Meaning of Scheduled Bank
- The banks in the Indian banking system are sub categorized as Scheduled Banks, Non-Schedule Banks, Private Banks and Public Banks. Scheduled banks are those banks that are listed under Schedule II of the Reserve Bank of India Act, 1934.
- The bank's paid-up capital and raised funds must be at least Rs. 5 lakh to qualify as a scheduled bank. These banks are liable for low interest loans from the RBI.
- They also have membership in clearing houses.
- They also have numerous obligations to fulfil such as maintaining an average daily Cash Reserve Ratio with the central bank.
Types of Scheduled Banks in India
- The banks listed in Schedule II are further classified as –
- Scheduled Commercial Public Sector Banks
- SBI and its associates
- Scheduled Commercial Private Sector Banks
- Old Private Banks
- New Private Sector Banks
- Scheduled Foreign Banks in India
Main functions of these banks
Given below is a list of the most important functions of these Scheduled Banks - - Acceptance of deposits from the public - Provide demand withdrawal facility - Lending facility - Transfer of funds - Issue of drafts - Provide customers with locker facilities - Dealing with foreign exchange
Differences Between a Scheduled Bank and Non-Scheduled Bank
Scheduled Bank
- They are listed in the second schedule of the RBI Act.
- These have a paid up capital of Rs. 5 lakhs or more and comply with all the requirements of the RBI.
- They maintain a cash reserve ratio with RBI.
- They are authorized to borrow funds from the Reserve Bank of India.
- They are comparatively more financially stable.
Non-Scheduled Bank
- They are not listed in the second schedule of the RBI Act.
- There is no such condition that needs to be fulfilled for it to be considered a non-scheduled bank.
- They maintain the CRR amount with themselves.
- They are not allowed to.
- These banks are riskier.
