Different Types Of Banks In India 2021

Are you looking for Types Of Banks In India? Well you came to the best place. Anyone, whether a housewife, a salaried employee, a businessman, a farmer, a student, or someone in another occupation, is familiar with the word “banking.” Indian households, in particular, are well-connected with banking and banks. The banking industry manages a country’s finances, which include credit and currency.

There are Different Types Of Banks In India have emerged over the last three centuries. Each category typically specialises in a specific type of industry. As a result, we can categorise the Types Of Banks In India based on the functions they perform.

Since banks are the backbone of a country’s economy, strict rules and regulations govern their operations. The most important transactions that take place at banks are the granting of credit and the acceptance of deposits by different individuals.

Banks are financial institutions that handle deposits and loans. In India, there are various types of banks, each responsible for performing different functions.

The bank accepts deposits from the public at a much lower rate known as the deposit rate and loans money at a much higher rate known as the lending rate.

Types Of Banks In India 2021

Banks are divided into many categories. The following are the Different Types Of Banks In India 2021:

  • Central Bank
  • Cooperative Banks
  • Commercial Banks
  • Regional Rural Banks (RRB)
  • Local Area Banks (LAB)
  • Small Finance Banks
  • Specialized Banks
  • Payments Banks
  • Exchange Banks
  • Industrial Banks / Development Banks

Central Bank

The Central Bank of India, a government-owned bank in India, is one of the country’s oldest and largest commercial banks. 

It is headquartered in Mumbai, India’s financial hub and the state capital of Maharashtra. In 2009, it was one of twelve public sector banks in India that were recapitalized.

Our country’s central bank is the Reserve Bank of India. Each country has a central bank that manages all other banks in that country.

The central bank’s primary role is to serve as the government’s bank and to direct and regulate the country’s other banking institutions. The following are the tasks of a country’s central bank:

  • Transferring wealth
  • Advising other banks
  • Putting monetary policies into action
  • The financial system’s supervisor

In other words, the country’s central bank is also known as the banker’s bank because it assists other banks in the country and controls the country’s financial system under government oversight.

Cooperative banks

A law-governed state government operates these banks. They make short-term loans to agriculture and other related industries.

Different Types Of Banks In India 2021
Types Of Banks In India – Image Source – Wikipedia

Cooperative banks’ primary goal is to promote social welfare through the provision of low-interest loans.

Agricultural banks’ primary business is to lend money to farmers. They work on the principle of cooperation. Land mortgage banks, also known as land-development banks, offer long-term funding, while cooperative societies and cooperative banks provide short-term loans.

Farmers need long-term loans to purchase land or make permanent improvements to their land, while short-term loans help them buy implements, fertilizer, and seeds. In India, such banks and societies are doing important work.

They are organized in a three-tiered system.

  • Tier 1 (State Level) – State Cooperative Banks (regulated by the RBI, the state government, and NABARD).
  • Tier 2 (District Level) – Cooperative Central/District Banks
  • Tier 3 (Village Level) – Primary Agriculture Cooperative Banks

Is it safe to put my money in a cooperative bank?

Safe, Vault, Steel Door, Banking, General Safe
Types Of Banks In India

To begin, deposits of up to Rs 1 lakh in any combination of savings and deposits with any commercial bank are guaranteed by the Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the Reserve Bank of India. So, if your bank – whether commercial or cooperative – fails, your money is safe up to Rs 1 lakh.

Commercial Banks

In modern economic organizations, these banks play the most crucial role. Their primary business is to accept deposits, make loans, and finance a country’s trade. They offer short-term loans or give loans for a short period.

  • They work on a commercial basis, with profit as their primary goal.
  • They have a single structure and are owned by the federal government, state governments, or private individuals.
  • They work in all industries, from rural to urban.
  • Unless instructed by the RBI, these banks do not charge concessional interest rates.
  • These banks’ primary source of funding is public deposits.

Commercial banks are further classified into three types:

Public sector Banks

A bank in which the government or the country’s central bank owns the majority of the stock.

