Types of Banks and Their Functions in India

Posted on May 12, 2024 in Economy

Central Bank:

The main function of the central bank (RBI) is to regulate money supply and maintain economic stability. The central bank can print currency notes and provides loans to banks and financial institutions. It is owned and controlled by the government of India. The central bank frames monetary and credit policies.

Commercial Bank:

These banks accept deposits from the public and provide short-term loans. They offer services like collecting cheques, remitting money, etc. Commercial banks are categorized as public sector, private sector, and foreign banks.

Development Banks:

Businesses requiring medium to long-term capital are supported by development banks like IFCI and SFCs.

Co-operative Banks:

Financial institutions registered under the co-operative societies Act, providing credit to economically backward people.

Specialized Banks:

Banks catering to specific business areas like EXIM Bank, SIDBI, and NABARD.

Regional Rural Banks:

Established to enhance banking facilities in rural areas, sponsored by commercial banks and governments.

Exchange Banks:

Focus on financing foreign trade, remitting money, and supporting import-export activities.

Indigenous Banks:

Native bankers dealing in ‘hundis’ and promissory notes, charging high interest rates.

Saving Banks:

Accept small savings from the public, promoting saving habits. Post office saving bank is an example.

Marketing Mix:

  • Product: Goods or services offered to customers, impacting business success.
  • Price: Amount paid by customers, influencing demand and profitability.
  • Place: Distribution channel ensuring product availability to customers.
  • Promotion: Marketing communication tools to publicize and sell products.
  • People: Individuals influencing business success directly or indirectly.
  • Process: Steps involved in delivering products and services efficiently.
  • Physical Environment: Tangible elements enhancing customer experience.

Principles of Management:

  1. Division of Work
  2. Authority and Responsibility
  3. Discipline
  4. Unity of Command
  5. Unity of Direction
  6. Subordination of Individual Interest to Organisational Interest
  7. Centralization
  8. Remuneration
  9. Scalar Chain
  10. Order
  11. Equity
  12. Stability of Tenure
  13. Initiative
  14. Esprit de corps (Team work)

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