Banking System in India:

As per the Reserve Bank of India Act, 1934, banks in India are classified into two major categories i.e. scheduled and non-scheduled banks. A scheduled bank is one whose name appears in the second schedule of the RBI Act, 1934. It includes those banks, which have a paid-up capital and reserves of an aggregate value of not less than Rs.5 lakhs and which satisfy RBI that their affairs are being carried out in the interests of the depositors. While, non-scheduled banks are those, which have not been included in the second schedule of the Act.
The scheduled banks comprise scheduled commercial banks and scheduled cooperative banks. The scheduled commercial banks in India are categorised into following different groups according to their ownership and/or nature of operation: -

(i) Nationalised Banks
(ii) State Bank of India and its associates;
(iii) Regional Rural Banks (RRBs);
(iv) Foreign banks; and
(v) Other Indian private sector banks
(vi) Local Area Bank.

Scheduled Co-operative Banks consist of

(i) Scheduled State Co-operative Banks and
(ii) Scheduled Urban Co-operative Banks.
Banks in India are controlled, supervised and regulated by Reserve bank of India. Banking structure in India can be broadly classified as under
Central Banking
Commercial Banking
Development Banking (Development Finance Institutions)
Non-Banking financial Institutions
· Merchant Banking

Banking structure in India

Reserve Bank of India Development Banks

EXIM Bank
SIDBI
NABARD Commercial Banks

Scheduled Banks Non-Scheduled Banks

Indian Banks Foreign Banks-Branches-Representative Office

Dist. Co-operative Banks
State Co-Operative Banks

Public Sector
Private Sector
State Bank of India & It’s Associate Banks
Nationalised Banks
Regional Rural Banks

New Generation Banks
· Local Area Banks
· Old Banks

Non Banking Finance Companies
Merchant Banking

Other Financial Institutions
· Land Mortgage Banks
· Industrial Finance Corporation
· Agriculture Refinance Corporation
· State financial Corporation
· The Industrial Reconstruction Bank of India
· Credit Guarantee Corporation of India
· The Deposit Insurance Corporation
· The Export credit and Guarantee Corporation
· Industrial Development Finance Corp.
· Industrial Investment Bank of India
Note:
There are 19 Nationalised Banks.
State bank of India and its associate banks are 8 in numbers.
There were around 196 Regional Rural Banks which were established in each district of the country in partnership with Central Government ( 50% Capital Share) State Government ( 15% Share capital) Sponsor Bank ( 35% capital share).As per the directives all the Regional Rural Banks established by a bank in a state have now been merged and made as one unit.
Old Private sector Bank – Example- Bank of Rajasthan,Nainital Bank,
New Generation Banks – Example- UTI Bank, IDBI Bank,YES Bank. ICICI Bank etc.,
Foreign Banks –Example- ABN Amro, Chartered Bank, ANZ Bank, HSBC etc.

Reserve Bank of India the Central Bank of the country was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934. .

Non-Banking Finance Companies:

According to Reserve Bank (Amendment Act) 1997. “A Non Banking Finance Company Means (NBFC)
A financial institution, which is a company;
A non-banking institution or class of which has its principal business the receiving of deposits under any scheme or arrangement or in any other manner or lending in any manner;
Such other non-banking institution or class of such institutions as the Bank may with the previous approval of the Central Government specify
Non Banking Finance Company include those finance companies, which are in the business of
Hire Purchase Finance
Housing Finance
Investment
Loan
Equipment Leasing
Mutual benefit financial companies.

Merchant Banking:

Merchant banking is a skill-based activity and involves servicing every need of the client. Merchant banking activities include issue and underwriting of shares and debentures. Merchant Bankers activities are regulated by ;
Guidelines of Securities and Exchange Board of India (SEBI).
Companies Act, 1956
Listing Guidelines of Stock Exchange
Securities Contracts (Regulations) Act, 1956