Private sector Banks

A bank in which a private organization, an entity, or a group of people owns most of the stock.

Foreign Banks

This category includes banks with headquarters in foreign countries and branches in our country.

List of commercial banks in our country:

Public Sector BanksPrivate Sector BanksForeign Banks
State Bank of India.
Allahabad Bank.
Andhra Bank.
Bank of Baroda.
Bank of India.
Bank of Maharashtra.
Canara Bank.
Central Bank of India.
Corporation Bank.
Dena Bank.
Indian Bank.
Indian Overseas Bank.
Oriental Bank of Commerce.
Punjab National Bank.
Punjab & Sind Bank.
Syndicate Bank.
Union Bank of India.
United Bank of India.
UCO Bank.
Vijaya Bank.
IDBI Bank Ltd.
Catholic Syrian Bank.
City Union Bank.
Dhanlaxmi Bank.
Federal Bank.
Jammu and Kashmir Bank.
Karnataka Bank.
Karur Vysya Bank.
Lakshmi Vilas Bank.
Nainital Bank.
Ratnakar Bank.
South Indian Bank.
Tamilnad Mercantile Bank.
Axis Bank.
Development Credit Bank (DCB Bank Ltd).
HDFC Bank.
ICICI Bank.
IndusInd Bank.
Kotak Mahindra Bank.
Yes Bank.
IDFC.
Bandhan Bank of Bandhan.
Financial Services.
Australia and New Zealand Banking Group Ltd.
National Australia Bank.
Westpac Banking Corporation.
Bank of Bahrain & Kuwait BSC.
AB Bank Ltd.
HSBC.
CITI Bank.
Deutsche Bank.
DBS Bank Ltd.
United Overseas Bank Ltd.
J.P. Morgan Chase Bank.
Standard Chartered Bank.
There are over 40 Foreign Banks in India.
Commercial Banks in India

Regional Rural Banks (RRB)

Regional Rural Banks in India are commercial banks that operate in various rural areas throughout the country. IBPS conducts the test for Officers and Office Assistants in different Regional rural banks.

The Institute of Banking Personnel Selection, one of the world’s largest banking sector organisations, is the organization that regulates the IBPS RRB exam across the country.

