Banking Awareness Basics: Types of Banks in India and How They Are Regulated
Scheduled and non-scheduled banks, public, private and foreign banks, RRBs, cooperatives, small finance banks and payments banks, and who regulates them.
On this page
IBPS and SBI general awareness papers expect you to sort banks by who owns them and who supervises them. The Second Schedule of the RBI Act lists scheduled banks. A scheduled bank meets the conditions in section 42 and is eligible for certain RBI facilities. A bank that is not on that list is non-scheduled. Most questions are about scheduled banks.
| Type | Typical role | Regulator to remember |
|---|---|---|
| Public sector bank | Majority owned by the government | RBI |
| Private sector bank | Majority private ownership | RBI |
| Foreign bank | Incorporated abroad, branches in India | RBI |
| Regional rural bank | Rural credit, sponsored by a public sector bank | RBI; NABARD has a development role |
| Cooperative bank | Urban or rural cooperatives | RBI for banking regulation; NABARD for rural cooperatives’ development |
| Small finance bank | Basic banking for small borrowers | RBI |
| Payments bank | Deposits and payments, not ordinary loans | RBI |
Limits that show up in questions
Payments banks can accept demand deposits and issue debit cards. They cannot issue credit cards or lend as a normal commercial bank does. Their deposit cap per customer is a current-affairs figure set by the RBI, so confirm the latest circular. Small finance banks can lend, with a priority-sector requirement that is higher than for universal banks. Regional rural banks were created under the Regional Rural Banks Act, 1976. Their capital is shared by the central government, the State government, and the sponsor bank.
NABARD is not a commercial bank that serves the public at a branch counter. It refinances and supervises rural credit institutions. SEBI regulates the securities market, not bank deposits. DICGC, a subsidiary of the RBI, insures deposits up to the limit notified under the DICGC Act. Check that limit before the exam; it has been revised before.
Practice MCQs
1. Scheduled banks are those: (a) listed in the Second Schedule of the RBI Act (b) owned only by States (c) regulated by SEBI (d) banned from deposits
Answer: (a).
2. A payments bank generally cannot: (a) open savings accounts (b) issue debit cards (c) give ordinary loans like a commercial bank (d) offer payments
Answer: (c).
3. NABARD is mainly concerned with: (a) stock-exchange listings (b) rural credit and agriculture refinance (c) income tax (d) railways
Answer: (b).
4. Regional rural banks were set up under an Act of: (a) 1949 (b) 1969 (c) 1976 (d) 1991
Answer: (c). Regional Rural Banks Act, 1976.
5. Deposit insurance for bank deposits is provided by: (a) SEBI (b) DICGC (c) IRDAI (d) PFRDA
Answer: (b). DICGC is a subsidiary of the RBI.
6. The securities market regulator in India is: (a) RBI (b) NABARD (c) SEBI (d) NHB
Answer: (c).
Practice a quiz
The free practice set on the homepage needs no account. Use it after you read, while the facts are still fresh.
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