Punjab & Sind Bank (79.62%)

                               vii.          Indian Bank (81.73%)

                             viii.          Bank of Maharashtra (87.01%)

                                 ix.          Bank of India (87.05%)

                                   x.          Central Bank of India (88.02%)

                                 xi.          Indian Overseas Bank (91%)

                               xii.          UCO Bank (93.29%)

 

Among the 12 PSBs, there are 6 merged banks i.e., i, ii, iii, iv, v & vii and 6 independent banks i.e., vi, viii, ix, x, xi & xii.

 

2)   Private Sector Banks

Banks in which major stake or equity is held by private shareholders are known as Private Sector Banks. Since these are owned and controlled by the private businessmen. Thus their main objective is to earn profits. All the rules and regulations laid down by the RBI will be applicable on private banks as well.

 

There are total 22 Private sector banks in India (as on April, 2020):-

 

                                     i.          Axis Bank

                                   ii.          Bandhan Bank

                                 iii.          CSB Bank

                                 iv.          City Union Bank

                                   v.          DCB Bank

                                 vi.          Dhanlaxmi Bank

                               vii.          Federal Bank

                             viii.          HDFC Bank

                                 ix.          ICICI Bank

                                   x.          IndusInd Bank

                                 xi.          IDFC First Bank

                               xii.          Jammu & Kashmir Bank

                             xiii.          Karnataka Bank

                             xiv.          Karur Vysya Bank

                               xv.          Kotak Mahindra Bank

                             xvi.          Lakshmi Vilas Bank

                           xvii.          Nainital Bank

                         xviii.          RBL Bank

                             xix.          South Indian Bank

                               xx.          Tamilnad Mercantile Bank

                             xxi.          YES Bank

                           xxii.          IDBI Bank

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