Structure of the Indian Banking System
One regulator, many kinds of bank. Here's the map, and why the lender's type matters in recovery.
India's banking system has one regulator at the top, the Reserve Bank of India (RBI), and several kinds of bank under it: public sector banks, private banks, foreign banks, regional rural banks, small finance banks, payments banks and co-operative banks. Non-banking financial companies (NBFCs) sit alongside them. They lend, but they are not banks.
A recovery agent works for all of these. Knowing which type of lender gave a loan tells you which rules apply and where a borrower can complain, so this topic is the first chapter of the DRA syllabus.
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Key Terms
- Reserve Bank of India (RBI)
- India's central bank, set up on 1 April 1935 under the RBI Act, 1934, and fully owned by the Government of India since 1949. It regulates and supervises banks, issues currency, manages monetary policy, and acts as banker to the government and to banks.
- Banking
- The Banking Regulation Act, 1949 defines it as accepting deposits of money from the public, for lending or investment, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise. Taking deposits from the public is what makes a business a bank.
- Scheduled bank
- A bank listed in the Second Schedule of the RBI Act, 1934. Most banks you deal with are scheduled banks. A bank not on that list is a non-scheduled bank.
- Commercial bank
- A bank run as a business to take deposits and give loans to the general public. Public sector, private, foreign, regional rural, small finance and payments banks are all commercial banks.
Types of Banks in India
A simple map of who is who. RBI's own list of banks follows these groups.
Public sector banks
Who owns it
The Government of India holds the majority. RBI lists 12: State Bank of India and 11 nationalised banks.
Example
SBI, Bank of Baroda, Canara Bank
Private sector banks
Who owns it
Private shareholders
Example
HDFC Bank, ICICI Bank
Foreign banks
Who owns it
Banks from other countries, working through branches or a subsidiary in India
Example
Citibank N.A., Barclays Bank
Regional rural banks (RRBs)
Who owns it
The Central Government, the state government and a sponsor bank
Example
Banks serving farmers and rural areas in one region
Small finance banks
Who owns it
Private shareholders
Example
AU, Equitas, Ujjivan Small Finance Banks
Payments banks
Who owns it
Private or public shareholders
Example
Airtel, India Post, Fino Payments Banks
Co-operative banks
Who owns it
Their members, under co-operative law
Example
Urban, state and district co-operative banks
| Type | Who owns it | Example |
|---|---|---|
| Public sector banks | The Government of India holds the majority. RBI lists 12: State Bank of India and 11 nationalised banks. | SBI, Bank of Baroda, Canara Bank |
| Private sector banks | Private shareholders | HDFC Bank, ICICI Bank |
| Foreign banks | Banks from other countries, working through branches or a subsidiary in India | Citibank N.A., Barclays Bank |
| Regional rural banks (RRBs) | The Central Government, the state government and a sponsor bank | Banks serving farmers and rural areas in one region |
| Small finance banks | Private shareholders | AU, Equitas, Ujjivan Small Finance Banks |
| Payments banks | Private or public shareholders | Airtel, India Post, Fino Payments Banks |
| Co-operative banks | Their members, under co-operative law | Urban, state and district co-operative banks |
What Each Type Is Built to Do
- check_circlePublic and private sector banks offer the full range: deposits, home and vehicle loans, cards, business loans.
- check_circleRegional rural banks focus on farmers, small traders and rural households.
- check_circleSmall finance banks were created under RBI's 2014 guidelines to take deposits and lend to people big banks often miss: small business units, small and marginal farmers, micro and small industries and the unorganised sector.
- check_circlePayments banks take deposits and offer payments, remittances and debit cards. RBI's guidelines say a payments bank cannot lend, so a recovery agent will never collect a loan for one.
- check_circleCo-operative banks are owned by their members. The Banking Regulation Act applies to them with modifications, and state co-operative law also governs them.
- check_circleNBFCs give loans but cannot do everything a bank does. Module D of the syllabus covers them separately.
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Why This Matters in Recovery Work
A borrower who is 95 days late on a two-wheeler loan from an NBFC and a borrower late on a credit card from a public sector bank are both protected by RBI's rules on recovery. But the lender's name, type and grievance officer differ. Always know exactly which lender you are collecting for, and say so when you introduce yourself.
How the DRA Exam Tests This
Expect direct, one-line questions: who regulates banks in India, which Act set up RBI, what a scheduled bank is, which type of bank cannot lend. These are quick marks if you have the basic map in your head.
The common trap is mixing up "regulator" and "lender". RBI does not lend to the public, and an NBFC is not a bank even when it gives the same loan. Another trap: payments banks take deposits but do not give loans.
FAQs
Who controls all banks in India?expand_more
The Reserve Bank of India regulates and supervises banks. It works under the RBI Act, 1934 and the Banking Regulation Act, 1949. Co-operative banks are also governed by co-operative law.
What is the difference between a bank and an NBFC?expand_more
A bank accepts deposits from the public that can be withdrawn by cheque or on demand. An NBFC lends money but is not a bank. Both are regulated by RBI, and both must follow RBI's rules when they use recovery agents.
How many public sector banks are there in India?expand_more
RBI lists 12: State Bank of India and 11 nationalised banks such as Bank of Baroda, Canara Bank and Punjab National Bank.
Can a payments bank give loans?expand_more
No. RBI's licensing guidelines for payments banks say they cannot undertake lending. They take deposits and offer payment and remittance services.
Next steps
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