What is scheduled Bank: The Importance of Scheduled Banks in

Understanding the Role and Functions of Scheduled Banks

Introduction to Scheduled Banks

What is scheduled Bank- Scheduled banks are a vital component of the modern banking system, playing a crucial role in the financial infrastructure of a country. In this article, we will explore what scheduled banks are, their significance in the economy, and some key characteristics that set them apart from non-scheduled banks.

What is scheduled Bank?

Scheduled banks, often referred to as commercial banks, are financial institutions that are regulated and supervised by the central banking authority of a country, such as the Reserve Bank of India (RBI) in India or the Federal Reserve in the United States. These banks form an essential part of the organized banking sector and are entrusted with various responsibilities that contribute to the overall economic development.

Regulation and Supervision: Scheduled banks operate under the strict oversight of the country’s central bank, which ensures compliance with established financial regulations and monetary policies.
Currency Issuing Authority: In many cases, scheduled banks have the privilege of issuing and regulating the circulation of currency notes. They work in conjunction with the central bank to manage the country’s currency supply.
Acceptance of Demand Deposits: Scheduled banks accept various types of deposits, including demand deposits like current and savings accounts. These deposits can be withdrawn on demand, making them highly liquid.
Credit Creation: Scheduled banks are pivotal in creating credit within the economy. They lend to individuals, businesses, and government entities, facilitating economic growth.
Branch Network: Scheduled banks often have an extensive branch network, offering their services to a wide range of customers across different regions.

Significance in the Economy

The importance of scheduled banks in the economy cannot be overstated. They serve as intermediaries between depositors and borrowers, facilitating the flow of funds in the financial system. Here are a few key roles they play:

Financial Intermediation: Scheduled banks channel funds from surplus units (those with excess money) to deficit units (those in need of funds), fostering investment and economic growth.
Monetary Policy Implementation: Central banks use scheduled banks as a means to implement monetary policy, influencing interest rates and money supply to control inflation and stimulate economic activity.
Payment Mechanism: Scheduled banks provide payment and settlement services, allowing transactions through checks, electronic fund transfers, and other modern payment methods.
Safekeeping of Funds: People trust scheduled banks with their savings, as they offer secure storage and accessibility of funds through various deposit products.
Credit Provision: Scheduled banks extend loans and credit facilities to individuals, businesses, and the government, promoting investment and consumption.

scheduled banks are the backbone of the financial system, playing a pivotal role in economic development, monetary policy execution, and financial stability. Their widespread influence and the services they provide make them a cornerstone of modern economies around the world. Understanding the role and significance of scheduled banks is essential for anyone looking to navigate the complexities of the financial world.

Characteristics of Scheduled Banks

Scheduled banks, also known as commercial banks, possess several distinct characteristics that set them apart from other financial institutions. These features are instrumental in their pivotal role within the financial system. In this section, we will delve into the specific characteristics that define scheduled banks.

Regulation and Supervision: Scheduled banks are subject to rigorous regulation and supervision by the central banking authority of their respective countries. This oversight ensures that they adhere to financial regulations, monetary policies, and prudential norms. Regulatory bodies like the Reserve Bank of India (RBI) in India or the Federal Reserve in the United States play a crucial role in monitoring their activities.
Currency Issuing Authority: In many countries, scheduled banks have the privilege of issuing and regulating currency notes. They work closely with the central bank to ensure the efficient circulation and maintenance of currency within the economy. This responsibility helps in managing the money supply and maintaining price stability.
Acceptance of Demand Deposits: Scheduled banks provide a wide range of deposit services, including demand deposits. Demand deposits are highly liquid and can be withdrawn by the account holder on demand without any notice. These typically include current accounts and savings accounts, which are the foundation of the payments and settlement systems.
Credit Creation: One of the most distinctive features of scheduled banks is their role in credit creation. They have the authority to extend loans and credit to various sectors of the economy, such as individuals, businesses, and government entities. By lending funds, they contribute to economic growth and development.
Branch Network: Scheduled banks typically maintain an extensive branch network across different regions. This widespread presence allows them to reach a broad customer base and provide banking services to a diverse clientele. The branch network is crucial for the accessibility and availability of banking services.
Modern Banking Services: Scheduled banks offer a wide array of modern banking services, including online and mobile banking, ATM facilities, and electronic fund transfers. They adapt to evolving technological trends to enhance customer convenience and efficiency.
Risk Management: Scheduled banks have dedicated risk management departments and mechanisms to identify, assess, and manage various risks, including credit risk, market risk, and operational risk. Effective risk management is essential for the stability of the financial system.
Intermediaries in Financial Markets: These banks serve as intermediaries in financial markets, facilitating the trading of financial instruments such as government securities, corporate bonds, and foreign exchange. Their involvement in financial markets contributes to market liquidity.
Custodian Services: Scheduled banks often provide custodian services, safeguarding and managing financial assets on behalf of their customers, including mutual funds, pension funds, and institutional investors.
Economic Stabilization: Through their participation in monetary policy transmission, scheduled banks play a critical role in the implementation of monetary policy. They assist central banks in influencing interest rates, money supply, and inflation, contributing to economic stability.

Understanding the unique characteristics of scheduled banks is essential for comprehending their importance in the financial system and the broader economy. These characteristics enable them to perform a multifaceted role that extends beyond traditional banking, making them a cornerstone of modern economic development and stability.

Functions of Scheduled Banks

Scheduled banks, also known as commercial banks, perform a wide range of functions that are integral to the functioning of a country’s financial system. These functions encompass various activities that contribute to economic development, monetary policy implementation, and the efficient allocation of funds. In this section, we will explore the detailed functions of scheduled banks.

