Scheduled Status of a Bank

Scheduled Status of a Bank

Subject – Economy

Context – Scheduled status to Paytm Payments Bank

Concept –

• Paytm Payments Bank has been given the scheduled bank status by the Reserve Bank of India.
• According to the bank, it has been included in the Second Schedule to the Reserve Bank of India Act, 1934.
• With the scheduled bank status, the bank can explore new business opportunities, including participation in government and other large corporations issued request for proposals, primary auctions, fixed-rate and variable rate repos, and reverse repos

Scheduled banks

• Scheduled banks are banks that are listed in the 2nd schedule of the Reserve Bank of India Act, 1934.
• The bank’s paid-up capital and raised funds must be at least Rs5 lakh to qualify as a scheduled bank.
• Scheduled banks are liable for low-interest loans from the Reserve Bank of India and membership in clearinghouses.
• They must, however, meet certain requirements, such as maintaining an average daily CRR (Cash Reserve Ratio) balance with the central bank at the rates set by it.
• The RBI allows Scheduled Banks to raise debts and loans at bank rates.

Scheduled banks consist of

1. Scheduled commercial banks
2. Scheduled cooperative banks

The scheduled commercial banks are divided into following categories:

1. Public sector banks(which are further classified as nationalised banks and State Bank of India [SBI] banks);
2. Private sector banks(which are further classified as old private sector banks and new private sector banks that emerged after 1991);
3. Foreign banks in India; and,
4. Regional rural banks(which operate exclusively in rural areas to provide credit and other facilities to small and marginal farmers, agricultural workers, artisans, and small entrepreneurs).