Different Kinds of Banks

Do you need to know what would be various Kinds / Types of Banks i.e., Different Number of Banks  available in Banking Industry in India? Just proceed further to know about it...

1. Saving Banks

Saving banks was founded to be a secure place for salaried people and low income groups to save money for a rainy day. Saving banks were established to encourage saving habit among the people to earn more money. At present, Post offices & Commercial banks act as the saving banks.

2. Commercial Banks

A commercial bank is a financial institution organized as a joint stock company that operates for earning profit. Commercial banks are established with an objective to help businesses to develop economy. These banks collect money from general public as deposits and give loans to different sectors of economy that are in need of money.
Commercial banks provide various services like attracting deposits, cash credits, overdraft, collecting cheques, bill of exchange, remittance money from one place to another place, transfer of funds. Some examples of Commercial Banks are as follows: Punjab National Bank, Canara Bank, Karur Vysaya Bank etc.,.

3. Industrial Banks / Development Banks

Industrial / Development banks collect cash by issuing shares & debentures and providing long-term loans to industries. The main focus of Industrial / Development Banks will be collecting cash by issuing / underwriting shares & debentures, assisting to promote industrial development (Expansion & Modernization) by providing medium and long-term loans, providing technical & managerial services to industrial development.

In India, following are the banks which play the role of industrial banks: Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI) and Industrial Credit and Investment Corporation of India (ICICI).

4. Land Mortgage / Land Development Banks

Land Mortgage or Land Development Banks are also known as Agricultural Banks because it gives long-term loans to agriculturalists for making improvements on the land, repaying old debts etc., and also gives loan to free the mortgaged land and to buy new land.

5. Indigenous Banks

Indigenous banks mean Money Lenders, Chettiars, Pawn brokers and Sahukars who do not come under the control of RBI. They often lend money from their own resources or if need arises they would attract deposits from general public or borrow from one another and grant loans to the persons who are in need of money. These indigenous banks are popular in villages and small towns because of less formality and no fixed banking business hours.

6. Central / Federal / National Bank

Every country in the world has its own Central Bank. In India, Reserve Bank of India, in U.S.A, Federal Reserve and in U.K, Bank of England. It is the apex bank & the superior financial authority of a country. The central banks act as the bankers for other banks. They perform the specialised functions such as regulating banking system, controlling credit, issue of currency notes, working as bankers of government, custodian of  foreign exchange etc.,. A central bank is a non-profit making institution. It does not deal with the public but it deals with other banks.

7. Co-operative Banks

In India, Co-operative Banks are operated on co-operative principles & registered under the Co-operative Societies Act, 1912. They generally link the farmers with the money markets of the country and give credit facilities to small farmers, salaried employees, small-scale industries, etc.  The Co-operative banks’ functions are just in line with commercial banks.

8. Exchange Banks

Exchange banks are mainly concerned with foreign exchange, discounting of foreign bills and specializing financing foreign trade. It plays a major role in promoting international trade. It helps in encouraging the flow of foreign investments into Indian markets. Some of the Foreign Banks in India which are doing the role of Exchange Banks are as follows: Hong Kong Bank, HSBC Bank, RBS, Bank of Tokyo, Bank of America etc.,.

Thus now might know the features of different types / kinds of banks available in banking industry.  You can decide which bank might be suitable for your needs.

Categories: Banking Basics, Tutorials, Types of Banks