Commercial Banks in India
The commercial banks in India are further classified into the following:
| Types | Meaning |
| Public Sector Banks | Commercial banks in which the government holds majority of the shares in the bank (more than 50%) are the public sector banks. Punjab National Bank, Canara Bank, Bank of Baroda, etc. are the examples of public sector banks in India |
| Private Sector Banks | Commercial banks in which individual shareholders possess higher equity stakes are called private sector banks. The functions and activities of these banks are similar to that of public sector banks. A few aspects like the charges imposed, and duration and description of the services of a private sector bank is different from that of public sector banks. Axis Bank, ICICI Bank, HDFC Bank, etc. are the most eminent private sector banks in India. |
| Small Finance Banks | These banks aim to provide financial inclusion to the underprivileged masses in the country. Such banks also encompass small and micro business units, various entities in the unorganized sector, marginal craftsmen, and small farmers, etc. Janalakshmi Small Finance Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank are some of the small finance banks in the country. |
| Regional Rural Banks | These banks have quite specific mandates like providing loans to small farmers and marginal workers, agricultural labourers, small entrepreneurs, craftsmen, etc. Such banks are set up following the recommendations of the Narasimham Committee on Rural Credit. Some of the Regional Rural Banks in India are Pragathi Krishna Gramin Bank, Kerala Gramin Bank, and so on. |
The general awareness section in most banking exams focus a lot on the commercial banks and the various functions they undertake. Let us learn more about the commercial banks in India and their functions in detail as described below.
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Functions of Commercial Banks
The various functions of the commercial banks include:
Accepting Deposits from their customers is one of the chief functions of the commercial banks. These deposits can be accepted from both individuals as well as business organizations. Savings deposits, time deposits, and current deposits are the ways through which funds can be deposited in the commercial banks.
Providing Loans is another activity undertaken by the commercial banks. These are the same funds that the bank received by way of deposits. Banks earn profits by using the money deposited by its customers and investing them in loans. However, extending loans may be of different kinds like cash credit, overdraft, discounting bills, advances, etc.
Fund Remittance or money transfer is also carried out by commercial banks. The funds can be transferred through various modes like NEFT, draft pay orders, IMPS, RTGS, etc. as per the specified commissions.
Cheque Issuance is done by the commercial banks in order to help its customers withdraw funds. Using a cheque, customers can withdraw the money for their own use or for the payee. A cheque can be either bearer or crossed. While a bearer cheque can be encashed over-the-counter, a crossed cheque can be deposited in the payee’s account only.
General Utilities are also provided by the commercial banks. These include traveller cheques issuance, facility for credit and debit card, locker facility for safe custody, etc.
Services as an Agent include collection of cheques, insurance premium payment, drafts and bills, trustee or executor or customers’ estate, and so on.
