Difference Between Nationalized Bank and Scheduled Bank (With Table)

Bank, also called financial institution, plays a crucial and important role in the financial and economic condition of the country. Nationalized Bank and Scheduled Bank, although both are banks and works specifically to serve the people, their functioning is quite different in various aspects.

Nationalized Bank vs Scheduled Bank

The difference between a nationalized bank and a scheduled bank is that the bank, which is primarily held and regulated by the government, is called a nationalized bank, and it is also referred to as a public sector bank. On the other side, the scheduled bank is a wide concept, and it includes all those banks which are incorporated in the second schedule of the RBI act 1934.

The public sector bank is the other name of a nationalized bank. In other words, a bank in which the government authority holds more than 50% share or stake is considered a nationalized bank. These banks are regulated in the undertaking of the government.

Scheduled banks include all those banks which are included or listed in the second schedule of the RBI act, 1934. It includes various public and private sector banks which are functioning for various purposes.

Comparison Table Between Nationalized Bank and Scheduled Bank

Parameters of ComparisonNationalized BankScheduled Bank
GovernanceA nationalized bank is primarily governed by the government of the country.The scheduled bank is considering semi-government and governed by both government and private shareholders.
SectorIt is specifically called a Public sector bank and includes only public sector banks.Schedule banks include public sector banks, foreign banks, and private sector banks as well.
PurposeThe nationalized banks are regulated to enhance the banking sector after the post-independence period.The scheduled banks are regulated with the purpose to provide effective banking services in a productive manner
ObjectiveThe objective of the nationalized bank is to provide banking facilities and assistance to all the citizens of the country.The objective of nationalized bank is to maintain the regional imbalance by providing financial assistance to weaker section
Area of OperationThe number of the nationalized banks is comparatively less, and hence they are operated on a smaller scale.Schedule bank has various branches, and it is operated nationwide on a large scale.

What is Nationalized Bank?

Nationalized bank as the name refers, the term nationalized means which is undertaking by the nation or the government authority. In the post-independence time government play an essential role in the financial assistance and economic development of the country and take the initiative to nationalize 14 commercial banks in India and this decision came into effect in year 1969, and this occurred after the establishment and nationalization of the Reserve bank of India.

Usually, a bank is considered a nationalized bank if the government of a country has a 51% or higher stake in that bank. In India, there are Various nationalized bank has around 80-95% of shares hold by the government of India. These nationalized banks are converted from the privately or commercially owned so that the government itself regulates them, and this has been done due to the following reasons:

  1. For social welfare
  2. For developing effective banking
  3. For the expansion of the banking sector in India
  4. To reduce the regional or geographical imbalance

Till July 2020, currently, 12 nationalized banks are there in India, and this includes Punjab National Bank (PNB), State Bank of India (SBI), Indian Bank, UCO, Bank of India (BOI), Bank of Baroda (BOB) and more.

What is Scheduled Bank?

In India, banks are managed and controlled by the Reserve Bank of India (RBI). The RBI act of 1934 has the second schedule, which categorized the banks into two categories scheduled banks and non-scheduled banks. The Scheduled banks include all those banks that fulfil the conditions and the criteria mentioned or described in section 42 (6) (a) of the act.

According to this act, a bank should be considered as a scheduled bank and included in the second schedule if it fulfils the conditions described below:

  1. The collected funds of the bank and the paid capital as well should not be less than Rs. 5lac.
  2. Any activity done by the bank should not adversely affect the interest of depositors.

Various facilities are provided to the scheduled banks, and it includes their eligibility for loans on the normal bank rate directly from the RBI, and these banks automatically acquire the authority and membership of the clearinghouse.

The Scheduled bank is a wide concept, and it includes the public sector banks, foreign banks and private sector banks as well. All the nationalized banks are schedule banks and regulated under the RBI act. Some examples of scheduled banks include:

  1. State bank of India (SBI)
  2. Bank of Baroda (BOB)
  3. Bank of India (BOI)
  4. Axis Bank
  5. ICICI Bank
  6. HDFC bank
  7. American Express Bank and many more

Main Differences Between Nationalized Bank and Scheduled Bank

  1. A scheduled bank is a wide term and categorized into two aspects, including scheduled commercial public and private sector banks. The nationalized bank is the sub-category of a scheduled bank, and hence both are considered interrelated with each other.
  2. A nationalized bank is governed by the government of the country, but the scheduled banks are semi-government, and they are not completely governed by the government.
  3. In the nationalized bank, a major portion of shares which means 51% or higher, is held by the government, but in the schedule, the bank government do not hold the major portion, and public shareholders are also involved.
  4. The nationalized bank is primarily working with a service motive to enhance the banking facilities in the country, but on the other hand, the scheduled banks have both service and profit motive as well.
  5. The nationalized bank are less in number, and consequently, they serve a small area as compared to the scheduled bank.


Financial institutions or banks play an essential role in the economic development of the country. Nationalized bank and scheduled bank both are equally important for the nation and help in providing financial assistance and other benefits to the people. A nationalized bank is simply a sub-category of the Scheduled bank. Both banks are working effectively to provide better banking services and facilities nationwide.


  1. https://www.researchgate.net/profile/Vijay_Joshi8/publication/262144765_Indian_Banking_Industry_Challenges_And_Opportunities/links/0deec536c6b9584499000000/Indian-Banking-Industry-Challenges-And-Opportunities.pdf
  2. https://journals.sagepub.com/doi/abs/10.1177/0256090920050102
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