Accepting Deposits: One of the primary functions of scheduled banks is to accept deposits from the public. They offer different types of accounts, including savings accounts, current accounts, and fixed deposit accounts, where individuals and businesses can deposit their savings.
Extending Loans and Credit: Scheduled banks provide loans and credit to individuals, businesses, and government entities. These loans can be for various purposes, such as personal loans, home loans, business loans, and agricultural loans. By extending credit, they stimulate economic activity and promote investment.
Payment and Settlement Services: Scheduled banks offer payment and settlement services to facilitate transactions. These services include check clearing, electronic funds transfer, and online banking, which enable the smooth flow of funds within the economy.
Currency Issuance and Management: Many scheduled banks have the authority to issue and manage currency notes. They work in collaboration with the central bank to ensure an adequate supply of currency in circulation and to replace old or damaged notes.
Custodial Services: Some scheduled banks provide custodial services, safeguarding and managing financial assets on behalf of their customers, including institutional investors, mutual funds, and pension funds.
Foreign Exchange Services: Scheduled banks often engage in foreign exchange activities, including buying and selling foreign currencies, offering trade finance services, and facilitating international trade transactions.
Investment Banking: Many scheduled banks have investment banking divisions that offer services such as underwriting, mergers and acquisitions, and advisory services to businesses and governments seeking capital market expertise.
Wealth Management: Scheduled banks provide wealth management services, helping clients manage and grow their wealth through investment products, estate planning, and financial advisory services.
Advisory Services: They offer financial advice and consultancy to individuals and businesses on matters related to investments, financial planning, and risk management.
Safe Deposit Boxes: Scheduled banks provide safe deposit boxes for customers to securely store valuable items and documents.
ATM Services: Scheduled banks maintain extensive ATM networks, offering customers 24/7 access to cash withdrawals and various banking services.
Interest Rate Management: Scheduled banks play a significant role in managing interest rates by setting the rates for loans and deposits. They also influence interest rates based on the monetary policy of the central bank.
Market Making: In financial markets, scheduled banks often serve as market makers, facilitating the trading of securities by providing liquidity and taking positions in various financial instruments.
Corporate Banking: Scheduled banks offer a range of services to corporate clients, including corporate loans, cash management, trade finance, and treasury services.
Risk Management: These banks have dedicated risk management departments to assess and manage credit risk, market risk, and operational risk. Effective risk management is crucial for financial stability.

The functions of scheduled banks are multifaceted, and they play a crucial role in the economic development and stability of a country. Their ability to accept deposits, extend credit, facilitate payments, and provide a wide range of financial services contributes significantly to the overall functioning of the financial system and the well-being of individuals and businesses.

Importance in the Economy

Scheduled banks, often referred to as commercial banks, hold a pivotal position in the economic landscape of a country. Their significance extends far beyond just being financial institutions. In this section, we will explore the multifaceted importance of scheduled banks in the economy.

Financial Intermediation: Scheduled banks act as intermediaries between those who have surplus funds and those in need of funds. This process, known as financial intermediation, helps channel savings from households and businesses to productive investments. By facilitating this flow of funds, scheduled banks play a crucial role in economic growth.
Monetary Policy Transmission: Central banks, such as the Federal Reserve in the United States or the Reserve Bank of India (RBI) in India, use scheduled banks as a key instrument in implementing monetary policy. They influence interest rates and money supply through scheduled banks, impacting inflation and stimulating economic activity.
Payment and Settlement Services: Scheduled banks provide essential payment and settlement services, which form the backbone of the economy. Through services like electronic funds transfer, checks, and digital payment systems, they ensure the smooth functioning of transactions, both at the individual and corporate levels.
Currency Management: Many scheduled banks have the responsibility of issuing and managing currency notes. This role involves controlling the money supply, replacing damaged currency, and ensuring an adequate circulation of money in the economy.
Credit Creation: Scheduled banks are at the forefront of credit creation. They extend loans to individuals, businesses, and the government, which encourages investment, consumption, and economic development. The ability to create credit contributes significantly to economic growth.
Financial Stability: Scheduled banks play a crucial role in maintaining financial stability. By monitoring and managing risks effectively, they help mitigate potential financial crises and ensure the soundness of the financial system.
Supporting Small and Medium-sized Enterprises (SMEs): Scheduled banks often offer tailored financial products and services to SMEs, which are the backbone of many economies. By providing them with access to credit and financial expertise, banks contribute to SME growth and job creation.
Foreign Trade and Exchange: Scheduled banks are key players in facilitating international trade. They offer trade finance services, foreign exchange transactions, and letters of credit, supporting businesses engaged in global commerce.
Investment in Infrastructure: These banks often finance critical infrastructure projects, such as roads, bridges, and utilities, which are vital for economic development. Their financial support fosters the growth of such projects.
Support for Agriculture: In many countries, scheduled banks play a critical role in agricultural development by providing loans to farmers for crop cultivation, modernization, and adopting sustainable farming practices.
Savings and Wealth Management: Scheduled banks offer various savings and investment products, helping individuals and families manage and grow their wealth. These services support financial security and prosperity.
Job Creation: By supporting businesses through loans and credit, scheduled banks indirectly contribute to job creation and economic well-being. A thriving business environment often translates into more employment opportunities.

Regulatory Bodies for Scheduled Banks

Scheduled banks, also known as commercial banks, operate within a well-defined regulatory framework established by regulatory bodies in their respective countries. These regulatory authorities are responsible for overseeing and supervising the activities of scheduled banks to ensure financial stability, consumer protection, and compliance with relevant laws and regulations. In this section, we will delve into the regulatory bodies for scheduled banks and their roles in maintaining the integrity of the financial system.