List of Regional Rural Banks in India

StateName of RRBSponsor BankHead Office
Andhra PradeshAndhra Pragathi Grameena BankSyndicate BankKadapa
Chaitanya Godavari Grameena BankAndhra BankGuntur
Andhra Pradesh Grameena Vikas BankState Bank of IndiaKadapa
Saptagiri Grameena BankIndian BankChittor
Arunachal PradeshArunachal Pradesh Rural BankState Bank of IndiaNaharlagun
AssamAssam Gramin Vikash BankUnited Bank of IndiaGuwahati
Langpi Dehangi Rural BankState Bank of IndiaDiphu
BiharUttar Bihar Gramin BankCentral Bank of IndiaMuzaffarpur
Bihar Gramin BankUCO BankPatna
Madhya Bihar Gramin BankPunjab National BankPatna
ChhattisgarhChhattisgarh Rajya Gramin BankState Bank of IndiaRaipur
GujaratBaroda Gujarat Gramin BankBank of BarodaBharuch
Dena Gujarat Gramin BankDena BankGandhinagar
Saurashtra Gramin BankState Bank of IndiaRajkot
HaryanaSarva Haryana Gramin BankPunjab National BankRohtak
Himachal PradeshHimachal Pradesh Gramin BankPunjab National BankMandi
Jammu and KashmirEllaquai Dehati BankState Bank of IndiaSrinagar
J&K Grameen BankJ&K Bank Ltd.Jammu
JharkhandVananchal Gramin BankState Bank of IndiaRanchi
Jharkhand Gramin BankBank of IndiaRanchi
KarnatakaPragathi Krishna Gramin BankCanara BankBallari
Kaveri Gramin BankState Bank of IndiaMysuru
Karnataka Vikas Grameena BankSyndicate BankDharwad
KeralaKerala Gramin BankCanara BankMallapuram
Madhya PradeshNarmada Jhabua Gramin Bank Bank of IndiaIndore
Central Madhya Pradesh Gramin BankCentral Bank of IndiaIndore
Madhyanchal Gramin BankState Bank of IndiaSagar
MaharashtraVidarbha Konkan Gramin BankBank of IndiaNagpur
Maharashtra Gramin BankBank of MaharashtraAurangabad
ManipurManipur Rural BankUnited Bank of IndiaImphal
MeghalayaMeghalaya Rural BankState Bank of IndiaShillong
MizoramMizoram Rural BankState Bank of IndiaAizawl
NagalandNagaland Rural BankState Bank of IndiaKohima
OdishaOdisha Gramya BankIndian Overseas BankBhubaneshwar
Utkal Grameen BankState Bank of IndiaBolangir
PuducherryPuduvai Bharathiar Grama BankIndian BankPuducherry
PunjabPunjab Gramin BankPunjab National BankKapurthala
Malwa Gramin BankState Bank of IndiaSangrur
Sutlej Gramin Bank Bhatinda
RajasthanBaroda Rajasthan Kshetriya Gramin BankBank of BarodaAjmer
Rajasthan Marudhara Gramin BankState Bank of IndiaJodhpur
Tamil NaduPallavan Grama BankIndian BankSalem
Pandyan Grama BankIndian Overseas BankVirudhunagar
TelanganaTelangana Grameena BankState Bank of IndiaHyderabad
TripuraTripura Gramin BankUnited Bank of IndiaAgartala
Uttar PradeshGramin Bank of AryavartBank of IndiaLucknow
Allahabad UP Gramin BankAllahabad BankBanda
Baroda Uttar Pradesh Gramin BankBank of BarodaRaebareli
Kashi Gomti Samyut Gramin BankUnion Bank of IndiaVaranasi
Sarva UP Gramin BankPunjab National BankMeerut
Prathama UP Gramin BankSyndicate BankMoradabad
Purvanchal BankState Bank of IndiaGorakhpur
UttarakhandUttarakhand Gramin BankState Bank of IndiaDehradun
West BengalBangiya Gramin Vikash BankUnited Bank of IndiaMurshidabad
Paschim Banga Gramin BankUCO BankHowrah
Uttarbanga Kshetriya Gramin BankCentral Bank of IndiaCoochbehar

Local Area Banks (LAB)

In 1996, it was introduced in India. The private sector organizes these banks. Local Area Banks’ primary goal is to make a profit. Local Area Banks are governed by the Companies Act of 1956. There are currently only four Local Area Banks, all of which are based in South India.

Small Finance Banks

As the name implies, this form of bank provides loans and financial assistance to micro industries, small farmers, and society’s unorganized sector. The country’s central bank is in charge of these banks.

The following is a list of our country’s Small Finance Banks:

AU Small Finance BankEquitas Small Finance BankJana Small Finance BankNortheast Small Finance Bank
Capital Small Finance BankFincare Small Finance BankSuryoday Small Finance BankUjjivan Small Finance Bank
Esaf Small Finance BankUtkarsh Small Finance Bank

Specialized Banks

Certain banks are introduced solely for particular purposes. These types of banks are known as specialized banks. There are some examples:

Small Industries Development Bank of India (SIDBI)

SIDBI offers loans for small-scale industries and businesses. This bank assists in the financing of small businesses with new technologies and equipment.

The following are the functions of the Small Industries Development Bank of India (SIDBI):

  • It starts the process of adopting new technology, exchanging existing technology, transferring and upgrading it, and modernizing existing units.
  • SIDBI invests in soft-term equity loans, term loans, working capital in both rupees and foreign currencies, venture capital funding, and various types of resource support to banks and other institutions.
  • In partnership with commercial banks, SIDBI promotes the timely flow of credit to SSI for both term loans and working capital.
  • SIDBI expands SSIs’ marketing capabilities in both domestic and foreign markets.
  • SIDBI directly discounts and rediscounts bills in order to promote bill culture and assist SSI units in realizing the selling proceeds of capital goods, supplies, and parts, among other things.
  • SIDBI promotes job-oriented industries, especially in semi-urban areas, in order to increase employment opportunities and prevent people from migrating from rural to urban areas.

