Structure of Commercial Banks

STRUCTURE
RE OF BANKS

Commercial banks can be divided into 2 main categories:
COMMERCIAL
BANKS
SCHEDULED
BANKS
COMMERC
IAL
BANKS
INDIAN
BANKS
PUBLIC
SECTOR
BANKS
SBI AND ITS
SUBSIDIARIES
NATIONALI
ZED BANKS
REGIONAL
RURAL
BANKS
PRIVATE
SECTOR
BANKS
FOREIGN
BANKS
CO-OPERATIVE
BANKS
URBAN
COOPERATIVE
BANKS
RURAL
COOPERATIVE
BANKS
NON-SCHEDULED
BANKS
(1) Scheduled banks
(2) Non-scheduled banks

(1) Scheduled bank: A scheduled bank is so called because it has been included in the
second schedule of Reserve bank of India Act, 1934. To be included in the schedule, the
bank must satisfy the following 3 conditions:
(a) It must have paid up capital and reserves of an aggregate value of at least Rs. 5 lakhs;
(b) It must satisfy the reserve bank that its affairs are not detrimental to the interest of its
depositors;
(c) It must be a corporation or co-operative society and not a partnership or a single
ownership firm.

(2) Non-scheduled bank: Banks whose names do not figure in the second schedule of RBI
Act are non-scheduled banks.
Scheduled banks can be further categorized into:
(a) Indian banks
(b) Foreign banks

(A) INDIAN BANKS
Indian banks are those banks which are registered or incorporated in the country. These
banks are the dominant segment of total commercial banks and have their presence in
every nook and corner of the country. Indian banks can be categorized into:

(1) Public sector banks
(2) Private sector banks

1. Public sector banks: Public sector banks are the banks in which atleast 51 % share is of
the government. Public sector banks dominate commercial banking in India. The
government of India entered commercial banking when it took over Imperial bank of
India in 1955 and converted it into State Bank of India on 1 July, 1955. State Bank of
India has 6 subsidiaries. These banks are collectively known as State Bank Group.
In July, 1969, the government of India took an important step of nationalizing 14 banks.
In April 1980, 6 more banks were nationalized.
In October 1975, another category was added to the public sector banks in the form of
Regional Rural Banks. These banks have been set up with the objective of providing
credit and other facilities for agriculture and other productive activities in rural areas.

Public sector banks can be classified into:
i. State Bank of India
ii. Nationalized Banks
iii. Regional Rural Banks

STATE BANK OF INDIA
The public sector commercial banking in India started with setting up of State Bank of India in
1955, by taking over the Imperial Bank of India. State Bank of India had earlier 7 associate
banks:
i. State Bank of Hyderabad
ii. State Bank of Patiala
iii. State Bank of Travancore
iv. State Bank of Bikaner and Jaipur
v. State Bank of Mysore
vi. State Bank of Saurashtra
vii. State Bank of Indore
But now, SBI has 6 associate banks.

NATIONALIZED BANKS
Another important step towards public sector bank was taken in July 1969, when 14 banks were
nationalized. Again in 1980, 6 more private banks were nationalized bringing up the number of
banks nationalized to 20. These banks were:
o Bank of Baroda
o Punjab National Bank
o Bank of India
o Canara bank
o Central Bank of India
o Indian Bank
o Indian Overseas Bank
o Syndicate Bank
o UCO bank
o Allahabad Bank
o United Bank of India
o Oriental Bank of commerce
o Corporation Bank
o Vijaya Bank
o Dena Bank
o Bank of Maharashtra
o Andhra Bank
o Punjab & Sind Bank
o New Bank Of India
One of the main objective of nationalization of banks was to help achieve balanced regional
sectoral and sectional development of the economy by way of making the banks to reach out to
the small man and to the remote areas of the country. It was a measure towards Mass Banking
from class banking.
REGIONAL RURAL BANKS
RRBs were set up on the recommendation of the working group headed by M.Narsimham in
1975. The objective was to provide credit and other facilities to small and marginal farmers,
agricultural labourers and artisans. The need was felt as commercial banks and co-operative
banks were not able to serve these segments adequately.

2. PRIVATE SECTOR BANKS
Private sector banks play a vital role in the smooth running of the banking system. These banks
introduce superior level of technology and customer satisfaction. Some of the private sector
banks are:
The Vyasya Bank
Karnataka bank
The Karur Vysya bank ltd.
AXIS bank
ICICI bank
HDFC bank

Structure of Commercial Banks

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