Guide on Scheduled Banks and How They Differ From Non-Scheduled Banks in India

If you explore details about the banking system in India, then you might come across terms such as “scheduled banks and non-scheduled banks”. In this article, we will explain these two terms in simple language and a clear manner. Along with the definition, we will explain the features and benefits of banking with scheduled banks, along with the complete list of scheduled banks. Stay with us till the very end to learn everything there is about these two categories of banks.

What are Indian Scheduled Banks?

We will explain what scheduled banks are from the following points:

• There is a list of banks in the Second Schedule of the Reserve Bank of India Act, 1934.
• Banks that are on this list are known as the scheduled banks.
• These banks enjoy certain benefits and special features granted to them by the RBI.
• However, to be entitled for this list, the banks need to fulfil certain eligibility criteria set by the RBI.
• These banks include public sector banks, private sector banks, foreign banks, regional rural banks, cooperative banks, and more.

Examples of Scheduled Banks:

• State Bank of India
• ICICI Bank
• HDFC Bank
• Punjab National Bank

What Are Non-Scheduled Banks?

• The banks that are not on the Second Schedule of the Reserve Bank of India Act, 1934, are known as Non-Scheduled banks.
• They are usually smaller in size, have limited operations and are often limited to a specific region.
• Please note that they are still regulated by the RBI and have to adhere to the RBI guidelines.

Examples of Non-Scheduled Banks:

• Capital Local Area Bank 
• Krishna Bhima Samruddhi LAB Ltd 
• Subhadra Local Area Bank Ltd

Key Differences Between Scheduled and Non-Scheduled Banks

Before we explain the key differences between these two categories, it is important to understand two critical terms associated with banking and finance.

Bank Rate

• Bank Rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks without any security.
• RBI uses this tool to control cash flow and inflation in the Indian economy.
• When the bank rate goes up, borrowing becomes expensive for banks, which in turn reduces the money supply in the market.
• When the bank rate goes down, borrowing becomes cheaper for banks, which in turn increases the money supply in the market as lending and spending are encouraged.

Clearing House

• A Clearing House is a financial institution where banks settle their mutual transactions and is managed by the Reserve Bank of India.
• Instead of each bank dealing with every other bank separately, they send all cheques and payment instructions to the clearing house.
• The clearing house calculates the net amount each bank owes or receives and then settles the balances.
• This process saves time and reduces errors in handling interbank payments.

Now, since we are clear with the two terms, let us see the major differences between Scheduled and Non-Scheduled banks:

Eligibility Criteria for Scheduled Banks

To be included in the Second Schedule of the RBI Act, a bank must meet the following conditions:

List of Scheduled Banks as Per RBI in India in 2025

According to the latest list released by the Reserve Bank of India (RBI), here is the list of scheduled banks operating in India in 2025 - 

You can also visit the RBI Scheduled Banks List to check the updated information.

Benefits of Banking with Scheduled Banks

The following are some of the benefits of banking with scheduled banks:

• Better Security: These banks are backed by the RBI, so your money is safer.
• Access to RBI Loans: In emergencies, they can borrow from the RBI, ensuring liquidity.
• Reliable Services: Scheduled banks follow strict rules, so you can rely on them.
• Wider Reach: They operate in more locations and provide better infrastructure.
• Government Support: Many government schemes are routed through scheduled banks.

Why Do Non-Scheduled Banks Still Exist?

So, now, you must be wondering that, if all the benefits are there for scheduled banks, then why do non-scheduled banks exist. Well, the following are the reasons:

• They provide banking services to people in remote and rural areas who do not have direct access to larger banks.
• These banks often have strong local connections and are trusted by their communities.
• In some cases, they provide very particular banking needs that larger banks do not focus on.

Conclusion

Now, we know what are scheduled banks and what are non scheduled banks and the differences between them. Scheduled banks are listed under the Second Schedule of the RBI Act and enjoy two major benefits - borrowing at bank rate and automatic membership to the clearing house.  On the other hand, non-scheduled banks are smaller in operations and customer base and are targeted to specific regions. They have an important role in local finance and also provide particular banking services, which larger banks usually ignore.

Frequently Asked Questions

What are non-scheduled banks?

Non-scheduled banks are banks that are not listed in the Second Schedule of the RBI Act. They are smaller, region-based, and have limited services compared to scheduled banks.

Are non-scheduled banks safe?

Although they are regulated by the RBI but they do not get the same support as scheduled banks. So, while they can be safe, they may face more risks in financial stress situations.

Can I open a savings account in a non-scheduled bank?

Yes, many non-scheduled banks offer savings and deposit accounts. However, their services may be limited to local areas.

How many scheduled banks are there in India?

As of the latest RBI data, there are more than 200 scheduled banks, including public, private, foreign, regional rural, and cooperative banks. You can see the full list on the RBI official website.

Why do scheduled banks have more trust among people?

Scheduled banks are backed by the RBI, have strong financial positions, and follow strict regulations. This makes them more trustworthy and safer for customers.

Author: Diwakar Kumar Singh

Diwakar Kumar Singh is an accomplished content creator with over 6 years of experience in crafting both long-form and short-form content.

 

A gold medalist in MBA (Marketing) from IMT and a qualified petroleum engineer, Diwakar brings a results-driven mindset to his work. His passion for writing enables him to produce compelling and engaging content that resonates with diverse audiences.