Difference between Scheduled banks & Non-Scheduled Banks

Difference between Scheduled banks & Non-Scheduled Banks

Difference between Scheduled banks & Non-Scheduled Banks:

 

Bank is a financial institution that takes deposits from public and gives loan to them who need it. They are a crucial part of the financial system which helps in overall economic development. They are broadly classified as Scheduled Banks and Non-scheduled banks in India & regulated under the Banking Regulation Act 1949.

 

Scheduled Banks:

Scheduled banks are those banks that have been included in the second schedule of the Reserve Bank of India Act, 1934. Scheduled banks are all Commercial banks, Small Finance Banks, Payment banks & Co-operative Banks that follow the norms directed by the Reserve Bank of India(RBI).To become a Scheduled banks it should meet the following conditions:

  1. Scheduled banks should have the minimum paid up capital of Rs. 5 Lakhs
  2. Scheduled banks cannot not harm the interest of the depositors
  3. Scheduled banks has to submit returns to the RBI periodically
  4. Scheduled banks have to maintain the Cash Reserve Ratio(CRR) with RBI
  5. The Bank has to be a Corporation & not Sole-proprietorship or Partnership Firm.

Also Scheduled banks enjoy the following benefits:

  1. Scheduled banks can borrow money from RBI for any banking purpose or any financial emergency
  2. Scheduled banks can become the member of the clearing house.

 

Non-Scheduled Banks:

Non-Scheduled banks are those banks that have not been included in the second schedule of the Reserve Bank of India Act, 1934. Non-scheduled banks are those banks that do not follow norms directed by the Reserve Bank of India (RBI).They are not bound to protect the depositor’s Interest. They are also not required to maintain the Cash Reserve Ratio(CRR) with the RBI.

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The main differences between Scheduled Banks & Non-Scheduled Banks are as follows:

  1. Scheduled banks are those banks that have been listed in the second schedule of the Reserve Bank of India Act, 1934.Non-scheduled are those banks that are not listed in second the Reserve Bank of India Act,1934
  2. A Scheduled Bank is a bank where the minimum paid up capital is Rs. 5 Lakhs or more whereas Non-Scheduled banks are those banks which doesn’t meet the criteria of Reserve bank of India (RBI)
  3. Scheduled banks can become the member of the clearing house but the Non-Scheduled banks cannot become the member of the clearing house.
  4. Scheduled Banks has to maintain Cash Reserve Ratio(CRR) with the RBI but the Non-Scheduled banks doesn’t need to maintain any Cash reserve Ratio with the RBI
  5. Scheduled bank can borrow money from RBI in case any financial emergency but the Non-Scheduled banks cannot borrow money from RBI.
  6. Scheduled banks has to submit periodic returns to the RBI but the Non-Scheduled banks doesn’t submit any such periodic returns to the RBI.