Banking Structure in India

The Banking Regulation Act, 1949 defines a banking company as a company which transacts the business of banking in India. Banking is defined as accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise. Section 49A of the Act prohibits any institution other than a banking company to accept deposits from the public withdrawable by cheque. RBI is the apex regulater for banks.
Banks can be broadly categorized as Commercial Banks or Co-operative Banks.
Commercial Banks include:
• Public Sector Banks (SBI, SBI Associates and Nationalised Banks)
• Private Sector Banks (Old, New and Foreign)
• Regional Rural Banks
Co-operative Banks include:
• Urban co-operative banks
• Rural / Agricultural co-operative banks.
Banks which meet specific criteria are included in the second schedule of the RBI Act, 1934. These are called scheduled banks.Scheduled banks are considered to be safer, and are entitled to special facilities like re-finance from RBI. Inclusion in the schedule also comes with its responsibilities of reporting to RBI and maintaining a percentage of its demand and time liabilities as Cash Reserve Ratio (CRR) with RBI.