Banks in India

In India, there are various banks. The operations of these banks are the governed by the Reserve bank of India.

What are the different Types of Indian Banks?

The Reserve bank of India classifies Indian banks into three types. They are:

1. Pubic Sector Banks
2. Co-operative Banks
3. Private sector Banks

Public Sector Banks

Public sector banks are the public banks. The majority of shares of these banks are vested in the hands of Government. Many of the oldest banks in India are Public sector banks.

State Bank of India, Bank of Baroda, Syndicate Bank and Canara Bank are some of the prominent banks in this category. They are charging normal or reasonable charges for all the services offered.

Advantages of Public Sector Banks

• Public sector banks are supported by the Government of India; therefore the depositors’ money is safe.
• These banks offer better services compared to all other banks in India.
• Public Provident Fund (PPF) accounts can be opened at State Bank of India branches which offer tax free returns.

Disadvantages of Public Sector Banks

• The drawback of these banks is that they are not as modern as private section banks.
• Many of the branches of these banks are now slowly introducing internet banking, ATM cards and other facilities.
• They lack IT requirements.
• They are not properly interconnected as per the current trends of the market and hence creates problem in customers.

Co-operative Banks

Co-operative banks are generally designed for the convenience of the general public, with an option of working on Sundays. They offer a higher rate of interest compared to other banks.

Abhyudaya Bank, Bharat Co-op Bank is some of the major co-operative banks in India.

Advantages of Co-operative banks

• They offer a higher rate of interest compared to other banks.
• Most of the banks are open in the evening. That makes it easy for working people.

Disadvantages of Co-operative banks

• Mutual funds dividends can’t be directly credited in these banks.
• If no cash deposit or withdrawal is made in the account of the customer for more than 1 year the account becomes inactive. Co-operative banks usually charge an additional amount to reactivate the account.

Because of the mismanagement by the directors of these banks, many depositors lost their money and many banks have shut down. The customers having accounts in such a bank should be in touch with the bank personal or the managers so that their accounts are not mismanaged.

Private Banks

Private Banks consist of ICICI Bank, HDFC bank, IDBI bank and UTI bank. These banks were established less than 15 years ago.

Advantages of Private Banks

• Private Banks provides optimum use of technology like Internet banking, ATM and phone banking.
• The customer can access their account from any branches in India usually at a charge.
• Mutual funds can directly credit dividends, redemption amounts to customers’ account.
• The minimum balance required for a saving account is Rs 5000 that is much higher than the other banks in India.
• The customer need to maintain an average quarterly balance for three months period and their bank charges are large-Rs 250-Rs 500.
• The bank usually sent their statements by post every month or every 3 months along with notification about their changes in bank charges.

Disadvantages of Private Banks

• Private Banks runs like a business. Eventhough, there are lots of advantages to this, the major dissapointment comes on the service charges. Most of the time, the charges associated with private section banks are higher.
• The bank usually takes any action only if the payees account has been debited. If the customer deposited a cheque and it is not credited in the account the bank usually take 3-4 days to find out where the cheque has disappeared.

The customer should go through the financial status of the bank before keeping large amounts in these banks.

Foreign Banks in India

Like Citibank, HSBC and Standard Chartered are some of the foreign banks operating in India. Indian government has a strict policy of not allowing more branches to Foregin Banks.

Advantages & Disadvantages of Foreign Banks

• Foreign Banks & Private Banks cover 65% of the foreign exchange transactions in India.
• They have limited number of branches.
• The function like Electronic transfer is offered by these banks to other banks, but there is no way to know who has sent the amount.
• They also have very high charges.

Indian Banking Ombudsman

A scheme called Banking Ombudsman Scheme was introduced by the Reserve Bank of India for solving problems related to the services of banks in India. So if you have any problem with any of the services offered, you can log in a complaint to the banking Ombudsman.

In India, you will find a banks suiting your needs. If you want all the technology advanced features like online banking it would be better to go for Private Banks. On the other hand if you want good care of every paise that you earn go for co-operative or public banks.