Banking in India started in the 18th century and had come a long way since inception. Today India has over 150 different banks which serve customers via over one lakh branches.
All Banks in India fall under the purview of RBI ( Reserve Bank of India) and belong to a category below:
- Public Sector Bank
- Private Sector Bank
- Foreign Bank
- Regional Rural Bank
- Cooperative Bank
- Payment Banks
Public Sector Banks ( PSB’s ) are banks where Government of India owns a majority of stake ( over 50% ). Since the government holds a majority in these banks, they are the first to implement various government schemes and are typically ones which receive the government bailout. India today has 21 Public sector banks and biggest is SBI ( State Bank of India ).
Private Sector Banks are banks where private shareholders hold the greater part of equity. ICICI, HDFC and Axis Bank are leaders in private sector banks.
Foreign Banks are banks with headquarters outside India and who came to India to extend their existing businesses. Because foreign banks are funded from outside India then can potentially give more loans to customers in India. Standard Charted Bank is the biggest private sector bank in India.
Regional Rural Bank is local level banking organizations operating in the different States of India. They were created to serve rural areas of India with basic banking and financial services.
Co-operative Bank involves autonomous association of persons united voluntarily to meet common economic, social and cultural needs through a jointly owned & democratically controlled enterprise. Co-operative bank performs all the main banking functions of deposit mobilization, the supply of credit and provision of remittance facilities.
Payment Banks are specialized banks to cater to the lower income groups and small businesses. The primary objective of payments Banks is to increase financial inclusion (to get more people into the banking system) by providing Small Savings Accounts, Payment or remittance services. Customers can open accounts in payment banks and deposit maximum Rs one lakhs in these accounts.
Banks offers various services to its customers like savings & current account, Fixed deposits, credit cards and lots more.
Almost all public and private sector banks in India have been dealing with bad loans on their balance sheets. By some estimates, these loans are approximately 7% of overall GDP for India. The government of India has been working hard with RBI to resolve these issues and GOI expects NPA problem to be substantially resolved by 2022.