Banking Awareness 16: Types of Banks.

Are you willing to know the detailed information about the Types of Banks we have? So here is the article which provides you the clean and clear information about the Types of banks we have. A bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services, such as wealth management, currency exchange, and safe deposit boxes. There are two types of banks: commercial/retail banks and investment banks. There were several types of banks worldwide and these are some of the important types of banks worldwide are as follows:-

Central Banks:- 

These Central banks are also known as Reserve Banks (or) Monetary Authorities which are generally the Top Banking institutions of a country with responsibilities such as Managing Currency, Foreign Exchange, Money Supply, Interest Rates, etc, of the country. These are the government-owned bodies.

These are some of the Central Banks as follows:-

Among all of these, we notice that the European Central Banks Whose Main Business is Normally Lending euro and Administrators Monetary Policy of the Eurozone, which consists of 19 EU Member States.

Commercial Banks:-

The term Commercial banks are used for the banks whose main Business is normally lending and deposits from Public as well as Corporation. This term Differenced from the Investment banks whose main functions was an investment. In India, Commercial banks are of two types, they have Scheduled Commercial Banks and Non- Scheduled Commercial Banks.

Investment Banks/ Merchant Banks:- 

The term investment bank is used for those banks whose main business is underwriting (guarantee the sale of) the stock and bond issues and their trade, investment management, and consultancy to corporate regarding share market activities. Similarly, Merchant Banks are those banks which provide capital to the firms in the form of shares and engage in underwriting of stocks, etc. Thus, the modern definition of Merchant banks is the same as that of Investment Banks.

Universal Banks:- 

This term is used for banks which are engaged in several kinds of banking activities apart from their core banking business. The additional kinds of business which may include insurance, Trade Finance, Housing, and Vehicle Finance and So on.

Land Development Banks:- 

This term is used for the banks which provide long term loans to promote the use of land, agriculture, etc.

Cooperative Banks:- 

These are generally not-for-profit banks owned by the depositors.

Postal Banks:- 

These banks offer banking services apart from their core business of postal services.

International Financial Institutions:- 

These are those banks that are established by more than one country and provide international finance. They are an important pillar of the Global Financial System and sometimes work as an important bridge between developed and developing countries in matters of development finance.

• Currently, the world’s largest International Financial Institution is the European Investment Bank. The IFIs can be multilateral, regional or bilateral. Example of multilateral IFIs include World Bank, African Development Bank, Asian Infrastructure Investment Bank (AIIB); examples of regional IFIs include Asian Development Bank and Examples of Bilateral IFIs include French  Development Agency.
• All banks of India can be simply divided into 3 major groups such as Central Bank (RBI), Scheduled Banks and Non-scheduled Banks. So, every bank other than RBI is either a scheduled bank or a non-scheduled bank. However, on the basis of functions, there are five board categories of the in India such as central Bank (RBI), Commercial Banks, Development Banks, Cooperative Banks, and Specialized Banks.

Scheduled Versus Non-Scheduled Banks: -

A bank is called a scheduled bank in India, if it is listed in the second schedule of the RBI Act, 1934. In order to be included under this schedule of the RBI Act, banks have to fulfill certainly Statutory conditions Such as:- 

• These banks need to have paid up capital and reserves of at least Rs. 0.5 million (50 Lakh)
• They should satisfy the CRAR norms and other prudential norms of RBI.
• They should satisfy the RBI that their business is not being conducted in a manner prejudicial to the interests of its depositors.
• Coastal Local Area Bank Ltd – Vijayawada (Andhra Pradesh)
• Capital Local Area Bank Ltd – Phagwara (Punjab)
• Krishna Bhima Samruddhi Local Area Bank Ltd, Mahbubnagar (Andhra Pradesh)
• Subhadra Local Area Bank Ltd., Kolhapur (Maharashtra)

These are some of the Scheduled Commercial Banks which can be further divided into four groups, they are:-