PrepMaticExam glossary · Bank exams
Scheduled bank: meaning, conditions and types
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A scheduled bank is a bank that is included in the Second Schedule of the Reserve Bank of India Act, 1934. Being on the Schedule gives the bank recognition and privileges, and brings it fully under the RBI's reserve and reporting rules. Banks that are not on the list are called non-scheduled banks.
Conditions to be scheduled
Under Section 42(6) of the Act, the RBI can add a bank to the Schedule if it satisfies two main conditions:
- It has paid-up capital and collected funds of at least ₹5 lakh.
- The RBI is satisfied that its affairs are not conducted in a manner detrimental to the interests of depositors.
The bank must also be a company, a corporation or a cooperative society (and not a sole proprietorship or partnership firm). The ₹5 lakh figure is as stated in the Act; confirm at rbi.org.in.
Types
- Scheduled commercial banks: public sector banks, private sector banks, foreign banks, regional rural banks, small finance banks and payments banks.
- Scheduled cooperative banks: state cooperative banks and urban cooperative banks that have been added to the Schedule.
Benefits of being scheduled
- Can borrow from the RBI, for instance through the bank rate and liquidity windows.
- Can take part in the clearing house system and the RBI's payment systems.
- Covered by the RBI's reserve requirements, such as the CRR under Section 42.
- Greater public trust, because of the RBI's closer oversight.
Duties
Scheduled banks must submit returns to the RBI on time, meet its reserve requirements and follow RBI directions.
Scheduled vs non-scheduled
| Point | Scheduled | Non-scheduled |
|---|---|---|
| Listed in Second Schedule | Yes | No |
| Eligible to borrow from the RBI | Yes | No |
| Typical examples | Almost all commercial banks | Some small cooperative banks and local area banks |
How bank exams ask about it
Look for "scheduled banks are those included in the ___ Schedule of the RBI Act" (Second), "the minimum paid-up capital and collected funds required" (₹5 lakh), and the types. The difference between scheduled and non-scheduled appears in one-liner definitions. Place it among the other bank classification questions in banking awareness.
Frequently asked questions
Are all banks in India scheduled banks?
Nearly all commercial banks are, but some small cooperative banks and local area banks are not. The RBI's list of scheduled banks is on its website.
Does scheduled status mean deposits are safer?
Not by itself. Deposit insurance through DICGC covers insured banks whether scheduled or not.
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