Includes special features of this country’s banking system and rules/laws that might impact U.S. business.
Last Published: 10/10/2018

India has an extensive banking network, in both urban and rural areas. The banking system has four tiers:

  • Scheduled commercial banks
  • Regional rural banks (operate in rural areas, not covered by the scheduled banks)
  • Cooperative banks and special purpose rural banks
  • Small Finance banks and Payment banks

Timely availability of adequate credit is of utmost importance for the development of the Indian rural economy and agriculture. At present regional rural banks, commercial banks and credit cooperatives, encouraged mainly by the Government of India (GOI), undertake this function. Financial inclusion remains the top most priority of the Government of India (GOI) and the creation of small finance banks and payment banks are aimed at furthering the financial inclusion in the economy.

In India, there are 43 foreign banks, 19 nationalized banks, six State Bank of India and its associates, two other public-sector banks, 25 private sector banks, 10 small finance banks and 11 payment banks. Large Indian banks and most Indian financial institutions are in the public sector. Though public-sector banks currently dominate the banking industry, numerous private and foreign banks exist. Several public-sector banks are being restructured, and in some cases the government either has already reduced or is in the process of reducing its ownership. In terms of the market share, the state-owned banks account for more than 72%, private banks handle 16%, foreign banks account for more than 7%, and old-generation private lenders control 5% of the market.

The Reserve Bank of India (RBI) is the central banking institution. It is the sole authority for issuing bank notes and the supervisory body for banking operations in India. It supervises and administers exchange control and banking regulations and administers the government's monetary policy. It is also responsible for granting licenses for new bank branches. The Deposit Insurance and Credit Guarantee Corporation, an organization promoted and fully funded by the RBI, offers deposit insurance facilities. The RBI directs banks to meet Bureau of Indian Standards guidelines. Indian banks must also adhere to the prudential norms laid down by the Basel Group.


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