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Unit 3: Indian Banking System

Banks can be classified on the bases of different groups. Some of the important groups are Notes
explained below:

3.2.1 State Bank Group (Eight Banks)

This consists of the State Bank of India (SBI) and Associate Banks of SBI. The Reserve Bank of
India (RBI) owns the majority share of SBI and some Associate Banks of SBI. SBI has 13 head
offices governed each by a board of directors under the supervision of a central board.
The boards of directors and their committees hold monthly meetings while the executive
committee of each central board meets every week.

3.2.2 Nationalized Banks (19 Banks)

In 1969, the government arranged the nationalization of 14 scheduled commercial banks in
order to expand the branch network, followed by six more in 1980. A merger reduced the
number from 20 to 19. Nationalized banks are wholly owned by the Government, although
some of them have made public issues. In contrast to the state bank group, nationalized banks
are centrally governed, i.e., by their respective head offices. Thus, there is only one board for
each nationalized bank and meetings are less frequent (generally, once a month). The state bank
group and nationalized banks are together referred to as the Public Sector Banks (PSBs).

3.2.3 Regional Rural Banks (RRBs)

In 1975, the State Bank group and nationalized banks were required to sponsor and set up RRBs
in partnership with individual states to provide low-cost financing and credit facilities to the
rural masses.
3.2.4 Private Banks

Private banks have been playing a crucial role in enhancing customer oriented products with no
choice left with the public sector banks except to innovate and compete in the process. Reserve
Bank of India has come out on clear-cut terms, their guidelines on ownership and governance in
private sector banks.
Major private banks in India are:

Bank of Rajasthan
Bharat Overseas Bank

Catholic Syrian Bank
Centurion Bank of Punjab
Dhanalakshmi Bank
Federal Bank
HDFC Bank

ICICI Bank
IDBI Bank
IndusInd Bank

ING Vysya Bank

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