Banks that are listed under the Reserve Bank of India Act, 1934's second schedule, are referred to as scheduled banks.To be considered a scheduled bank, the sum of raised funds and paid-up capital of a bank should be Rs 5 lakh at the minimum. The Reserve Bank of India is obligated to provide scheduled banks with low-interest loans and membership in clearing houses.
However, they must adhere to certain conditions, such as keeping an average daily CRR (Cash Reserve Ratio) balance with the central bank at the rates set by the institution. The Reserve Bank of India permits Scheduled Banks to borrow money at bank rates.
Scheduled banks include all commercial banks, including nationalized, global, cooperative, and regional rural banks. Various categories of Scheduled Commercial Banks include: Scheduled Public Sector Commercial Banks SBI and its partners Scheduled Private Sector Commercial Banks Banks, Old Private And New Banks in the Private Sector The benefits obtained by scheduled banks are sometimes withheld from non-scheduled foreign banks in India.
These banks enjoy a number of advantages and privileges, including:
- a central bank's power to provide a refinancing facility.
- access to facilities for storing cash.
- Automatic enrollment in the clearinghouse
Difference between Scheduled Bank & Non-Scheduled Bank
Distinguish between scheduled banks and non-scheduled banks using the characteristics written below:
Their meaning, reserve requirement, safety and security, cash reserve ratio, borrowing, returns, and clearinghouse membership.
- They are listed in the RBI Act's second schedule.
- These meet all RBI standards and have a paid-up capital of Rs. 5 lakh or higher.
- With the RBI, they keep a cash reserve ratio.
- The Reserve Bank of India has granted them permission to borrow money from it.
- They are more financially secure in comparison.
- They are not listed in the RBI Act's second schedule.
- No such prerequisite must be met in order for it to qualify as a non-scheduled bank.
- The CRR sum is kept on hand by them.
- These banks carry greater risk.
Important functions of Scheduled Banks
- Deposits from the public are accepted
- Provide a facility for on-demand withdrawal.
- lending facility
- Fund Transfer
- Release of drafts
- the provision of lockers for clients
- handling foreign exchange
Students can consider scheduled banks because they provide affordable services and frequently don't have a minimum balance requirement. Customers who need access to particular capabilities that aren't offered at scheduled banks or who wish to preserve more control over their money may find that non-scheduled banks are a better option.