Also Read: How Do Banks Works In India? (2021)

Export Import Bank of India (EXIM Bank)

EXIM Bank is an acronym that stands for Export and Import Bank. This form of the bank can provide loans or other financial assistance to foreign countries exporting or importing goods.

The EXIM Bank’s primary roles are as follows:

  • Financing of India’s exports and imports of goods and services, as well as those of third-world countries
  • Leasing financing for exports and imports of machinery and equipment
  • Joint venture financing in foreign countries
  • Providing loans to Indian parties in order for them to contribute to the share capital of international joint ventures
  • To perform restricted merchant banking functions such as underwriting stocks, shares, bonds, or debentures issued by Indian companies involved in export or import.

National Bank for Agricultural and Rural Development Bank (NABARD)

People may turn to NABARD for any type of financial assistance for rural, handicraft, village, and agricultural production.

National Bank for Agricultural and Rural Development Bank primary roles are as follows:

  • Takes steps to improve the absorptive capability of the credit distribution system, such as inspection, the formulation of rehabilitation programs, the restructuring of credit institutions, staff training, and so on.
  • Coordinates the rural financing activities of all institutions involved in development work on the ground and maintains contact with the Government of India, state governments, the Reserve Bank of India (RBI), and other national-level institutions involved in policy formulation.
  • It is in charge of tracking and evaluating initiatives that it has refinanced.
  • NABARD restructures the financial institutions that fund the rural sector.
  • NABARD assists in the creation of institutions that benefit the rural economy.
  • NABARD also monitors its client institutes.
  • It governs the organization that provides financial assistance to the rural economy.
  • It offers training to organizations operating in the field of rural development.
  • It oversees cooperative banks and the RRB.

There are numerous other specialized banks, each with a unique role in assisting the country’s financial growth.

Payments Banks

The Reserve Bank of India conceptualized the payments bank, a newly introduced form of banking. People who have a payments bank account can only deposit up to Rs.1,000,000/- and cannot apply for loans or credit cards via this account.

Payment banks have options for online banking, mobile banking, ATM card issuance, and debit card issuance. The following is a list of our country’s few payment banks:

  • Airtel Payments Bank
  • India Post Payments Bank
  • Fino Payments Bank
  • Jio Payments Bank
  • Paytm Payments Bank
  • NSDL Payments Bank

Exchange Banks

Exchange banks primarily fund a country’s international exchange. Their primary role is to accept, discount, and receive international bills of exchange. They also buy and sell foreign currencies and assist business owners in converting their money into any foreign currency they need. Their share of a country’s internal trade is typically small. They also conduct daily banking transactions.

Industrial Banks / Development Banks

In India, there are a few industrial banks. However, in some other nations, most especially Germany and Japan, these banks advance loans to industrial enterprises. Industries need capital for a long time in order to purchase machinery and equipment. 

This form of Mock capital is provided by industrial banks. Industrial banks have a substantial amount of their own money. They also get deposits for longer periods of time. As a result, they are able to make long-term loans.

In 1948, the Central Government of India founded the Industrial Finance Corporation of India (IFCI). Its operations have since grown significantly. Furthermore, the states have formed State Financial Corporations. 

For the financing and promotion of industrial enterprises, the Central Government has also developed the Industrial Credit and Investment Corporation of India (ICICI) and the National Industrial Development Corporation. The Industrial Development Bank of India (IDBI) was founded in 1964 as the country’s apex or top term-lending institution. These new institutions fill critical holes in our industrial finance structure.

There are three major national development banks. They are as follows:

  • Industrial Finance Corporation of India (IFCI)
  • Industrial Credit and Investment Corporation of India (ICICI)
  • Industrial Development Bank of India (IDBI)
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