Question

Any ‘five types’ of banks.

Answer 1

 

1. Central Bank: -The main function of the central bank (RBI) is to regulate money supply and to maintain economic stability of the country. The central bank can print currency notes. The central bank does not accept deposits from public. The Central bank provides loan to banks and financial institutions. It is owned and controlled by the government if India. The Central bank frames the monetary policy and credit policy for the country.

2. Commercial Bank: -These banks accept the deposits from the general public and provide short term loans to traders, manufacturers and businessmen by way of cash credits, overdrafts, and etc. commercial banks provide various services like collecting cheques, bills of exchange, remitting money from one place to another place, etc.  Commercial banks are of three types' i.e. public sector banks, private sector banks, and foreign banks.

3. Development Banks: -business often requires medium and long term capital for purchase of machinery and equipment, for using latest technology or for expansion and modernization. Such financial assistance is provided by development banks. Examples of development banks are Industrial Development Corporation of India (IFCI) And State Financial Corporation (SFCs)

4. Co-operative Banks: -Co-operative banks are financial institutions registered under the co-operative societies Act. The main objective of such a bank is to give credit to economically backward people. In India co-operative banks are the main source of rural credit. These banks encourage saving habit among the villagers and give loans at a low rate of interest.

5. Specialized Banks: -There are some banks which cater to the requirements and provide overall support for setting up business in specific areas. EXIM Bank, SIDBI and NABARD are examples of such banks.

6. Regional Rural Banks: -These banks were established in 1975 to enhance the banking facilities in the rural areas. In these banks, the features of commercial and co-operative banks are found. These banks are sponsored by some commercial bank. 50% of their capital is provided by the central Government. 35% by the Commercial bank concerned and 15% by the state government concerned.

7. Exchange Banks: -Exchange banks are mainly concerned with financing foreign trade. Main functions of exchange bank are remitting money from one country to another country, discounting of foreign bills, helping import and export trade, etc. Bank of Tokyo, Bank of America is examples of exchange banks working in India.

8. Indigenous Banks: -In India, Indigenous or native/domestic bankers have been carrying on banking functions for generations before properly organized commercial and other banks started functioning. They mainly deal in "hundis" and promissory notes. They charge a very high rate of interest on loan. Hundis are regarded as native Bills of Exchange.

9. Saving Banks: - This bank accepts small savings from public who have fixed income. It creates the saving habit among people. In India, post office saving bank is one of the saving banks.