What are Schedule Banks?
There are many banks under the categorization of the Indian banking system such as Private banks, Public banks, Scheduled banks, non-scheduled banks etc.
Schedule Banks refers to all those banks recognized and listed by the Reserve Bank of India (RBI) under the Second Schedule of the Reserve Bank of India Act, 1934. The RBI has stated numerous obligations that schedule banks need to fulfil such as they must maintain a minimum paid-up capital and reserves as stipulated by the RBI.
There are 2 principle facilities for every schedule bank:
- Schedule banks are eligible for debts or loans from the RBI at the bank rate
- The membership of clearing house is acquired by schedule banks
Types of Schedule Banks
Following is the classification of banks listed under schedule II.
- Public Sector Banks
- Private sector banks
- Regional rural banks
- Foreign banks
- Small finance banks
- Payment banks
Benefits of Schedule Banks
- Access to RBI Facilities: Scheduled Banks have access to various facilities provided by the RBI, including borrowing from the RBI’s discount window and participating in the central bank’s monetary policy operations.
- Inclusion in Clearing System: They are eligible to participate in the clearing and settlement system managed by the RBI, facilitating efficient inter-bank transactions.
- Credibility and Trust: Being recognized by the RBI enhances their credibility and trustworthiness among customers and investors.
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