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RBI Update its List of Scheduled Banks

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    10th Jan, 2022

Context

The Reserve Bank of India (RBI) has announced the inclusion of Airtel Payments Bank Ltd. in the Second Schedule to the Reserve Bank of India Act, 1934.

What are Scheduled Banks?

  • Any bank which is listed in the 2nd schedule of the Reserve Bank of India Act, 1934 is considered a scheduled bank. 
  • “Banks which have been included in the second schedule of the RBI Act, 1934”. The banks included in this category should fulfil two conditions-
    • The paid up capital and collected fund of the bank should not be less than Rs. 5 lac.
    • Any activity of the bank will not adversely affect the interests of the depositors.
  • The Schedule consists of those banks which satisfy various parameters, criteria under clause 42 of this act.
  • The list includes-
    • The State Bank of India and its subsidiaries (like State Bank of Travancore)
    • All nationalised banks (Bank of Baroda, Bank of India etc)
    • Regional rural banks (RRBs)
    • Foreign banks (HSBC Holdings Plc, Citibank NA)
    • Some co-operative banks
  • These also include private sector banks, both classified as old (Karur Vysya Bank) and new (HDFC Bank Ltd).
  • To qualify as a scheduled bank, the paid-up capital and collected funds of the bank must not be less than Rs5 lakh. 
  • Scheduled banks are eligible for loans from the Reserve Bank of India at bank rate, and are given membership to clearing-houses.
  • Scheduled Commercial Banks in India are categorised in 5 different groups according to their ownership / nature of operation.These bank groups are: 
    • State Bank of India 
    • Nationalised Banks, 
    • Regional Rural Banks, 
    • Foreign Banks 
    • Other Indian Scheduled Commercial Banks (in the private sector).

About Airtel Payments Bank

  • It is among the fastest-growing digital banks in the country, with a base of 115 million users.
  • It offers a suite of digital solutions through the Airtel Thanks app and a retail network of over 500,000 neighbourhood banking points.

What are Payment Banks?

  • Payment banks were established to promote financial inclusion by offering; ‘modest savings accounts and payments/remittance services to migratory labour workforce, low-income households, small enterprises, other unorganised sector entities, and other users.’
  • These banks can accept a restricted deposit, which is now capped at Rs 200,000 per person but could be raised in the future.
  • These banks are unable to provide loans or credit cards. Banks of this type can handle both current and savings accounts.
  • Payments banks can provide ATM and debit cards, as well as online and mobile banking.
  • They will not lend to customers and will have to deploy their funds in government papers and bank deposits.