Scheduled Banks: Those banks which have been included in the

Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in

turn includes only those banks in this schedule which satisfy the
criteria laid down vide section 42 (6) (a) of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India

having a total network of 64,918 branches. The scheduled
commercial banks in India comprise of State bank of India and its
associates (8), nationalized banks (19), foreign banks (45),
private sector banks (32), co-operative banks and regional rural
banks.

Nationalized Banks: The nationalization of banks in India took

place in 1969 by Mrs. Indira Gandhi the then prime minister. It
nationalized 14 banks then. These banks were mostly owned by
businessmen and even managed by them.
(Central Bank of India, Bank of Maharashtra ,Dena Bank Punjab
National Bank, Syndicate Bank, Canara Bank, Indian Bank ,Indian
Overseas Bank, Bank of Baroda, Union Bank, Allahabad Bank
United Bank of India, UCO Bank, Bank of India)

Before the steps of nationalization of Indian banks, only State

Bank of India (SBI) was nationalized. It took place in July 1955
under the SBI Act of 1955. Nationalization of Seven State Banks
of India (formed subsidiary) took place on 19th July, 1960.

The State Bank of India is India's largest commercial bank and is

ranked one of the top five banks worldwide. It serves 90 million
customers through a network of 9,000 branches and it offers --
either directly or through subsidiaries -- a wide range of banking
services.

The second phase of nationalization of Indian banks took place in

the year 1980. Seven more banks were nationalized with deposits
over 200 crores. Till this year, approximately 80% of the banking
segment in India were under Government ownership.

After the nationalisation of banks in India, the branches of the

public sector banks rose to approximately 800% in deposits and
advances took a huge jump by 11,000%.

Central Bank: A Central Bank or reserve bank, by definition, is

the organization within a specific country that regulates all of the
currency supplies and related policies for that particular area. A
Central Bank will perform various actions, but its most important
job is to make certain that the national currency and Money
Supply remain stable. Depending on the country, Central Banks
may be government owned and controlled or may be run under
regulations that are specifically created to prevent extensive
government interference.

Eg.RBI is central bank of India and FED is central bank of USA.

SLR((Statutory Liquidity Ratio) is the amount a commercial

bank needs to maintain in the form of cash, or gold or govt.
approved securities (Bonds) before providing credit to its
customers. SLR rate is determined and maintained by the RBI
(Reserve Bank of India) in order to control the expansion of bank
credit. Present rate of SLR is 25 %.

CRR (Cash Reserve Ratio): Cash reserve Ratio (CRR) is the

amount of Cash(liquid cash like gold) that the banks have to keep
with RBI. This Ratio is basically to secure solvency of the bank
and to drain out the excessive money from the banks. If RBI
decides to increase the percent of this, the available amount with
the banks comes down and if RBI reduce the CRR then available
amount with Banks increased and they are able to lend more.RBI
has reduced this ratio three times and reduced it from 9 % to 5%.
Repo Rate: Repo rate is the rate at which our banks borrow
rupees from RBI. This facility is for short term measure and to fill
gaps between demand and supply of money in a bank .when a
bank is short of funds they they borrow from bank at repo rate.

Reverse repo rate: If bank has a surplus fund then the deposit
the funds with RBI and earn at Reverse repo rate .So reverse
Repo rate is the rate which is paid by RBI to banks on Deposit of
funds with RBI.A reduction in the repo rate will help banks to get
money at a cheaper rate. When the repo rate increases borrowing
from RBI becomes more expensive. To borrow from RBI bank
have to submit liquid bonds /Govt Bonds as collateral security ,so
this facility is a short term gap filling facility and bank does not use
this facility to Lend more to their customers. present rate is 7.5%
and reverse repo rate is 6%.

PLR(Prime Landing Rare): PLR or prime lending rate as the rate

of interest at which banks lend to their credit-worthy or favored
customers. It is treated as a benchmark rate for most retail and
term loans.

The RBI does not set these rates, but in a broad way stipulates
the interest rates in the economy. The banks are at liberty to lend
at a rate above or below the RBI’s.