The Banking sector in India has spread its wings fully by the galvanizing economic reforms introduced in 1980 and 1990. Since then the sector has seen rapid and unbridled growth with many new national and foreign players entering the arena. Banks remain segregated mostly as per their area of functioning, ownership and category of customers sought.
A brief introduction as to their separate characters and features is listed below:
As per ownership
In India there are basically three types of banks under the control of Reserve Bank of India, they are, public sector banks in which government has stakes, private sector banks which are privately owned companies with public listing of shares and a scheduled bank category.
Public sector banks
Public sector banks are the banks in which Government of India has stakes. State Bank of India, the oldest bank of India established in 1806 along with other thirteen banks constitute the public sector banks in India.
Private sector banks
Private sector banks also come the peripheral of RBI but the government does not have any control in the management and stakes of the bank. ICIC is a leading private bank in India with a pan India appeal.
The schedule banks are the banks which have been brought under the surveillance of the criteria laid down vide section 42 (6) (a) of the RBI Act of 1934.
The banks have also a similar rate of differentiation in its place of operations as some of the banks cater only to urban population while some others engage in rural banking needs. The public and scheduled banks however have clear contours for operation and allocation of funds in line with the government policies and strategies.
There are three types of mostly used accounts in Indian Banking:
Also known as the corporate account, the no interest account is for facilitating the smooth business transactions which happen in substantial amount on a daily basis. It doesn’t provide any interest as its intention is not savings but business transactions on the basis of cheques. The account is used by most corporate houses, small and big entrepreneurs and firms for their business related financial needs.
Bank Fixed Deposits
The most common and safe mean of savings for the Indian population remains a fixed deposit. It is an account in which the sum is generally kept untouched for a fixed time period which varies from 15 days to even 5 years. The reasonable rate if interest provided by the banks act as clinchers for the saving minded Indians. This is the main source of income for the banks which is then utilized for various investment purposes as per the duration of the period. The excellent performance by the banks in India has gained a greater margin of the saved incomes.
Savings Bank account
Savings bank account or the more popular SB is the layman’s gateway into banking sector in India. These have both minimum balance category with a marginally higher interest and the zero balance category. The zero balance account has been popular with the youth and student folks.
The burgeoning working class in India has contributed a lot in the trajectory of the banking sector. Today they have moved ahead from a mere lender and guardian of money into huge investment pundits attracting foreign capital flows.