Central Banks: Central banks play a pivotal role in regulating scheduled banks. In many countries, the central bank is the primary regulatory authority for the banking sector. For example, the Reserve Bank of India (RBI) in India, the Federal Reserve in the United States, and the European Central Bank (ECB) in the Eurozone serve as the central regulatory bodies for scheduled banks. Central banks are responsible for formulating monetary policy, regulating money supply, and overseeing financial stability.
Banking Supervisory Authorities: These authorities are responsible for the day-to-day supervision and regulation of scheduled banks. They ensure that banks operate within the defined regulatory framework, maintain adequate capital levels, and comply with prudential norms. Examples include the Office of the Comptroller of the Currency (OCC) in the United States and the Prudential Regulation Authority (PRA) in the United Kingdom.
Deposit Insurance Agencies: These agencies provide deposit insurance to safeguard the interests of depositors. In the event of a bank failure, deposit insurance agencies reimburse depositors up to a specified limit. The Federal Deposit Insurance Corporation (FDIC) in the United States and the Deposit Insurance and Credit Guarantee Corporation (DICGC) in India are examples of such agencies.
Securities and Exchange Commissions: In some countries, scheduled banks may engage in activities related to securities and investments. Securities and Exchange Commissions (SECs) or similar regulatory bodies oversee these activities, ensuring compliance with securities laws and protecting investors.
Financial Services Authorities: Some countries have independent financial services authorities responsible for regulating a wide range of financial institutions, including scheduled banks. These authorities often have a broader mandate encompassing banking, insurance, and securities sectors.
Anti-Money Laundering (AML) Authorities: Scheduled banks are subject to AML regulations to prevent money laundering and the financing of terrorism. AML authorities work to ensure that banks have effective anti-money laundering and counter-terrorist financing policies and procedures in place.
Consumer Protection Agencies: These agencies focus on safeguarding the rights and interests of banking customers. They enforce regulations related to fair lending practices, transparency in financial products, and handling of customer complaints.
Financial Ombudsman Services: In many countries, ombudsman services provide an independent platform for resolving disputes between customers and banks. They ensure that customers have a mechanism for addressing grievances.
International Regulatory Bodies: Given the global nature of banking, international organizations like the Basel Committee on Banking Supervision set global standards for banking regulations. These standards help ensure consistency and stability in the international banking system.
Financial Stability Oversight Councils: In some countries, financial stability oversight councils or committees are responsible for monitoring and addressing systemic risks in the financial system, which can impact the stability of scheduled banks.

The regulatory bodies for scheduled banks play a critical role in maintaining the safety and soundness of the banking system. They set guidelines, enforce regulations, and conduct regular examinations to ensure that banks operate with integrity, protect the interests of depositors, and contribute to overall financial stability. Their oversight is essential in preventing financial crises and safeguarding the well-being of both the banking sector and the broader economy.

Types of Scheduled Banks

Scheduled banks are categorized into different types based on their ownership, governance, and operational characteristics. These distinct categories include Nationalized Banks, Private Sector Banks, and Foreign Banks, each with its unique features and roles within the banking sector. In this section, we will explore these types of scheduled banks in detail.

1. Nationalized Banks:

Nationalized banks, also known as public sector banks, are financial institutions that are owned and controlled by the government of a country. In many cases, these banks were originally private sector banks that were nationalized or taken over by the government to promote financial inclusion and support the country’s economic development. Key features of nationalized banks include:

Government Ownership: Nationalized banks are wholly or significantly owned by the government. The government typically holds a majority stake in these banks, giving it significant control over their operations.
Widespread Branch Network: Nationalized banks often have an extensive branch network that reaches even the remotest parts of the country. This allows them to provide banking services to a large portion of the population.
Social and Developmental Focus: These banks often play a crucial role in advancing the government’s social and developmental objectives. They may be tasked with providing financial services to underserved and marginalized sections of society.
Policy Implementation: Nationalized banks are instrumental in implementing the government’s policies related to economic development, financial inclusion, and social welfare.
Stability and Trust: Due to their government ownership, these banks are often perceived as more stable and secure by the public, which encourages trust among depositors.

2. Private Sector Banks:

Private sector banks are financial institutions that are owned and operated by private individuals or corporations. These banks are characterized by their independent governance and profit-oriented approach. Key features of private sector banks include:

Private Ownership: Private sector banks are owned and managed by private entities, which may include individuals, corporate entities, or a combination of both. They are not controlled by the government.
Profit Motive: Private sector banks primarily aim to generate profits for their shareholders. They focus on efficiency, innovation, and customer service to enhance profitability.
Competitive Environment: Private sector banks operate in a competitive environment and must compete with other private banks and nationalized banks for market share and customers.
Innovation and Technology: Private sector banks often lead in adopting cutting-edge technology and innovation to provide modern banking services and attract customers.
Niche Markets: Some private sector banks specialize in serving niche markets, such as high-net-worth individuals, corporate clients, or specific industries.

3. Foreign Banks:

Foreign banks are financial institutions that are headquartered in one country but operate branches or subsidiaries in another country. These banks can have a significant impact on the host country’s financial system. Key features of foreign banks include:

International Presence: Foreign banks have a global presence and often operate in multiple countries. They leverage their international network to offer a wide range of financial services.
Diverse Services: These banks provide diverse banking services, including retail and corporate banking, trade finance, and foreign exchange services, catering to a broad customer base.
Cross-Border Transactions: Foreign banks facilitate cross-border trade and investment by providing services to businesses and individuals engaged in international transactions.
Risk Diversification: Host countries benefit from foreign banks by accessing a diversified pool of international funds and expertise. This can enhance financial stability and investment opportunities.
Regulatory Oversight: Foreign banks operating in a host country are subject to the regulations and supervision of both their home country and the host country’s regulatory authorities.

