Unit 1: Banking structure and services

• Scheduled vs non-scheduled: scheduled banks are in the Second Schedule of the RBI Act — eligible for RBI facilities.

Commercial banks

• Public sector banks: majority government-owned — SBI and 11 nationalised banks (after the 2019–20 mergers). Nationalisation in 1969 (14 banks) and 1980 (6 banks).
• Private sector banks: old (pre-1993) and new (HDFC Bank, ICICI Bank, Axis Bank, Kotak).
• Foreign banks: branches or wholly owned subsidiaries (Citibank's retail business sold to Axis in 2023; SBM, DBS India).
• Organisation: head office → zonal/regional offices → branches; board of directors; functional departments (credit, treasury, retail, risk, IT).

Regional Rural Banks (RRBs)

• Set up under the RRB Act, 1976 (Narasimham Working Group, 1975) to provide credit to small farmers, labourers and artisans in rural areas.
• Ownership: Central Government 50%, sponsor bank 35%, state government 15%.
• Amalgamated over time to improve viability (about 28 RRBs after the 2025 consolidation — "one state, one RRB").

Co-operative banks

• Urban co-operative banks (UCBs): serve urban and semi-urban areas; under dual control (RBI for banking functions, Registrar of Co-operative Societies for management) — strengthened by the Banking Regulation (Amendment) Act, 2020.
• Long-term credit: State/Primary Co-operative Agriculture and Rural Development Banks.
• Features: owned by members, one member one vote, service motive, cheaper credit.

New-generation banks

• Small Finance Banks (2015): small loans to unserved segments; 75% of ANBC to priority sector.
• Payments Banks (2015): deposits up to ₹2 lakh per customer, no lending — Airtel Payments Bank, India Post Payments Bank.

• Trends: digital retail lending, co-lending with NBFCs, supply-chain finance, transaction banking platforms.

• Universal bank: a single financial entity offering commercial banking, investment banking, insurance, mutual funds and other financial services ("financial supermarket").
• India: recommended by the R.H. Khan Committee (1997) and Narasimham Committee II; ICICI–ICICI Bank reverse merger (2002) and IDBI Bank created universal banks; services offered mainly through subsidiaries (SBI Life, HDFC AMC).
• Advantages: economies of scope, one-stop shop, diversification of income, better use of customer data. Concerns: conflicts of interest, concentration of risk, complex supervision, contagion.

• Credit Information Companies (Regulation) Act, 2005 (CICRA): CICs licensed by RBI — TransUnion CIBIL (the first, 2000), Experian, Equifax, CRIF High Mark.
• Role: collect credit data from lenders, produce credit information reports (CIR) and credit scores (300–900), help lenders assess risk, reduce defaults, speed up loan approvals.
• Rights of customers: free full credit report once a year from each CIC; dispute resolution within 30 days; compensation for delays (RBI, 2024 norms).

• RBI's Fair Practices Code for lenders and guidelines on recovery agents:
• Recovery agents must be verified and trained; carry identity and authority letters.
• Contact borrowers only between 8 a.m. and 7 p.m.; no harassment, intimidation, threats, public humiliation or contacting family and friends to shame.
• Give notice before repossession; follow due process (SARFAESI where applicable).
• Banks are responsible for agents' conduct; complaints through grievance redressal and the RBI Integrated Ombudsman.
• Digital lending guidelines (2022): loan disbursal and repayment only between the borrower's and lender's accounts; key fact statement (KFS); no automatic increase in credit limits; cooling-off period.