Scheduled vs Non-Scheduled Banks in India: List, Features & Differences
List of Scheduled and Non-Scheduled Banks The list of scheduled and non-scheduled banks can change as banks are added to or removed from the relevant categories.
Priyanka Bali The Indian banking system consists of different types of banks that serve individuals, businesses, and government institutions. Based on their inclusion in the Second Schedule of the Reserve Bank of India Act, 1934, banks are broadly classified as scheduled banks in India and non-scheduled banks in India. Understanding the difference between these two categories can help customers choose suitable banking services.
What Are Scheduled Banks in India?
Scheduled banks are banks included in the Second Schedule of the Reserve Bank of India Act, 1934. To qualify as a scheduled bank, a bank generally needs to meet certain conditions prescribed under the Act, including maintaining the required level of capital and reserves and ensuring that its activities do not adversely affect depositors' interests.
Scheduled banks have access to certain facilities from the Reserve Bank of India (RBI), subject to applicable rules and conditions. They may also participate in various banking and financial operations within the regulatory framework.
The major categories of scheduled banks include:
- Scheduled commercial banks
- Scheduled cooperative banks
- Public sector banks
- Private sector banks
- Foreign banks
- Regional Rural Banks
- Small Finance Banks
Examples of scheduled commercial banks include State Bank of India, Bank of Baroda, HDFC Bank, ICICI Bank and other eligible banks included in the RBI's schedule.
What Are Non-Scheduled Banks in India?
Non-scheduled banks in India are banks that are not included in the Second Schedule of the RBI Act, 1934. These banks operate under the applicable banking regulations but do not receive all the facilities available specifically to scheduled banks.
Non-scheduled banks generally have a smaller operational scale and may have more limited geographical or financial operations. They are still subject to regulatory requirements and must comply with applicable banking laws.
List of Scheduled and Non-Scheduled Banks
The list of scheduled and non-scheduled banks can change as banks are added to or removed from the relevant categories. Scheduled banks form the larger part of India's formal banking system and include major public sector, private sector, foreign, regional rural and other eligible banks.
Non-scheduled banks are comparatively fewer and may include certain cooperative or local banking institutions that do not meet the criteria for inclusion in the Second Schedule.
Key Differences Between Scheduled and Non-Scheduled Banks
| Basis | Scheduled Banks | Non-Scheduled Banks |
|---|---|---|
| RBI Schedule | Included in the Second Schedule | Not included in the Second Schedule |
| Regulatory framework | Operate under applicable RBI regulations | Operate under applicable banking regulations |
| RBI facilities | Eligible for specified RBI facilities, subject to conditions | Generally do not receive the same scheduled-bank facilities |
| Scale | Generally larger and more widespread | Generally smaller in scale |
| Types | Commercial and cooperative categories | Mostly smaller banking institutions |
| Recognition | Specifically listed under the Second Schedule | Not listed under the Second Schedule |
Why Is the Classification Important?
The distinction between scheduled and non-scheduled banks is important because it indicates the regulatory classification and eligibility of a bank for certain RBI facilities. However, customers should not select a bank solely based on whether it is scheduled or non-scheduled.
Before opening an account or applying for a loan, customers should compare interest rates, fees, deposit products, loan terms, digital banking facilities, customer service and accessibility.
Conclusion
Scheduled and non-scheduled banks are important components of India's banking structure. Scheduled banks in India are included in the Second Schedule of the RBI Act and generally have access to specified RBI facilities, while non-scheduled banks in India are not included in that schedule. Checking the latest list of scheduled and non-scheduled banks and comparing their services can help customers make informed banking decisions.
