What’s Bank

A bank is a financial institution that is authorized to receive deposits and offer loans to their customers, including individuals, corporations, and groups¹. Banks also provide various financial services to the public, such as payment and remittance, overdraft, currency exchange, wealth management, investment, and more².

The banking industry in India consists of different types of banks that cater to the needs of different sectors and segments of the economy. Some of the major types of banks in India are:

• Commercial banks: These are also known as retail banks. They provide basic banking services to individuals and small businesses, such as deposits, withdrawals, loans, and cards. Some of the leading commercial banks in India are State Bank of India, ICICI Bank, HDFC Bank, and Axis Bank².
• Investment banks: These are banks that specialize in providing financial advisory, capital raising, and trading services to large corporations, governments, and other entities. They help their clients with mergers and acquisitions, initial public offerings, debt and equity issuance, and market making. Some of the prominent investment banks in India are JP Morgan, Citigroup, Bank of America, Deutsche Bank, and Barclays³.
• Postal savings banks: These are banks that are associated with the national postal system to provide basic banking services to the citizens, especially in rural and remote areas. They offer savings accounts, money orders, and postal stamps.
• Regional rural banks: These are banks that are created to serve the rural and agricultural sectors with basic banking facilities. They offer deposits, loans, and remittances to farmers and small enterprises. They are sponsored by commercial banks and regulated by the Reserve Bank of India and the National Bank for Agriculture and Rural Development.
• Co-operative banks: These are banks that are registered under the Co-operative Societies Act, 1912. They are owned and managed by their members, who are usually from the same community or profession. They provide banking services to their members at low interest rates and fees. They are classified into urban co-operative banks and rural co-operative banks, depending on their area of operation.

The banking industry in India is undergoing rapid changes and innovations, driven by technological advancements, regulatory reforms, and customer preferences. Some of the emerging trends and key terms in the banking industry are:

• Digital banking: This refers to the delivery of banking services through digital channels, such as mobile apps, internet banking, and ATMs. Digital banking enables customers to access their accounts, transfer funds, pay bills, apply for loans, and more, anytime and anywhere, without visiting a branch. Digital banking also helps banks to reduce operational costs, enhance customer experience, and increase efficiency and security⁴.
• Fintech: This is a term that combines finance and technology. It refers to the use of technology to provide innovative and disruptive solutions for the financial sector. Fintech encompasses a wide range of domains, such as payments, lending, insurance, wealth management, and blockchain. Fintech companies leverage data, analytics, artificial intelligence, and cloud computing to offer faster, cheaper, and more convenient services to customers and businesses. Some of the leading fintech companies in India are Paytm, PhonePe, Zerodha, Policybazaar, and Razorpay.
• Government initiatives: The government of India has launched several initiatives to promote the growth and development of the banking industry and to enhance financial inclusion and literacy among the masses. Some of the notable initiatives are:
  • Pradhan Mantri Jan Dhan Yojana (PMJDY): This is a scheme that aims to provide universal access to banking services, such as savings accounts, debit cards, insurance, and pensions, to every household in the country. It was launched in 2014 and has achieved over 430 million accounts as of March 2021.
  • Pradhan Mantri Mudra Yojana (PMMY): This is a scheme that provides loans of up to 10 lakh rupees to non-corporate, non-farm small and micro enterprises, such as traders, artisans, and service providers. It was launched in 2015 and has disbursed over 28.68 trillion rupees as of March 2021.
  • Pradhan Mantri Awas Yojana (PMAY): This is a scheme that aims to provide affordable housing to all urban and rural poor by 2022. It offers subsidies on interest rates for home loans to eligible beneficiaries. It was launched in 2015 and has sanctioned over 11.3 million houses as of March 2021.