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Maharashtra HSC Bifocal Banking study materials
Maharashtra HSC Bifocal Banking study resources

Maharashtra HSC Bifocal Banking: Types of Banks and Financial Institutions

Maharashtra HSC Bifocal Banking · Work through your exam, one topic at a time.

All guide sections

Types of Banks and Financial Institutions

Types of Banks and Financial Institutions

This domain tests the licence categories and what each institution may legally do. Expect comparisons of payment banks, small finance banks, cooperative banks, RRBs, NBFCs and development finance institutions.

Core distinctions

  • Commercial banks: full banking licence; accept demand and term deposits; lend; operate payment systems.
  • Payment banks: accept deposits up to ₹2 lakh per customer, issue debit cards, distribute insurance and mutual funds, but cannot lend or issue credit cards. At least 75% of demand deposit balances must be invested in short-term government securities and T-bills; the remainder may be placed with other commercial banks.
  • Small finance banks: full lending and deposit-taking, with at least 75% of adjusted net bank credit in priority sector and at least 50% of the loan portfolio in loans up to ₹25 lakh.
  • Regional rural banks: established under the RRB Act, 1976; shareholding is Centre 50%, State 15% and sponsor bank 35%; they focus on rural and agricultural credit.
  • Cooperative banks: urban cooperative banks and rural cooperatives; licensed and regulated by RBI, with dual regulation in some cases.
  • NBFCs: financial companies regulated by RBI but not banks; they cannot accept demand deposits.
  • Development finance institutions: NABARD, SIDBI, NHB, EXIM Bank, NaBFID; they provide long-term or sectoral finance.

Worked example

A fintech proposes to take ₹1 lakh demand deposits from 50,000 customers and lend ₹2 lakh to each. A payment bank licence fails because payment banks cannot lend. A small finance bank licence fits because it can accept deposits and lend, subject to PSL and small-loan composition. The answer turns on permitted activities, not on the applicant's technology.

Traps

  • Payment banks can issue debit cards but not credit cards.
  • NBFCs are not banks; no CRR and no demand deposits.
  • RRB shareholding percentages are exam favourites.
  • A cooperative bank can be scheduled without becoming a commercial bank.