MONEY AND BANKING PART 25
TYPES OF COMMERCIAL BANKS Commercial banks are of two types: 1. SCHEDULED BANKS 2. NON SCHEDULED BANKS
NON-SCHEDULED BANKS Non Scheduled bank is a bank that is not included in the Second Schedule of the RBI ACT 1934 They do not comply with the provisions specified by the central bank, within the meaning of the RBI Act 1934, or as per specific functions. They have to maintain a CRR, but not with the RBI. They have to keep it with themselves. These are local area banks.
DIFFERENCE Scheduled banks and non scheduled banks are different in many aspects. Such as 1. A banking corporation whose paid up capital is Rs. 25 lacs or more and does not harm the interest of the depositors, is called as Scheduled bank. Unlike, non-scheduled banks are the banks which do not require any such minimum amount of paid up capital.
2. Both the banks have to keep a minimum amount of CRR. A scheduled bank have to deposit it to the RBI but the Non scheduled banks have to keep it with themselves. 3. A scheduled bank is mentioned in the Second Schedule of RBI Act whereas a non scheduled bank is not included.
4. A scheduled bank must submit its periodic returns to the RBI. There is no such compulsion for the non schecdaled banks. 5. Scheduled banks are entitled to borrow money from the central bank for regular banking purposes. Conversely, non-scheduled banks are not entitled to borrow money from the central bank for regular banking purposes.
6. Scheduled banks have the right to become the member in clearing house, while no such facility is allowed to non-scheduled banks. 7. Scheduled banks do care about the interests of the depositors while Non-Scheduled Banks don't do so because they are bound to follow the guidelines of RBI.
CONCLUSION Scheduled banks and Non-scheduled banks are different not only in their functioning but also in the regulations made by RBI However, a scheduled bank gets more privileges than a non scheduled bank. Scheduled banks get remittances through the offices of the RBI and its agents, for free or at concessional rates. Moreover, borrowing facilities by Central Bank on the submission of the documents. Such facilities are not provided to the non-scheduled banks.