SCHEDULED BANKS Flashcards
What are the two conditions that must be satisfied simultaneously for a bank to be classified as a Scheduled Bank?
The two conditions are:
The bank must have a minimum Paid Up Capital and Reserves of ₹5 Lakhs.
The bank must not be conducting its business in a manner that is harmful to its depositors.
What happens when a bank meets the criteria set by the RBI for Scheduled Banks?
When a bank meets the criteria, it is listed in the 2nd Schedule of the RBI Act and is known as a Scheduled Bank.
Define ‘Paid Up Capital’ in the context of Scheduled Banks.
‘Paid Up Capital’ refers to the amount of money a bank has received from shareholders in exchange for shares of stock that have been issued and fully paid for.
Why is it important for a bank to not conduct business in a manner harmful to its depositors?
It is important because the safety of the depositors’ funds is paramount. A bank that operates harmfully could lead to financial losses for the depositors and undermine trust in the banking system.
What is the significance of being listed in the 2nd Schedule of the RBI Act for a bank?
Being listed in the 2nd Schedule of the RBI Act signifies that the bank has met certain financial stability and operational criteria, qualifying it for benefits like access to loans from the Reserve Bank of India at bank rate, and other privileges.
What are the two categories under Scheduled Banks in India?
Scheduled Banks in India are categorized into:
Scheduled Commercial Banks such as SBI, Axis, ICICI.
Scheduled Cooperative Banks like specific state cooperative banks.
How can one find more information about Non-Scheduled Banks?
More information about Non-Scheduled Banks can be obtained from the Reserve Bank of India’s official website, specifically in the section for common persons.
What type of banks are many cooperative banks classified as?
Many cooperative banks are classified as Non-Scheduled Banks.
What is a distinguishing feature of Scheduled Banks?
Scheduled Banks are distinguished by their inclusion in the Second Schedule of the Reserve Bank of India Act, 1934, which allows them access to facilities from the RBI.
What is a significant difference in the operations of Scheduled and Non-Scheduled Banks?
Scheduled Banks are required to maintain a reserve with the RBI, which is not a requirement for Non-Scheduled Banks.
What is the minimum requirement for Scheduled Banks in terms of their operations with the RBI?
Scheduled Banks must engage with the RBI’s operations at least once every fortnight, either by borrowing or depositing funds.
How do Scheduled Banks ensure the protection of depositor interests?
Scheduled Banks are mandated to follow RBI norms, which are designed to safeguard depositor interests and ensure financial stability.
Which type of banks are more likely to get opportunities to handle private sector accounts or government body’s large private bank accounts?
Scheduled Banks are typically afforded more opportunities to open private sector accounts or manage large accounts for government bodies and companies.
Are Non-Scheduled Banks eligible for emergency financial support schemes like PILF (Pillar 3)?
Non-Scheduled Banks are generally not eligible for emergency financial support schemes such as PILF (Pillar 3).
When was Airtel Payments Bank recognized as a Scheduled Bank?
Airtel Payments Bank was categorized as a Scheduled Bank in the fiscal year 2021-22.