Each type of scheduled bank has a unique role and contribution to the financial system, and their existence provides diversity and choice to customers while contributing to the economic development and stability of the country.

Scheduled Banks vs. Non-Scheduled Banks

Banks are classified into two main categories: scheduled banks and non-scheduled banks. These classifications are based on specific criteria and have implications for the regulatory framework, functions, and operations of the banks. In this section, we will explore the key differences between scheduled banks and non-scheduled banks in detail.

Scheduled Banks:

Scheduled banks are financial institutions that are included in the Second Schedule of the Reserve Bank of India (RBI) Act, 1934, in the context of India. The term “scheduled bank” can be applied to other countries’ banking systems as well, each with its own regulatory framework. Here are the characteristics of scheduled banks:

Regulation: Scheduled banks are regulated and supervised by the country’s central bank, such as the RBI in India. They are subject to specific banking regulations and monetary policies set by the central bank.
Acceptance of Demand Deposits: Scheduled banks accept demand deposits, including current accounts and savings accounts. Demand deposits are liquid and can be withdrawn by customers on demand.
Clearinghouse Membership: Scheduled banks are often members of a clearinghouse that facilitates the clearing of checks and other payment instruments. This enables them to participate in the interbank payment system.
Functions: They offer a wide range of banking services, including lending, deposit-taking, and facilitating payment and settlement systems. Scheduled banks play a vital role in the economy and financial sector.
Government Business: Scheduled banks often handle government transactions, such as disbursement of salaries, collection of taxes, and distribution of subsidies. They serve as a financial intermediary for government funds.
Lender of Last Resort: In times of financial crises, scheduled banks can access emergency funds and liquidity support from the central bank, which helps maintain financial stability.

Non-Scheduled Banks:

Non-scheduled banks are financial institutions that are not included in the Second Schedule of the central bank’s regulatory framework. Here are the characteristics of non-scheduled banks:

Lack of Central Bank Regulation: Non-scheduled banks are not regulated by the central bank and may be subject to different regulatory authorities or have limited regulatory oversight.
Limited Banking Functions: They may have restrictions on the types of banking functions they can perform. This can include limitations on accepting demand deposits and participating in clearinghouse operations.
Private Banks and Cooperatives: Non-scheduled banks can include private banks, cooperative banks, and other specialized financial institutions that do not meet the criteria for scheduled bank status.
Non-Government Transactions: Non-scheduled banks typically do not handle government transactions or serve as intermediaries for government funds.
Financial Inclusion: Some non-scheduled banks, particularly cooperative banks, may focus on serving specific communities or regions, promoting financial inclusion and supporting localized economic development.
Limited Access to Central Bank Support: In times of financial stress, non-scheduled banks may have limited access to emergency funds or liquidity support from the central bank, which can pose challenges during financial crises.

It’s important to note that the classification of scheduled and non-scheduled banks may vary from one country to another. The primary distinction lies in the level of regulatory oversight and the range of services they can provide. Scheduled banks are typically more integrated into the national and international financial systems, while non-scheduled banks often serve specific niches or localized communities.

Scheduled Banks in India

Scheduled banks play a critical role in the Indian banking system, contributing significantly to the country’s economic development and financial stability. These banks are regulated and supervised by the Reserve Bank of India (RBI), the central bank of India. In this section, we will provide detailed information about scheduled banks in India, their significance, and some notable examples.

Characteristics of Scheduled Banks in India:

Regulation: Scheduled banks in India are regulated and supervised by the Reserve Bank of India (RBI), which sets the rules, regulations, and monetary policies governing the banking sector.
Acceptance of Demand Deposits: Scheduled banks in India are authorized to accept demand deposits, including current accounts and savings accounts. These deposits are highly liquid and can be withdrawn on demand by customers.
Clearinghouse Membership: Scheduled banks are typically members of clearinghouses that facilitate the clearing of checks and other payment instruments, enabling interbank transactions and settlements.
Government Business: They often handle government transactions, such as disbursement of salaries, collection of taxes, and distribution of subsidies. Scheduled banks serve as intermediaries for government funds.
Credit Creation: Scheduled banks are instrumental in extending loans and credit to various sectors of the economy, including individuals, businesses, and government entities. This promotes investment and economic growth.
Lender of Last Resort: In times of financial crises or liquidity shortages, scheduled banks have access to emergency funds and liquidity support from the RBI. This helps maintain financial stability.

Significance of Scheduled Banks in India:

Scheduled banks hold a crucial position in the Indian economy for several reasons:

Financial Intermediation: They facilitate the flow of funds from savers to borrowers, supporting economic growth by channelling investments into productive sectors.
Monetary Policy Implementation: Scheduled banks play a vital role in implementing the RBI’s monetary policy. By influencing interest rates and controlling money supply, they contribute to price stability and economic growth.
Payment and Settlement System: They provide essential payment and settlement services, ensuring smooth financial transactions through checks, electronic fund transfers, and digital payment systems.
Credit Creation: Scheduled banks are key contributors to credit creation in India. They extend loans to individuals, businesses, and government agencies, fueling investment and consumption.
Financial Inclusion: They have a widespread branch network, enabling them to provide banking services even in remote areas. This supports the government’s financial inclusion initiatives.

Notable Examples of Scheduled Banks in India:

India has a diverse banking landscape with various scheduled banks, including:

State Bank of India (SBI): SBI is one of the largest and oldest scheduled banks in India, with an extensive branch network both nationally and internationally. It offers a wide range of financial products and services.
HDFC Bank: HDFC Bank is one of the leading private sector scheduled banks in India, known for its innovative banking solutions and customer-centric approach.
ICICI Bank: Another prominent private sector bank, ICICI Bank, is known for its extensive branch network, digital services, and global presence.
Punjab National Bank (PNB): PNB is a nationalized scheduled bank with a significant presence in India and abroad, providing a broad spectrum of banking services.
Axis Bank: Axis Bank is a private sector bank that offers a wide array of banking and financial products to a diverse customer base.
Kotak Mahindra Bank: This private sector bank is recognized for its focus on customer service, innovation, and a robust banking platform.

