Introduction to Banking Systems and Performance Measurement

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Introduction to Banking Systems and Performance Measurement

In India, the banking function is classified into 2 broad formal classifications

• Commercial Banks
• Co-operative Banks

Commercial banks as a group form the predominant part of the organized banking systems in India. They are further divided into 4 classes based on their method of establishment and pattern of ownership.

Public Sector Banks: These types of banks are one where the majority stake is held by the Government of India. Public sector banks form a large section of the Indian Banking systems. There are currently 27 public sector banks in India.

Private Sectors Banks: The majority of share capital is held by private individuals and corporate. In 1993 as part of the banking reforms process, RBI permitted the private sector to enter into the banking systems.

Foreign Banks: The RBI permits these banks to operate either through branches wholly-owned subsidiaries. Foreign banks have their registered and head offices in a foreign country. However they have branches located in India.

Regional Rural Banks: These banks played a pivotal role in the economic development of the country. The main goal of these banks is to provide finance to the rural areas, like farmers, artisans and small entrepreneurs.