Types of Banks in India – A Complete Guide
India has a diverse banking structure that caters to various segments of society — from urban corporate businesses to rural farmers. Understanding these types is essential for banking exam aspirants and anyone interested in India’s financial system.
1. Reserve Bank of India (RBI)
The Reserve Bank of India is the central bank of India, established in 1935. It regulates the entire banking system and formulates monetary policy.
- Issues currency
- Controls inflation and money supply
- Acts as banker to the Government and banks
2. Commercial Banks
These are profit-oriented institutions that accept deposits and offer loans. They are categorized as:
a. Public Sector Banks
Owned majorly by the Government of India (more than 50% stake).
- Examples: State Bank of India (SBI), Bank of Baroda, PNB
b. Private Sector Banks
Owned and operated by private entities and shareholders.
- Examples: HDFC Bank, ICICI Bank, Axis Bank
c. Foreign Banks
Headquartered abroad, but operate through branches in India.
- Examples: Citibank, HSBC, Standard Chartered
d. Regional Rural Banks (RRBs)
Set up in 1975 to serve rural areas with banking and credit facilities.
- Jointly owned by Central Government, State Government, and a Sponsor Bank.
3. Cooperative Banks
These are community-based banks owned by members and follow cooperative principles.
- Offer services to farmers, artisans, and small traders
- Types: Urban Cooperative Banks and State Cooperative Banks
4. Small Finance Banks
Aimed at financial inclusion of underserved sections such as small businesses and low-income groups.
- Examples: AU Small Finance Bank, Equitas SFB, Ujjivan SFB
5. Payments Banks
These are niche banks that accept deposits up to ₹2 lakh and offer digital banking services.
- Cannot issue credit cards or offer loans
- Examples: Paytm Payments Bank, India Post Payments Bank, Airtel Payments Bank
6. Development Banks
These provide long-term financing to sectors like industry, agriculture, exports, etc.
- Examples: NABARD, SIDBI, EXIM Bank
7. Specialized Banks
Banks set up for a specific sector or purpose under the regulation of RBI or other authorities.
- NABARD: Agriculture and Rural Development
- EXIM Bank: Export and Import financing
- NHB: National Housing Bank for housing finance
Conclusion
India’s banking structure is designed to support all sections of the economy — urban and rural, large enterprises and small borrowers. Understanding the different types of banks helps in building a strong foundation for competitive exams and personal finance knowledge.