The banking system is at the heart of the financial system. It is an organisation that provides various financial services, for example keeping or lending money. The banking structure in India is described below:
Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935 under the RBI Act of 1934. It holds the apex position in the banking structure. It is called the Reserve Bank’ as it keeps the reserves of all commercial banks. It also issues country’s currency.
They can be divided into two groups:
Commercial bank includes public sector, private sector, foreign banks.
They were established on 2nd October 1975 under the provisions of RRB Act 1976 with a view to develop the rural economy. They are working in all states except Sikkim and Goa. These are state sponsored regional rural oriented banks. Their borrowers include small and marginal farmers, agricultural laborers, artisans etc. NABARD gives short term and medium term loans to them. South Malabar Gramin Bank is the RRB sponsored by Canara bank is the largest among the 82 RRBs in the country in terms of total business.
Co-operative bank was set up by passing a co-operative act in 1904. They are organised and managed on the principal of co-operation and mutual help. The main objective of co-operative bank is to provide rural credit. Three tier structures exist in the cooperative banking:
A development bank is a financial institution, which provides a long term funds to the industries for development purpose. This organization includes banks like IDBI, ICICI, IFCI etc. at All India level. State level institutions like State financial corporations (SFC’s), State industrial development corporations (SIDC’s) etc. It also includes investment institutions like UTI, LIC, and GIC etc. As development banks their main role is promotion of economic development by way of promoting investment and enterprise in their priority areas.
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