Scheduled banks are banks that are listed in the 2nd schedule of the Reserve Bank of India Act, 1934. The bank’s paid-up capital and raised funds must be at least Rs5 lakh to qualify as a scheduled bank. Scheduled banks are liable for low-interest loans from the Reserve Bank of India and membership in clearinghouses.
They must, however, meet certain requirements, such as maintaining an average daily CRR (Cash Reserve Ratio) balance with the central bank at the rates set by it. The RBI allows Scheduled Banks to raise debts and loans at bank rates.
All commercial banks, including nationalized, international, cooperative, and regional rural banks, fall under scheduled banks. Scheduled Commercial Banks can be divided into: Scheduled Commercial Public Sector Banks SBI and its associates Scheduled Commercial Private Sector Banks Old Private Banks New Private Sector Banks Scheduled Foreign Banks in India the benefits enjoyed by scheduled banks are often denied to non-scheduled banks.
These banks have certain privileges and benefits, such as:
- The ability to obtain a refinancing facility from the central bank.
- Access to currency storage facilities.
- Membership in the clearinghouse is automatic
Non-scheduled banks, by definition, are those that do not adhere to the RBI’s regulations. They are not mentioned in the Second Schedule of the RBI Act, 1934, and are therefore deemed incapable of serving and protecting depositors’ interests.
Non-scheduled banks must also meet the cash reserve requirement, but not with reserve banks, but with themselves. They are generally smaller in size and have a range of influence that is somewhat narrow. They are risky to do business with due to their financial limitations. The reserve capital of these banks is less than 5 lakh rupees.
There are 11 Non-Scheduled State Cooperative Banks as described by RBI. Furthermore, 1500 Non-Scheduled Urban Co-operative Banks as described by RBI