Banks can be classified into the following:
- Commercial banks
- Cooperative banks
- Specialized banks
- Central bank
(i) Commercial Banks: Commercial banks are institutions dealing in money. These are governed by Banking Regulation Act (Country Rule) and according to its banking mean accepting deposits of money from the public for the purpose of lending or investment. There are two types of commercial banks, public sector and private sector banks.
(ii) Cooperative Banks: Cooperative Banks are governed by the provisions of State Cooperative Societies Act and meant essentially for providing cheap credit to their members. It is an important source of rural credit i.e. agricultural financing in India.
(iii) Specialized Banks: Specialized banks are foreign exchange banks, industrial banks, development banks, export-import banks catering to specific needs of these unique activities. These banks provide financial aid to industries, heavy turnkey projects and foreign trade.
(iv) Central Bank: The Central bank of any country supervises controls and regulates the activities of all the commercial banks of that country. It also acts as a government banker. It controls and coordinates currency and credit policies of any country. The Reserve Bank of India is the central bank of our country.