Commercial Banks
- It is the type of financial intermediary which Mediates between savers and borrows. It accept public deposits and lend it to business man and consumers.
- Liabilities & deposits.
- Primary assets –> Loans and Bonds.
India has three types of Banks
- Public sector bank –> Major state holder is government (around 75% of whole banking industry)
- Private Sector bank.
- (Foreign bank) not a types –> private sector included.
- Co – operative bank.
Currently India has around 34 public sector banks operating (A/c to July-2021).
Public Sector Banks
Public Sector Banks (PSBs) are a major type of government owned banks in India, where a majority stake (i.e. more than 50%) is held by the Ministry of Finance of the Government of India or State Ministry of Finance of various State Governments of India.
Nationalized Banks (Government Shareholding %, as of 30 June 2021)
- State Bank of India (55%)
- Bank of Baroda (64%)
- Canara Bank (69.33%)
- Punjab National Bank (73.1%)
- Indian Bank (78.86%)
- Union Bank of India (83.5%)
- Bank of India (81.41%)
- Central Bank of India (93.08%)
- Bank of Maharashtra (93.33%)
- UCO Bank (95.39%)
- Indian Overseas Bank (96.4%)
- Punjab and Sind Bank (98.07%)
Cooperative Banks
These banks have social objectives and not the motive of profit. It helps people to get more purchasing power. Reserve Bank of India lays down the conditions and operations of all banks in India under it’s control. First government sponsored, government supported, government subsidized, Financial agency of India. State co-operative Bank and central co- operative Banks.(11th schedule banks) . Some included in Second schedule of RBI Act 1934, some not.
Their Sources are,
- Debentures/ deposits
- NABARD
- S/C government
- RBI
- Ownership Funds.
They work under, one member, one vote, no profit, no loss, and main focus is on self-help, mutual help and co- operation. In the beginning it support, Focuses only on Agricultural assistance. But now a days it provide loans to capital formation, housing loan etc… They also subject under CRR & SLR requirement by RBI, But it is requirement are less than commercial banks. Prakash Bakshi Committee à Short term co-operative credit structure (STCCS). Formed to improve STCCS System, Prakash is the chairman of NABARD. 7 member committee.
RBI –>Terms CRR and SLR –> Applicable to co – operative bank –> but requirements are less comparing to other common banks.
Development Banks
Bank which give loan for long term capital of industries and agriculture.
After 1947, –> Industrial Finance Corporation of India –> IFCI incorporated immediately in 1948 after independence.
Other Development Banks –> ICICI, EXIM , NHB , NABARD, , etc.…
S.H. Khan committee recommended (RBI 1997) to make all the DFI (Development Finance Institutions) into universal banks.
Narasimhan committee Recommendation
- To get stronger banking sector –> all finance institutions and PSBS need to Merger with each other and also development banks and ALFI need to be merged with weaker banks and enviable banks need to be closed.
- Tier section introduced :
- Tier 1: 2 to 3 banks of international orientation.
- Tier 2 : 8 to 10 banks of national orientation.
- Tier 3 : large no of local banks.
- High capital – Risk – weighted adequacy Ratio suggested increase of 10%
- Net MPA’S need to cut and reduced by 3% within (2002)
- Legal Framework to recover the loans ( SARFAES Act, 2002)
- Licensing to new private banks.
- Boards of Banks should be depoliticized under RBI supervision.
