Chapter: Business Science - Banking Financial Services Management


Types of banks

Types of banks
Functions: controller of credit, banker‘s bank issuing currency

Types of banks

         Central Bank

    Apex controlling institution in the banking and financial system.



    controller of credit,


    banker‘s bank


    issuing currency


2. Commercial Banks

    Accepts deposits from the general public


 loans to the households, the firms and the government. Characteristics


    Acceptance of deposits from public


    For the purpose of lending or investment


    Repayable on demand or lending or investment.


    Withdrawal by means of an instrument, whether a cheque or otherwise.


3. Development Banks


Ø It is considered as a hybrid institution (functions of a finance corporation and a development corporation).


Ø To provide technical, financial and managerial assistance for the implementation of project.

ØIndustrial Development Bank on India‘ (IDBI)

4. Co-operative Banks


Ø To provide finance to agriculture.

Ø They aim at developing a  system of credit.

In India there are three wings of co-operative credit system namely


Ø Short term,

Ø Medium-term,

Ø Long term credit.

5. Specialised Banks

    Special act of parliament.


    ‗National Bank for Agricultural and Rural development‘ (NABARD) established in 1982


    In 1990 a special bank named small industries development Bank of India (SIDBI)


was established.


6. Indigenous Bankers


    To provides long term, medium term and short term loan at the higher interest rate


    These banks can be found everywhere in cities, towns, villages.


7. Rural Banking


 A set of financial institution engaged in financing of rural sector is termed as ‗Rural Banking‘.


 The polices of financing of these banks have been designed in such a way so that these institution can play catalyst role in the process of rural development.


8. Saving Banks


Ø These banks perform the useful services of collecting small savings commercial banks also run ―saving bank‖ to mobilise the savings of men of small means.


Ø Different countries have different types of savings bank

viz. Mutual savings bank, Post office saving, commercial saving banks etc.


9. Export - Import Bank

    Established for the purpose of financing foreign trade.


    Medium and long-term financing.


Ø The Export-Import Bank of India (EXIM Bank)       January 1, 1982.


10. Foreign Exchange Banks

    These banks finance mostly to the foreign trade of a country.



 They also buy and self foreign currencies and help businessmen to convert their money into any foreign currency they need.


 Over a dozen foreign exchange banks branches are working in India have their head offices in foreign countries.



