What is a Bank? SCHEDULED & COMMERCIAL BANKS

What is a Bank?
It's a financial institution authorized by the government to receive deposits, pay interest, clear cheques, serve loans, act as an intermediary in financial transactions and provide other such financial services to customers.

SCHEDULED BANKS

These are included in the 2nd schedule of RBI Act, 1934. RBI includes only those banks that satisfy section 42 (6)(a) of the act. Two conditions to be fulfilled are :
1. Paid Capital & collected funds of the bank should be >= 5 lakhs
2. any activity of the bank should not adversely affect interests of depositors

Every Scheduled bank :
A. Becomes eligible for debt/loans on bank rate from RBI
B. Automatically acquire membership of clearing house

COMMERCIAL BANKS
These may be defined as institutions that deal with deposits & advances of a business organisation. Remember!!! RBI is NOT a commercial bank! These can be classified into :
1. Public Sector Banks : All government of India undertakings + IDBI + SBI & Assoc.
2. Private Sector Banks : ICICI, YES, HDFC, Axis etc etc ... whose head offices are in India (GoI does not have stakes in these)
3. Foreign Banks : HSBC, Bank of America etc. whose Head offices are not in India
4. Regional Rural Banks - These will be discussed in details in an upcoming article.


That's for today aspirants!! Hang on until 2moro!
P.S. If there's any terms you don't get, don't go digging, try to memorise what I've provided as much as possible and after I'm done posting all my articles, you'll feel differently!! Later!!