Scheduled banks in India, both public and private, play a critical role in the financial sector and the overall economic development of the country. They are at the forefront of financial services, contributing to economic growth, monetary policy implementation, and financial inclusion.

Recent Developments in Scheduled Banking

The world of scheduled banking is continually evolving, adapting to changing economic landscapes, technological advancements, and regulatory updates. In recent years, several notable developments have shaped the banking industry. In this section, we’ll explore some of these significant developments in scheduled banking:

Digital Transformation: One of the most notable recent developments is the widespread adoption of digital banking. Scheduled banks are investing heavily in digital infrastructure, online and mobile banking platforms, and fintech partnerships. This transformation has made banking services more accessible, convenient, and efficient for customers.
Payment Innovations: With the advent of digital payments, real-time payment systems, and the growth of mobile wallets, scheduled banks have expanded their offerings to include digital payment solutions. The Unified Payments Interface (UPI) in India, for instance, has revolutionized peer-to-peer and peer-to-merchant payments.
Open Banking: Open banking initiatives are gaining momentum, allowing customers to share their financial data with third-party providers securely. This fosters competition, innovation, and personalized banking experiences. Scheduled banks are embracing open banking principles to stay competitive.
Artificial Intelligence and Machine Learning: Banks are using AI and machine learning for customer service, fraud detection, risk assessment, and data analytics. These technologies improve efficiency and enhance the customer experience.
Blockchain and Cryptocurrency: Banks are exploring the potential of blockchain technology for secure and transparent transactions. Some are even developing or investing in cryptocurrency-related services, although regulatory challenges remain.
Sustainable Banking: Environmental, Social, and Governance (ESG) considerations have gained prominence. Scheduled banks are integrating ESG criteria into their lending and investment decisions, supporting sustainability and responsible banking practices.
Regulatory Reforms: Regulatory changes, such as Basel III norms, are influencing the capital adequacy, risk management, and overall operations of scheduled banks. Compliance with evolving regulations remains a top priority.
Customer-Centric Approach: Scheduled banks are focusing on enhancing customer experiences by offering personalized services, improving the onboarding process, and addressing customer feedback promptly.
Cybersecurity Measures: Given the increasing threat of cyberattacks, banks are bolstering their cybersecurity measures to protect customer data and maintain the integrity of financial transactions.
Branch Network Optimization: Some scheduled banks are optimizing their physical branch networks by consolidating branches in response to the growing demand for digital services. This allows them to cut costs and enhance operational efficiency.
Financial Inclusion: Banks are actively participating in government-led financial inclusion initiatives, ensuring that underserved and remote populations have access to essential banking services.
COVID-19 Response: The COVID-19 pandemic has accelerated the adoption of digital banking and remote customer service. Banks have also offered relief measures, like loan moratoriums, to assist customers during economic hardships.
Mergers and Acquisitions: The banking industry has witnessed several mergers and acquisitions, leading to the consolidation of some scheduled banks. These strategic moves aim to enhance efficiency and expand market reach.
Evolving Competitive Landscape: The entry of new players, including fintech startups and non-banking financial companies (NBFCs), has intensified competition. Scheduled banks are adapting by collaborating with fintech firms or launching their own digital subsidiaries.
Financial Education and Literacy: Banks are increasingly focusing on educating customers about financial products and services, promoting financial literacy, and offering financial planning tools.

These recent developments reflect the dynamic nature of scheduled banking as it adapts to technological advancements, changing customer expectations, and evolving regulatory landscapes. As scheduled banks continue to innovate and invest in their operations, the industry is likely to witness further transformation and progress in the years ahead.

What is a non-scheduled bank?

Non-scheduled banks are financial institutions that do not fall under the category of scheduled banks, and they typically operate with certain limitations when compared to their scheduled counterparts. To fully comprehend the concept of non-scheduled banks, it’s essential to explore their key characteristics and roles in the banking sector.

Characteristics of Non-Scheduled Banks:

Limited Regulatory Oversight: Non-scheduled banks are not included in the Second Schedule of the central bank’s regulatory framework. This means they are subject to less stringent regulations and oversight compared to scheduled banks.
Deposits and Lending: Non-scheduled banks may have restrictions on the acceptance of demand deposits, such as current accounts, and their ability to participate in interbank clearing systems. Additionally, they might have limits on extending credit.
Ownership and Governance: These banks can include a variety of entities, such as private banks, cooperative banks, specialized financial institutions, and non-banking financial companies (NBFCs). Their ownership structures can vary, and they are not necessarily controlled by the government.
Niche Markets: Non-scheduled banks often serve specific niches or localized communities. They may cater to unique customer segments or focus on particular types of banking services.
Government Business: Unlike scheduled banks, non-scheduled banks typically do not handle government transactions, including salary disbursements, tax collections, or subsidy distributions.

Roles and Functions of Non-Scheduled Banks:

Financial Inclusion: Non-scheduled banks can play a vital role in promoting financial inclusion, especially in underserved or remote areas where scheduled banks may have limited presence. They cater to local communities, providing banking services and credit access.
Specialized Services: Some non-scheduled banks specialize in offering niche services. For example, cooperative banks often serve the agricultural and rural sectors, focusing on rural credit and cooperative banking principles.
Cooperative Banking: Cooperative credit societies and cooperative banks are typical examples of non-scheduled banks. They operate on a cooperative basis, where members are both customers and shareholders, and they often emphasize community development.
Microfinance: Many non-scheduled banks, particularly NBFCs, engage in microfinance, providing small loans to low-income individuals and small businesses to support economic growth at the grassroots level.
Complementary Services: Non-scheduled banks can complement the services provided by scheduled banks. They may offer products and services tailored to the specific needs of their customer base, thus diversifying the banking landscape.
Local Initiatives: Non-scheduled banks can be more responsive to local initiatives and economic development projects, thereby contributing to localized economic growth.

