Scheduled banks are those banks that are listed under schedule II of “THE RESERVE BANK OF INDIA ACT 1934”, the funds must be raised by the bank by RS.5 LAKH, and scheduled banks are liable for the low-interest loans from RBI(Reserve Bank of INDIA).
The banking sector is an important dimension of the Indian economy which is for the people by the and of the people as Abraham Lincoln said. In today’s world globalization and privatization, industrialization are present. These banks are eligible to receive loans from the RBI at a concessional rate of interest, and they also have to maintain a certain percentage of their demand and time liabilities as cash reserves with the RBI. Scheduled banks in India can be classified into two categories:
Commercial Banks and Cooperative Banks
Commercial banks can further be classified into public sector banks, private sector banks, and foreign banks. Co-operative banks can be further classified into urban co-operative banks and rural co-operative banks.
There are 12 scheduled public sector banks in India & 22 scheduled private sector banks in India. Public Sector Banks are the banks whose majority of stakes are held by the state or central government.
The government is responsible for formulating all the financial guidelines for these banks. These banks work under the government and thus they are trustworthy. Public sector banks work for the benefit of people by introducing new schemes from time to time and also charge less for their services. The charges on loans are also less as compared to private sector banks. The biggest public sector bank in India is the State Bank of India.
HDFC is the first private bank in INDIA, it is an INDIAN banking and financial services company headquartered in MUMBAI, it is India’s largest private sector company, and it was the world’s fourth largest bank by market capitalization as of July 2023.
Functions of Scheduled Bank’s
Given below is a list of the most important functions of these Scheduled Bank’s
- Acceptance of deposits from the public
- Providing demand withdrawal facility Lending facility
- Transfer of funds – Issue of drafts
- Providing customers with locker facilities
- Dealing with foreign exchange, Private banks were set up in India after 1990 when the Government of India permitted to establish them. Before 1990, the major stakeholders were the public sector banks.
As of today, both the public sector and private sector contribute largely to the Indian economy. People choose between public sector banks and private sector banks based on their requirements and the type of service they want.
At present, there are 12 public sector banks and 21 private sector banks in India. Besides, according to RBI regulations, a single organization or an individual cannot invest more than a 10% stake in a bank.
Section 18 deals with emergency loans to banks. Section 21 states that the RBI must conduct banking affairs for the central government and manage public debt Section 22 states that only the RBI has the exclusive rights to issue currency notes in India.
TheSection 24 states that the maximum denomination a note can be is ₹10,000,
The Section 26 of the Act describes the legal teacher character of Indian banknotes.
Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes,
The Section 31 states that in India, only the RBI or the central government can issue and accept promissory notes that are payable on demand.
Section 42(1) says that every scheduled bank must have an average daily balance with the RBI. The amount of the deposit shall be more than a certain percentage of its net time and demand liabilities in India.
The Companies Act, 2013
The Companies Act 2013 is an act of the Parliament of India that forms the primary source of India. It received presidential assent on 29 August 2013 and largely superseded the Companies act1943. The Act was brought into force in stages. Section 1 of this act came into force on 30 August 2013. 98 different sections were enacted on 12 September 2013 with a few changes. A total of another 183 units came into force on 1 April 2014.
The Ministry of Corporate Affairs thereafter published a notification exempting private companies from the ambit of various sections under the act, The Act increased the responsibilities of corporate executives in the information technology sector, increasing India’s safeguards against organized cybercrime by allowing CEOs and CTOs to be prosecuted in cases of IT failure.
The Act established the National Company Law Tribunal (NCLT), which was constituted on 1 June 2016, based on the rec authority n of the Justice Committee on the law relating to insolvency and winding up of companies. Further, the National Financial Accountants NFRA) was established in March 2018 as an oversight body to investigate matters of professional misconduct by chartered accountants or CA firms.
Example of Scheduled Banks in India
Public sector banks of scheduled banks in India:
State Bank of India.
Punjab National Bank.
union Bank of India.
bank of India.
Private sector banks of scheduled banks in India:
HDFC Bank.
ICICI Bank.
Axis Bank.
IndusInd Bank.
Conclusion
Scheduled banks play an important role in the Indian economy and also in the financial system. (Legal 251)provides various financial services to their customer, mobilize savings, and channels them into product investment. With their extensive network and reach, scheduled banks have played a crucial role in promoting financial inclusion and economic growth in India.
