Conditions to be Scheduled Bank

Conditions to be Scheduled Bank

Conditions to be Scheduled Bank

The scheduled bank means which bank those are identified in the particular name list of banks under the rule of the central bank. Every commercial bank has to be scheduled under the central bank. There are some rules and conditions for the commercial banks to be scheduled. A bank can only be scheduled when it maintains the rules and regulations of the central bank. Here the conditions are described as follows:

Legally Organized: Bank that is formed under Banking Company Act-1991 and registered by the government is eligible to be scheduled.

Paid-up Capital and Reserve Fund: It is must for every bank to be scheduled is to keep the definite amount of paid-up capital and reserve fund in the central hank. Such kind of amount is set by central bank regulation.

Statutory Liquidity Ratio: When the scheduled bank has to deposit a certain percentage of its reserve in the Central Bank. It does vary from country to country. In India, this rate is about 20 percent.

Cash Reserve Ratio: The scheduled bank has to maintain a specified amount of cash reserve rate in the central bank which is about 4 percent in Bangladesh.

Provisions: The provision is the sign of profit to the central bank. The scheduled bank follows the terms against the classified loans as well as to the unclassified loan, substandard and had debt etc under a different provision of the central bank.

Submission of weekly Report: Weekly activities of the bank have to be submitted in the form of the report to the central bank. This is mandatory for every scheduled bank.

Promised to be Honest: Every scheduled bank is bound to abide by the rules of the central bank. It cannot commit any illegal activities. It has to work in favor of the depositors.

Order of Central Bank: Every hank has to obey the rules provided by the central bank.

Usage of Fund: the Scheduled bank is bound to use the capital in a productive way.

Above conditions are almost same in all countries. When a bank fulfills those conditions it is considered as the scheduled bank.