It’s important to note that the specific roles and functions of non-scheduled banks can vary significantly depending on their type, ownership structure, and focus. While they may not have the same scale and scope as scheduled banks, they fulfil critical roles in supporting localized economies, addressing specialized needs, and contributing to the financial inclusion and well-being of specific communities or customer segments.

Scheduled bank list

Please note that this list is not exhaustive and may not include every scheduled bank globally. Also, there might have been changes or additions. Here are examples of scheduled banks:

NO.	BANK	COUNTRY
1.	State Bank of India (SBI)	India
2.	HDFC Bank	India
3.	ICICI Bank	India
4.	Punjab National Bank (PNB)	India
5.	Axis Bank	India
6.	Kotak Mahindra Bank	India
7.	Bank of Baroda	India
8.	Canara Bank	India
9.	Citibank	United States
10.	JPMorgan Chase	United States
11.	Wells Fargo	United States
12.	HSBC	United Kingdom
13.	Barclays	United Kingdom
14.	Standard Chartered	United Kingdom
15.	Deutsche Bank	Germany
16.	BNP Paribas	France
17.	Societe Generale	France
18.	UBS	Switzerland
19.	Credit Suisse	Switzerland
20.	Mitsubishi UFJ Financial Group (MUFG)	Japan
21.	Sumitomo Mitsui Financial Group (SMFG)	Japan
22.	Commonwealth Bank of Australia	Australia
23.	Westpac Banking Corporation	Australia
24.	National Australia Bank (NAB)	Australia
25.	Toronto-Dominion Bank (TD Bank)	Canada
26.	Royal Bank of Canada (RBC)	Canada
27.	Bank of Nova Scotia (Scotiabank)	Canada

Please note that this list includes some of the globally recognized scheduled banks, but there are many more scheduled banks in various countries. Additionally, the status of a bank as a scheduled bank may change over time due to regulatory updates or changes in the bank’s operations. For the most current and specific information, it’s recommended to refer to the official regulatory authorities or the respective banks’ official sources.

What is a scheduled bank in India?

Scheduled banks, also known as commercial banks, are a crucial part of India’s financial system. They play a pivotal role in the country’s economic development, offering a wide range of banking and financial services to the public. The term “scheduled bank” is primarily applicable to the Indian context, and it signifies a specific status granted by the Reserve Bank of India (RBI), the country’s central bank. Here, we will delve into what makes a bank a “scheduled bank” in India and its significance.

Characteristics of Scheduled Banks:

Regulation: Scheduled banks in India are regulated and supervised by the Reserve Bank of India (RBI), which is the central banking institution. This regulatory oversight ensures the smooth functioning of the banking system and compliance with relevant laws and regulations.
Acceptance of Demand Deposits: Scheduled banks are authorized to accept demand deposits, which include current accounts and savings accounts. Demand deposits are highly liquid and can be withdrawn by customers without notice.
Clearinghouse Membership: They are typically members of clearinghouses, which facilitate the clearing of checks and other payment instruments. Being part of these clearinghouses enables scheduled banks to participate in interbank transactions and settlements.
Government Business: Scheduled banks often engage in government-related financial transactions. They handle activities such as disbursing salaries, collecting taxes, and distributing subsidies, serving as intermediaries for government funds.
Credit Creation: Scheduled banks are at the forefront of extending loans and credit to various sectors of the economy, including individuals, businesses, and government entities. This credit creation role stimulates investment and economic growth.
Lender of Last Resort: In times of financial crises or liquidity shortages, scheduled banks have access to emergency funds and liquidity support from the RBI. This mechanism helps maintain financial stability.

Significance of Scheduled Banks in India:

Scheduled banks in India hold a central position in the country’s economy for several reasons:

Financial Intermediation: They act as intermediaries, channelling funds from savers to borrowers, and supporting economic growth by directing investments into productive sectors.
Monetary Policy Implementation: Scheduled banks play a pivotal role in implementing the RBI’s monetary policy. By influencing interest rates and controlling the money supply, they contribute to price stability and economic growth.
Payment and Settlement System: They provide essential payment and settlement services, ensuring smooth financial transactions through checks, electronic fund transfers, and digital payment systems.
Credit Creation: Scheduled banks are key contributors to credit creation in India. They extend loans to individuals, businesses, and government agencies, fueling investment and consumption.
Financial Inclusion: With a widespread branch network, they support the government’s financial inclusion initiatives, making banking services accessible even in remote areas.

Notable Examples of Scheduled Banks in India:

India boasts a diverse banking landscape, with a mix of public sector and private sector scheduled banks. Some well-known scheduled banks in India include:

State Bank of India (SBI): SBI is one of the largest and oldest scheduled banks in India, with an extensive branch network both nationally and internationally, offering a wide range of financial products and services.
HDFC Bank: HDFC Bank is a leading private sector scheduled bank in India, recognized for its innovative banking solutions and customer-centric approach.
ICICI Bank: Another prominent private sector bank, ICICI Bank, has a vast branch network and a strong digital presence.
Punjab National Bank (PNB): PNB is a nationalized scheduled bank with a significant presence in India and abroad, providing a broad spectrum of banking services.
Axis Bank: Axis Bank, a private sector bank, offers a wide array of banking and financial products to a diverse customer base.
Kotak Mahindra Bank: Known for its customer service, innovation, and robust banking platform, Kotak Mahindra Bank is a private sector scheduled bank.

