Scheduled Banks vs. Non-Scheduled Banks

Key Differences


Comparison Chart
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Cash Reserve Ratio
Returns
Second Schedule
Borrowing

Members of Clearing House

Scheduled Banks vs. Non-Scheduled Banks
The banks that are enlisted or included in the scheme of the central bank called scheduled bank whereas Non-scheduled banks are those banks which not included in the schedule of the central bank. Scheduled banks are scheduled and under full control of central bank and non-scheduled banks are neither scheduled nor under the direct control of the central bank. Scheduled banks shall have to deposit 18% to the central bank ( 12.5% others and 5.5% cash), and there is no compulsion for non-scheduled banks. Scheduled banks get the privileges of clearing facility and re-discounting of a bill to the central bank whereas non-scheduled banks do not get such facility. The prevailing rates of interest for scheduled banks are comparatively low and non-scheduled banks rate of interest is comparatively high. Scheduled banks play a significant role in the money market whereas non-scheduled banks do not play a significant role.
What are Scheduled Banks?
Scheduled Banks are the banks, which accounted in the second schedule of the reserve bank. Scheduled banks savor certain rights such as Right to receive refinance facility from the vertex bank, Entitled for currency chest facility and Right to become members of clearing house. However, they are required to fulfill certain obligations like maintaining a standard daily balance of CRR (Cash Reserve Ratio) with the reserve bank or central bank at the rates stated by it. Add to that; these banks need to present returns at regular intervals, to the central bank as long as the rules of reserve bank or central bank and banking regulation. To modify as a scheduled bank, the bank should conform to the conditions which are:
- The total minimum value of paid-up capital and reserve must be a specific
- The bank requires satisfying the central bank that its concerns are not carried out in a way that causes damage or harm to the interest of the depositors.
- The bank requires to be a corporation rather than a sole proprietorship or partnership firm.
What are Non-Scheduled Banks?
Non-scheduled bank refers to the banks which not listed in the second schedule of the reserve bank. In better terms, the banks which do not obey or acquiesce with the provisions specified by the central bank, under the meaning of the reserve bank , or as per specific functions, etc. or as per the judgment of the reserve bank, are not able to assist and protect the precipitates or depositor’s interest, are known as non-scheduled banks. Non-scheduled banks are also needed to maintain the cash reserve requirement, not with the reserve banks, but with themselves. These are local area banks.
Types
- Co-operative banks
- State co-operative banks
- Central co-operative banks
- Primary credit societies