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Q- 2. Explain Different Kinds of banks.

Ans: With the development of banking system and increase in

population and also greater confidence of people upon banks,
functions performed by banks have considerably increased. Basing
upon certain factors banks have been classified into many to have
better conduct of their operations. Following are the different classes
of banks:
A. Basing Upon Origin:
Banks have been classified into two classes:
1- Local banks: Banks having its branches also the Head office in
the same country are regarded as local banks. These banks are
formed according to regulations of that country.
2- Foreign banks: Banks who’s Head Office is not present in the
country in which they are performing banking functions are
classified as foreign Banks. These banks are formed in some
other country but are having branches in some countries.

B- Basing Upon Ownership:

Banks are divided into two classes:
1- Public Sector Banks: Banks which are owned solely by
government of any country are classified as Public banks.
2- Private Banks: Banks which are not owned by government are
private banks. Private Banks also includes banks registered
under Co-operative Societies Act.
3- Co-operative Banks: These banks are owned by co-operative
societies. The primary motive behind establishment of such
banks is to raise the living standard of people. These banks
provide credit facilities to farmers at businessmen operating
their business at small scale.

C- Basing Upon Functions:

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On the basis of functions performed banks
are classified into six types:
1- Central Banks: Bank which is responsible for controlling
banking and monetary systems of a country and also have the
authority of note issue is termed as central bank.
2- Commercial banks: Banks which deals in money, and accepts
deposits from general public and advance loans to businessmen
are called commercial banks.
3- Exchange Banks: Banks with primary responsibility of
arranging foreign business and foreign exchange are called
“Exchange Banks”.
4- Mortgage Banks: Such banks are formed to provide credit
facilities against the mortgage of properties. Clean loans are
seldom issued by such banks so called as mortgage banks.
5- Saving Banks: Banks collecting small savings from public and
investing them in safest government securities are called saving
banks.
6- Agricultural Banks: Banks providing services especially to
agricultural sector are called Agricultural Banks. Basic aim of
these banks is to provide financial assistance to formers.
7- Industrial Banks: Banks working for industrial sector are said
Industrial Banks. The primary function of these banks is to
provide loans to industrial sector.

D- Basing Upon Registration:

Banks have two kinds on the basis of
registration:
1- Scheduled Banks: Banks which have arranged their
registration with central bank and are bound to accept
regulations laid down by central banks are called as Scheduled
Banks.

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Sheikhupura. Contact: 0334-6988867, 0321-7990028, 0301-4817282
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2- Non Scheduled Banks: Banks not registered with central bank,
and who are not bound to act as per instructions of central bank
are called as Non scheduled Banks.

Golden Education Academy, Civil Quarters Road, Jinnah Park Near Punjab Broast,
Sheikhupura. Contact: 0334-6988867, 0321-7990028, 0301-4817282