Banks implicate the financial institution that takes public deposits and extends credit to those who need it. They are a substantial part of the financial system, which assists in general economic development. These are generally classified as planned and unplanned banks in India, governed by the Banking Regulation Act of 1949, in which the banks in program they include all commercial banks such as national, foreign, development, cooperative and regional rural banks.
At the other extreme, unclassified banks are banks that do not comply with the rules prescribed by the Reserve Bank of India (RBI). In this excerpt from the article, you can find out about all the relevant differences between planned and unplanned banks in India.
|Sense||The planned banks are a banking company whose minimum paid-up capital Rs. 25 lakh and does not harm the interest of depositors.||Non-scheduled banks are banks that do not comply with the rules specified by the Reserve Bank of India, or claim banks that do not fall into the category of scheduled banks.|
|Second program||Listed in the second program.||Not listed in the second program.|
|Cash Reserve Ratio||Maintained with RBI.||Kept with yourself.|
|Borrowing||Scheduled banks are authorized to borrow money from the RBI for regular banking purposes.||Unscheduled banks are not allowed to borrow money from the RBI for regular banking purposes.|
|come back||To be presented periodically.||No provision for sending periodic returns.|
|Clearinghouse members||Can become a member of the clearing house.||He cannot become a member of the clearing house.|
Definition of Bank Scheduled
The banks planned as the name suggests are banks, which are accounted for in the second program of the Reserve Bank of India (RBI) law of 1934. To qualify as a scheduled bank, the bank should comply with the following conditions:
- The minimum total value of the paid-up capital and reserve must be Rs. 25 lacs.
- The bank requests that the central bank be satisfied that its business is not carried out in such a way as to harm the interests of depositors.
- The bank must be a company rather than a sole proprietorship or a partnership company.
The scheduled banks enjoy some rights such as:
- Right to receive refinancing from the apex bank
- Titled for the structure of the currency chest.
- Right to become members of the clearing house
However, they are required to fulfill certain obligations such as maintaining an average daily CRR (Cash Reserve Ratio) balance with the central bank at the rates specified by it. Add to that; these banks must submit returns at regular intervals to the central bank subject to the rules of the Reserve Bank of India Act, 1934 and Banking Regulation Act, 1949.
Types of banks
Definition of unplanned bank
The unplanned bank refers to banks that are not listed in the Reserve Bank of India's second program.
In more precise terms, banks that do not comply with the provisions specified by the central bank, pursuant to the Reserve Bank of India Act, 1934, or according to specific functions, etc. Or in the opinion of the RBI, they are unable to serve and protect the interest of the depositor, they are known as unscheduled banks.
Unplanned banks are also required to maintain the cash reserve requirement, not with the RBI, but with themselves. These are local banks.
Key differences between planned and unplanned banks
The difference between planned and unplanned banks can be clearly traced in the following premises:
- A banking company whose paid-up capital Rs. 25 lacs or more and does not harm the interest of depositors, called as a scheduled bank. Otherwise, non-scheduled banks are banks that are unable to comply with the supply of RBI, for scheduled banks.
- The programmed banks are those covered in the second Reserve Bank program, while the non-scheduled banks are the banks that are not covered in the second Reserve Bank program.
- The planned banks must maintain liquidity reserves with the RBI, according to the rates established by it. On the other hand, the unscheduled bank must also maintain liquidity reserves, but only with themselves.
- Scheduled banks have the right to borrow money from the central bank for regular banking purposes. By contrast, non-scheduled banks do not have the right to borrow money from the central bank for regular banking purposes. However, in abnormal conditions, they can request housing from the central bank.
- Scheduled banks must submit periodic returns to the Reserve Bank of India. By contrast, there is no such requirement for periodic returns to be submitted to the central bank in the case of non-scheduled banks.
- Scheduled banks have the right to become members in the clearing house, while none of these facilities are allowed to non-scheduled banks.
When it comes to privileges, scheduled banks are ahead of unplanned banks. Scheduled banks receive remittances through the offices of the Reserve Bank of India and its agents, free of charge or at discounted rates. In addition, the central bank loan services on the presentation of documents. These services are not provided to non-scheduled banks.