Scheduled banks in India, whether public or private, play a critical role in the financial sector and the country’s overall economic development. They are at the forefront of financial services, contributing to economic growth, implementing monetary policy, and promoting financial inclusion.

What is a scheduled bank example?

Scheduled banks, also known as commercial banks, are financial institutions that are regulated and supervised by the central bank of a country. They are authorized to perform a wide range of banking and financial services. To provide a clear example of a scheduled bank, we will focus on one of the most prominent and well-known scheduled banks in India, the State Bank of India (SBI).

State Bank of India (SBI):

The State Bank of India is a prime illustration of a scheduled bank in the Indian context. Established in 1806 as the Bank of Calcutta, it later merged with two other banks to form the Bank of Bengal in 1809. In 1921, it was renamed the Imperial Bank of India, and in 1955, it was nationalized to become the State Bank of India.

Key Features of SBI as a Scheduled Bank:

Regulation: SBI is regulated and supervised by the Reserve Bank of India (RBI), which is the central bank of the country. The RBI sets the rules, regulations, and monetary policies governing the banking sector.
Acceptance of Demand Deposits: SBI is authorized to accept demand deposits, which include current accounts and savings accounts. These deposits are highly liquid and can be withdrawn by customers on demand.
Clearinghouse Membership: SBI is a member of clearinghouses, such as the Indian Banking Association (IBA), which facilitates the clearing of checks and other payment instruments. This enables SBI to participate in interbank transactions and settlements.
Government Business: SBI plays a crucial role in government-related financial transactions. It is involved in disbursing salaries, collecting taxes, distributing subsidies, and serving as an intermediary for government funds.
Credit Creation: SBI is a major player in extending loans and credit to various sectors of the Indian economy, including individuals, businesses, and government entities. This role promotes investment and economic growth.
Lender of Last Resort: In times of financial crises or liquidity shortages, scheduled banks like SBI have access to emergency funds and liquidity support from the RBI. This mechanism helps maintain financial stability.

Significance of SBI as a Scheduled Bank:

SBI holds a pivotal position in the Indian banking sector for several reasons:

Size and Reach: It is one of the largest and oldest scheduled banks in India, with an extensive branch network not only nationally but also internationally. This extensive presence ensures that SBI’s services are accessible to a wide range of customers.
Comprehensive Services: SBI offers a wide array of financial products and services, including savings and current accounts, loans, credit cards, insurance, investment products, and more.
Monetary Policy Implementation: As a scheduled bank, SBI plays a crucial role in implementing the RBI’s monetary policy. It influences interest rates and controls the money supply, contributing to price stability and economic growth.
Financial Inclusion: SBI actively participates in the government’s financial inclusion initiatives, making banking services accessible even in remote and underserved areas, thereby promoting economic development.
Global Presence: SBI’s international presence allows it to serve the banking needs of the Indian diaspora and international customers while facilitating cross-border transactions.

In summary, the State Bank of India (SBI) is an exemplary scheduled bank in India. As a scheduled bank, it operates within the regulatory framework set by the Reserve Bank of India, offering a wide range of banking and financial services to the public and playing a crucial role in the economic development and financial stability of the country.

What are scheduled bank and commercial bank

Scheduled Bank vs. Commercial Bank: Understanding the Differences

Scheduled banks and commercial banks are both financial institutions, but they serve distinct roles and are subject to different regulatory frameworks in some countries. To understand the differences between these two types of banks, it’s important to explore their characteristics and functions.

Scheduled Bank:

A scheduled bank is a term commonly used in the context of Indian banking, but it can be applied to the banking systems of other countries as well. Scheduled banks are those financial institutions that are included in the Second Schedule of the Reserve Bank of India (RBI) Act, 1934, in India. In this context, the term “scheduled” refers to the fact that these banks are scheduled by the RBI, which signifies their inclusion in the country’s regulated banking system. Key characteristics of scheduled banks include:

Regulation: Scheduled banks are regulated and supervised by the central bank of the country, such as the RBI in India. They are subject to specific banking regulations and monetary policies set by the central bank.
Acceptance of Demand Deposits: Scheduled banks are authorized to accept demand deposits, including current accounts and savings accounts. Demand deposits are liquid and can be withdrawn by customers on demand.
Clearinghouse Membership: Scheduled banks are often members of clearinghouses that facilitate the clearing of checks and other payment instruments. This enables them to participate in the interbank payment system.
Government Business: Scheduled banks frequently handle government transactions, such as disbursement of salaries, collection of taxes, and distribution of subsidies. They serve as a financial intermediary for government funds.
Credit Creation: Scheduled banks play a pivotal role in extending loans and credit to various sectors of the economy, including individuals, businesses, and government entities. This promotes investment and economic growth.
Lender of Last Resort: In times of financial crises, scheduled banks can access emergency funds and liquidity support from the central bank, which helps maintain financial stability.

Commercial Bank:

A commercial bank is a broader term that encompasses a wide range of banking institutions engaged in commercial and retail banking activities. Commercial banks can be scheduled or non-scheduled, depending on the regulatory framework of the specific country. Key characteristics of commercial banks include:

Range of Services: Commercial banks offer a comprehensive array of financial services, including deposit accounts, loans, mortgages, credit cards, trade finance, foreign exchange services, wealth management, and more.
Customer Base: They cater to a broad customer base, including individuals, small and medium-sized enterprises (SMEs), large corporations, and government entities.
Profit Orientation: Commercial banks are typically profit-oriented institutions. They aim to generate revenue and profits by lending at higher interest rates than they pay on deposits.
Diverse Products: Commercial banks may offer diverse products, such as business and personal loans, savings accounts, checking accounts, investment products, and insurance services.
Regulatory Oversight: Commercial banks are subject to regulatory oversight, which may vary from country to country. The extent of regulation depends on the specific laws and policies of the governing authority.
Customer-Centric Approach: Many commercial banks focus on enhancing the customer experience, offering convenience, accessibility, and personalized services to attract and retain clients.

