Banking System in India
BANKING SYSTEM IN INDIA
Banking system in India plays a vital role in the economic development of a country. Banking system in India can be broadly divided into unorganized sector and organized sector. Unorganized sector mainly comprises of money lenders and indigenous bankers. The organized sector consists of commercial banks, co-operative banks and regional banks. Apart from these institutions which provide short-term credit to businesses, there are number of specialized term lending institutions which provide long term requirements of industry, agriculture and foreign trade. Post office savings is another segment of banking system. The RBI, the Central Bank of the country is at the apex of the banking structure in India.
Indigenous Bankers
Indigenous bakers lend money; act as money changers and finance internal trade by means of internal bill of exchange. With their own capital, they grant loans against securities such as gold, jewellery, land, promissory notes, etc. They also buy and sell remittance and discount hundies. They generally deal with agriculturist and small traders. The interest rate charged by them is higher than the interest charged by other banking institutions. According to RBI, about 50% of internal trade is financed by these indigenous bankers.
Commercial Banks
Commercial banks are the oldest banking institutions in the organized sector. They constitute the predominant segment of the banking system in India. They cater to the needs of trade, commerce, industries, agriculture, small business, transport and other activities with a wide network of branches throughout the country. Commercial banking system consists of scheduled banks and non-scheduled banks.
Scheduled banks: These banks are registered in the Second Schedule of the RBI. The following conditions must be fulfilled by a bank for inclusion in the Schedule:
1. The bank concerned must be carrying on a business of banking in India.
2. The bank must have
Banking system in India plays a vital role in the economic development of a country. Banking system in India can be broadly divided into unorganized sector and organized sector. Unorganized sector mainly comprises of money lenders and indigenous bankers. The organized sector consists of commercial banks, co-operative banks and regional banks. Apart from these institutions which provide short-term credit to businesses, there are number of specialized term lending institutions which provide long term requirements of industry, agriculture and foreign trade. Post office savings is another segment of banking system. The RBI, the Central Bank of the country is at the apex of the banking structure in India.
Indigenous Bankers
Indigenous bakers lend money; act as money changers and finance internal trade by means of internal bill of exchange. With their own capital, they grant loans against securities such as gold, jewellery, land, promissory notes, etc. They also buy and sell remittance and discount hundies. They generally deal with agriculturist and small traders. The interest rate charged by them is higher than the interest charged by other banking institutions. According to RBI, about 50% of internal trade is financed by these indigenous bankers.
Commercial Banks
Commercial banks are the oldest banking institutions in the organized sector. They constitute the predominant segment of the banking system in India. They cater to the needs of trade, commerce, industries, agriculture, small business, transport and other activities with a wide network of branches throughout the country. Commercial banking system consists of scheduled banks and non-scheduled banks.
Scheduled banks: These banks are registered in the Second Schedule of the RBI. The following conditions must be fulfilled by a bank for inclusion in the Schedule:
1. The bank concerned must be carrying on a business of banking in India.
2. The bank must have