Banks are the financial institutions that deal with deposits, withdrawals, and loans. Banks provide financial help, safety, and support to individuals and businesses. Banks provide a safe place to store your funds. Your deposits and savings are safe and secure in banks. You can withdraw them anytime, whenever you want. You can also link your bank account with the UPI payment app to make online payments.
Also, if you do not have money but need funds urgently, you can get loans and advances from the banks. Other services of banks include insurance, digital financial services, mobile banking, debit card, credit card bill payment, etc. And in this digital era, banking services have become more advanced and faster.
We are all aware of the different financial services offered by banks. But do you know that there are several types of banks in India, and each has different services and responsibilities? Following are the various types of banks in India:
Central bank –
Each country has a central bank to oversee other financial institutions. Our country’s central bank is also known as the Reserve Bank of India. The principal role of a central bank is to regulate, control and assist other banks and financial institutions in the country. In addition, central banks are responsible for issuing money and generating monetary policies, and that’s why they are also known as the supervisor of the financial and economic system.
Cooperative banks –
Cooperative banks are small financial entities or institutions that provide loans and advanced facilities to small businesses. These banks are established on a cooperative basis and belong to their members. That is why the customers are also known as the owners of cooperative banks. It includes both retail banking and commercial banking services.
Commercial banks –
Commercial banks are profit-based institutions that accept deposits, allow withdrawals, provide services to check account status, and lend emergency loans. The main goal of commercial banks is to make adequate profits. These banks offer their services in both rural and urban areas. There are three types of commercial banks, which are as follows:
- Public sector banks – The banks in which central or government banks own most of the stocks.
- Private sector banks – The individuals, private entities, and a group of people own most of the stocks of the banks in the private sector.
- Foreign banks – The banks with headquarters in other nations and branches in the United States are known as foreign banks.
Regional rural banks (RRB) –
The ministry of finance owns and regulates the regional rural banks. RRB provides essential financial and banking services to customers in rural areas. Fifty-six regional rural banks in India provide financial support to farmers, laborers, etc. As per the legal rules, one regional rural bank cannot open branches in more than three geographically connected districts.
Local area banks (LAB)-
The government of India formed local area banks. The primary purpose of setting up LAB is to mobilize savings. Today there are only four local area banks located in South India. These banks are the small private banks set up in district towns that provide financial services in the local area or district.