Differences Between Scheduled Banks and Commercial Banks:

The primary difference between the two lies in the regulatory framework. Scheduled banks, as defined in India, are those banks scheduled by the central bank and are subject to specific regulations. Commercial banks, on the other hand, refer to a broader category of banks engaged in a wide range of commercial and retail banking activities.

It’s essential to note that the terms “scheduled bank” and “commercial bank” may be used differently in other countries, so the specific characteristics and regulatory distinctions can vary. The key takeaway is that scheduled banks are a subset of commercial banks, and their inclusion in the Second Schedule of the central bank’s regulations signifies their regulated status.

How many scheduled banks in India

A large number of scheduled banks operate in the banking system of India. However, it is important to note that the number of scheduled banks may change over time due to various factors including mergers, new bank licenses, and changes in regulatory status. To give a rough idea of the number of scheduled banks in India, here are the details of the major categories of scheduled banks:

Public Sector Banks: These are those banks in which the government has majority ownership. Some of the major scheduled public sector banks include the State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda and others.
Private Sector Banks: These are privately owned scheduled banks. Notable examples include HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank.
Foreign Banks: Foreign banks which operate in India and are included in the Second Schedule of the Reserve Bank of India (RBI) Act are also considered as scheduled banks. HSBC, Standard Chartered, Citibank and others fall into this category.
Regional Rural Banks (RRBs): RRBs, created to serve rural and semi-urban areas, are also scheduled banks. Some of the famous RRBs include Baroda Uttar Pradesh Gramin Bank and Kerala Gramin Bank.
Co-operative Banks: Some co-operative banks including urban co-operative banks (UCBs) and state co-operative banks are also included in the list of scheduled banks. Examples are Saraswat Cooperative Bank and Gujarat State Cooperative Bank.
Small Finance Banks: These are a relatively new category of banks in India, primarily focused on serving the unbanked and underbanked areas. Scheduled small finance banks include Equitas Small Finance Bank and Ujjivan Small Finance Bank.
Payments Banks: Payments banks, which are a special category of banks providing limited services like mobile banking and remittances, can also be scheduled banks. Airtel Payments Bank is an example of this.

Please note that the number of scheduled banks has changed since the last update, and it is advisable to check the official website of the Reserve Bank of India or other official sources for the latest information on the current number of scheduled banks. Bank in India. Additionally, new banks may receive licenses or some banks may merge or consolidate their operations.

FAQs about Scheduled Banks

Frequently Asked Questions (FAQs) about Scheduled Banks

What is a scheduled bank?
A scheduled bank is a financial institution authorized by the central bank of a country to operate within the country’s regulatory framework. Scheduled banks are subject to specific regulations and are included in the central bank’s Second Schedule.
What’s the significance of being a scheduled bank?
Being a scheduled bank indicates that the bank is regulated and supervised by the central bank, giving it certain privileges, such as the ability to accept demand deposits and participate in the clearinghouse system.
How is a bank designated as a scheduled bank?
In India, for example, the Reserve Bank of India (RBI) designates banks as scheduled banks by including them in the Second Schedule of the RBI Act, of 1934. Banks need to fulfil certain criteria and meet regulatory standards to achieve this status.
What types of banks can be scheduled banks?
Various types of banks can be scheduled, including public sector banks, private sector banks, foreign banks, regional rural banks, cooperative banks, small finance banks, and payment banks, depending on the country’s regulatory framework.
What services do scheduled banks provide?
Scheduled banks offer a wide range of banking and financial services, including accepting deposits, extending loans, facilitating government transactions, providing payment and settlement services, and more.
Are all scheduled banks commercial banks?
No, while many scheduled banks are commercial banks, not all of them are. Scheduled banks encompass a broader range of banking institutions, including cooperative banks, regional rural banks, and specialized banks like payment banks.
What is the role of scheduled banks in the economy?
Scheduled banks play a critical role in the economy by acting as financial intermediaries, supporting economic growth, implementing monetary policies, and providing essential payment and settlement services.
How do scheduled banks contribute to financial inclusion?
Scheduled banks often have a widespread branch network, making banking services accessible, even in remote areas. They support the government’s financial inclusion initiatives by providing services to underserved populations.
Can scheduled banks extend credit to individuals and businesses?
Yes, scheduled banks are significant contributors to credit creation. They extend loans and credit to various sectors, including individuals, small businesses, large corporations, and government entities.
What is the difference between scheduled banks and non-scheduled banks?
Scheduled banks are regulated and included in the central bank’s Second Schedule, while non-scheduled banks are not subject to the same level of regulation. Scheduled banks have more privileges, such as accepting demand deposits and participating in interbank clearing systems.

What is a scheduled bank?

A scheduled bank is a financial institution authorized by the central bank to operate and offer banking services to the public.

How is a scheduled bank different from other banks?

Scheduled banks are listed in the Second Schedule of the Reserve Bank of India Act, 1934, granting them certain privileges and functions, unlike non-scheduled banks.

What services does a scheduled bank provide to customers?

Scheduled banks offer a wide range of services including accepting deposits, granting loans, providing overdraft facilities, issuing credit cards, and facilitating electronic fund transfers.

Are scheduled banks regulated by any authority?

Yes, scheduled banks are regulated by the central bank or the monetary authority of the respective country to ensure compliance with banking and financial regulations.