Difference Between Scheduled and Nationalized Bank (With Table)

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A bank is a financial institution, aside from receiving deposits and lending money to businesses and individuals also involves protecting people’s money, disbursing payments, and investing the funds in securities.

The concept of the banking system in India was developed during the British Era. The British East India Company established three banks in India during the 1800’s. All the three banks were merged into one imperial bank later.

The banking sector in India is widely categorized as Scheduled and Non-Scheduled Banks. The Scheduled Banks are those banks that are incorporated in the Second Schedule of the Reserve Bank of India Act, 1934.

They are further classified into Nationalized Banks, State Bank of India and its associates, Regional Rural Banks, Foreign Banks, and other Private Sector Banks.

The terminology Commercial Banks implies to both Scheduled and Non-scheduled banks governed under the Banking Regulation Act, 1949.

Scheduled vs Nationalized Bank

The difference between Scheduled Bank and Nationalized Bank is that the Scheduled bank comprises of all but not limited to Nationalized banks but Nationalized banks are fully under the control of the Government.


Comparison Table Between Scheduled and Nationalized Bank (in Tabular Form)

Parameter of ComparisonScheduled BanksNationalized Banks
Customer ServiceScheduled banks are partly public and partly private so service will be customer-centricComparatively the service is better, although it is not as efficient as in Private Sector banks
PurposeScheduled banks were started for productive purposeNationalized banks were started for political purpose
GovernanceSemi-government or quasi-governmentAs the majority of stake is held, it is fully governed by the Government.
MotiveProvides financial assistance to economically weaker sections of the societyProvides financial assistance to all the people of the country
OperationsLarger scale and countrywide operations with numerous branchesOperations are relatively on a smaller scale as there are only a few Nationalised banks in India


What is Scheduled Bank?

Scheduled Banks are those banks that are incorporated in the Second Schedule of the Reserve Bank of India Act, 1934.

Reserve Bank of India has the supreme monitoring authority. All Scheduled Banks comes under RBI and Scheduled banks are classified as,

  1. Commercial banks
    1. Public sector banks
      1. State Banks of India
      1. Other Nationalized banks
    1. Private sector banks
      1. Old
      1. New
    1. Foreign banks
    1. Regional rural banks
  2. Co-operatives
    1. Urban cooperatives
    1. State cooperatives

All the banks classified under scheduled type can obtain debts or loans at the bank rate from the RBI. Scheduled banks enjoy the benefits of procuring the membership of clearinghouse automatically.

Scheduled banks regularly submit all their activities information to Reserve Bank of India. Scheduled banks are categorized into Commercial Banks and Co-operative Banks.

Scheduled banks explicitly follow two conditions, that the collected fund and paid-up capital of the bank cannot be less than five lakh rupees. Another condition is that any of the bank’s actions should not impact depositor’s interests.


What is Nationalized Bank?

Indian private banks were converted into public sector banks through the operation of nationalization which is the root cause for the origin of nationalized banks in India.

Nationalization is nothing but the Government taking authority over assets and corporations, generally by procuring the majority of stakes in the corporation.

The reasons to commence Nationalized banks were to improve the banking habits, to expand banking in India, to control private sectors, to minimize regional difference and for social welfare.

There were around 19 nationalized banks in India. Even though State Bank Of India is often considered as a nationalized bank but it is a state-owned organization undertaken as a public sector.

Any Bank where the Government has a majority of stake is called a Nationalized Bank. This means that the Government calls many of the policies for the bank and also has a big role in appointments of directors and even in decisions on loans.

Main Differences Between Scheduled and Nationalized Bank

  1. Both the scheduled banks and nationalized banks are interrelated as nationalized banks come under the sub-category of scheduled commercial public sector banks. The main difference between Scheduled banks and Nationalized banks is, all nationalized banks are scheduled banks whereas all scheduled banks are not nationalized banks which explains that all nationalized banks are included in the second schedule of RBI completely.
  2. Scheduled banks are not owned by the government completely but held by individual shareholders from the public whereas nationalized banks are governed and a major portion of shares are held by the government.
  3. Nationalized banks are service motive whereas scheduled banks are profit motive.
  4. A nationalized bank provides less attractive and less efficient customer service. On the other hand, scheduled banks provide good customer service and more attractive features for the customers.
  5. The expansion rate is higher in scheduled banks as both Public and Private sector banks are inclusive. On the contrary, ease of expansion is relatively lesser in Nationalized banks.



Banks are the financial institutions that are authorized to accept deposits and grant loans and credits. They play a significant role in supporting and fostering the economic balance of a country. Both the scheduled and nationalized banks were established for the welfare of the people to provide financial assistance and other benefits.

Scheduled banks are categorized into different types, where Nationalized banks are one among them.  Scheduled banks are predominantly profit-oriented as it includes private sector banks and other foreign banks.

Nationalized banks are mostly service-oriented as they are completely monitored and procured by the government. The scheduled banks comprise of Co-operative banks that are under the control of the Co-operative Society.

They cater to the needs of rural and agricultural segments, whereas Nationalized banks cater to all people. The features provided by the Nationalized bank are not on par with that of a Private bank which comes under the scheduled bank category. To conclude, the holding pattern is the key difference between a scheduled bank and a Nationalized bank.



  1. https://arc.aiaa.org/doi/pdf/10.2514/3.21745
  2. https://core.ac.uk/download/pdf/25988647.pdf