Meaning of Scheduled Bank and Non- Scheduled Bank, Public Sector Bank and Private Sector Bank

Meaning of Scheduled Bank and Non- Scheduled Bank:

 

   Scheduled Bank:

Scheduled Commercial Banks are those banks which are included in the second schedule of the RBI Act of 1934. They have to keep minimum stipulated statutory cash reserves with the RBI. Following are the condition to be fulfilled for inclusion in the second schedule:-

a. The bank must have a minimum paid up capital and total reserves of Rs.5 lakh.

b. It must satisfy the RBI that its operations are not detrimental to the interest of the depositors.

c. It must be either a company, or a corporation, or an institution notified by the central Government or a state co-operative bank.

A scheduled bank enjoys certain facilities from the RBI:-

a.      It can borrow from the RBI against approved securities.

b.    It can remit money through the RBI.

c.     The Reserve Bank provides clearance facilities.

d.    The scheduled bank can obtain the advice and guidance of the Reserve Bank in all matters relating to banking operations.

     Scheduled Commercial Banks are categorized into three:-

a.     Public Sector Banks.

b.    Private Banks.

c.     Foreign Banks.

Non-Scheduled Commercial Bank:-

Those banks which are not included in the second schedule of the RBI Act of 1934 are called non-scheduled banks. They have a paid up capital and reserves of an aggregate value of less than Rs.5 lakhs. They are under the obligation to maintain a minimum deposit of 5% of their deposits with some scheduled Commercial Bank. Non-scheduled banks do not enjoy certain privileges grants to the scheduled banks by the Reserve Bank of India Act.

Explanation on Public Sector Bank and Private Sector Bank:

 

Public Sector Bank:

Banks which are owned by the government are called Public Sector Banks. The government runs these banks in India. In public sector banks majority of the shares are held by the Government or Reserve Bank of India. Example -State Bank of India,Punjab National Bank, Bank of Baroda etc.

Private Sector Bank:

 Banks which are owned and controlled by the private individuals or corporations are called Private Sector Banks.In the case of private sector Banks majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. Example- Federal Bank Ltd,Development Credit Bank Ltd, etc.

 

Foreign Bank:

These banks are foreign in origin and have their registered office in a foreign country but operate their branches in other countries. Their principal function is to make credit arrangement for exports and imports of the country. Some of the foreign banks operating in India are – Hong Kong and Shanghais Banking Corporation (HSBC), American Express Bank, Standard & Charterd Bank, Grind lays Bank etc.

  Domestic Bank

Domestic banks are those banks which are registered or incorporated in India. These banks are the dominant part of total commercial banks. 

 

A Brief Explaination of Presidency Bank & Imperial Bank of India  

Differences between Public Sector and Private Sector Bank:

Public Sector Bank	Private Sector Bank
1. Public sector banks are owned and controlled by the Government.	1. Private sector banks are owned and controlled by the private individuals or corporations.
2. Public sector banks can be classified as- SBI, Associated Banks of SBI and Nationalized Banks.	2. Private Sector Banks can be classified as-Indian Banks and Foreign Banks.
3. Public Sector Banks are under the tight controls of RBI.	3. Private Sector Banks are loosely controlled by the RBI.
4. Public Sector Banks aims at providing social responsibilities.	4. Private Sector Banks are urban oriented & aims at to earn profit.

Differences between Scheduled Bank and Non – Scheduled Bank:

Scheduled Bank	Non-Scheduled Bank
1. Scheduled banks are those banks which come under the second scheduled of RBI Act 1934.	1. Non-scheduled banks are those banks which are not included in the second schedule of RBI Act 1934.
2. Schedule bank enjoy certain privileges from the RBI.	2. They do not enjoy any privileges from the RBI.
3. Scheduled banks have a paid up capital and reserves of an aggregate value of not less than of Rs.5 Lakhs.	3. Non-scheduled banks have a paid up capital and reserves on an aggregate value of less than Rs.5 Lakhs.
4. Scheduled banks can be classified as public, private and foreign sector banks.	4. No-such classification follows in this case.
5. Scheduled banks have to keep minimum stipulated statutory cash reserves with the RBI.	5. Non-scheduled commercial banks have to maintain a minimum deposit of 5% of their deposit with some scheduled commercial banks.