Includes special features of this country’s banking system and rules/laws that might impact U.S. business.
Last Published: 8/2/2019

India’s extensive banking network, in both urban and rural areas is classified as below:

Public sector commercial banks (including State Bank of India and its associates)
Private sector commercial banks including foreign 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 46 foreign banks, 17 nationalized banks, State Bank of India (with its merged associate banks) , 25 private sector banks, 10 small finance banks and 7 payment banks in addition to large number of co-operative and regional rural 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. Private banks are capturing the market share from state-owned banks, both in terms of deposits and advances.  In terms of the market share, public and private sector banks held 70 percent and 26 percent of deposits and 65 percent and 30 percent of loans respectively.

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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