Banks  in India           Fixed deposits          Home


The operation of  banks in India is governed by the Reserve Bank of India. In India, banks can be classified into 3 categories

1. Public sector banks like State Bank of India, Bank of Baroda, Syndicate Bank, Canara Bank . These are backed by Government of India, so depositors money is safe. Public sector banks are some of the oldest banks in India and have reasonable charges for most services. Many of the branches of these banks are not networked, but they are slowly introducing internet banking, ATM cards and other facilities. Sometimes,  IT requirements are not correctly estimated and this results in problems for customers

Our experience is that they offer better service compared to all other types of banks. Public Provident Fund (PPF) accounts, which offer tax free returns,  can be opened at State Bank of India branches. If you do not operate an account (make a deposit or withdrawal) in the branch for a long time - a period of more than one year, the account becomes inactive and additional verification is required to make it active. You have to periodically visit the branch to update your passbook, though some banks are now offering internet banking.

  Most branches are open for a limited time in the morning, which is very inconvenient for customers, especially salaried employees with a 9  to 5 job, who have to reach office in time. Their employees are unionized and often strike work  

2. Co-operative banks : major banks include Abhyudaya Bank , Bharat Co-op Bank . Maharashtra has the largest number of co-op banks in India. In cities like Mumbai , these banks have a large number of branches. They also have timings convenient for working people - usually open in the evening and on Sundays. They also offer a higher rate of interest compared to other banks. However, many co-op banks have shut down and depositors have lost  money, because of  mismanagement by the Directors of these banks. Mutual funds dividends cannot be directly credited to your account  in these banks. If an account is inactive for more than 1 year (no cash withdrawal or deposit is made), these banks usually charge an additional amount to reactivate it.

If your account is debited for some bank charges, you should check with the bank manager and ask them the exact details. Many times, your account is debited for services you have never used. Also keep a track of  the cheque books that are issued to your account. Bharat Co-op Bank issues cheque books in denominations of 10 leaves and 25 leaves only. They issue 30 cheque leaves free every 6 months. They often do not have cheque books of  10 leaves available. So, if a customer has already taken a cheque book of 10 leaves , they are forced to take a cheque book of 25 leaves and pay bank charges for taking more than 30 cheque leaves (though this is the banks fault actually). Closing an account usually takes 15-20 minutes.


3. Private banks such as  ICICI Bank , HDFC bank, IDBI bank, UTI bank were established less than 15 years ago. They have made optimum use of technology and offer internet banking, ATM and phone banking. You can  access your account from any branch in India ( usually at a charge). Mutual funds can directly credit dividends, redemption amounts to your account. Private and foreign banks cover 65% of the forex transactions in India

 The minimum balance requirement is much higher in these banks, usually more than Rs 5000 for a savings account. If you do not maintain the minimum average quarterly balance (AQB) for a three month period, their bank charges are substantial - Rs 250 - Rs 500. Marketing executive of some new banks like Kotak Mahindra are willing to reduce the AQB requirements to get more customers. It is advisable to check the balance sheets of these banks, before opening an amount. Bank statements are sent by post every month or every 3 months, along with notifications about changes in bank charges.

  The air-conditioned branches of  private banks are well designed , but their staff is often indifferent to customers. Earlier these banks refused to give any acknowledgement for cheques deposited  (if they lost the cheque - they were not responsible). Now the Reserve Bank of India has made it mandatory for them to give an acknowledgement. If you have deposited a cheque and it is not credited to your account, they usually take 3 to 4 days to find out where the cheque has disappeared.  If  a cheque has been deposited in an ATM, and not been credited to your account, these banks will only take any action , if it can be proved that the payees account has been debited.

Before keeping large amounts in these banks, it is advisable to check the financial status of these banks. Global Trust Bank was a private sector bank, which was taken over by the public sector Oriental Bank of  Commerce, due to financial problems. Customers could not withdraw large amounts from their bank accounts for some time.


Citibank, HSBC , Standard Chartered are some of the foreign banks operating in India. However, they have a limited number of  branches, usually in the main financial district of major cities.  Citibank offers electronic fund transfer to other bank, but the recipient does not have any way to find out who has sent the amount. They also have very high charges and for some types of accounts, you are charged for even a visit to the branch. So if you have any problem, you can only contact their call center!

Recently the entire staff of  Citibank's Jaipur branch was dismissed due to malpractices - article from Economic Times on Citibank Jaipur problem


Procedure for opening a bank account in India     Cash withdrawal


The Reserve Bank of India  has established the Banking Ombudsman Scheme for inexpensive and quick resolution of complaints against banks. Some banks like Syndicate Bank provide details of this scheme at their branch. Details of Banking Ombudsman Scheme are available at the RBI website and websites of  some Indian and foreign banks . Indian banks have a large number of holidays and bank holidays are different in the various states in India.

Though 17 banks are authorized to import gold and resell to jewelers, exporters and retail customers, only ICICI bank, HDFC bank, Corporation Bank, Indusind Bank and Indian Bank are selling to retail customers as of March 2006. The gold purchased from banks is 24 karat gold imported from PAMP refinery, Switzerland 


If  you have any query, feedback or suggestion, or  wish to share your experience with us, please send an  email 


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