BANKING AFFAIRS

Detailed explanation-1: -Scheduled banks are those banks that are listed under Schedule II of the Reserve Bank of India Act, 1934 . The bank’s paid-up capital and raised funds must be at least Rs. 5 lakh to qualify as a scheduled bank. These banks are liable for low interest loans from the RBI.

Detailed explanation-2: -To qualify as a scheduled bank, the paid-up capital and collected funds of the bank must not be less than Rs5 lakh. Scheduled banks are eligible for loans from the Reserve Bank of India at bank rate, and are given membership to clearing-houses.

Detailed explanation-3: -The scheduled banks are those banks that are listed in the second schedule of the RBI Act 1934. But a bank needs to have a paid-up capital and raised funds of at least Rs. 5 lakh to be eligible as a scheduled bank.

Detailed explanation-4: -All Scheduled Commercial Banks are at present required to maintain with Reserve Bank of India a Cash Reserve Ratio (CRR) of 5.00 per cent of the Net Demand and Time Liabilities (NDTL) (excluding liabilities subject to zero CRR prescriptions) under Section 42(1) of the Reserve Bank of India Act, 1934.

Detailed explanation-5: -This is the RBI’s way of controlling the excess flow of money in the economy. The cash balance that is to be maintained by scheduled banks with the RBI should not be less than 4% of the total NDTL, which is the Net Demand and Time Liabilities.